Explained: Why HC stayed Arvind Kejriwal's bail order and the 'twin test' of PMLA

NEW DELHI: The Delhi high court on Tuesday put the bail of Delhi chief minister Arvind Kejriwal on hold saying the "trial court did not apply mind". Kejriwal is in Tihar jail on charges under the Prevention of Money Laundering Act (PMLA) in the now-scrapped Delhi excise policy case.
A bench headed by Justice Sudhir Kumar Jain on Tuesday said the trial court failed to appreciate the material placed before it by the Enforcement Directorate (ED).
The stay on the bail comes as the ED challenged the trial court order terming it "perverse", "one-sided" and "wrong-sided". It also contended that adequate opportunity was not given to argue the case. The ED lawyers had also asked the trial court to keep its order in abeyance for 48 hours to enable them to approach superior courts which not considered.
In high court, the ED asked to stay the bail order on the ground that the trial court had failed to apply the 'twin test' for granting bail under Section 45 of PMLA.
While staying the trial court order the high court, as reported by Bar and Bench, stated that "it is of the opinion that Section 45 PMLA has not been properly discussed by the trial court".

The Centre by amending the Prevention of Money Laundering Act (PMLA) Act in March 2018 revived a twin-condition under section 45(1) of the Act that makes it tougher to get or grant bail in money laundering cases. The Section 45 of the PMLA deals with the ‘twin conditions’ of bail.
The conditions stipulate that when an accused in a money laundering case applies for bail, the court has to first give an opportunity to the public prosecutor to be heard.
The said section states that no person accused of an offence under the PMLA shall be released on bail unless:
1. the public prosecutor has been given an opportunity to oppose the application for such release, and
2. 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.
Thus, the burden of proving innocence falls on the accused.
An offence of money laundering is predicated on proceeds of crime generated through certain other offences termed predicate offence for which a separate First Information Report (FIR) would have been registered. In force since 2002, Section 45 had placed the onus on the accused to demonstrate lack of guilt in the 'schedule A' offences—numerous predicate offences under Indian Penal Code (IPC), Prevention of Corruption Act and drug offences under Narcotic Drugs and Psychotropic Activities (NDPS) Act — that attract over 3 years' rigorous imprisonment.
In 2018, in Nikesh Tarachand Shah vs UOI case, the Supreme Court had struck down the section on the basis of being arbitrary and violative of Articles 14 and 21 of the Constitution of India.
The Supreme Court had stated that section 45 is a "draconian provision which inverts the presumption of innocence which is fundamental to a person accused of any offence."
On March 29, 2018, the Central government amended Section 45(1) of PMLA Act. It substituted 'the scheduled offence' with "offences under the PMLA". Post this amendment, the language of Section 45 was brought on par with other special laws like TADA/MCOCA/Companies Act which provided for twin conditions for grant of bail.

The trial court on June 20 gave bail to Arvind Kejriwal stating the ED failed to furnish direct evidence linking Delhi CM to the proceeds of crime in the money laundering case against him.
In the order granting relief to Kejriwal, Special Judge Niyay Bindu held that prima facie his guilt was yet to be established.
"It may be possible that some persons known to the applicant are having involvement in an offence....but ED has failed to give any direct evidence against the applicant in respect of the proceeds of crime," the judge said.
She also questioned the ED's silence on Kejriwal's assertion that he was arrested in the money laundering case related to the alleged excise scam without having been named in the CBI FIR or the ECIR registered by the anti-money laundering agency. Enforcement Case Information Report (ECIR) is ED's version of an FIR.
The judge said the ED has failed to clarify as to how much time it required to trace the complete money trail.
"Meaning thereby that until and unless this exercise of tracing out the remaining amount gets completed by ED, accused is supposed to remain behind bars that too without proper evidence against him. This is also not an acceptable submission of ED," the judge said.
The maxim of law that every person must be presumed innocent until proven guilty seems to be not applicable in the given case in respect of the present accused, she said.
The judge quoted Benjamin Franklin, one of the founding fathers of the US, to say "It is better that 100 guilty persons should escape than an innocent person should suffer".
"This principle imposes a duty upon the court not only to prevent guilty individuals from escaping justice but also to ensure that no innocent should be punished. There have been thousands of cases where the accused underwent a long lasting trial and agony resulting from the same till the date they were acquitted by the court for being innocent.
"Unfortunately, the mental and physical agony of such person cannot be compensated in any manner whatsoever," she said.