SUPREME COURT SETS ASIDE DELHI HIGH COURT’S DENIAL OF SPECIAL TREATMENT FOR WOMEN UNDER PMLA

Introduction

A two-Judge Bench of the Supreme Court comprising of Justice B.R. Gavi and Justice K.V. Vishwanathan passed an Order dated 27.08.2024 in Criminal Appeal No. 3522 Of 2024 [Arising Out Of SLP(Criminal) No. 10778 Of 2024 in Kalvakuntla Kavitha Vs. Directorate of Enforcement and overturned the Delhi High Court’s Order, which had previously denied bail, citing an incorrect application of the law regarding special treatment for women under the Prevention of Money Laundering Act, 2002 (PMLA).

Facts

The Appeals were filed by Kalvakuntla Kavitha, Appellant, against the Directorate of Enforcement (ED), challenging the Delhi High Court’s decision dated 01.07.2024, which refused to grant her bail. The case revolved around allegations that Kavitha, a member of the Telangana Legislative Council, played a key role in a money laundering conspiracy involving the formulation and implementation of a new excise policy in Delhi. The ED argued that Kavitha, in collusion with other Accused persons, manipulated the policy for illicit financial gains.

The Counsel for the Appellant argued that the High Court had erred in its judgment by not considering the special treatment provision under Section 45(1)[1] of the PMLA (Offences to be cognizable and non-bailable) for a woman accused. The Counsel contended that the law explicitly allows for bail for women without meeting the stringent conditions typically required under the PMLA. He further emphasized that the Appellant’s continued detention was unnecessary since the investigation had been completed, and all relevant documents and evidence had already been submitted.

The Counsel for the Respondent vehemently opposed the bail plea, arguing that the Appellant had played a pivotal role in the conspiracy and had tampered with evidence. The Counsel pointed to instances of witness tampering, specifically the timing of Arun Pillai’s retraction of his statement, which coincided closely with the issuance of summons to the Appellant.

The Counsel for the Respondent contended that though the statement of Arun Pillai under Section 50 of the PMLA (Powers of authorities regarding summons, production of documents and to give evidence, etc) was recorded on 10.11.2022 after a period of more than three months, he had retracted the statement on 09.03.2023, which was just after 2 days after the Appellant was issued the summons.

The Counsel also pointed that on various statements of the witnesses as well as the co-Accused would clearly show that the Appellant was a kingpin in arranging the deal between the co-Accused Arvind Kejriwal and the south lobby. These arguments suggested an active attempt by the Appellant to influence the proceedings.

The Counsel for the Respondent further submitted that the Ld. Trial Judge had rightly refused the grant of the benefit of the proviso to the Section 45(1) of the PMLA on the ground that the Appellant is a woman as she had indulged herself into tampering of the evidence and influencing the witnesses.

Supreme Court Analysis

The Supreme Court observed that the High Court had misdirected itself in interpreting the proviso to Section 45(1) of the PMLA. The Court pointed out that the provision grants bail to women without the need to satisfy the twin conditions required for other accused persons. The Apex Court clarified that the statute does not limit this benefit only to “vulnerable women” but applies to all women, subject to the court’s discretion based on the facts of the case.

The Supreme Court criticized the High Court’s reasoning that the Appellant, being a well-educated and accomplished woman, was not entitled to special treatment under the proviso. It emphasized that the law does not discriminate between different categories of women based on their social or educational background but instead provides a general rule that may be departed from only for specific and justifiable reasons.

The Apex Court relied on the case of Saumya Chaurasia v. Directorate of Enforcement (2024) 6 SCC 401 : 2023 INSC 1073 wherein the Supreme Court while paraphrasing proviso to Section 45(1) of the PMLA stated in paragraph 23 as follows:

“23. ….. No doubt the courts need to be more sensitive and sympathetic towards the category of persons included in the first proviso to Section 45 and similar provisions in the other Acts, as the persons of tender age and women who are likely to be more vulnerable, may sometimes be misused by the unscrupulous elements …….”

The Supreme Court further observed that that the Ld. Single Judge of the High Court has totally misdirected herself while denying the benefit of the proviso to Section 45(1) of the PMLA.

Conclusion

The Supreme Court, upon perusal of the facts and circumstances held as follows:

1.  “The impugned Judgment and Order dated 01.07.2024 passed by the Ld. Single Judge of the High Court of Delhi at New Delhi in Bail Application Nos.1675 and 1739 of 2024 are quashed and set aside;

The Appellant is directed to be released forthwith on bail in connection with Complaint Case No.31 of 2022 arising out of ECIR/HIUII/14/2022 dated 22.08.2022, P.S. HIU, Directorate of Enforcement and RC-0032022A0053 dated 17.08.2022, P.S. CBI, ACB, on furnishing bail bonds in the sum of Rs.10,00,000/- in each of the cases;

1) The Appellant shall not make any attempt to tamper with the evidence or influence the witnesses;

2) The Appellant shall deposit her passport with the learned Trial Judge; and

3) The Appellant shall regularly attend the Trial Court and cooperate with the expeditious disposal of the trial.”

 

Kartik Khandekar

Senior Associate

The Indian Lawyer & Allied Services

 

[1] Section 45 (1) of PMLA-

Offences to be cognisable and non-bailable.

(1)[Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence [under this Act] [Substituted by Act 20 of 2005, Section 7, for certain words (w.e.f. 1.7.2005).] shall be released on bail or on his own bond unless]

(i)the Public Prosecutor has been given an opportunity to oppose the application for such release; and

(ii)where the Public Prosecutor opposes the application, the Court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:

Provided that a person, who is under the age of sixteen years or is a woman or is sick or infirm [or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees] [Inserted by Finance Act, 2018 (Act No. 13 of 2018) dated 29.3.2018.], may be released on bail, if the Special Court so directs:

Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by

(i)the Director; or

(ii)any officer of the Central Government or State Government authorised in writing in this behalf by the Central Government by a general or a special order made in this behalf by that Government.

[(1-A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed;] [Inserted by Act 20 of 2005, Section 7 (w.e.f. 1.7.2005).]