IMPORTANT POINTS
Grant of bail depends upon variety of circumstances varying from case to case.
Every law need not have universal application for all persons. State can make legitimate classification and every classification is likely to make inequalities to certain extent. Classification, however, must not be made arbitrarily and be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained.
Article 14 condemns discrimination not only by substantive law but procedural law as well.
Law as interpreted in Article 21 implies a due process, both procedurally and substantively.
Section 45 declared unconstitutional being violative of Articles 14 and 21.

Headnote:(a) Prevention of Money Laundering Act, 2002 – Section 3 – To be adjudged guilty u/s 3 a person must not only be involved in any process or activity connected with proceeds of crime, but must also project or claim it as being untainted property. (Para 7)
       (b) Bail – Grant of – Depends upon variety of circumstances – Varying from case to case – Magna carta – Eight Amendment to American constitution, read into Article 21, Constitution of India. (Para 10, 11, 12, 13)
       (2011) 13 SCC 706; (1980) 2 SCC 565 – Referred
       (c) Constitution of India – Article 14 – ‘Discriminatory aspect’ and ‘manifestly arbitrary’ aspect – Validity of statute – Statutes presumed to be constitutionally valid – Every law need not have universal application for all persons – State can make legitimate classification – Every classification likely to make inequalities to certain extent – Mere inequality will not attract Article 14 – Classification, however, must not be made arbitrarily and be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained – Article 14 condemns discrimination not only by substantive law but procedural law as well – Similarly, a ‘manifestly arbitrary’ statute would be hit by Article 14. (Para 16,18)
       (1951) SCR 682; (1955) 1 SCR 1045; (1954) SCR 30; (2017) 9 SCC 1 – Relied upon
       1957 SCR 678 – Referred
       (d) Constitution of India – Article 21 – Repository of vast numbers of substantive and procedural rights – Law as interpreted in Article 21 implies a due process, both procedurally and substantively. (Para 19)
       (1978) 1 SCC 248; (2011) 13 SCC 706 – Relied upon
       (e) Prevention of Money Laundering Act, 2002 – Section 45 – Twin conditions for grant of bail – Four situations – First, Person tried for predicate offence without offence under the Act – Later charged with offence under the Act – Can be granted bail u/s 439 CrPC without conditions u/s 45 – Second, person charged with predicate offence under Part B along with offence under the Act – Bail can be granted u/s 439 CrPC without conditions u/s 45 – Third, person charged with predicate offence under Part A in which the term for imprisonment would be 3 years or less than 3 years, along with offence under the Act – Bail Cn Bee granted u/s 439 CrPC without conditions u/s 45 – Fourth, person charged with predicate offence under Part A in which the term for imprisonment would be more than 3 years, along with offence under the Act – Bail cannot be granted without satisfying twin conditions u/s 45 – Circumstance making all difference being punishment for a Part A offence being less or more than 3 years – Having no nexus with grant of bail for offence of money laundering – Similarly, when proceeds of a predicate offence under Part A committed by X goes to Y who claims it as untainted and both are tried together, X will not be granted bail without the twin conditions u/s 45 although he is not charged for an offence under then Act – Grant of bail would depend upon a circumstance having nothing to do with offence of money laundering – Section 45, held, manifestly arbitrary and providing a procedure which is not fair or just – Liable to be struck down being violative of Articles 14 and 21. (Para 24, 25, 26, 27)
       (f) Prevention of Money Laundering Act, 2002 – Section 45 – ‘Such offence’ – Person seeking bail under the Act – ‘Such offence’ relating not to offence under the Act but predicate offence under Part A – whether a person is guilty of a predicate offence or not, or whether he is likely to commit that offence again not germane to grant of bail for offence of money laundering – The expression occurring in other Acts relating to offences under that act – Section 45, held, not sustainable. (Para 28)
       (g) Prevention of Money Laundering Act, 2002 – Section 45 – Act aiming to attach property involved in money laundering and book the person concerned – Section 45 classifying offences under Part A on basis of sentencing – Having no nexus with objective of the Act – Interestingly, Part B classified on basis of value of proceeds – Having a reasonable nexus – Classification on basis of sentencing, held, arbitrary and unjust. (Para 29)
       (1979) 1 SCC 380 – Relied upon
       (h) Prevention of Money Laundering Act, 2002 – Section 45 – Act not covering many offences punishable with life imprisonment and which may yield to proceeds of crime – Sections 232, 238, 240, 251, 372, 372 IPC – Section 37, Narcotic Drugs and Psychotropic Substances Act, 1985 puts twin conditions for grant of bail as in section 45 but only in case of commercial quantity – Section 45 does not differentiate on basis of quantity – Person with any quantity has to satisfy the twin conditions for getting bail – In case of commercial quantity, the person has to satisfy the twin conditions under both the Acts – Similarly, breach of Biological Diversity Act, 2002 cannot be considered so serious as to warrant the twin conditions for grant of bail – Provision held arbitrary. (Para 31, 32, 33, 34)
       (i) Prevention of Money Laundering Act, 2002 – Section 45 – Act having no provision denying anticipatory bail – A person charged with offence u/s 4 of the Act along with a predicate offence punishable with more than 3 years imprisonment – Can get an anticipatory bail u/s 438 CrPC without rigours of section 45 – However, if arrested u/s 19, cannot get bail without rigours of section 45 – Held, Section 45 leads to manifestly arbitrary and unjust results and would, therefore, violate Articles 14 and 21 of the Constitution. (Para 35)
       (j) Prevention of Money Laundering Act, 2002 – Section 45 – Interpretation of statute – Reading down – Merely reading down the two conditions would not get rid of the vice of manifest arbitrariness and discrimination – Contention that the twin conditions are akin to conditions for grant of ordinary bail rejected. (Para 36, 37)
       481 US 739 (1987); 342 US 1 – Referred
       (2005) 8 SCC 21; (1994) 3 SCC 569; (2005) 5 SCC 294 – Distinguished
       (k) Prevention of Money Laundering Act, 2002 – Section 45 and 24 – Section 45 speaks only of Part A offences, section 24 speaking of offence of money laundering – Presumption of person prosecuted for money laundering has no application to scheduled offence. (Para 41)
       2017 (348) ELT 24 (P & H) – Referred
       Facts of the case:
       The present writ petitions and appeals raise the question of the constitutional validity of Section 45 of the Prevention of Money Laundering Act, 2002. Section 45(1) imposes two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act is involved. The conditions are that the Public Prosecutor must be given an opportunity to oppose any application for release on bail and the Court must be satisfied, where the Public Prosecutor opposes the application, that there are reasonable grounds for believing that the accused is not guilty of such offence, and that he is not likely to commit any offence while on bail.
       Finding of the Court:
       Section 45(1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, declared to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India.
       Result: Writ petitions and the appeals disposed of.

Judgement Key Points

The provided legal document primarily discusses the constitutional validity of Section 45 of the Prevention of Money Laundering Act, 2002, and the principles surrounding bail, discrimination, arbitrariness, and fundamental rights under Articles 14 and 21 of the Constitution of India. It emphasizes that laws must not be manifestly arbitrary or discriminatory and must bear a rational relation to the objective they seek to achieve. The judgment underscores the importance of procedural fairness, equality before the law, and the protection of personal liberty.

However, the judgment does not specifically address issues related to the issuance, conditions, or confiscation of passports, especially in cases where passports are issued on an urgent basis without disclosing or recording criminal antecedents. The focus is on procedural fairness, constitutional protections against arbitrary laws, and the rights of individuals in relation to bail and criminal proceedings, rather than the specific legal regime governing passports or their confiscation.

Therefore, this judgment does not explicitly support or oppose the saying "Where a passport is issued on an urgent basis and no criminal antecedents are disclosed or recorded therein, such passport is not liable to confiscation." It does not provide any direct legal principles or rulings concerning passport issuance or confiscation, and thus, its support or contradiction of that statement cannot be inferred from the content provided.

JUDGMENT

R.F. Nariman, J.

1. Leave granted.

2. The present writ petitions and appeals raise the question of the constitutional validity of Section 45 of the Prevention of Money Laundering Act, 2002. Section 45(1) imposes two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act is involved. The conditions are that the Public Prosecutor must be given an opportunity to oppose any application for release on bail and the Court must be satisfied, where the Public Prosecutor opposes the application, that there are reasonable grounds for believing that the accused is not guilty of such offence, and that he is not likely to commit any offence while on bail.

3. The Prevention of Money Laundering Act, 2002 was introduced, as its Statement of Objects and Reasons mentions, to make money laundering an offence, and to attach property involved in money laundering, so that this serious threat to the financial system of India is adequately dealt with. It is worth setting out the Statement of Objects and Reasons of the Act in full.

“STATEMENT OF OBJECTS AND REASONS
It is being realised, world over, that money-laundering poses a serious threat not only to the financial systems of countries, but also to their integrity and sovereignty. Some of the initiatives taken by the international community to obviate such threats are outlined below:—
(a) the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, to which India is a party, calls for prevention of laundering of proceeds of drug crimes and other connected activities and confiscation of proceeds derived from such offence.
(b) the Basle Statement of Principles, enunciated in 1989, outlined basic policies and procedures that banks should follow in order to assist the law enforcement agencies in tackling the problem of money-laundering.
(c) the Financial Action Task Force established at the summit of seven major industrial nations, held in Paris from 14th to 16th July, 1989, to examine the problem of money-laundering has made forty recommendations, which provide the foundation material for comprehensive legislation to combat the problem of money-laundering. The recommendations were classified under various heads. Some of the important heads are—
(i) declaration of laundering of monies carried through serious crimes a criminal offence;
(ii) to work out modalities of disclosure by financial institutions regarding reportable transactions;
(iii) confiscation of the proceeds of crime;
(iv) declaring money-laundering to be an extraditable offence; and
(v) promoting international co-operation in investigation of money-laundering.
(d) the Political Declaration and Global Programme of Action adopted by United Nations General Assembly by its Resolution No. S-17/2 of 23rd February, 1990, inter alia, calls upon the member States to develop mechanism to prevent financial institutions from being used for laundering of drug related money and enactment of legislation to prevent such laundering.
(e) the United Nations in the Special Session on Countering World Drug Problem Together concluded on the 8th to the 10th June, 1998 has made another declaration regarding the need to combat money-laundering. India is a signatory to this declaration.
2. In view of an urgent need for the enactment or a comprehensive legislation inter alia for preventing money-laundering and connected activities confiscation of proceeds of crime, setting up of agencies and mechanisms for coordinating measures for combating money-laundering, etc., the Prevention of Money-Laundering Bill, 1998 was introduced in the Lok Sabha on the 4th August, 1998. The Bill was referred to the Standing Committee on Finance, which presented its report on the 4th March, 1999 to the Lok Sabha. The recommendations of the Standing Committee accepted by the Central Government are that (a) the expressions “banking company” and “person” may be defined; (

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2017 Supreme(SC) 1116

Cases Referred (12)