Court emphasizes mandatory twin conditions for bail under Prevention of Money Laundering Act, 2002, directing Special Court to reconsider bail application within 60 days.
In a significant judgment dated September 10, 2026, the Kerala High Court, presided over by Justice C.S. Dias, set aside an order of bail granted to the accused, Kolatt Dasan Prathapan, by the Special Court for PMLA cases in Ernakulam. The case pertains to allegations under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA), following an investigation by the Enforcement Directorate (ED).
The Enforcement Directorate challenged the bail granted to the accused on the sole ground of prolonged judicial custody of 15 months, contending that the Special Court failed to consider the stringent requirements mandated under Section 45 of the PMLA before granting bail. The petitioner highlighted that the accused had multiple criminal antecedents, including convictions in other cases, and that the Special Court overlooked the statutory twin conditions necessary for bail under the PMLA.
Section 45(1) of the PMLA clearly stipulates that no person accused under the Act shall be released on bail unless (i) the Public Prosecutor has been given an opportunity to oppose the bail application and (ii) if opposed, the court is satisfied that there are reasonable grounds to believe that the accused is not guilty of the offence and is not likely to commit any offence while on bail. The Court noted that these twin conditions are mandatory and must be strictly complied with, as consistently held by the Supreme Court in several precedents.
The accused, through his counsel, submitted that the Special Court exercised its discretion judiciously, taking into account changed circumstances and compliance with bail conditions. However, the Kerala High Court found the bail order deficient for failing to address the statutory conditions and for ignoring the accused's antecedents, which could indicate a risk of reoffending.
While remitting the matter back to the Special Court for reconsideration of the bail application, the High Court directed that both the prosecution and the defence be afforded full opportunity to present their case afresh. The Court ordered that the Special Court must strictly adhere to the provisions of Section 45 of the PMLA and dispose of the bail application within 60 days. Until a fresh order is passed, the accused shall continue on bail subject to the earlier imposed conditions.
This judgment reaffirms the rigorous bail framework under the PMLA aimed at preventing misuse of bail provisions in money laundering offences. It underscores the overriding effect of the Act over the general provisions of the Code of Criminal Procedure and reiterates that courts must not dilute the rigour of the bail conditions in such cases, thereby strengthening the enforcement regime against economic offences.
Bottom Line:
Bail in Prevention of Money Laundering Act cases - Court must satisfy twin conditions under Section 45 of the Act before granting bail.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Sections 3, 4, 45
Directorate of Enforcement v. Kolatt Dasan Prathapan, (Kerala) : Law Finder Doc Id # 2979245
