The abolition of grant of bail without hearing govt’s position, and requirement to satisfy court that accused is not guilty, has become so rampant that it has now found place even in basic company law
The recent judgment of the Supreme Court striking down as unconstitutional, the provisions on bail contained in the Prevention of Money Laundering Act, 2002, (PMLA) is a long-overdue wake-up call. The law mandated two conditions for grant of bail — first, the public prosecutor must be given a chance to oppose the request for grant of bail; and second, the court must be satisfied that the accused is not guilty and is unlikely to commit another offence when on bail.
Now, this unconstitutional provision has in the past been upheld as constitutional in dreaded “anti-terror” laws such as Terrorist and Disruptive Activities (Prevention) Act, 1987, (Tada). This was obviously canvassed with the Supreme Court in arguments in support of the provision. However, the court differentiated the context of the earlier judgment (terror law) as compared with the PMLA (which has now covered within its sweep multiple laws across the board). In fact, it is provisions such as these that made society dread Tada. Once suspected of terror activity and arrested, the onus literally would shift to the accused to satisfy the court system to stay out of jail — remember consideration of bail is before the trial gets underway.
Interestingly, across governments (headed by political parties of supposedly varying colour), legislation with the bail provisions now held to be unconstitutional have been introduced. The abolition of grant of bail without hearing the government’s position, and the requirement to satisfy the court that the accused is not guilty has become so rampant that it has now found place even in basic company law. When fraud is alleged, the onus of satisfying the court considering the bail application that the accused is not guilty, and is unlikely to commit another offence, shifts to the accused under the Companies Act, 2013. Besides, the public prosecutor necessarily has to be heard — which simply means that even if she is unavailable and seeks a few adjournments, the person arrested has to stay inside jail even before trial. Moreover, the court must be satisfied that the person accused is unlikely to commit any offence when out on bail.
Time was when bail was the rule and jail was the exception. Today, across legislation, jail is the rule, and bail, the exception. Meanwhile, society fed by media, builds firm views on innocence or guilt. Not too many are unsure about Salman Khan not having been behind the wheel or Indrani Mukherjee not being guilty of killing her child — and indeed, it took a film and a book for society to question facts in the Arushi Talwar case. In fact, a large segment of society resents the Talwars being exonerated on the grounds that their guilt is not proven. Now picture having to satisfy junior judiciary and magistracy that the judges should be satisfied that accused are not guilty. A perverse outcome of such provisions of law is that the judge would worry if the grant of bail would mean that the judge is satisfied that the accused are not guilty and that would be used a clean chit when the trial is actually conducted.
In the PMLA case, the Supreme Court was told that its earlier decisions had upheld actions under these provisions, but the apex court rightly pointed out that in those decisions, the question before the court did not involve a challenge to the constitutional validity of the provisions.
The PMLA started as a check on laundering of proceeds of crime earned out of a narrow set of specific serious offences. The list of these offences, set out in a schedule to the PMLA (titled “scheduled offences”), kept growing through amendments. Heinous crimes like human trafficking and drug running, the original big ones on the list of scheduled offences, suddenly found violations such as failure to make an open offer under takeover regulations, keeping them company.
This kind of legislative thinking is what has led to bail provisions usually seen in laws prohibiting drug trafficking to find their way into law governing the running of companies. In other words, the risk of being accused of fraud when running a company is as high as the risk of being accused of drug trafficking when it comes to personal liberty and the ability to be granted bail. In the PMLA decision, the Supreme Court has built multiple scenarios of the timing of initiation and conduct of trial under the primary law and the trial under the PMLA to show how mindless and arbitrary the formulation has been, and has held the conditions for grant of bail to be unconstitutional.
When differentiating from the earlier ruling upholding these provisions as constitutionally valid in Tada, the Supreme Court has also extracted portions of that earlier judgment, which show that the Supreme Court had then taken note of the existence of such provisions in other laws affecting revenue. However, the constitutional validity of these provisions in those revenue legislation had not been challenged — they were only noticed by the court then. Now that these provisions have been held to be unconstitutional in the context of PMLA, it is critical for such provisions to be reviewed in the context of every legislation in which they reside. A good rule of law system would mean that this is done without asking the courts to consider each case and when they get presented. But that is truly wishful thinking in the political economy. However, some low-hanging fruit like company law could be a good starting point.
A substantial part of this piece was published as the Without Contempt column in the Business Standard editions dated December 14, 2017