TL;DR: Section 45 of the Prevention of Money Laundering Act, 2002 makes bail nearly impossible unless the court records two findings, that there are reasonable grounds to believe the accused is not guilty and that the accused is unlikely to commit any offence while on bail. The Supreme Court struck this provision down in 2018 in Nikesh Tarachand Shah, Parliament revived it by amendment, and a five-judge bench upheld the revived version in Vijay Madanlal Choudhary in 2022. This guide explains the text, the exemptions, how the twin test is actually applied, and what a bail application needs to say to succeed.

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What Section 45 actually says

Section 45 of the Prevention of Money Laundering Act, 2002 (PMLA) governs bail for offences under the Act. It does not sit inside the general bail framework of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), the code that replaced the Code of Criminal Procedure, 1973 (CrPC).

Instead it layers an additional, stricter test on top of ordinary bail law. The section says that no person accused of a PMLA offence shall be released on bail unless the public prosecutor has been given an opportunity to oppose the application.

If the prosecutor opposes it, the court must be satisfied of two things before granting bail. First, that there are reasonable grounds for believing the accused is not guilty of the offence. Second, that the accused is not likely to commit any offence while on bail.

These are the twin conditions. They apply in addition to, not instead of, the ordinary considerations a court looks at under BNSS, such as flight risk, tampering with evidence, and influencing witnesses.

A proviso to Section 45 carves out a lighter standard for certain categories of accused persons. We cover that proviso in detail later in this guide.

The twin conditions in plain language

Most Indian bail provisions ask a court to decide whether pre-trial detention is necessary. Section 45 flips that logic for money laundering cases.

It asks the court to form a preliminary view on guilt before granting liberty. That is unusual, and it is the reason Section 45 has been litigated up to the Supreme Court twice.

Ordinary bail jurisprudence follows the rule that “bail is the rule, jail is the exception.” Our companion piece on the bail is the rule, jail is the exception doctrine under Article 21 traces where that principle comes from and how far it stretches.

Section 45 inverts that presumption for PMLA cases. Unless the accused clears both limbs of the twin test, bail must be refused, even if the accused would otherwise qualify under ordinary criteria.

The practical effect is that many undertrials in PMLA matters spend years in custody while a trial that can itself take years is pending. That tension between Section 45 and Article 21 personal liberty runs through the rest of this article.

Nikesh Tarachand Shah: the provision struck down

In 2018, the Supreme Court decided Nikesh Tarachand Shah v. Union of India. The bench struck down Section 45(1) of the PMLA as it then stood.

The provision at the time linked the twin conditions to the schedule of offences attracting a sentence of more than three years under Part A of the PMLA schedule. The Court found that classification arbitrary and violative of Article 14, the right to equality.

The judgment reasoned that the classification bore no rational nexus with the object of the twin conditions. Two accused persons facing similarly serious predicate offences could be treated differently depending on an arbitrary sentencing threshold that had nothing to do with the risk they posed if released.

Because Section 45(1) fell, the twin conditions themselves stood unenforceable for a period after the 2018 ruling. Bail applications during that window were decided under ordinary principles, without the heightened threshold.

This was a significant moment for the money laundering bail regime. It showed that even a provision inserted for a policy reason such as combating serious economic offences cannot survive if its classification is arbitrary.

The 2018 amendment that revived the twin conditions

Parliament responded quickly. Through the Finance Act, 2018, it amended Section 45 to remove the offending classification that the Supreme Court had objected to.

The amended provision no longer tied the twin conditions to Part A offences carrying more than three years imprisonment. Instead, it applied the twin conditions to bail applications for any offence under the PMLA, without that classification.

This amendment effectively reinstated the twin test in a form intended to survive the Article 14 challenge that had sunk the earlier version. The retrospective effect of this amendment, and whether it validly cured the defect the Court had identified, became the next major point of litigation.

For several years after 2018, courts across India took divergent views. Some held the twin conditions revived and binding, others continued to apply the Nikesh Tarachand Shah reasoning to the amended text as well.

That divergence needed a definitive answer from the Supreme Court. It came in 2022.

Vijay Madanlal Choudhary and what it settled

Vijay Madanlal Choudhary v. Union of India is the landmark 2022 judgment of a three-judge bench of the Supreme Court that examined the entire PMLA framework, including Section 45 as amended. The Court upheld the constitutional validity of the amended twin conditions.

It held that the 2018 amendment had cured the defect identified in Nikesh Tarachand Shah by removing the arbitrary classification. Since the twin conditions now applied uniformly to all PMLA offences, the Article 14 objection no longer survived.

The judgment reaffirmed that money laundering is a distinct, standalone offence, not merely dependent on the outcome of the predicate offence trial. This distinction matters directly for bail, because an accused cannot argue that a discharge or acquittal in the predicate offence automatically entitles them to bail in the PMLA case.

Vijay Madanlal Choudhary also addressed the reversed burden of proof under Section 24 of the PMLA, the wide definition of proceeds of crime, and the powers of the Enforcement Directorate (ED) to record statements under Section 50. Each of these findings feeds back into how a bail court evaluates the twin conditions, because the accused’s explanation for the money trail is central to the first limb of the test.

The judgment has been the subject of a review petition, and some of its findings on the ED’s powers and procedural safeguards have been revisited in later benches. Practitioners should always check the current status of any specific finding before relying on it in a fresh filing, since PMLA jurisprudence continues to evolve.

For background on how the ED initiates proceedings before a bail question even arises, see our explainer on ECIR versus FIR under PMLA. Understanding what triggers the case shapes how the bail court reads the twin conditions.

The proviso exemptions: who gets a lighter test

Section 45 carries a proviso that exempts certain categories of accused persons from the full twin condition test. The proviso applies to any person who is under the age of sixteen years.

It also applies to a woman accused of a PMLA offence. Courts have read this exemption as a legislative recognition that certain categories of accused warrant a more lenient approach to pre-trial liberty.

The proviso further covers a person who is sick or infirm. What counts as sick or infirm is a factual question, decided on medical evidence placed before the court, not a fixed legal category.

There is also a monetary threshold exemption. Where the amount involved is less than one crore rupees, the proviso allows the special court to release the accused on bail without applying the strict twin conditions, though the court’s ordinary discretion under BNSS bail principles still applies.

It is important to be precise about what the proviso does. It does not grant automatic bail to these categories, it removes the additional twin condition hurdle and lets the court decide bail under the ordinary standard that applies to non-PMLA offences.

Courts have also clarified that the exemption for women is not absolute in every fact situation. Where a woman accused is shown to be a key beneficiary or active participant in a large-scale laundering scheme, some benches have taken a calibrated view rather than a blanket exemption, so this proviso should never be assumed to guarantee an outcome.

How reasonable grounds for believing not guilty is applied

The first limb of the twin test, reasonable grounds for believing the accused is not guilty, does not require the court to conduct a mini-trial. Courts have repeatedly cautioned against detailed evaluation of evidence at the bail stage, since that would trespass into the trial court’s domain.

Instead, the standard is a prima facie assessment based on the material already on record. The court looks at the ED’s complaint, called a prosecution complaint, the statements recorded under Section 50, and any documentary trail placed before it.

In practice, this means the accused’s counsel must show the court a plausible, evidence-backed explanation for the money trail alleged by the ED. A bare denial rarely satisfies the first limb, because the court is looking for something the record itself can point to.

The second limb, that the accused is not likely to commit any offence while on bail, is assessed more loosely. Courts weigh factors like whether the accused holds a position that could allow evidence tampering, whether co-accused are still absconding, and whether the accused has a clean record apart from the present case.

Both limbs must be satisfied together. Satisfying one and failing the other still results in bail being refused, which is why PMLA bail applications tend to be far more evidence-heavy than an ordinary bail plea.

This is a sharper version of the same difficulty that arises in other special-statute bail regimes. Our pieces on bail jurisprudence under the UAPA and bail under the NDPS Act discuss comparable reverse-onus and near-guilt threshold tests, and reading them alongside this one helps explain why courts treat these statutes as a distinct category of bail law.

Courts have also held that the reasonable grounds standard is not a fixed mathematical threshold, it varies with the facts of each case and the stage of investigation. An application filed early, before a prosecution complaint is even filed, is assessed differently from one filed after the complaint and supporting material are already on record.

Article 21, prolonged incarceration, and the bail versus jail debate

The twin conditions create a genuine tension with Article 21 of the Constitution, the right to life and personal liberty. PMLA trials are often lengthy, involving voluminous financial records, forensic audits, and multiple co-accused.

When an accused is denied bail under the strict Section 45 standard and the trial does not conclude for years, courts have increasingly had to weigh whether continued incarceration itself becomes a constitutional problem. The Supreme Court has, in several individual cases, granted bail on the ground of prolonged incarceration even where the twin conditions were not conclusively satisfied, treating Article 21 as an independent basis that can operate alongside Section 45.

This line of reasoning does not overrule Vijay Madanlal Choudhary. It recognises that a statute upheld as constitutional in the abstract can still produce an unconstitutional result in a specific case if trial delay becomes the real punishment.

The approach generally used is that the longer an undertrial has spent in custody without trial progress, the more weight a court gives to Article 21 considerations relative to the strict twin condition threshold. This is fact-specific and does not create an automatic entitlement after any fixed period, but it is a factor defence counsel should always plead with evidence of the trial’s actual pace.

Our piece on how bail works in sensational, high-scrutiny cases discusses how courts balance public interest, media attention, and personal liberty in exactly this kind of high-stakes matter. PMLA cases frequently sit at that intersection.

Default bail under Section 187 BNSS in PMLA cases

Default bail, sometimes called statutory bail, is a separate route from the merits-based twin condition test. It arises when the investigating agency fails to file its final report within the statutory period after arrest.

Under the BNSS, which replaced the CrPC’s Section 167, the relevant provision is Section 187 BNSS (corresponding to the old Section 167 CrPC). It fixes the outer limits for filing a charge sheet or prosecution complaint, generally sixty or ninety days depending on the offence, failing which the accused acquires an indefeasible right to bail.

Our detailed explainer on default bail under Section 187 BNSS walks through the mechanics of this provision for any criminal case. The key question in PMLA matters is whether this default bail right survives the twin conditions in Section 45.

Courts have held that the right to default bail under Section 187 BNSS is a fundamental, indefeasible right that is not defeated by Section 45. If the ED fails to file the prosecution complaint within the statutory period, the accused is entitled to bail regardless of whether the twin conditions would otherwise have been satisfied.

This is because default bail is not a merits-based bail, it is a consequence of the investigating agency’s own delay. The twin conditions in Section 45 govern bail applications decided on merits, they do not override a separate statutory right that arises from the prosecution’s failure to act within time.

Practitioners handling PMLA custody matters should track the prosecution complaint filing deadline closely from the date of arrest. Missing that window by even a day can change the entire strategy of a bail application from a difficult merits argument to a straightforward statutory entitlement.

Practical drafting points for a PMLA bail application

A PMLA bail application needs a structure that speaks directly to both limbs of the twin test, not a general narrative of innocence. Start by setting out, point by point, why the material on record does not establish a prima facie case, addressing each transaction or document the ED relies on rather than making a sweeping denial.

Address the source and trail of funds specifically. If the accused has documentary evidence explaining the impugned transactions, such as loan agreements, invoices, or bank statements showing legitimate business activity, that evidence should be summarised and annexed, since it directly targets the first limb of the twin test.

Do not ignore the predicate offence status. State clearly whether the predicate offence is still pending trial, has resulted in acquittal, or has been quashed, since Vijay Madanlal Choudhary treats the PMLA offence as independent, but the status of the predicate case remains relevant context for the court.

Plead custody duration and trial progress with specific dates. List the date of arrest, the date the prosecution complaint was filed, the number of witnesses examined so far, and the likely time to conclude trial, because this is the evidentiary basis for any Article 21 argument.

Address the second limb separately from the first. Explain concretely why the accused will not tamper with evidence or influence witnesses, for example by pointing to cooperation with the investigation, surrender of travel documents, or absence of any attempt to contact co-accused.

If the accused qualifies under the proviso, such as being a woman, a senior citizen with infirmity, or the amount involved being under one crore rupees, plead this as a distinct and primary ground, not as an afterthought. This can shift the entire framework of the application away from the strict twin test.

Anticipate the prosecutor’s likely objections and address them preemptively in the application itself. An application that only responds to objections after they are raised in court loses the advantage of framing the narrative first.

Finally, keep a clear chronology annexed as a separate document. Special courts handling PMLA matters deal with voluminous records, and a clean chronology of dates, summons, statements, and custody periods makes the judge’s task easier and the application more persuasive.

Our step by step guide to drafting a bail application covers the general structure that applies across offences, including how to frame grounds and annex documents. Layer the PMLA-specific points above onto that structure rather than starting from a blank template.

Many PMLA cases also involve parallel attachment of property under Section 5 of the Act, which can influence the bail court’s view of the accused’s conduct and cooperation. If attached property is part of your matter, read our explainer on challenging a PMLA property attachment order alongside this guide, since the two proceedings often move together and arguments in one affect strategy in the other.

How Niyam helps with PMLA bail research

Building a PMLA bail application means tracking a fast-moving body of case law across the Supreme Court, High Courts, and special PMLA courts. Niyam’s legal research tools let you search this case law by section, by court, and by specific fact patterns like custody duration or predicate offence status.

You can pull up how different High Courts have applied Vijay Madanlal Choudhary to specific fact situations, rather than relying on secondary summaries. Niyam also helps you draft and structure bail applications with citation checking, so you are not left guessing whether a case you want to rely on is still good law.

None of this replaces a lawyer’s judgment on strategy. It does save the hours otherwise spent manually searching for precedent on a provision that keeps generating fresh litigation.

Frequently asked questions

What is Section 45 of the PMLA?

Section 45 is the bail provision under the Prevention of Money Laundering Act, 2002. It requires courts to apply two additional conditions, known as the twin conditions, before granting bail in a money laundering case.

What are the twin conditions under Section 45 PMLA?

The twin conditions require the court to find reasonable grounds for believing the accused is not guilty of the offence. The court must also find that the accused is unlikely to commit any offence while on bail.

Why did the Supreme Court strike down Section 45 in 2018?

In Nikesh Tarachand Shah v. Union of India, the Supreme Court found the provision’s classification of offences arbitrary under Article 14. The classification tied the twin conditions to a sentencing threshold that had no rational connection to the object of the provision.

Did Parliament revive the twin conditions after the 2018 ruling?

Yes, the Finance Act, 2018 amended Section 45 to remove the arbitrary classification. The amended provision applied the twin conditions to all PMLA offences uniformly.

What did Vijay Madanlal Choudhary decide about Section 45?

The 2022 judgment in Vijay Madanlal Choudhary v. Union of India upheld the constitutional validity of the amended Section 45. It held that the 2018 amendment cured the defect identified in Nikesh Tarachand Shah.

Who is exempt from the twin conditions under the proviso?

The proviso exempts persons under sixteen years of age, women, and persons who are sick or infirm. It also exempts cases where the amount involved is less than one crore rupees.

Does the proviso mean these categories get automatic bail?

No, the proviso only removes the additional twin condition hurdle. The accused still has to satisfy the ordinary bail standard that applies outside PMLA cases.

How does a court decide if there are reasonable grounds for believing an accused is not guilty?

The court conducts a prima facie assessment of the material on record, without a detailed evaluation of evidence. It looks for a plausible, evidence-backed explanation for the alleged money trail.

Is the second twin condition about future conduct or past conduct?

It is forward-looking, focused on whether the accused is likely to commit any offence while on bail. Courts consider factors like the accused’s position, the status of co-accused, and prior conduct in the investigation.

Can an accused get bail if only one of the twin conditions is satisfied?

No, both conditions must be satisfied together. Failing either one results in bail being refused under the twin condition standard.

Does an acquittal in the predicate offence automatically entitle the accused to PMLA bail?

Not automatically, because Vijay Madanlal Choudhary treats the money laundering offence as independent of the predicate offence. However, the status of the predicate offence remains a relevant factor the bail court can consider.

Can prolonged incarceration override the twin conditions?

Courts have granted bail on Article 21 grounds in individual cases involving long pre-trial detention and slow trial progress. This operates as an independent constitutional consideration alongside Section 45, not as an overruling of it.

What is default bail and does it apply to PMLA cases?

Default bail arises when the investigating agency fails to file its final report within the statutory period fixed under Section 187 BNSS. Courts have held that this indefeasible right to bail is not defeated by the twin conditions in Section 45.

What is the deadline for the Enforcement Directorate to file a prosecution complaint?

The applicable statutory period depends on the offence category, generally sixty or ninety days from the date of arrest under Section 187 BNSS. If this period lapses without a complaint being filed, the accused can claim default bail.

What role does Section 50 of the PMLA play in bail proceedings?

Statements recorded under Section 50 of the PMLA are often part of the material the court examines for the first twin condition. Vijay Madanlal Choudhary addressed the evidentiary value and procedural safeguards around these statements.

Is Section 45 PMLA linked to the old CrPC or the new BNSS?

Section 45 is a standalone provision within the PMLA itself and applies regardless of the general criminal procedure code in force. Default bail computations under it now reference Section 187 BNSS, which replaced Section 167 of the CrPC.

What should a PMLA bail application specifically address?

It should address the source and trail of funds, the status of the predicate offence, custody duration and trial progress, and why the accused is unlikely to tamper with evidence. If the accused qualifies under the proviso, that should be pleaded as a primary ground.

Can the amount involved being under one crore rupees guarantee bail?

It removes the twin condition hurdle for the special court’s consideration, but the court still applies its ordinary discretion. The specific facts of the case, including flight risk and evidence tampering concerns, remain relevant.

Has Vijay Madanlal Choudhary been reconsidered since 2022?

A review petition against parts of the judgment has been filed, and certain aspects concerning ED procedure have been examined by later benches. Always verify the current status of specific findings before relying on them in a fresh filing.

Where can I read more about the ED’s process before a PMLA bail question arises?

Our guide on ECIR versus FIR under PMLA explains how ED proceedings are initiated and how that differs from an ordinary FIR. Understanding this helps frame the bail application’s account of the investigation’s origin.

Key takeaways

  • Section 45 PMLA imposes twin conditions, reasonable grounds for believing the accused is not guilty, and unlikelihood of committing an offence on bail, on top of ordinary bail law.
  • Nikesh Tarachand Shah (2018) struck down the original Section 45(1) for an arbitrary Article 14 classification.
  • The Finance Act, 2018 amendment removed that classification and reapplied the twin conditions uniformly.
  • Vijay Madanlal Choudhary (2022) upheld the amended Section 45 and treated money laundering as an independent offence from the predicate crime.
  • The proviso exempts minors under sixteen, women, the sick or infirm, and cases involving less than one crore rupees from the strict twin test, without granting automatic bail.
  • Courts assess the first limb through a prima facie, not a detailed, evaluation of the evidentiary record.
  • Article 21 and prolonged incarceration can support bail as an independent ground even where the twin conditions are not conclusively met.
  • Default bail under Section 187 BNSS remains available in PMLA cases if the prosecution complaint is not filed within the statutory period.
  • A strong PMLA bail application addresses the money trail, predicate offence status, custody duration, and both twin conditions point by point.