Prevention of Money-Laundering Act, 2002 — Sections 45(1) — Application of Proviso to Section 45(1) — The Supreme Court clarified that the proviso to Section 45(1) of the PMLA, which grants special treatment to certain categories of accused including women, should be applied without automatically denying bail based on the accused’s social or political status — The Court emphasized that the provision is intended to protect vulnerable individuals, including women, who may be misused in criminal activities Bail granted- The Court clarified the interpretation of its previous judgment in Saumya Chaurasia v. Directorate of Enforcement (2024) 6 SCC 401, which discussed the sensitivity required in dealing with bail applications of women and vulnerable individuals under the PMLA — The Court clarified that Saumya Chaurasia did not limit the application of the proviso to Section 45(1) to only “vulnerable women” but emphasized the need for courts to be sensitive and sympathetic towards all categories of persons mentioned in the provision, including women of all backgrounds.

2024 INSC 632

SUPREME COURT OF INDIA

DIVISION BENCH

KALVAKUNTLA KAVITHA — Appellant

Vs.

DIRECTORATE OF ENFORCEMENT — Respondent

( Before : B.R. Gavai and K.V. Viswanathan, JJ. )

Criminal Appeal No……of 2024 [Arising out of SLP(Criminal) No. 10778 of 2024] with Criminal Appeal No…..of 2024 [Arising Out of SLP(Criminal) No. 10785 of 2024]

Decided on : 27-08-2024

A. Prevention of Money-Laundering Act, 2002 — Sections 45(1) and 50 — Criminal Procedure Code, 1973 (CrPC) — Section 164 — Bail — K. Kavitha was denied bail by the Delhi High Court — She appealed to the Supreme Court, arguing that her continued custody was unnecessary as the investigation was complete — Whether the appellant should be granted bail under the proviso to Section 45(1) of the Act (PMLA), considering her status as a woman — The appellant argued that there was no material evidence against her, the investigation was complete, and she was entitled to special treatment under the PMLA as a woman — The Directorate of Enforcement argued that the appellant was a key conspirator, had tampered with evidence, and influenced witnesses — The Supreme Court granted bail to the appellant, emphasizing that prolonged incarceration before trial should not become punishment and that the proviso to Section 45(1) of the PMLA entitles women to special treatment — The Court highlighted the principle that “bail is the rule and refusal is an exception” and that the fundamental right of liberty under Article 21 of the Constitution is superior to statutory restrictions — The Supreme Court set aside the Delhi High Court’s order and directed the appellant to be released on bail, with conditions to ensure she does not tamper with evidence or influence witnesses.

B. Prevention of Money-Laundering Act, 2002 — Sections 45(1) — Application of Proviso to Section 45(1) — The Supreme Court clarified that the proviso to Section 45(1) of the PMLA, which grants special treatment to certain categories of accused including women, should be applied without automatically denying bail based on the accused’s social or political status — The Court emphasized that the provision is intended to protect vulnerable individuals, including women, who may be misused in criminal activities.

C. Prevention of Money-Laundering Act, 2002 — Sections 45(1) — Application of Proviso to Section 45(1) — The Court noted that while highly educated or influential women may also be involved in criminal activities, their status alone should not disentitle them from the benefits of the proviso — The Court cautioned against equating all women with vulnerability and stressed the need for a case-by-case assessment.

D. Prevention of Money-Laundering Act, 2002 — Judicial Discretion in Bail Applications under PMLA — The Court reiterated that while deciding bail applications under the PMLA, courts must exercise their discretion judiciously, considering the gravity of the allegations, the evidence collected, and the potential risk of tampering with evidence or influencing witnesses — The Court highlighted the balance between ensuring the accused’s right to liberty and protecting the public interest and the integrity of the investigative process — It underscored that the mere seriousness of the allegations alone is not sufficient to deny bail, but it is one of the factors to be considered.

E. Interpretation of Judicial Precedents — The Court clarified the interpretation of its previous judgment in Saumya Chaurasia v. Directorate of Enforcement (2024) 6 SCC 401, which discussed the sensitivity required in dealing with bail applications of women and vulnerable individuals under the PMLA — The Court clarified that Saumya Chaurasia did not limit the application of the proviso to Section 45(1) to only “vulnerable women” but emphasized the need for courts to be sensitive and sympathetic towards all categories of persons mentioned in the provision, including women of all backgrounds.

Cases Referred

• Manish Sisodia vs. Directorate of Enforcement, 2024 SCC OnLine SC 1920 : 2024 INSC 595
• Saumya Chaurasia vs. Directorate of Enforcement, (2024) 6 SCC 401 : 2023 INSC 1073

JUDGMENT

B.R. Gavai, J. – Leave granted.

2. These appeals challenge the judgment and order dated 01.07.2024 passed by the learned Single Judge of the High Court of Delhi at New Delhi in Bail Application Nos.1675 and 1739 of 2024, vide which the learned Single Judge has refused to grant bail to the appellant herein.

3. Though the matter has been argued at length by Shri Mukul Rohatgi, learned Senior Counsel along with Shri D.S. Naidu and Shri Vikram Chaudhri, learned Senior Counsel appearing on behalf of the appellant, and Shri S.V. Raju, learned Additional Solicitor General of India (for short, ASG) for the respondent(s), at length; learned ASG has suggested that this Court should avoid elaborate discussions on the merits, inasmuch as any observations may prejudice the rights of either of the parties at the trial.

4. We appreciate the fairness of the learned ASG in suggesting the Court not to record the detailed elaborations on the merits of the case. It has been a consistent view of this Court that the Courts should avoid elaborate discussion at the stage of considering application for bail. We would therefore avoid any discussion on the merits of the present case inasmuch as the same may prejudice the rights of either of the parties at the trial.

5. Shri Rohatgi, learned Senior Counsel submits that there is no material on record so as to implicate the appellant herein with the offences charged with. In any case, he submits that insofar as the appeal arising out of SLP(Crl.) No.10778 of 2024 is concerned, the complaint has been filed by the prosecution and insofar as the appeal arising out of SLP(Crl.) No. 10785 of 2024 is concerned, the charge-sheet has already been filed. It is submitted that since the investigation is complete, further custody of the appellant would not be required.

6. Shri Rohatgi, relying on the judgment of this Court in the case of Manish Sisodia vs. Directorate of Enforcement, 2024 SCC OnLine SC 1920 : 2024 INSC 595, submits that inasmuch as both the said case and the present case arise out of the same set of facts and so in the present case also there are about 493 witnesses to be examined and the documents to be considered are in the range of about 50,000 pages. He further submits that no proceeds of crime have been recovered from the appellant. Shri Rohatgi further submits that the appellant is a woman and is therefore entitled to special treatment under proviso to Section 45(1) of the Prevention of Money-Laundering Act, 2002 (for short, PMLA).

7. Shri S.V. Raju, learned ASG vehemently opposed these appeals. He submits that the statements of various witnesses as well as co-accused would clearly show that the present appellant was a kingpin in arranging the deal between the co-accused-Arvind Kejriwal and the south lobby. He submits that the statements of the witnesses clearly show that the proceeds of the crime have passed through, or at least at her instance. Learned ASG further submits that not only the statements recorded under Section 50 of the PMLA but also the statements recorded under Section 164 of the Code of Criminal Procedure, 1973 before the learned Magistrate would clearly implicate the present appellant in the trial.

8. Learned ASG further submits that the learned Trial Judge has rightly refused to grant the benefit of the proviso to Section 45(1) of the PMLA on the ground that the appellant is a woman, inasmuch as she has indulged herself into tampering with the evidence and influencing the witnesses. He submits that the appellant has formatted her mobile set in order to destroy the evidence which was against her.

9. Learned ASG further submits that the sequence as to in what manner the accused Arun Pillai has retracted his statement would clearly show that it is the present appellant, who has a role to play. He submits that though the statement of Arun Pillai under Section 50 of the PMLA was recorded on 10.11.2022 after a period of more than three months, he has retracted the statement on 09.03.2023. He further submits that it is relevant to note that the first summons were issued to the present appellant on 07.03.2023 i.e., two days prior to the day Arun Pillai retracted his statement. He therefore submits that the Court will have to draw an inference that the appellant is indulging in influencing the witnesses.

10. On perusal of the record, we find that in CBI case charge-sheet has been filed and in ED case complaint has been filed. As such, the custody of the appellant herein is not necessary for the purpose of investigation.

11. The appellant has been behind the bars for the last five months. As observed by us in the case of Manish Sisodia (supra), taking into consideration that there are about 493 witnesses to be examined and the documents to be considered are in the range of about 50,000 pages, the likelihood of the trial being concluded in near future is impossible.

12. Relying on the various pronouncements of this Court, we had observed in the case of Manish Sisodia (supra) that the prolonged incarceration before being pronounced guilty of an offence should not be permitted to become punishment without trial.

13. We had also reiterated the well-established principle that “bail is the rule and refusal is an exception”. We had further observed that the fundamental right of liberty provided under Article 21 of the Constitution is superior to the statutory restrictions.

14. We are further of the view that the proviso to Section 45(1) of the PMLA would entitle a woman for special treatment while her prayer for bail is being considered.

15. The said proviso to Section 45(1) of the PMLA reads thus:-

16. A perusal of the above proviso would thus reveal that the proviso permits certain category of accused including woman to be released on bail, without the twin requirement under Section 45 of the PMLA to be satisfied. No doubt that, as argued by the learned ASG, in a given case the accused even if a woman may not be automatically entitled to benefit of the said proviso and it would all depend upon the facts and circumstances of each case.

17. However, when a statute specifically provides a special treatment for a certain category of accused, while denying such a benefit, the Court will be required to give specific reasons as to why such a benefit is to be denied.

18. The order of the learned Single Judge, which denies the special treatment to the present appellant makes for an interesting reading. The learned Judge observed thus:-

19. Day in and day out it is argued before us on behalf of the prosecution that merely because an accused has a special status in terms of he/she being a Member of Parliament or a Member of Legislative Assembly or a Minister or a Chief Minister, etc., they should not be given a special treatment and should be treated equally as any other accused.

20. However, the learned Single Judge in the present case, while denying the benefit of the proviso to Section 45(1) of the PMLA, comes to a “heartening conclusion” that the appellant is highly qualified and a well-accomplished person. The learned Single Judge further observed that the appellant has made significant contributions to politics and social work. The learned Single Judge further observed that while deciding her bail application, the Court may appreciate her accomplishment, however, it cannot lose sight of the serious allegations levelled by the prosecution and the evidence collected during the course of the investigation and presented before the Court.

21. The learned Single Judge thereafter proceeds to observe that the present appellant cannot be equated to a “vulnerable woman”.

22. We find that the learned Single Judge erroneously observed that the proviso to Section 45(1) of the PMLA is applicable only to a “vulnerable woman”.

23. We further find that the learned Single Judge totally misapplied the ratio laid down by this Court in the case of Saumya Chaurasia vs. Directorate of Enforcement, (2024) 6 SCC 401 : 2023 INSC 1073.

24. A perusal of the judgment of this Court in the case of Saumya Chaurasia (supra) would show that this Court has observed that the Courts need to be more sensitive and sympathetic towards the category of persons included in the first proviso to Section 45 of the PMLA and similar provisions in the other Acts. The Court observes that the persons of tender age and women who are likely to be more vulnerable may sometimes be misused by unscrupulous elements and made scapegoats for committing such crime.

25. No doubt that this Court observes that nowadays the educated and well-placed women in the society engage themselves in commercial ventures and enterprises and advertently or inadvertently engage themselves in the illegal activities. The Court therefore puts a caution that the Courts, while deciding such matters, should exercise the discretion judiciously using their prudence.

26. This Court in the case of Saumya Chaurasia (supra), while paraphrasing proviso to Section 45(1) of the PMLA stated in paragraph 23 as follows:

27. This Court, in the carefully couched paragraph extracted above used the phrase “persons of tender age and woman who are likely to be more vulnerable, may sometimes be misused by the unscrupulous elements”. This is vastly different from saying that the proviso to Section 45(1) of the PMLA applies only to “vulnerable woman”. Further, this Court in the case of Saumya Chaurasia (supra) does not say that merely because a woman is highly educated or sophisticated or a Member of Parliament or a Member of Legislative Assembly, she is not entitled to the benefit of the proviso to Section 45(1) of the PMLA.

28. We, therefore, find that the learned Single Judge of the High Court has totally misdirected herself while denying the benefit of the proviso to Section 45(1) of the PMLA.

29. In the result, we allow these appeals, in the following terms:-

30. Though we have not observed anything on the merits of the matter, any observation in this judgment would not prejudice the trial.

31. Pending application(s), if any, shall stand disposed of.