The Supreme Court today struck down Section 45(1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two additional conditions for release on bail..The judgment was delivered by a Bench of Justices Rohinton Fali Nariman and Sanjay Kishan Kaul. Senior Advocate Mukul Rohatgi appeared for the petitioner Nikesh Tarachand Shah while Attorney General KK Venugopal appeared for the Central government..Section 45(1) imposes two conditions for grant of bail where an offence punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the Act is involved. The conditions are that the Public Prosecutor must be given an opportunity to oppose any application for release on bail and the Court must be satisfied, where the Public Prosecutor opposes the application, that there are reasonable grounds for believing that the accused is not guilty of such offence, and that he is not likely to commit any offence while on bail..Part A of the Schedule consists of various offences under different statutes including IPC, Narcotic Drugs and Psychotropic Substances Act, 1985, Arms Act 1959, Wildlife (Protection) Act 1972, Immoral Traffic (Prevention) Act, 1956 and the Prevention of Corruption Act, 1988, Explosive Substances Act, 1908 and Unlawful Activities (Prevention) Act, 1967 etc..It was the petitioner’s contention that the two further conditions before grant of bail is manifestly arbitrary, discriminatory and violative of the petitioner’s fundamental rights under Article 14 read with Article 21 of the Constitution..Attorney General KK Venugopal had, however, argued that Section 45 can easily be read down to make it constitutional in two ways. First, the expression “there are reasonable grounds for believing that he is not guilty of such offence” must be read as the making of a prima facie assessment by the Court of reasonable guilt. Secondly, according to the learned Attorney General, in any case the conditions contained in Section 45(1)(ii) are there in a different form when bail is granted ordinarily insofar as offences generally are concerned..The Court in its judgment noted the difference in the Bill which was tabled before the Parliament and the Act with respect to the impugned provision while observing that the same would have a direct bearing on the vires of the provision..“When the Prevention of Money Laundering Bill, 1999 was tabled before Parliament, Section 44, which corresponds to Section 45 of the present Act, provided that several offences punishable under “this Act” are to be cognizable, and the twin conditions for release on bail would apply only insofar as the offences under the Act itself are concerned. When the Act was finally enacted in 2002 and notified in 2005, this scheme changed radically. Now, both the offence of money laundering and the predicate offence were to be tried by the Special Court, and bail is granted only if the twin conditions under Section 45(1) are met, where the term of imprisonment is more than three years for the predicate offence. It is important to note that Clause 44 of the Bill referred only to offences under Sections 3 and 4 of the Bill, whereas Section 45 of the Act does not refer to offences under Sections 3 and 4 of the Act at all. Reference is made only to offences under Part A of the Schedule, which are offences outside the 2002 Act. This fundamental difference between the Bill and the Act has a great bearing on the constitutional validity of Section 45(1) with which we are directly and immediately concerned.”.The Court then proceeded to set out various illustrations to explain how the twin conditions are manifestly arbitrary and discriminatory. It held:.“…manifestly arbitrary, discriminatory and unjust results would arise on the application or non application of Section 45, and would directly violate Articles 14 and 21, inasmuch as the procedure for bail would become harsh, burdensome, wrongful and discriminatory depending upon whether a person is being tried for an offence which also happens to be an offence under Part A of the Schedule, or an offence under Part A of the Schedule together with an offence under the 2002 Act. Obviously, the grant of bail would depend upon a circumstance which has nothing to do with the offence of money laundering. On this ground alone, Section 45 would have to be struck down as being manifestly arbitrary and providing a procedure which is not fair or just and would, thus, violate both Articles 14 and 21 of the Constitution.”.The Court proceeded to discuss the words “such offence” employed in Section 45. The expression according to the Court would result in the situation that when a person applies for bail in case of money laundering, the Court must be satisfied that there are reasonable grounds for believing that he is not guilty of the offence under Part A of the Schedule, which is not the offence of money laundering, but which is a completely different offence..“Obviously, the twin conditions laid down in Section 45 would have no nexus whatsoever with a bail application which concerns itself with the offence of money laundering, for if Section 45 is to apply, the Court does not apply its mind to whether the person prosecuted is guilty of the offence of money laundering, but instead applies its mind to whether such person is guilty of the scheduled or predicate offence. Bail would be denied on grounds germane to the scheduled or predicate offence, whereas the person prosecuted would ultimately be punished for a completely different offence – namely, money laundering. This, again, is laying down of a condition which has no nexus with the offence of money laundering at all, and a person who may prove that there are reasonable grounds for believing that he is not guilty of the offence of money laundering may yet be denied bail, because he is unable to prove that there are reasonable grounds for believing that he is not guilty of the scheduled or predicate offence. This would again lead to a manifestly arbitrary, discriminatory and unjust result which would invalidate the Section.”.Further, the classification of predicate offences under Part A of the Schedule on the basis of sentencing was held to be bearing no rational nexus to the object sought to be achieved by the statute..The Court went so far as to state that Section 45 is a provision which turns on its head the presumption of innocence and such a provision can be upheld only if there is a compelling State interest..It, therefore, held that Section 45(1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India..It also directed that all the matters before the Supreme Court in which bail was denied, because of the presence of the twin conditions contained in Section 45, will now go back to the respective Courts which denied bail. The respective courts will have to hear the matter on merits without application of the twin conditions under Section 45..Read the judgment below.