Nikesh Tarachand Shah v. Union of India
Bench: Division Bench — 2 Judges (R.F. Nariman & S.K. Kaul JJ)
Parties
Facts of the Case
Section 45 PMLA (before its 2018 amendment) conditioned bail not just on the standard criminal law tests but also required that the Public Prosecutor be given an opportunity to oppose bail and that the court be satisfied that there were reasonable grounds to believe the accused was not guilty. The provision had previously been struck down and reinstated. Nikesh Tarachand Shah challenged the constitutional validity of the twin conditions as disproportionately restrictive of personal liberty.
Legal Issues Before the Court
- 1Were the twin conditions for bail under the pre-2018 Section 45 PMLA unconstitutional as violating Article 21?
- 2Is the connection between the scheduled offence and the bail conditions constitutionally required?
The Judgment
The Supreme Court struck down the pre-2018 Section 45 PMLA bail conditions as unconstitutional — holding they were arbitrary and disproportionate. However, Parliament re-enacted modified twin conditions in 2018. The modified Section 45 was then upheld by Vijay Madanlal Choudhary (2022). Nikesh Tarachand Shah is therefore important as showing the constitutional limits that must inform PMLA bail conditions — the conditions must be rational and proportionate, not blanket denials of liberty.
Key Principles Laid Down
BAIL CONDITIONS MUST BE PROPORTIONATE AND NON-ARBITRARY: Even in special statutes like PMLA, bail conditions must satisfy Articles 14 and 21 — they must be proportionate to the legitimate aim and not arbitrarily harsh.
SCHEDULED OFFENCE NEXUS: The pre-2018 Section 45 PMLA was struck down partly because its bail conditions were disconnected from the underlying scheduled offence and operated in an arbitrary manner. Any bail restriction in special legislation must bear a rational nexus to the specific offence.
PARLIAMENT CAN RE-ENACT WITH CORRECTIONS: The striking down of Section 45 did not permanently invalidate PMLA bail restrictions — Parliament re-enacted with modifications and the modified version survived constitutional challenge in Vijay Madanlal (2022). This illustrates the dialogue between courts and Parliament on constitutional limits.
Impact on Indian Law
Nikesh Tarachand Shah is an important marker in the constitutional journey of PMLA bail law. Read with Vijay Madanlal Choudhary (2022), it shows: the old Section 45 was unconstitutional; the amended Section 45 is constitutional. The case is relevant for PMLA bail applications in the context of the constitutional history of the provision — and for the broader principle that special statute bail conditions must still satisfy constitutional standards.
Frequently Asked Questions
What is the relationship between Nikesh Tarachand Shah and Vijay Madanlal Choudhary on PMLA bail?
Nikesh Tarachand Shah (2018) struck down the pre-2018 Section 45 PMLA twin bail conditions as unconstitutional — too arbitrary and disproportionate. Parliament re-enacted modified twin conditions. Vijay Madanlal Choudhary (2022) upheld the post-2018 amended Section 45 as constitutional. The current law is that the amended twin conditions are valid — but Nikesh Tarachand Shah establishes the constitutional principle that PMLA bail conditions cannot be entirely disproportionate.