TWIN TEST UNDER PMLA

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Context: The Supreme Court's strict bail test for PMLA requires proof of innocence and assurance against reoffending, making bail challenging.

Details

• The Supreme Court's handling of bail in money laundering cases has recently drawn attention due to the stringent conditions imposed under the Prevention of Money Laundering Act (PMLA). The "twin test" is central to these conditions, making bail a rare exception rather than the norm.

The Twin Test under Section 45 of PMLA

• Section 45 of PMLA starts by stating that no court can grant bail for offences under this law. The provision mandates hearing from the public prosecutor in all bail applications. If the prosecutor opposes bail, the court must apply a twin test.
• The Twin Test:
  • Belief in Innocence: There must be reasonable grounds to believe that the accused is not guilty of the offence.
  • Likelihood of Re-offending: The accused should not be likely to commit any offence while on bail.

These conditions make it difficult for an accused to secure bail, thereby aiming to ensure that only those who can convincingly prove their lack of guilt and low risk of re-offending are released.

Application and Legal Challenges

• The twin test is applied by all courts, including special courts dealing with money laundering offences and constitutional courts. It is equally applicable to both regular bail and anticipatory bail.
• Nikesh Tarachand Shah Case (2017): The twin test's constitutional validity was first challenged in the Nikesh Tarachand Shah v/s Union of India case. The Supreme Court struck down the bail provision, stating that the onerous conditions did not constitute a reasonable classification, violating the right to equality.
• Reintroduction through Finance Act (2018): Parliament reinstated the twin test via the Finance Act, 2018, which led to new legal challenges.
• Vijay Madanlal Choudhary Case (2022): A three-judge bench upheld the twin test, rejecting the reasoning of the Nikesh Tarachand Shah case. The bench emphasized the seriousness of money laundering and its potential threat to national sovereignty and integrity.

Section 45 of the PMLA deals with bail conditions and states that an accused person cannot be granted bail unless certain conditions are met. These conditions include giving the Public Prosecutor an opportunity to oppose the bail application and ensuring that there are reasonable grounds for believing that the accused is not guilty of the offense and will not commit any other offense while on bail.

Conclusion

• Twin test in PMLA imposes strict bail conditions for money laundering cases, reflecting judiciary's intent to prevent misuse. While criteria ensure thorough investigations, challenges remain in balancing justice and fundamental rights. Evolving legal landscape may shape the provision's application and interpretation.

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Source:

Indian Express

PRACTICE QUESTION Q. Benami transactions involve placing property or assets in the name of someone other than the actual owner. How can loopholes in regulations concerning Benami transactions be exploited for money laundering in India, and what are some potential solutions to address this challenge?