Between Liberty and Enforcement: The Emerging Judicial Approach to Prolonged Incarceration and Bail under the Prevention of Money Laundering Act, 2002

Posted On - 17 June, 2026 • By - Smita Paliwal

Introduction

The Prevention of Money Laundering Act, 2002 (“PMLA”) remains one of India’s most stringent criminal statutes. Designed to combat the laundering of proceeds derived from criminal activity, the legislation equips enforcement authorities with extensive investigative powers while imposing stringent conditions on the grant of bail. Over the last decade, courts have repeatedly grappled with a difficult constitutional question: how should the State’s legitimate interest in combating complex financial crime be balanced against an accused person’s fundamental right to personal liberty?

Recent judicial developments suggest the emergence of a more nuanced approach to PMLA bail jurisprudence. While courts continue to acknowledge the seriousness of money laundering offences, they have increasingly scrutinized whether prolonged incarceration can be justified where investigations remain incomplete, trials are unlikely to conclude within a reasonable period, or the prosecution lacks the practical ability to bring the case to a timely conclusion. This evolving line of authority reflects a growing emphasis on constitutional safeguards under Article 21 of the Constitution and the right to a speedy trial.

The result is not a dilution of the PMLA’s stringent framework, but rather a recognition that even special statutes must operate within constitutional limits.

Understanding the PMLA Bail Framework

Section 45 of the PMLA imposes what are commonly referred to as the “twin conditions” for bail. Before granting bail, a court must be satisfied that:

  1. There are reasonable grounds for believing that the accused is not guilty of the offence of money laundering; and
  2. The accused is not likely to commit any offence while on bail.

These requirements represent a significant departure from ordinary criminal law principles. Unlike conventional bail jurisprudence, where the prosecution generally bears the burden of demonstrating why detention should continue, Section 45 creates a substantially higher threshold for release.

The position is further strengthened by Section 24 of the PMLA, which places the burden on the accused to explain the legitimacy of allegedly tainted assets once foundational facts have been established by the prosecution.

The constitutional validity of these provisions was upheld by the Supreme Court in Vijay Madanlal Choudhary v. Union of India (2022),[1] where the Court recognized the exceptional nature of money laundering offences and the legislature’s authority to prescribe stricter conditions for bail. However, the judgment did not hold that constitutional protections under Article 21 stand suspended in PMLA proceedings. Rather, it reaffirmed that statutory restrictions must continue to operate within the broader framework of constitutional rights.

Article 21 and the Constitutional Limits of Pre-Trial Detention

Article 21 guarantees that no person shall be deprived of life or personal liberty except according to a procedure established by law. Since the landmark decision in Maneka Gandhi v. Union of India[2], the Supreme Court has consistently held that such procedure must be fair, just and reasonable.

A critical component of Article 21 jurisprudence is the right to a speedy trial. Courts have repeatedly emphasized that prolonged incarceration of an undertrial prisoner, particularly where trial proceedings are unlikely to conclude within a reasonable timeframe, may itself constitute a violation of constitutional rights.

This principle assumes particular importance in PMLA prosecutions. Money laundering investigations often involve voluminous documentary evidence, multiple accused persons, cross-border financial transactions, forensic accounting exercises and extensive witness examinations. As a result, trials frequently extend over several years. The constitutional challenge therefore arises when the severity of the statutory bail restrictions collides with the reality of lengthy incarceration before guilt has been established.

The Supreme Court’s Evolving Approach

Recent Supreme Court decisions indicate an increasing willingness to assess not merely the gravity of allegations but also the practical realities surrounding prosecution and trial.

Prem Prakash v. Union of India: In Prem Prakash[3], the Supreme Court reiterated that the constitutional principle that “bail is the rule and jail is the exception” continues to inform criminal jurisprudence, even in cases governed by special statutes. While acknowledging the rigours of Section 45, the Court emphasized that statutory restrictions cannot completely eclipse constitutional guarantees.

Manish Sisodia v. Directorate of Enforcement: The Court’s decision[4] granting bail to former Delhi Deputy Chief Minister Manish Sisodia marked a significant development in the discourse surrounding prolonged incarceration. The Court recognized that where an accused has spent a substantial period in custody and the trial is unlikely to conclude in the near future, continued detention may become constitutionally impermissible. The judgment reinforced the proposition that pre-trial incarceration cannot be allowed to transform into a form of punishment before conviction.

Enforcement Directorate v. Subhash Sharma: The Supreme Court[5] further clarified that procedural safeguards available under the Code of Criminal Procedure and constitutional protections under Article 22 continue to apply to PMLA proceedings unless expressly excluded. The decision underscored the judiciary’s insistence that enforcement objectives cannot justify procedural shortcuts that undermine constitutional rights.

The Emerging Focus on the State’s Ability to Prosecute

One of the most significant trends in recent PMLA jurisprudence is the judiciary’s growing focus on the State’s capacity to effectively prosecute a case within a reasonable period.

Courts are increasingly examining questions such as:

  • How long has the accused already remained in custody?
  • Has the investigation substantially concluded?
  • Has the complaint been filed?
  • How many witnesses remain to be examined?
  • What is the realistic timeline for completion of the trial?
  • Is continued detention serving any legitimate investigative purpose?

This approach shifts part of the judicial inquiry away from the abstract seriousness of the allegations and toward the practical realities of prosecution.

The underlying constitutional rationale is straightforward. If the State is unable to conclude a trial within a reasonable timeframe, indefinite detention based solely on pending allegations risks converting preventive custody into punitive incarceration. Such an outcome would undermine the presumption of innocence and conflict with Article 21.

Although courts have not formally articulated a standalone “wherewithal test,” recent judgments reveal an increasing willingness to consider whether the prosecution possesses the institutional capacity and preparedness necessary to justify continued detention.

Why This Development Matters

The significance of this evolving jurisprudence extends beyond individual bail applications.

  • First, it reinforces judicial oversight over investigative delays in complex economic offences. Enforcement agencies are increasingly expected to demonstrate progress in investigation and prosecution rather than relying solely on the gravity of allegations.
  • Second, it recognizes that prolonged incarceration can itself become a constitutional injury. The longer an accused remains in custody without a realistic prospect of trial completion, the stronger the Article 21 considerations become.
  • Third, it introduces greater proportionality into PMLA proceedings. Courts are beginning to assess whether continued detention serves a legitimate purpose or merely reflects systemic delays.
  • Finally, this development aligns Indian jurisprudence with broader constitutional principles recognized in comparative jurisdictions, where prolonged pre-trial detention is increasingly subjected to heightened judicial scrutiny.

The Road Ahead

The judiciary’s recent approach does not signal a retreat from the fight against money laundering. Courts continue to recognize that financial crimes can have significant economic and societal consequences and that the PMLA serves an important public purpose.

However, recent decisions demonstrate that constitutional courts are unwilling to permit statutory rigour to become a substitute for timely prosecution. The emphasis is gradually shifting from the mere seriousness of allegations to a more balanced inquiry that considers liberty, proportionality, procedural fairness and the realistic prospects of trial.

As PMLA litigation continues to evolve, courts are likely to place greater emphasis on factors such as duration of custody, progress of proceedings, completion of investigation and the feasibility of concluding trials within a reasonable period.

Conclusion

The emerging judicial trend in PMLA bail jurisprudence reflects a broader constitutional principle: the fight against economic crime cannot come at the cost of indefinite deprivation of personal liberty. While Section 45 continues to impose stringent conditions on bail, courts are increasingly recognizing that prolonged incarceration without meaningful progress in prosecution raises serious constitutional concerns.

Recent Supreme Court decisions indicate that the State’s ability to effectively prosecute a case within a reasonable timeframe is becoming an important consideration in assessing continued detention. Although the statutory framework remains intact, Article 21 continues to operate as a constitutional safeguard against arbitrary or disproportionate restrictions on liberty.

The evolving jurisprudence therefore represents not a weakening of the PMLA, but a reaffirmation of a fundamental constitutional proposition that even the most stringent criminal statutes must ultimately function within the boundaries of fairness, due process and personal liberty

  1. https://api.sci.gov.in/supremecourt/2014/19062/19062_2014_3_1501_36844_Judgement_27-Jul-2022.pdf ↑

  2. https://indiankanoon.org/doc/1766147/ ↑

  3. https://api.sci.gov.in/supremecourt/2023/1962/1962_2023_2_41_56274_Order_04-Oct-2024.pdf ↑

  4. https://api.sci.gov.in/supremecourt/2023/53935/53935_2023_2_2_58905_Order_31-Jan-2025.pdf ↑

  5. https://bombayhighcourt.nic.in/generatenewauth.php?bhcpar=cGF0aD0uL3dyaXRlcmVhZGRhdGEvZGF0YS9qdWRnZW1lbnRzLzIwMjUvJmZuYW1lPTIzMDgwMDAyOTg5MjAyNV8yLnBkZiZzbWZsYWc9TiZyanVkZGF0ZT0mdXBsb2FkZHQ9MzEvMDUvMjAyNSZzcGFzc3BocmFzZT0wNjA2MjUxNTUwMDQmbmNpdGF0aW9uPTIwMjU6QkhDLUFTOjIyMzA1LURCJnNtY2l0YXRpb249JmRpZ2NlcnRmbGc9WSZpbnRlcmZhY2U9Tw== ↑

Last Updated on 17 June, 2026