Prevention of Money Laundering Act and Twin Test

• A day, after a trial court granted bail to the Delhi Chief Minister, who is jailed under the Prevention of Money Laundering Act (PMLA), the Delhi High Court, stayed the order as the trial court failed to apply the ‘twin test’ required under PMLA for granting bail.
• Twin Test and Section 45 of PMLA

Section 45 of the PMLA mandates that bail can only be granted if two conditions are met:

1. There are reasonable grounds to believe the accused is not guilty;
2. The accused is not likely to commit any offence while on bail.

Supreme Court on Twin Test

• In 2017, the Supreme Court in Nikesh Tarachand Shah v Union of India ruled the twin test unconstitutional due to unreasonable classification, but the Finance Act of 2018 reinstated these provisions, leading to further legal challenges.
• In 2022, the Supreme Court upheld the re-insertion of the twin test in Vijay Madanlal Choudhary v Union of India, rejecting the previous ruling.
• Although the Supreme Court has agreed to review the Vijay Madanlal Choudhary ruling, it remains a valid law as no stay is in place.

1. The public prosecutor must be heard in all bail applications, and if the prosecutor opposes bail, the court must apply the twin test.
2. Similar provisions exist in other laws dealing with serious offences, such as the Drugs and Cosmetics Act, the Narcotic Drugs and Psychotropic Substances Act, and the Unlawful Activities Prevention Act.
3. The twin test must be rigorously applied by all courts for both regular and anticipatory bail.
4. An accused can benefit from Section 436A of the Code of Criminal Procedure (CrPC), which allows bail after serving half of the maximum sentence as an undertrial.
5. This means that in most money laundering cases if the trial is not completed within three and a half years, the accused is entitled to bail regardless of the twin test.

Dig Deeper:  Read about the contentious provisions of the Prevention of Money Laundering Act.