Bombay High Court
Ajay Kumar S/O Chandraprakash Baheti vs Directorate Of Enforcement Thr. The ... on 28 January, 2022
Bench: V.M. Deshpande, Vinay Joshi
(1) criaba1149.21
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT NAGPUR
CRIMINAL APPLICATION (BA) NO.1149 OF 2021
Ajay Kumar s/o. Chandraprakash Baheti .. Applicant
Aged about 42 years, Occ. Business,
R/o. Vishnu Complex, Nanded City,
Dist. Nanded.
VERSUS
Directorate of Enforcement .. Respondent
Through the Assistant Director,
Sub-Zonal Officer,
Nagpur.
Mr.S.V. Manohar, Sr. Counsel with Mr.D.V. Chavan and
Mr.G.S.Gour, Advocate for the applicant.
Mr.Anil Singh, ASGI with Mr. Aditya Thakkar, Ms. Mugdha
Chandurkar and Ku. Divya Gontia, Advocates for the
respondent.
CORAM : V.M. DESHPANDE &
VINAY JOSHI, JJ.
RESERVED ON : 06.01.2022
PRONOUNCED ON : 28.01.2022
J U D G M E N T :[PER : VINAY JOSHI, J.] :-
01. Reference made by learned Single Judge dated 03.12.2021 has occasioned us to deliberate upon the conflicting views expressed by the learned Single Judges on the issue involved. The center of focus revolves around the effect of post-amended section 45 of the ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: (2) criaba1149.21 Prevention of Money-Laundering Act, 2002 (PML Act) in terms of amendment introduced w.e.f. 19.04.2018, after decision of the Supreme Court in the case of Nikesh Tarachand Shah Vs. Union of India (2018) 11 SCC 1. The applicant (accused) has preferred an application in terms of section 439 of the Code of Criminal Procedure, 1972 (code) read with section 65 of the PML Act, for grant of bail in ECIR/NGSZO/13/2021 registered at the Director of Enforcement (ED), Sub-Zonal Office, Nagpur, in connection with the offence of money laundering in terms of section 3 of the PML Act punishable under section 4 of the said Act.
BACKGROUND FOR REFERENCE :-
02. During the course of hearing of bail application, learned Counsel appearing for applicant-
accused canvassed that rigor of complying duel conditions incorporated in section 45(1)(ii) of the PML Act would not apply in view of the decision of the Supreme Court in ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: (3) criaba1149.21 the case of Nikesh Shah (supra). It is the contention that the Supreme Court has declared section 45(1) of the PML Act unconstitutional to the extent of twin conditions incorporated therein for grant of bail. The said submission appears to have been countered by the prosecution stating that due to subsequent amendment introduced vide Act No.13 of 2018, the twin conditions have been revived and therefore the statutory mandate would apply while considering the bail application.
03. To substantiate the contention about non- applicability of twin conditions post decision of the Supreme Court in the case of Nikesh Shah (Supra), reliance was placed on two decisions of this Court in the case of Sameer M. Bhujbal Vs. Assistant Director, Directorate of Enforcement, (B.A. No.286/2018 - Bombay High Court) and the case of Union of India Vs. Yogesh Narayanrao Deshmukh (2021) SCC Online Bom 2905. Besides that some decisions of other High Courts in cases of Dr. Shivinder Mohan Singh Vs. Directorate of Enforcement ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: (4) criaba1149.21 (2020) SCC Online Del 766 (Delhi High Court), Upendra Rai Vs. Directorate of Enforcement (2019) SCC Online Del 9086 (Delhi High Court), Dr.Vinod Bhandari Vs. Assistant Director (2018) SCC Online MP 1559 (Madhya Pradesh High Court) and Most. Ahilya Devi Vs. State of Bihar & Ors. (Cri.Misc. Appl. No.41413/2019) (Patna High Court) have been pressed into service. The learned Counsel Mrs. Mugdha Chandurkar appearing for the Enforcement Directorate (ED) in bail application, expressed her reservation about the view expressed in above decisions by reiterating that due to subsequent amendment, twin conditions would revive. In that regard she relied on the decision of Delhi High Court in cases of Bimal Kumar Jain Vs. Director of Enforcement, 2021 SCC Online Del 3847. Her submission appears to be that the subsequent amendment introduced by the Legislation in section 45(1) has cured the defects pointed out by the Constitutional Court in the case of Nikesh Shah (supra). Since the very foundation which was the basis for declaring twin conditions incorporated in section 45(1) of the Act ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: (5) criaba1149.21 unconstitutional has been removed, the twin conditions would squarely apply. The Reference Court also took note of the decision of Orissa High Court in case of Mohammad Arif Vs. Directorate of Enforcement, 2020 SCC OnLine Ori 544 and the decision of the Supreme Court in the case of P.Chidambaram Vs. Directorate of Enforcement (2020) 13 SCC 791 while making reference.
04. On confronting with rival submissions, the learned Single Judge of this Court expressed that the very foundation of the declaration of the unconstitutionality was that the stringent twin conditions operated indiscriminately before amendment. According to the learned referal Judge, the basis and foundation of the declaration of unconstitutionality stood removed in view of the Legislative intervention and therefore expressed his inability to concur with the view expressed by the learned Single Judges of this Court in the cases of Sameer Bhujbal (supra) and Yogesh Deshmukh (supra).
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(6) criaba1149.21 05. Reluctance of learned Single Judge for concurring with earlier view expressed by coordinate
Benches persuaded him to make reference to the Larger Bench for an authoritative pronouncement. In the wake of such position, the learned Single Judge vide its order dated 03.12.2021 framed the following question to be answered by the Larger Bench:-
QUESTION REFERRED :-
"Whether the twin conditions in section 45(1) of the 2002 Act, which was declared unconstitutional by the judgment of the Apex Court in Nikesh T.Shah Vs. Union of India (2018) 11 SCC 1, stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018?"
. In turn, we are called upon to answer the above referred question.
06. We have exhaustively heard learned Senior Counsel Mr.Sunil Manohar for the applicant-accused and learned Additional Solicitor General of India (ASGI) Mr. ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: (7) criaba1149.21 Anil Singh on behalf of the ED. Both of them made elaborate submissions on the issue involved in context with the relevant provisions in different enactments like, The Terrorist and Disruptive Activities (Prevention) Act, 1987, Narcotic Drugs and Psychotropic Substances Act, 1985, The Maharashtra Control of Organised Crime Act, 1999, The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 etc. Besides that both of them placed reliance on various reported judgments, which we prefer to deal contextually. We may hasten to add that submissions were made as if we are dealing with the issue about constitutional validity of the amended provision, which challenge, in fact, is pending before the Supreme Court. RIVAL CONTENTIONS AND ITS ANALYSIS :-
07. Coming to the submissions of learned Senior Counsel Mr.Sunil Manohar, his main thrust was on the point that in view of the declaration made by the Supreme ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: (8) criaba1149.21 Court in the case of Nikesh Shah (supra), the entire section 45 has been struck down. The Constitutional Court has struck down the twin conditions on many grounds. The Legislative amendment of the year 2018 has not cured the entire defects pointed out by the Supreme Court and therefore the twin conditions would not revive. He would submit that the Parliament cannot nullify the effect of the judgment of the Supreme Court by introducing the said amendment. Unless all defects pointed by the Supreme Court are cured by comprehensive legislation, the twin conditions would not revive. In other words, the effect of striking down section 45 of the PML Act would remain as it stands. In his elaborate submission, learned Senior Counsel Mr.Sunil Manohar took us through the judgment of the Supreme Court in Nikesh Shah's case with special reference to some of the paragraphs.
08. The learned ASGI Mr. Anil Singh submits that though in Nikesh Shah's case, section 45(1) of the PML ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: (9) criaba1149.21 Act, as it then stood, had been declared unconstitutional, but the defect pointed out by the Supreme Court which formed the basis to declare section 45(1) to be unconstitutional has been cured by the Legislature through its Amendment Act No.13 of 2018 which came into force from 19.04.2018. He would submit that the offending expression "punishable for a term of an imprisonment of more than three years under Part-A of the Schedule" as used under section 45(1) has been substituted with the words "under this Act" and as such the foundation for declaration that the provision is violative of Articles 14 and 21 of the Constitution, has been stood removed and corrected.
09. The learned ASGI argued that by substitution of words "under this Act", in section 45 of the Act, now the twin conditions for bail with respect to an offence of money laundering which is a serious economic offence would revive. He contended that the twin conditions incorporated in section 45(1) of the PML Act, have been ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 10 ) criaba1149.21 declared ultravires in case of Nikesh Shah (supra) not because of any inherent defect in these two conditions in itself, but because of its dependency, its applicability on predicated offence i.e. offences included in Part-A of the Schedule, as those scheduled offences are not offences of money laundering, but different one. The learned ASGI would submit that the unconstitutionality arose on account of criteria for the application of twin conditions contained in the opening part of Section 45(1) not having rational nexus with the purpose and intent of the PML Act. The Supreme Court struck down those conditions being linked to the predicated offences and not with the offence of money laundering. The defect which was identified by the Supreme Court was cured by the Legislative amendment. The arbitrariness that was pointed out by the Supreme Court in applicability of twin conditions de-linked with the offence of the PML Act has been rectified by making criteria for application uniformly, namely, for the offences under the PML Act. In other words, by introducing new Legislative amendment, ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 11 ) criaba1149.21 the very basis of invalidity has been removed and cured. He would submit that the Legislature has the power to enact validating laws including power to amend the laws by removing causes of invalidity.
10. In the aforesaid background, the issue which was referred in the present matter is as to whether after Legislative intervention vide Amended Act No.13 of 2018, twin conditions which were struck down in case of Nikesh Shah (supra) stands revived. At the inception, it is to be noted that the constitutional validity of Amending Act No. 13 of 2018 is not the subject matter of challenge. Admittedly, the said challenge is pending before the Supreme Court. However, both sides made exhaustive submissions by contending that while answering the reference, it needs to be gone into as to whether Amending Act has cured the deficiency pointed out by the Supreme Court in case of Nikesh Shah (supra) having effect of reviving the conditions. The submissions are made as if we are called upon to decide the question of ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 12 ) criaba1149.21 validity of the Amending Act under constitutional jurisdiction.
11. We are confronted by divergent views expressed by the learned Single Judges spread over the country. Reverting to the reference order dated 03.12.2021, we have noted that two decisions of this Court in case of Sameer Bhujbal (supra) and Yogesh Deshmukh (supra) cited before the referal Judge, became the genesis for the reference. The learned Single Judge (Reference Court) shown his disagreement with the view expressed by coordinating Benches of this Court by expressing that the very foundation or basis for striking down the twin conditions has been removed by the Legislative amendment and therefore in his opinion the twin conditions would revive.
12. It necessitates us to go through the decision of the learned Single Judge in Sameer Bhujbal's case, which we consider to be a foundation, since it has been ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 13 ) criaba1149.21 referred by various High Courts while echoing the same view. In Samir Bhujbal's case, this Court was dealing with bail application in terms of section 439 of the Code of Criminal Procedure for the offence punishable under section 3 read with section 4 of the PML Act. The argument was advanced that taking note of the decision in the case of Nikesh Shah (supra), the Parliament has brought amendment in the Finance Act, 2018 and thus rectified the defects pointed out by the Supreme Court. In short, it was contended that after amendment, the twin conditions have been revived. The Court expressed (Sameer Bhujbal's case) that the Supreme Court in Nikesh Shah's case has struck down section 45 of the Act as a whole. The Supreme Court expressed in para 45 that 'we declare section 45(1) of the PML Act insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India'. It is expressed that even after amendment original section 45(1)(ii) has neither been revived or resurrected by the Amending Act. Moreover, ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 14 ) criaba1149.21 the notification dated 29.03.2018 thereby amending section 45(1) of the PML Act is silent about its retrospective effect. Therefore, as of today, there is no rigor of said twin conditions.
13. The second decision of this Court in line was in case of Union of India Vs. Yogesh Narayanrao Deshmukh (supra). In said case, the learned Single Judge took note of earlier two decisions of this Court in cases of Sameer Bhujbal (supra) and Deepak Virendra Kochar Vs. Directorate of Enforcement (Cri.B.A. No.1322/2020 Bombay High Court). It is expressed that, in Nikesh Shah's case the Hon'ble Apex Court has struck down Section 45 of the PML Act, as a whole having found it arbitrary and violative of Article 14 and 21 of the Constitution of India and not just applicability of twin conditions to scheduled offences and, therefore expressed its agreement with the view taken in earlier decisions in the cases of Sameer Bhujbal (supra) and Deepak Kochhar (supra) along with decision of Delhi High Court in Upendra Rai's case. ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 :::
( 15 ) criaba1149.21 In short, taking a note of the Supreme Court's decision in case of Nikesh Shah coupled with the views expressed by this Court in earlier two decisions, same view has been reiterated. In the said decision, we are unable to find much deliberation on the point as to what was the effect of subsequent amendment.
14. In the decision of Delhi High Court in case of Upendra Rai (supra) while dealing with the issue, Delhi High Court has expressed its agreement with a view taken by this Court in case of Sameer Bhujbal (supra) and also its agreement with a decision of Madhya Pradesh High Court in case of Vinod Bhandari (supra) and accordingly stated that it has no reason to take different view.
15. Another decision in case of Most. Ahilya Devi Vs. State of Bihar (supra) rendered by Patna High Court has been pressed into service. On careful examination, we find that Patna High Court has simply stated that (para 24) in view of clear language used in para 46 of ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 16 ) criaba1149.21 the Supreme Court decision in case of Nikesh Shah (supra), the Amending Act does not have effect of reviving twin conditions. In another decision of Manipur High Court in case of Okram Ibobi Singh Vs. Directorate of Enforcement (2020) SCC Online Mani 365 cited by the applicants, similar view was taken that twin conditions would not revive. We have also gone through some other decisions in cases of Sai Chandrashekar Vs. Directorate of Enforcement (2021) SCC Online Del 1081 and Amarendradhari Singh Vs. Directorate of Enforcement, 2021 SCC Online Del 3901 of Delhi High Court, Prakash Gurubaxani Vs. Directorate of Enforcement (2021) SCC Online P & H 1567 of Punjab and Haryana High Court, Pankaj Grover Vs. Directorate of Enforcement (2021) SCC Online All 566 of Allahabad High Court, wherein same view was expressed.
16. One another decision of Delhi High Court in case of Dr.Shivinder Mohan Singh (supra) has been pressed into service to uphold the submission that Legislative ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 17 ) criaba1149.21 amendment does not have effect of revival of twin conditions. In said case, Delhi High Court has expressed that, although there has been amendment to section 45 of the PML Act, however, after the judgment of Nikesh Shah (supra), there is no subsequent decision of the Supreme Court holding that said two conditions to be constitutionally valid, even when brought back by way of amendment. We are not in agreement with the said line of thinking, since there is presumption of constitutionality of statutory amendment unless it is struck down by the Courts. Admittedly, the Amending Act has not been struck down meaning thereby its subsequent authorization by Court for its applicability is unwarranted.
17. We have carefully examined the above decisions which speak that Legislative amendment does not revive the twin conditions which were declared unconstitutional by the Supreme Court in Nikesh Shah's case. In most of the cases, respective High Courts have reiterated the view expressed by this Court in case of Sameer Bhujbal ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 18 ) criaba1149.21 (supra).
18. The learned ASGI has assiduously pointed out that the view taken by Delhi High Court in case of Upendra Rai Vs. Directorate of Enforcement (supra) has been stayed by the Supreme Court in SLP (Cri) 2598/2020 vide its order dated 03.06.2020. Likewise, the decision taken in case of Dr. Shivinder Singh (supra) has also been stayed by the Supreme Court in its order dated 31.07.2020 in SLP (Cri) No.3474/2020. The learned ASGI has submitted that the review petition was filed against the decision of Delhi High Court in case of Bimal Kumar Jain (supra) taking contrary view, however, by reiterating the earlier view and expressing that there is presumption in favour of constitutionality the review petition was rejected.
19. The learned ASGI Mr.Anil Singh took us through another line of thinking which speaks about a contrary view stating that by way of amendment the Legislature has ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 19 ) criaba1149.21 cured the defect having result of reviving twin conditions. In this regard he relied on the decision of Orissa High Court in the case of Mohammad Arif (supra), wherein it is expressed that in view of the fact that section 45 has been amended after decision of Nikesh Shah (supra), argument that twin conditions would not revive does not hold good. On the same line our attention has been invited to the decision of Delhi High Court in case of Bimal Kumar Jain (supra). In said case by placing reliance on the decision of the Supreme Court in case of P.Chidambaram (supra) and Mohammad Arif (supra) it was held that merely because the entire section is not re- enacted would be of no consequence since the provision even after being declared unconstitutional does not get repealed or wiped up from the statute book and it only become unenforceable. It is held that once the Parliament steps in and cures defect pointed out by the Constitutional Court, the defect appears to be cured and the presumption of constitutionality is to apply to such provisions.
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( 20 ) criaba1149.21 20. Reverting to the rival submissions, we would
like to advert to the argument canvassed by Sr. Counsel Mr. Sunil Manohar on the issue. His basic contention is that unless all the defects cited by the Constitutional Court have been cured or removed, there would be no effect of the amendment and twin conditions would not revive. His entire endeavour was to impress upon us that the Constitutional Court has pointed several defects in Section 45(1) of the PML Act, which then stood, all these defects have not been removed and therefore by way of amendment Legislature cannot undo what the Constitutional Court has struck down. Learned Sr. Counsel Mr.Manohar took us through various paragraphs of the judgment of Nikesh Shah (supra) to contend that several defects have been pointed out by the Constitutional Court of which care has not been taken by the Amending Act of 2018.
21. In case of Nikesh Shah (supra), the very question about Constitutional validity of Section 45 of ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 21 ) criaba1149.21 the PML Act with reference to twin conditions incorporated therein was under challenge. After said decision, the Legislature has amended the provision of Section 45 (1) of the Act. The pre and post position of section 45 is as below:− PRE AND POST POSITION :-
Section 45 - Prior to Nikesh Section 45 - Post Nikesh Tarachand Shah Tarachand Shah Section 45. Offence to be Section 45. Offences to be cognizable and non-bailable. cognizable and non-bailable.
(1) Notwithstanding (1)1[Notwithstanding anything contained in the Code of contained in the Code of Criminal Procedure, 1973 (2 Criminal Procedure, 1973 (2 of 1974), no person accused of 1974), no person accused of an offence punishable for of an offence under this Act a term of imprisonment of shall be released on bail or more than three years under on his own bond unless--] Part A of the Scheduled (i) the Public shall be released on bail or Prosecutor has been given an on his own bond unless- opportunity to oppose the
(i) the Public application for such release;
Prosecutor has been given an and
opportunity to oppose the (ii)where the Public
application for such Prosecutor opposes the
release; and application, the court is
(ii) where the Public satisfied that there are
Prosecutor opposes the reasonable grounds for
application, the Court is believing that he is not
satisfied that there are guilty of such offence and
reasonable grounds for that he is not likely to
believing that he is not commit any offence while on
guilty of such offence and bail:
that he is not likely to Provided that a person,
commit any offence while on who is under the age of
bail; sixteen years or is a woman
Provided that a person, or is sick or infirm, or is
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who, is under the age of 16 accused either on his owns or
years, or is a woman or is along with other co-accused
sick or infirm, may be of money laundering a sum of
released on bail if the less than 1 crore rupees may
special Court so directs: be released on bail, if the
Provided further that special court so directs:
the special Court shall not Provided further that
take cognizance of any the Special Court shall not
offence punishable under take cognizance of any
Section 4 except upon a offence punishable under
complaint in writing made section 4 except upon a
by- complaint in writing made by--
(i)The director; or (i) the Director; or
(ii)Any officer of the (ii)any officer of the
Central Government or State Central Government or State
Government authorized in Government authorised in
writing in this behalf by writing in this behalf by the
the Central Government by a Central Government by a
General or a Special Order general or a special order
made in this behalf by that made in this behalf by that
Government. Government.
(1-A)Notwithstanding [(1A) Notwithstanding
anything contained in the anything contained in the
Code of Criminal Procedure, Code of Criminal Procedure,
1973 (2 of 1974), or any 1973 (2 of 1974), or any
other provision of this act, other provision of this Act,
no police officer shall no police officer shall
investigate into an offence investigate into an offence
under this Act unless under this Act unless
specifically authorized, by specifically authorised, by
the Central Government by a the Central Government by a
general or special order, general or special order,
and, subject to such and, subject to such
conditions as may be conditions as may be
prescribed; prescribed.]
(2)The limitation on (2) The limitation on
granting of bail specified granting of bail specified in
in sub Section (1) is in sub-section (1) is in
addition to the limitations addition to the limitations
under the Code of Criminal under the Code of Criminal
Procedure, 1973 (2 of 1974) Procedure, 1973 (2 of 1974)
or any other law for the or any other law for the time
time being in force on being in force on granting of
granting of bail. bail.
Explanation - xxxx
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22. The learned Sr.Counsel Mr. Manohar took us
through paras 31 to 34 of the judgment wherein the
Supreme Court gave illustrations to contend that the
applicability of twin conditions would simply depend upon predicated offences incorporated under Part-A of the Schedule which has no nexus with the offences of money laundering punishable under section 4 of the Act. The Supreme Court after quoting few examples observed that there would be arbitrary and discriminatory result about applicability of the twin conditions.
23. Then learned Senior Counsel Mr.Sunil Manohar took us through paras 37, 39 and 40 of the judgment in the case of Nikesh Shah (supra) to contend that the defects pointed out by the Supreme Court have not been remedied by way of amendment. Unless all the defects are cured by way of comprehensive Legislation, it has no effect in reviving the conditions. In short the classification based on sentence of imprisonment of more ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 24 ) criaba1149.21 than three years of an offence contained in Part-A of the schedule, which is predicated offence having no relation with the object of the Money Laundering Act has been pointed.
24. On the similar line, learned Senior Counsel Mr. Manohar took us through some of the sections of para 1 of Part-A of the schedule, namely, Sections 327 and 411 of the Indian Penal Code. Likewise, our attention is invited to para 20 of Part-A of the schedule pertaining to offence under the Copy Right Act and Para 25 relating to offence under the Environment Protection Act. He would submit that unless there is amendment to schedule as these offences have no relation with act of money laundering, it could not be said that the defect is removed. The endeavour was to show certain offences falling under Part-A of the Schedule to be having less gravity.
25. Learned Senior Counsel Mr.Manohar took us ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 25 ) criaba1149.21 through para 42 of the judgment of Nikesh Shah (supra) to contend that there is no parallel provision in the PML Act excluding the applicability of the provisions of section 438 of the Cr.P.C. like some other statues and therefore said defect still survives. During the course of argument we have pointed out to learned Sr.Counsel Mr. Manohar that there are some statutes like MCOC Act and NDPS Act, wherein the applicability of section 438 has not been excluded despite existence of twin conditions. Moreover, on this point learned ASGI in his additional submission has placed on record recent decision of the Supreme Court (dated 04.01.2022) in case of Assistant Director of Enforcement Directorate Vs. Dr.V.C. Mohan (Criminal Appeal No.21 of 2022), wherein in relation to pre-arrest bail, judgment of Nikesh Shah was pressed into service on the point of mandate of section 45 of the PML Act. In that regard the Supreme Court expressed that the principles and rigor of section 45 of the PML Act must get triggered although application is under 438 of the Cr.P.C.
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26. Learned ASGI took us through preamble of the PML Act which inter alia provides that it is an enactment to prevent money laundering and to provide confiscation of property derived from or involved in money laundering and or matters connected there with or incidental thereto. It is submitted that the offence of money laundering poses serious threat to the financial system of the country. Learned ASGI Mr.Anil Singh has submitted that already the Supreme Court has upheld the validity of twin conditions, namely, section 45(1) in its earlier decision in the case of Gautam Kundu Vs. Directorate of Enforcement (2015) 15 SCC 1 later on approved by the Supreme Court in another decision in case of Rohit Tandon Vs. Director of Enforcement (2018) 11 SCC 46. His line of argument is that in case of Nikesh Shah (supra) per se applicability of the twin conditions to the PML Act has not been struck down but considering the defects about its applicability depending upon predicated offence twin conditions are held unconstitutional, which now stood rectified. ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 :::
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27. Learned ASGI would contend that offence of money laundering being an economic offence constitute a class apart and need to be visited with different approach. For this purpose he relied on the decision of Y.S. Jagan Mohan Reddy Vs. CBI, (2013) 7 SCC 439. He also took us through observations made by the Division Bench of this Court in the case of Anil Vasantrao Deshmukh Vs. Directorate of Enforcement, 2021 SCC On Line Bom 3641. In said case, this Court took a note of legislative history and the intent of the PML Act. It is observed that large scale of money laundering affects the economic interest of the country. Menace of money laundering has international ramifications. The PML Act was enacted to prevent money laundering and to provide for confiscation of property derived from money laundering. It is submission that keeping in mind object of enactment the provisions are to be interpreted.
28. On the other hand, learned Sr. Counsel Mr. ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 28 ) criaba1149.21 Manohar would submit that there is absence of compelling State interest like other enactments where the validity of twin conditions has been upheld. In-fact, we are not deciding the validity of the Amending provisions, as the said challenge is pending before the Supreme Court. The question under reference poses a limited issue about effect of amendment on the twin conditions existed in section 45 after the amendment.
LEGISLATIVE COMPETENCE TO AMEND THE LAWS :-
29. Learned Sr. Counsel Mr. Manohar placed reliance on the decision of B.K. Pavitra and Ors. Vs. Union of India, (2019) 16 SCC 129 to contend that the Legislature cannot simply override declaration of invalidity without remedying the basis on which law was held to be ultra vires. However, in the same judgment it is also observed that a declaration by a Court that a law is a constitutionally invalid, does not fetter the authority of the Legislature to remedy the basis on which the ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 29 ) criaba1149.21 declaration was issued by curing the ground for invalidity. One has to essentially understand the reason underlying declaration of invalidity. There is no dispute about Legislative competence to enact the law on the subject. The Hon'ble Supreme Court in the case of State of Karnataka Vs. Karnataka Pawn Brokers Association (2018) 6 SCC 363 has explained the Legislative powers to enact validating laws. The relevant observations made in para 24 runs as below :-
"24. On analysis of the aforesaid judgments it can be said that the Legislature has the power to enact validating laws including the power to amend laws with retrospective effect. However, this can be done to remove causes of invalidity. When such a law is passed, the Legislature basically corrects the errors which have been pointed out in a judicial pronouncement. Resultantly, it amends the law, by removing the mistakes committed in the earlier legislation, the effect of which is to remove the basis and foundation of the judgment. If this is done, the same does not amount to statutory overruling.::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 :::
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25. However, the Legislature cannot set at naught the judgments which have been pronounced by amending the law not for the purpose of making corrections or removing anomalies but to bring in new provisions which did not exist earlier. The Legislature may have the power to remove the basis or foundation of the judicial pronouncement by the Legislature cannot overturn or set aside the judgment, that too retrospectively by introducing a new provision. The legislature is bound by the mandamus issued by the court. A judicial pronouncement is always binding unless the very fundamentals on which it is based are altered and the decision could not have been given in the altered circumstances. The Legislature cannot, by way of introducing an amendment, overturn a judicial pronouncement and declare it to be wrong or a nullity. What the Legislature can do is to amend the provisions of the statute to remove the basis of the judgment."
30. Learned ASGI would submit that the Legislature vests with a power to correct the error pointed by the ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 31 ) criaba1149.21 Courts. In this regard he relied on the decision of the Supreme Court in the case of Bakhtawar Trust and Ors. Vs. M.D. Narayan and Ors. (2003) 5 SCC 298 with special emphasis to para 26 which reads as under :-
"26. Where a legislature validates an executive action repugnant to the statutory provisions declared by a court of law, what the legislature is required to do is first to remove the very basis of invalidity and then validate the executive action. In order to validate an executive action or any provision of a statute, it is not sufficient for the legislature to declare that a judicial pronouncement given by a court of law would not be binding, as the legislature does not possess that power. A decision of a court of law has a binding effect unless the very basis upon which it is given is so altered that the said decision would not have been given in the changed circumstances."
31. On the same line he relied on the decision of the Supreme Court in the case of Goa Foundation and Another Vs. State of Goa and another (2016) 6 SCC 602 to contend that even legislature has competence to pass an ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 32 ) criaba1149.21 Amending Act or validating Act with retrospective effect removing the basis of the decision of the Court. The relevant portion of said decision in para 24 reads as below :-
"24. The principles on which first question would require to be answered are not in doubt. The power to invalidate a legislative or executive act lies with the Court. A judicial pronouncement, either declaratory or conferring rights on the citizens cannot be set at naught by a subsequent legislative act for that would amount to an encroachment on the judicial powers. However, the legislature would be competent to pass an amending or a validating act, if deemed fit, with retrospective effect removing the basis of the decision of the Court. Even in such a situation the courts may not approve a retrospective deprivation of accrued rights arising from a judgment by means of a subsequent legislation (Madam Mohan Pathan V. Union of India). However, where the Court's judgment is purely declaratory, the courts will lean in support of the legislative power to remove the basis of a court judgment even retrospectively, paving the way for a ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 33 ) criaba1149.21 restoration of the status quo ante. Though the consequence may appear to be an exercise to overcome the judicial pronouncement it is so only at first blush; a closer scrutiny would confer legitimacy on such an exercise as the same is a normal adjunct of the legislative power. The whole exercise is one of viewing the different spheres of jurisdiction exercised by the two bodies i.e. the judiciary and the legislature. The balancing act, delicate as it is, to the constitutional scheme is guided by the well-defined values which have found succinct manifestation in view of this Court in Bakhtawar Trust."
32. The Legislative competence of introducing Amending Act has not been disputed, nor countered on any count. Certainly the legislature cannot by way of amendment undo the decision of Courts. However, the Legislature has power to rectify through amendment the defect noticed or highlighted by the decision of the Court. The purpose behind amendment is not to over rule the decision of the Court but simply to correct it and to ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 34 ) criaba1149.21 remove the basis on which the provision has been declared as unconstitutional.
33. We may note that when the Prevention of Money Laundering Bill, 1999 was tabled before the Parliament, the twin conditions for release on bail would apply only insofar as offence under the PML Act itself. In case of Nikesh Shah (supra) the Supreme Court took note of initial Bill and observed that the said initial scheme was radically changed when the Bill was converted into enactment in the year 2002 and notified in 2005. The amendment of the year 2018 has in one way restored the position which was at its initial shape in the form of Bill of 2009.
OBJECT OF THE AMENDING BILL :-
34. The Bill introduced on 1st February, 2018 for amending the PML Act specifies its object under sub-
clause (v) to clause 204 and 205 of the Bill. The
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relevant clause (v) of the Bill reads as below :-
"Clauses 204 and 205 of the Bill seeks to amend certain provisions of the Prevention of Money- laundering Act, 2002, which include the following, namely :-
x x x x x x
(v) to amend section 45 of the Act relating to offences to be cognizable and non-bailable and to amend sub-section (1) of section 45 to substitute the words "punishable for a term of imprisonment of more than three years under Part A of the Schedule" by words "under this Act" so as to take a step further towards delinking the Scheduled offence and money laundering offence.
Further, it seeks to amend the proviso in sub- section (1) by inserting the words "or is accused either on his own or along with other co-accused of money laundering a sum of less than Rupees one crore", after the words "sick or infirm" to allow the Court to apply lenient bail provisions in case of money laundering offence is not grave in nature."
35. The object is to take step towards delinking the ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 36 ) criaba1149.21 scheduled offences and money laundering offence for applicability of section 45 of the Act, inasmuch as by way of amendment latitude has been given to the accused of money laundering offence connecting to sum less than rupees one crore.
36. Learned ASGI would submit that the Amending Act has the effect of uniform application to all concerned who have committed the offence under the PML Act. The amending provision has taken care of the less serious offences of money laundering involved with sum less than one crore rupees. As a matter of fact, we are not deciding the constitutional validity of the Amending Act for making comments on its propriety and correctness.
37. Learned ASGI Mr. Anil Singh in a bid to convince that the entire section does not require re-enactment stated that there are some other provisions under section 45 of the Act, which still remains. For example, clause 1(A) of section 45 is a special provision for power to ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 37 ) criaba1149.21 investigate by authorized person which still exists. In short, he would submit that reintroduction of twin conditions is not necessary, as the section remains in Statute book, though held certain portion ineffective by decision of the Supreme Court.
38. It is a settled law that a statute must be given its effect unless it is struck down. Always there is presumption about constitutionality of the provisions of law. For this purpose, we may refer to the decisions of the Supreme Court in the cases of Nagaland Senior Government Employees Welfare Association and Others Vs. State of Nagaland and Ors., (2010) 7 SCC 643 and M.L. Kamra Vs. The Chairman cum Managing Director, New India Assurance Co. Ltd. and Anr., AIR 1992 SC 1072. Unless the provision introduced by the Legislature is struck down or wiped up from Statute book, its effect cannot be nullified unless found to be exceptionally undoing the earlier decision of the Court.
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( 38 ) criaba1149.21 SCOPE OF THE REFERENCE :- 39. Essentially the reference arises out of bail application. The limited question is referred to the
Larger Bench to decide whether the twin conditions of Section 45(1) of the PML Act which were declared unconstitutional by the Supreme Court in Nikesh Shah's case stands revived by virtue of the subsequent Legislative amendment. We remind ourselves that the constitutional validity of the Amendment Act 13 of 2018 is not under challenge, which is admittedly pending before the Supreme Court. The entire tenor of argument advanced by the learned Senior Counsel Mr. Manohar is on the line that all the defects pointed out by the constitutional Court have not been cured and therefore the Amendment Act 13 of 2018 has no effect of revival of twin conditions. The endeavour was to impress that the Amendment Act 2018 has not cured all the defects and thus it has no effect in reviving twin conditions. The learned ASGI has countered said submission by contending that all ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 39 ) criaba1149.21 the defects pointed out by the Supreme Court stood cured by the Amendment Act 13 of 2018. The issue whether the Amendment Act 13 of 2018 has cured all the defects directly connects to the aspect of validity of the Amendment Act 13 of 2018, which is not the matter for consideration nor can be dealt under this reference arising out of bail application filed under the statutory provision.
40. This Court cannot deal with or decide indirectly what it cannot do directly. The Supreme Court in case of Union of India Vs. E.I.D. Parry (India) Ltd. (2000) 2 SCC 223 has expressed that the Court may not decide the question not raised before it unless the pleadings contain a contention that a particular rule is ultra vires a statute or there is a question in respect of which parties are at variance and which is the subject- matter of an issue held. The Court is not within jurisdiction in deciding the matter or considering the validity of the rule and striking it down as ultra vires. ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 :::
( 40 ) criaba1149.21 The issue in hand is limited to the extent of referred question about the effect of the Amendment Act on twin conditions and not to self-undertake the exercise whether the Amending Act has cured the defects which is an issue directly touching to the constitutional validity of the Amendment Act of 2018.
41. Undeniably there has been no assail to the constitutional validity of the Amendment Act, since the reference arose out of bail application. In order to raise the challenge to the constitutional validity, at least prima facie acceptable grounds in support have to be pleaded to sustain and entertain the challenge. The said exercise would be, of course, by appropriate proceeding in proper way. The Supreme Court in the case of A.C. Estates Vs. Serajuddin & Co. (1973) 2 SCC 324 has observed that when the question of ultra vires is wholly foreign to the scope and jurisdiction of initial authority, then it will not be open to the High Court to go into those questions in proceeding arising out of said ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 41 ) criaba1149.21 initial proceeding.
42. Full Bench of this Court in the case of Shikshan Prasarak Mandal, Akola Vs. Laxmikant Balkrishna Joshi & Ors., 2004(1) Mh.L.J.619 has expressed that the Reference Court exercises advisory and consultative and not original jurisdiction under Article 226 of the Constitution of India. Power under Rule 7 of Chapter-1 of the Bombay High Court Appellate Side Rules, 1960 is distinct and separate than the one under Article 226 of the Constitution and can generally be invoked for the limited purpose to resolve inconsistency on the point of law. Reference Bench should decide the questions which are referred to it and it does not decide the issues which are not referred to it. The Supreme Court in the case of Indra Sawhney Etc. Etc vs Union Of India And Others Etc., 1992 (3) SCC 217 has expressed that the constitutional questions are decided only if they arises for determination on the facts and absolutely necessary to decide. The Court does not decide questions which do ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 42 ) criaba1149.21 not arise.
43. We may note that there is no proper challenge to the constitutional validity of the Amending Act. Neither there are grounds of challenge nor pleadings to that effect, since obviously the reference was made while dealing bail application. The Supreme Court in reported case of New Delhi Municipal Committee Vs. State of Punjab, AIR 1997 SC 2847 has observed that courts should, particularly in constitutional matters, refrain from expressing opinions on points not raised or not fully and effectively argued by counsel on either side. Learned Sr. Counsel Mr.Sunil Manohar raised several grounds by reading judgment of Nikesh Shah (supra) to state that all the deficiencies, which are pointed, have not been met. In our view, this submission has come up without proper challenge and pleadings, at the time of oral submission. Certainly, the State has lost its opportunity to counter such grounds of challenge besides making mere oral submission.
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( 43 ) criaba1149.21 44. The reference which arises out of bail
application is to the limited extent of expressing about existence or non-existence of twin conditions after amendment despite the earlier pronouncement of the Supreme Court in the case of Nikesh Shah (supra). Whether the Amendment Act No. 13 of 2018 has cured all the defects pointed out by the Supreme Court is an issue directly touching to the constitutional validity of the Amendment Act which cannot be dealt without proper pleading and proper challenge.
45. After decision of Nikesh Shah (supra) the Parliament has introduced an amendment to Section 45 of the Act, which has changed the entire complexion. Merely because the entire section is not re-enacted, has no consequence. Admittedly, the Amending Act is not struck down yet by the Courts as the said challenge is pending. Since the Legislative amendment on date is in existence, presumption of constitutionality would apply. In the ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 44 ) criaba1149.21 subsequent pronouncement of P. Chidambaram's case (supra), the Supreme Court took a note of its earlier decision in case of Nikesh Shah (supra) and subsequent amendment, but never expressed that despite amendment, twin conditions do not survive. Our view is fortified by recent decision of the Supreme Court in the case of Assistant Director, Directorate of Enforcement Vs. V.C. Mohan decided on 04.01.2022. In said case, High Court of Telangana at Hyderabad has granted anticipatory bail in connection with offence under the PML Act. It is observed that though offence under the PML Act is dependent on the predicate offences that does not mean that while considering the prayer for bail, in connection with offence under the PML Act, the mandate of section 45 of the PML Act would not come into play. Pertinent to note that the judgment in Nikesh Shah's case was brought to the notice of the Supreme Court. However, it is observed that the underlying principles and rigor of section 45 of the Act must get triggered although the application is under section 438 of the Cr.P.C. The ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 45 ) criaba1149.21 reading of said judgment conveys that the Supreme Court in its above pronouncement even after taking note of the decision of Nikesh Shah (supra) has expressed that the rigor of Section 45 of the PML Act would be attracted while dealing with bail application.
46. It is argued that the Amending Act has not reintroduced twin conditions in Section 45 of the Act. In this regard, we may take a note of the decision of the Supreme Court in the case of Shamrao V. Parulekar Vs. The District Magistrate, Thana, Bombay 1952 SCR 683, of which para 7 reads as below :-
"The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part of itself, into the earlier, then the earlier Act must thereafter be read and construed (except where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 46 ) criaba1149.21 all. x x x x x "
. The above observations are useful to decide the objection about requirement of reintroduction of twin conditions.
47. The Amending Act has changed the entire complexion. Notably section 45 of the Act has not been repelled from the statute book. Therefore, in our view, the section as it stood after amendment has to be read as it stands. We do not find it necessary that the entire section has to be resurrected afresh. The very effect of the amendment has changed the periphery of its applicability. The section which stands after amendment has to be read as a whole.
48. Absence of reference in notification dated 29.03.2018 thereby amending section 45(1) of the Act about its retrospective applicability (as observed in Sameer Bhujbal's case), does not take away the force and ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 47 ) criaba1149.21 impact of amendment. It is for the Legislature to give effect to the amending provisions prospectively or retrospectively. However, that cannot be reason for ineffecting the amending provisions of the Act. CONCLUSION :-
49. We may reiterate that the reference arose out of statutory jurisdiction and not constitutional jurisdiction of this Court. Unless there is proper challenge and pleadings, the issue of constitutional validity cannot be undertaken. Undoubtedly, the Legislature has power and competence to amend the provisions of the Act. Unless the amended provision is struck down by the Courts, it cannot be watered down.
Since after the amendment the entire complexion of section 45 has been changed, we are not in agreement with the contention that the entire section has to be re- enacted by way of amendment after decision in the case of Nikesh Shah (Supra). Therefore, in our opinion, the twin ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 ::: ( 48 ) criaba1149.21 conditions would revive and operate by virtue of Amendment Act, which is on date in force. In view of that, we answer the reference by stating that the twin conditions in section 45(1) of the 2002 Act, which was declared unconstitutional by the judgment of the Apex Court in Nikesh T.Shah Vs. Union of India (2018) 11 SCC 1, stand revived in view of the Legislative intervention vide Amendment Act 13 of 2018.
50. Registry shall place the bail application before the concerned Court for further consideration.
[VINAY JOSHI,J.] [V.M. DESHPANDE,J.] ::: Uploaded on - 29/01/2022 ::: Downloaded on - 30/01/2022 03:19:52 :::