The Supreme Court of India, in a significant judgment dated 21 January 2025, held that when a court finds that the fundamental rights of an accused have been violated during or after arrest under the Prevention of Money Laundering Act, 2002, it is duty-bound to release the accused on bail. A Bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan ruled that in such cases, the arrest stands vitiated and bail must be granted even if the conditions stipulated under Section 45 of the PMLA are not satisfied.
Background
The case arose from the arrest of the respondent, Subhash Sharma, by the Directorate of Enforcement in connection with proceedings under the PMLA. The respondent was not produced before the nearest Magistrate within 24 hours of arrest, in direct contravention of clause (2) of Article 22 of the Constitution, which mandates that every person arrested and detained shall be produced before the nearest Magistrate within twenty-four hours.
The respondent moved for bail, arguing that the arrest was illegal on account of the constitutional violation. The Enforcement Directorate contested the bail application, relying on the twin conditions under Section 45(1)(ii) of the PMLA — which ordinarily require the court to be satisfied that there are reasonable grounds for believing that the accused is not guilty and is unlikely to commit an offence while on bail — as a bar to release.
The question before the Supreme Court was whether the stringent bail conditions under PMLA can override the constitutional right to be produced before a Magistrate within 24 hours.
Key Holdings
The Supreme Court established the following principles:
Fundamental rights override statutory bail conditions: When a court adjudicating a bail application finds that the fundamental rights of the accused under Articles 21 and 22 of the Constitution have been violated during or after arrest, it is the duty of the court to release the accused on bail. The twin conditions under Section 45 of the PMLA cannot operate as a bar to release in such circumstances.
Arrest stands vitiated: An arrest that violates the constitutional guarantee of production before a Magistrate within 24 hours is rendered completely illegal. The vitiation of the arrest itself removes the legal foundation for continued detention.
24-hour production mandate is inviolable: The Court reaffirmed that clause (2) of Article 22 admits of no exception for special legislation. The failure to produce the accused before the nearest Magistrate within 24 hours renders the arrest unconstitutional, regardless of the severity of the offence or the statutory regime under which the arrest is effected.
No double standards for PMLA: The Bench rejected the proposition that the special nature of economic offences under the PMLA justifies relaxation of constitutional safeguards attendant upon arrest. The constitutional protections apply with equal force to all arrests, including those under special statutes.
Implications for Practitioners
This judgment is of immediate relevance to criminal defence practitioners representing accused persons in PMLA proceedings. Where the Enforcement Directorate has failed to comply with the 24-hour production requirement or has otherwise violated constitutional arrest safeguards, defence counsel now have clear authority to seek bail without being constrained by the Section 45 twin conditions.
For the Enforcement Directorate and investigating agencies, the decision reinforces the imperative of strict procedural compliance during arrests. Any failure to observe constitutional safeguards — however inadvertent — now carries the consequence of the accused being entitled to bail as of right, effectively neutralising the prosecution's ability to oppose release on substantive grounds.
The ruling also has implications for future litigation challenging arrests under other stringent statutes such as the Unlawful Activities (Prevention) Act, 1967, where similar arguments about constitutional violations vitiating arrest may be advanced.