Gujarat High Court
Mukesh Kumar S/O Jai Kishan Sharma vs State Of Gujarat & on 6 May, 2016
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
R/SCR.A/5002/2015 CAV ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CRIMINAL APPLICATION (QUASHING) NO. 5002 of 2015
With
SPECIAL CRIMINAL APPLICATION NO. 4795 of 2015
With
SPECIAL CRIMINAL APPLICATION NO. 5014 of 2015
With
SPECIAL CRIMINAL APPLICATION NO. 5685 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
==========================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?
========================================================== MUKESH KUMAR S/O JAI KISHAN SHARMA....Applicant(s) Versus STATE OF GUJARAT & 1....Respondent(s) ========================================================== Appearance:
MR CHETAN K PANDYA, ADVOCATE for the Applicant(s) No. 1 MS TRUSHA K PATEL, ADVOCATE for the Respondent(s) No. 2 PUBLIC PROSECUTOR for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 06/05/2016 CAV ORDER Page 1 of 68 HC-NIC Page 1 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER
1. Since the issues raised in all the captioned petitions are more or less the same, those were heard analogously and are being disposed of by this common judgment and order.
2. For the sake of convenience, the Special Criminal Application No.5002 of 2015 is treated as the lead matter.
3. The petitioner came to be arrested on 23rd May, 2015 by the respondent No.2 under the Prevention of Money Laundering Act, 2002 (for short the PMLA) in connection with the ECIR/03/AMZO/2015 registered as the PMLA Complaint No.8 of 2015 for the offence punishable under sections 3 and 4 of the Act, 2002. It is the case of the petitioner that a first information report being I-C.R. No.85 of 2015 came to be registered with the Kishanwadi Police Station for the offence punishable under sections 418, 419, 420, 465, 467, 468, 471 and 120B of the Indian Penal Code against four persons, namely, (i) Girish Parshottam Patel @ Tommy Patel (ii) Kirankumar Jayantilal Mala (iii) Dharmendrasinh Vishwanath Chauhan @ Dharmin Chauhan and (iv) Chirag Parikh. It is alleged that they were engaged in the activity of gambling with the aid of mobile phone. The accusation is that they were engaged in the cricket betting.
4. On the very next day of the registration of the first information report, the Enforcement Case Information Report No.ECIR/03/AMZO/2015 was registered with the office of the respondent No.2, inter alia, alleging that the four persons, named above, have committed the offence of money laundering under the Act, 2002.
5. The petitioner came to be arrested at New Delhi. After Page 2 of 68 HC-NIC Page 2 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER his arrest, his statement was recorded under section 50 of the Act, which was, later on, retracted when he was produced before the court of the learned Metropolitan Magistrate, Patiala House, New Delhi.
6. The petitioner was, thereafter, produced before the Designated Special Court at Ahmedabad on 25.05.2015. The Designated Court granted remand upto 28.05.2015.
7. In the PMLA Complaint No.8 of 2015, which was filed on 15.06.2015 before the Designated Special Court, Ahmedabad, the petitioner has been shown as an accused along with the other co-accused. In such circumstances referred to above, he has prayed for the following reliefs;
"(A) To issue a writ of mandamus and/or certiorari and/or any other writ, order or direction quashing and setting aside the PMLA Case No. 8 of 2015 filed in ECIR No: EClR/O3/AMZO/2015 dated 15/06/2015 and order dated 15/06/2015 at Annexure-A passed by Hon'ble Special Judge, Ahmedabad (Rural), the Designated Special Court under the Prevention of Money Laundering Act, 2002 at Ahmedabad qua the petitioner.
(B) To issue a writ of mandamus and/or certiorari and/or any other writ. order or direction quashing and setting aside the PMLA Case No. 8 of 2015 filed in ECIR No:
ECIR/03lAMZO/2015 dated 15/06/2015 under the Prevention of Money Laundering Act, 2002 at Ahmedabad qua the petitioner.
(C ) Pending admission. hearing and final disposal of this writ petition. further proceedings of PMLA Case No.8 of 2015 filed in ECIR No: ECIR/03/AMZO/2015 pending before the Hon'bie Court of Principal District & Sessions Judge. Ahmedabad (Rural), the Designated Special Court under the Prevention of Money laundering Act, 2002 at Ahmedabad on such terms and conditions as may deem fit and proper in the interest of justice.
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(c) To dispense with filing of certified copy of ECIR No; ECIR/03/AMZO/2015 at Annexure-C to the petition. (D) To dispense with an affidavit in support of the petition since the petitioner is in custody. (E) To pass any other and further orders as may be deemed fit and proper."
8. So far as the other petitions are concerned, the petitioners have prayed to quash the ECIR referred to in the prayer clause on the very same submissions as canvassed in Special Criminal Application No.5002 of 2015.
9. Mr. Chaudhary, the learned senior advocate, assisted by Mr. Chetan Pandya, the learned counsel appearing for the petitioners, submitted that the investigation under the PMLA was commenced and continued by the officers of the Enforcement Directorate without;
1.1 Recording any information relating to the Commission of a cognizable offence (u/s 154 of Code of Criminal Procedure), 1.2 Forwarding any report/FIR of the cognizable offence to competent Magistrate (u/s 157 of the Code), 1.3 Recording any Information as prescribed of the Commission of a non-cognizable offence and referring the informant to the competent Magistrate (u/s 155(1) of the Code), 1.4 Obtaining any order from a competent Magistrate for investigating any non-cognizable offence (u/s 155(2) of the Code), Page 4 of 68 HC-NIC Page 4 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER 1.5 Obtaining any warrant from competent Magistrate to arrest the Petitioner in a non-cognizable offence (u/s 155(3) of the Code), 1.6 Maintaining any case diary in a duly paginated volume, entering therein day-to-day proceedings in the investigation and other material particulars (u/s l72 of the Code), and 1.7 Producing such case diary before the Magistrate when the Petitioner was arrested and produced before the Magistrate (u/s 167 of the Code).
10. According to the learned counsel, irrespective of the fact whether the offence under the PMLA is cognizable or non- cognizable, the officers of the respondent-Investigating Agency failed to adhere to the mandatory procedural safeguards contained in the Criminal Procedure Code on an erroneous claim that since they are not "police officers", and the PMLA, being a Special Act containing the provisions for arrest, search, seizure, examination etc., they are not bound by any provisions of the Cr.P.C.
11. The learned counsel submitted that under the PMLA, it was necessary to follow the procedural safeguards contained in the Cr.P.C for the purpose of investigation, recording of information of an offence, informing the concerned Magistrate regarding the receipt of information of the offence, maintaining case diary and for producing the same when the accused was produced in the court.
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12. According to the learned counsel, section 65 of the PMLA clearly mandates application of the provisions of the Cr.P.C insofar as they are not inconsistent with the provisions of the PMLA.
13. The learned counsel has placed strong reliance on the decision of the Supreme Court in the case of Om Prakash vs. Union of India, 2011 (14) SCC 1.
14. The learned counsel has also placed reliance on the decision of the Supreme Court in the case of Directorate of Enforcement vs. Deepak Mahajan, 1994(3) SCC 440.
15. The learned counsel submitted that the lack of specific inclusion of the mandatory procedural requirements prescribed under the Code, is very much relevant so far as the case in hand is concerned. In support of this submission, the learned counsel relied on a bill which was proposed for enactment of the Railway Property (Unlawful Possession) Act, 1996, which provided that:-
"4...It is also proposed to invest powers of investigation and prosecution of offence relating to Railway property in the Railway Protection Force in the same manner as in the Excise and Customs."
16. The learned counsel pointed out that although section 5 of the Railway Property Act made the offence a 'non- cognizable', however, while enacting the said Act, there was a specific departure in section 6 to exclude the application of sections 155(2) and 155(3) in the following manner:-
Page 6 of 68HC-NIC Page 6 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER "6. Power to arrest without warrant- Any superior officer or member of the Force may, without an order from a Magistrate and without a warrant, arrest any person who has been concerned in an offence punishable under this Act or against whom a reasonable suspicion exists of his having been so concerned."
17. The learned counsel submitted that no such provision, excluding the application of sections 155(2) and 155(3) of the Code exists in the PMLA, and thus the same shall apply in the investigations under the PMLA if the offence thereunder is non- cognizable.
18. The learned counsel also placed reliance on the decision of the Supreme Court in the case of Union of India vs. Thamisharasi, 1995 (4) SCC 190. He submitted that the Supreme Court, after considering the provisions of section 4(2) of the Cr.P.C, rejected the criminal appeal filed by the Union of India holding that in view of the conditions precedent vide section 37 of the NDPS Act, imposing limitations on grant of bail, the proviso to sub-section (2) of section 167 of the Cr.P.C was not applicable for release on bail even upon expiry of the total period specified therein. He relied on the following observations made by the Supreme Court;
"In our opinion, in order to exclude the application of the proviso to sub-section(2) of Section 167 CrPC in such cases an express provision indicating the contrary intention was required or at least some provision from which such a conclusion emerged by necessary implication. As shown by us, there is no such provision in the NDPS Act and the scheme of the Act indicates that the total period of custody of the accused permissible during investigation is to be found in Section 167 CrPC which is expressly applied. The absence of any provision Page 7 of 68 HC-NIC Page 7 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER inconsistent therewith in this Act is significant.
19. He submitted that in the absence of any provision in a Special Act indicating the contrary intention, the provisions of the Code would apply. There is no specific contrary provision in the PMLA, so as to exclude the operation of Sections 154 & 157/155(2) & 155(3), 167 and 172 and other consequent provisions of the Code. Only on the aspects for which specific procedure so as to exclude that specified in the Code is provided under the PMLA, the provisions of the PMLA would override the provisions of the Code. So far as the procedure for commencement of the investigation, recording of information of offence, informing the jurisdictional Magistrate regarding the receipt of information of the offence, maintaining case diary or for dealing with the person after production in the Court is concerned, there exist no contrary provision under the PMLA. Therefore, by application of section 65 of the PMLA r/w Section 4(2) of the Code, the mandatory procedure prescribed in the Code would be necessarily applicable.
20. He submitted that despite there being no provision in the PMLA excluding the applicability of the mandatory provisions in the Code, the officers of the Respondent investigating agency proceeded to embark upon the investigation into the alleged offence under the PMLA, without discharging their bounden duty to follow the mandate of the procedure prescribed under the Code, for commencement of investigation, recording of information of offence, informing the jurisdictional Magistrate regarding the receipt of information of the offence, maintaining case diary or for producing the same when the accused is Page 8 of 68 HC-NIC Page 8 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER produced in Court. Grave prejudice has thus been caused to the Petitioner violating his fundamental rights guaranteed under Articles 14 and 21 of the Constitution of India. The accused has been deprived of his liberty and reputation without following the "procedure established by law".
21. According to the learned counsel, if the mandatory procedural safeguards provided in the Code are complied with, then the following is taken care of;
i). The jurisdictional Magistrate is kept in the picture at all stages of the investigation.
ii). The Court would be aware about the commencement of the investigations, and closure of the same qua any of the accused.
iii). The Court would have the advantage of Case Diary as and when required.
iv). The person who is shown as suspect/ accused of the offence by complying with section 154/155 (1) and 157/155 (2) of the Code, would be able to-
a). seek a certified copy of the Information report from the Court on payment of fee,
b). file application for seeking anticipatory bail under section 438 of the Code by relying upon:-
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i). the contents of the FIR for the cognizable offence, or ,
ii). the Complaint for Non-cognizable offence, as the case may be;
c). "appear" before the Court with reference to the FIR of the cognizable case or the Order to investigate the non-cognizable case, and thus effectively seek regular bail as per the provisions of section 437/439 of the Code as the case may be;
d). effectively invoke inherent jurisdiction of the Hon'ble High Court under section 482 of the Code/Article 226 for seeking quashing of the FIR/the complaint of non-cognizable offence at the inception;
e). seek effective protection from the threatened violation of the fundamental rights under Article 32 of the Constitution by annexing therewith the concerned FIR of the cognizable case or the complaint with order to investigate the non- cognizable case;
f). place on record of the investigating agency such material which would, demolish the allegations in the FIR/the complaint, and/or satisfy the officer concerned that the role alleged against him is not true and correct; and
g). take appropriate steps in accordance with law, if the information recorded is wrong, malicious, distorted and to wreck vengeance only to spitefully set criminal law into motion,
h). seek redress against fishing and roving inquiry,
i). Any person would be entitled to seek an order from a Magistrate for seeking directions to the Authorities for investigating the offence under the PMLA.Page 10 of 68
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22. According to the learned counsel, a valid investigation in any offence punishable under section 4 of the PMLA made after complying with the provisions of the Code, would culminate with the filing of a complaint, if offence is made out, or would culminate with the filing of a closure report if no offence is made out qua any accused. The compliance of these procedural safeguards, therefore, also minimizes arbitrary action such as choose and pick methods and letting loose the actually involved persons for personal pecuniary gains, as the jurisdictional Magistrate is kept in the picture at all stages of the investigation.
23. The learned counsel submitted that even in the cognizable cases, this Court in the case of Jayantibhai Lalubhai Patel vs. State of Gujarat, 1992 Cri. Law Journal, 2377, observed as under;
"From the aforesaid discussions. it clearly appears that whenever FIR is registered against the accused. a copy of it is forwarded to the Court under provisions of the Code; Thus it becomes a public document. Considering (I) the provisions of Article 21 of the Constitution of India (2) First Information Report is a public document in view of Section 74 of the Evidence Act (3) Accused gets right as allegations are made against him under provisions of Section 76 of the Indian Evidence Act and (4) FIR is a document to which section 162 of the Code does not apply and I of considerable value as on that basis investigation commenced and that is the first version of the prosecution, as and when applicable is made by accused for a certified copy of the complaint, the Court to which it is forwarded should give certified copy f the FIR, if the application and legal fees thereof have been tendered for the same in the Court of Law."
24. The learned counsel made a gallant effort to convince Page 11 of 68 HC-NIC Page 11 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER this Court that the offence under section 4 of the PMLA is non- cognizable. In support of his submission, he highlighted the following;
"The PMLA Bill, 1999 (in Clause 44) as also the PMLA Act. 2002 when enacted (in specific clause (a) in sub-section (1) of section 45) contained the following provision making the offence under PMLA a 'cognizable' offence -
(i) Notwithstanding contained in the Code of Criminal Procedure, 1973.-
(a) every offence punishable under this Act shall be cognizable."
The marginal note / side note in the said PMLA Bill. 1999 as also the PMLA Act. 2002 accordingly read as follows --
"Offence to be cognizable and non-bailable "
The Act was proposed to be amended in 2005 vide "Prevention of Money-Laundering (Amendment) Bill. 2002" which inter alia contained the following objects and reasons-
2. Steps are being taken by the Central Government to implement the provisions of the Prevention of Money laundering Act. 2002 which, inter alia, includes.... However certain difficulties were envisaged while planning the implementation of the Act. In order to ensure effective implementation and to remove certain difficulties in the implementation of the aforesaid Act, it is proposed to amend the aforesaid Act inter alia so as to-
(c) omit clause (a) of sub-section (1) of Section 45 of the Prevention of Money Laundering Art, 2002, which provides that every offence punishable under that Act shall be cognizable;
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[emphasis supplied]
The corresponding "Loksabha Debates" of 6.5.2005 for consideration of "Prevention of Money Laundering (Amendment) Bill, 2002', clearly shows that the said amendment was proposed to "make the offence non- cognizable", inter alia because if the offence is cognizable, any police officer can arrest without warrant. Although these debates do not have any binding force, but have some persuasive value.
Under section 54 (f) and (g) of the PMLA, the police officers as well as the officers of the Enforcement Directorate are empowered and required to assist the authorities defined under section 48 and appointed under section 49(1) of the PMLA. Therefore, only an authority under section 48 can exercise the powers under the Act, and other officers can only assist them.
The PMLA Act was thus amended vide section 7 the of Prevention of Money Laundering (Amendment) Act, 2005 by way of specific deletion of clause (a) and substitution in section 45(1).
It is settled law that there is no real distinction between such amendment (i.e. by way of deletion and substitution) and 'repeal' as held in Bhagat Ram Sharma v. Union of India, AIR 1988 SC 740.
Consequently, old section 45(1) with the said clause (a), which provided that every offence punishable under that Act shall be cognizable, stands repealed in 2005. It is further settled law as held in T. Barai v. Henry Ah Hoe, (1983) 1 SCC 177, that when a later statute again describes an offence created by an earlier statute and varies the procedure, the earlier statute is repealed by implication by the later statute. By necessary implication of the said specific amendment of 2005, the offences under the PMLA no more remain "cognizable" and by implication became "non-cognizable", irrespective of the now misleading heading o the section 45(1), which remained unaltered.
Further, it is settled law as held in Afcons Infrastructure Page 13 of 68 HC-NIC Page 13 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24, that error can be rectified by interpretation when the legislature could not possibly have intended what its words signify, and that the modifications made by interpretation are mere corrections of careless language and really give the true meaning, because where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsman's unskillfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. Moreover, no further amendment in section 45(1) has been carried out for revival of the said repealed provision much less by expressly stating any purpose as required in section 7 of the General Clauses Act, 1897. Even otherwise, the marginal notes/side notes/heading are not considered as legitimate aid to construction of any section. The Hon'ble Supreme Court in Guntaiah v. Hambamma, (2005) 6 SCC 228 (at page 103 of the compilation), relied on the following observations of a Privy Council Judgment in Chandler v. D.P.P (All ER pp. 145I-l46 A-B) -
"In my view, sidenotes cannot be used as an aid to construction. They are mere catchwords and I have never heard... that an amendment to alter a sidenote could be proposed in either House..... so sidenotes cannot be said to be enacted in the same sense as the long title or any part o the body of the Act."
Even in Union of India vs National Federation of the Blind & Ors., (2013) 10 SCC 772 (at Page 131 of the compilation), the Hon'ble Supreme Court found that the heading or marginal note would not play any crucial role in the interpretation, while observing that-
"45. It is clear that when the provision is plainly worded and unambiguous, it has to be interpreted in such a way that the court must avoid the danger of a prior determination of the meaning of a provision based on their own preconceived notions of ideological structure or scheme into which the provision to be interpreted is somehow fitted. While interpreting the provisions, the court only interprets the law and cannot legislate it. It is Page 14 of 68 HC-NIC Page 14 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER the function of the legislature to amend, modify or repeal it, if deemed necessary.
46. The heading of a section or marginal note may be relied upon to clear any doubt or ambiguity in the interpretation of the provision and to discern the legislative intent. However, when the section is clear and unambiguous, there is no need to traverse beyond those words, hence, the headings or marginal notes cannot control the meaning of the body of the section. Therefore, the contention of Respondent 1 herein that the heading of Section 33 of the Act "Reservation of posts" will not play a crucial role, when the section is clear and unambiguous.
Moreover, in Sec.179(1) of the Income Tax Act, which provides for liability of directors of a private company, although the said section was amended by substitution with effect from 01.10.1975 to make it applicable to all private companies even if not in liquidation, however the heading remain unaltered. For ready reference, section 179 of the Income tax Act as amended by Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975, is reproduced thus-
"179. Liability of directors of private company in liquidation-(1) Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect misfeasance or breach of duty on his part in relation to the affairs of the company."
Section 179 prior to its amendment read as under:
"179.Liability of directors of private company in liquidation- Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), when any private company is wound up after the commencement of this Act, and any tax assessed on the company, whether Page 15 of 68 HC-NIC Page 15 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER before or in the course of or after its liquidation, in respect of any income of any previous year cannot be recovered then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non- recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company."
In such identical situation, the Hon'ble Allahabad High Court in the matter of Roop Chandra Sharma vs Deputy Commissioner of Income Tax (Assessment), 1998 (229) ITR 570 (AIL) was pleased to hold that notwithstanding the misleading heading of Sec.179, it must be held that the directors of a private company, though not under liquidation, may be liable for the dues outstanding against the company. This view was taken by following the decision of Hon'ble Bombay High Court in Union of India vs. Manik Dattatreya Lotlikar, 1998 (172) ITR 1 (Bom), wherein the Hon'ble Bombay High Court observed that the object of the amendment was to extend the liability for taxes due from a private company to the directors thereof, even though such company may not be in liquidation.
On the same analogy, notwithstanding the misleading heading showing the offence as 'cognizable', after the 2005 amendment, by necessary implication, the offence under PMLA is a 'non-cognizable' offence. Neither can misleading heading govern the amended section, nor can by any interpretative process by referring to the Part II of the 1st Schedule to the Code, the effect of 2005 amendment whittled down to still construe the offence as 'cognizable'.
It may be seen that in Om Prakash (supra), although the offence under the Central Excise and Customs Act are punishable for maximum period of 7 years, the same were held as 'bailable', notwithstanding the second entry of the Part II of the 1st Schedule to the Code. On the same analogy and in view of the above peculiar position, notwithstanding the second entry of the Part II of the 1 st Schedule to the Code the offence under the PMLA is 'non- cognizable'.
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Second proviso to section 45(1) creates an embargo on a special court from taking cognizance of any offence punishable under section 4 of the PMLA except upon a complaint in writing made by specified/ authorized officer. It is true that investigations into only a 'non- cognizable' offence can result in a complaint rather than a report under section 173(2) of the Code ."
25. The learned counsel relied on the decision of the Supreme Court in the case of State of Punjab vs. Baldev Singh, 1999 (6) SCC 172 in support of his submission as regards the importance of compliance with the procedural safeguards. He placed reliance on the following observations;
""28. This Court cannot overlook the context in which the NDPS Act operates and particularly the factor of widespread illiteracy among persons subject to investigation for drug offences. It must be borne in mind that severer the punishment, greater has to be the care taken to see that all the safeguards provided in a statute are scrupulously allowed. We are not able to find any reason as to why the empowered officer should shirk from affording a real opportunity to the suspect, by intimating to him that he has a right "that if he requires "
to be searched in the presence of a gazetted officer or a Magistrate, he shall be searched only in that manner. As already observed the compliance with the procedural safeguards contained in Section 50 are intended to serve a dual purpose to protect a person against false accusation and frivolous charges as also to lend creditability to the search and seizure conducted by the empowered officer. The argument that keeping in view the growing drug menace, an insistence on compliance with all the safeguards contained in Section 50 may result in more acquittals does not a appeal to us. If the empowered officer fails to comply with the requirements of Section 50 and an order or acquittal is recorded on that ground, the prosecution must thank itself or its lapses. Indeed in every case the end result is important but the means to achieve it must remain above board. The remedy cannot be worse than the disease itself. The legitimacy of the judicial process may come under a Page 17 of 68 HC-NIC Page 17 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER cloud if the court is seen to condone acts 0 lawlessness conducted by the investigating agency during search operations and may also undermine respect for the law and may have the effect of unconscionably compromising the administration of justice. That cannot be permitted. "
"55. We, therefore, hold that an illicit article seized from the person of an accused, during search conducted in violation of the safeguards provided in Section 50 of the Act, cannot by iitself be used as admissible evidence of proof of unlawful possession of the contraband on the accused. Any other material/article recovered during that search may, however, be relied upon by the prosecution in other/independent proceedings against an accused notwithstanding the recovery of that material during an illegal search and its admissibility would depend upon the relevancy of that material and the facts and circumstances of that case. "
26. The learned counsel raised one more contention that the non-compliance with the procedural safeguards provided under the Code is not a "curable error, omission or irregularity" and the proceedings would not be saved by application of section 68 of the PMLA or section 465 of the Code. In support of his submission, he highlighted the following.
"The saving provisions under section 68 of PMLA or Section 465 Cr.P.C. cannot come to the aid of the respondents, since there is a clear breach of mandatory provisions of the Code. Section 465 has no application in deliberate violations by the officers of Respondents of the mandatory procedure prescribed in Code violating fundamental rights guaranteed under Article 14 and 21 of the Constitution of India, as the said section 68 of PMIA or Section 465 Cr.P.C. only relate to such error, omission or irregularity which are merely technical and do not occasion any failure of justice.
Moreover, the Hon'ble Calcutta High Court, in Subodh Singh Modak vs. State, 1974 CriLJ 185, was pleased to hold that a non-conformance to the mandatory provisions laid down in Section 155 (2) of the Code was not curable Page 18 of 68 HC-NIC Page 18 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER under Section 537 of the Code and is a non-conformance to the procedure established by law within the meaning of Article 21 of the Constitution of indie. It was observed that-
'4... The steps of reasoning of the learned Sessions Judge, Purulia are that even if there has been such a non- conformance it is an illegality that is curable under Section 537, Criminal Procedure Code on the ground that the procedure adopted by the Investigating Officer was erroneous and irregular. He relied on the principles laid down in the case of H. N. Rishbud v. The State of Delhi:
1955 CriLJ 526. Mr. Biswas supported these reasons and contended that even if the investigation has been illegal that will not affect the competency of the Court to take cognizance and in any event the said non-conformance is curable. It is difficult to agree with Mr. Biswas. Firstly, because the provisions of Section 155, Criminal Procedure Code are quite mandatory and it has been held in a series of decisions, facts wherein have been sought to be distinguished from by the learned Sessions Judge, that such a non-conformance is a material one vitiating the ultimate proceeding. Secondly, the interpretation of the principles laid down in H. N. Rishbuds case is not a correct one. It is pertinent, therefore, to refer to the relevant findings arrived at by Mr. Justice Jagannadhadas, delivering the judgment of the Court in the said case. It is, inter alia, as follows: - "We are, therefore, clearly, also, of the opinion that where the cognizance of the case has in fact been taken and the case has proceeded to termination, the invalidity of the precedent investigation does not vitiate the result, unless miscarriage of justice has been caused thereby." It is abundantly clear, therefore, that the ultimate principles laid down by the Supreme Court are based on two different steps, firstly, that the case had proceeded to a termination and secondly, that there has been a (sic)(no?) miscarriage of justice. The test of such miscarriage has been made quite clear by the Supreme Court, namely, that no objectio was taken to the illegality in the first blush. In this particular case, the case has not proceeded to termination but at the earlier stage the objection was taken on behalf of the accused and given effect to by the learned Judicial Magistrate. The analogy of the said principles, therefore, would not hold good in the present case. It is a short and simple case where a non-cognizable offence was being Page 19 of 68 HC-NIC Page 19 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER investigated by the police without taking the previous order of the learned Magistrate concerned. The question is one of illegality and the question also is of not conforming to the procedure established by law. Article 21 of the Constitution of India has laid down in clear and unambiguous terms that no person shall be deprived of his life or personal liberty except according to the procedure established bylaw and this is quite distinct from the concept of due process of law in the American Constitution, Some meaning and effect must be given thereto. Even before the passing of the Constitution in our Country the well-known principle laid down by Jessel M. R. in the case of Taylor v. Taylor 1876-1 Ch D 420 was approved of by Lord Roche in the case of Nazir Ahmed v.
King Emperor (1936) 63 IA 372 at pp. 381 and 382: 37 Cri LJ 897 namely, that "where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden. " I respectfully agree with the said observations and I hold that a non-conformance to the mandatory provisions laid down in Section 155 (2). Criminal Procedure Code is a non-conformance to the procedure established by law and the impact thereof has been missed by the learned Sessions Judge, vitiating the ultimate order that he passed in setting aside the order for quashing the proceedings and sending back the case on remand. Justice demands that the said order should be set aside and due regard should be given to the order passed by the learned Judicial Magistrate. The contentions of Mr. Banajee accordingly succeed."
The said decision was followed by Hon'ble Calcutta High Court in Harilal Shaw vs. State, 1985 (1) Crimes 484 (at Pages: 95-96 of the Compilation).
Hon'ble Bombay High Court in Avinash Madhukar Mukhedkar Vs. State, 1983 CriLJ 1833 (at Pages 83-89 of the Compilation), while quashing and setting aside the criminal prosecution initiated against the Petitioner therein, agreed with the said Judgment in the matter of Subodh Singh Modak (supra) and also held that non- conformance of mandatory provisions of section 155 (2) of the Code vitiates the entire investigations as well as the trial and such irregularity cannot be cured under section 460 or 466 of the Code.
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The Hon'ble Supreme Court in Keshav Lal Thakur vs. State of Bihar, (1996) ll SCC 577 (at Pages 24-25 of the compilation) was pleased to quash the criminal proceedings initiated on completion of investigation of a non-cognizable offence under section 31 of Representation of the People Act, 1950, where no order of a Competent Magistrate under section 155 (2) of the Code was obtained, by holding that neither the Police was entitled to investigate into the offence in question, nor the Chief Judicial Magistrate to take cognizance upon the Report submitted on completion of such investigation.
The Hon'ble Bombay High Court in Vithal Puna Koli vs. State of Maharashtra, 2006 All MR (Cri.) 3021 (at pages 93-94 of the Compilation) was pleased to follow the decisions in Avinash Madhukar Mukhedkar (supra) and Keshav Lal Thalcur (supra), for quashing and setting aside the criminal proceedings under non-cognizable offences under section 417 and 504 of IPC, in view of non- compliance with section 155 of the Code. The Hon'ble Supreme Court in State of Haryana vs. Bhajan Lal, 1992 Supp (1) SCC 335 (at pages 26-82 of the Compilation) was pleased to quash the commencement as well as the entire investigation as the SHO was not clothed with valid legal authority to take up the investigation and proceed with the same within the meaning of section 5A(1) of the Prevention of Corruption Act, while granting liberty to the State Government to direct an investigation afresh, if it so desired, in strict compliance with law (para 141). It was observed by the Hon'ble Supreme Court that-
"34. In this connection, it may be noted that though a police officer cannot investigate a non-cognizable offence on his own as in the case of cognizable ofence, he can investigate a non-cognizable offence under the order of a Magistrate having power to try such non-cognizable case or commit the same for trial within the terms under Section 155(2) of the Code but subject to Section 155(3) of the Code... "
"60... .....Indeed, a noticeable feature of the scheme under Chapter XIV of the Code is that a Magistrate is kept in the picture at all stages of the police investigation but he is not authorised to interfere with the actual Page 21 of 68 HC-NIC Page 21 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER investigation or to direct the police how that investigation is to be conducted. But if a police officer transgresses the circumscribed limits and improperly and illegally exercises his investigatory powers in breach of any statutory provision causing serious prejudice to the personal liberty and also property of a citizen, then the court on being approached by the person aggrieved for the redress of any grievance, has to consider the nature and extent of the breach and pass appropriate orders as may be called for without leaving the citizens to the mercy of police echelons since human dignity is a dear value of our Constitution. It needs no emphasis that no one can demand absolute immunity even if he is wrong and claim unquestionable right and unlimited powers exercisable up to unfathomable cosmos. Any recognition of such power will be tantamount to recognition of 'Divine Power' which no authority on earth can enjoy. "
The Hon'ble Supreme Court was further pleased to lay down illustrations in para 102 in Bhajanlal (supra), wherein powers under Article 226 or under Section 482 of the Code could be exercised to secure the ends of justice, inter alia, for the following categories of cases -
"102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulate and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.
"(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate as contemplated within the power of Section 155(2) o the Code. "Page 22 of 68
HC-NIC Page 22 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER "(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemIated under Section 155(2) of the Code.
"140 We set aside the judgment of the High Court quashing the first information report as not being legal and factually sustainable in law for the reasons aforementioned; but. however, we quash the commencement as well as the entire investigation, if any. so or done or the reasons given by us in the instant judgment on the ground that appellant 3 (SHO) is not clothed with valid legal authority to take up the investigation and proceed with the same within the meaning of Section 541(1) of the Prevention of Corruption Act as indicated in this judgment. Further we set aside the order of the High Court awarding costs with a direction that the said costs is payable to respondent 1 (Shri Bhajan La) by respondent 2 (Dharam Pal).
141. In the result, the appeal is disposed of accordingly but at the same giving liberty to the State Government to direct an investigation afresh, if it so desires, through a competent police officer empowered with valid legal authority in strict compliance with Section 5 2DA(1) of the Act as indicated supra. No order as to costs.
In Income Tax Act, Section 292 B is pari-materia to section 68 of PMLA In the context of Section 292 B, it was observed by a Division Bench of the Hon'ble Kerala High Court in RN. Sasikumar v. CIT, 1988 (170) ITR 80 that - "4. But, the Appellate Tribunal held that Section 292B cures the defects or omissions in the instant case. Section 2928 is as follows:
" No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, Page 23 of 68 HC-NIC Page 23 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. "
".6. .....Such a fundamental infirmity cannot be called a "technical objection "' or a mere "irregularity" and such vital infirmity cannot be cured or obliterated by relying on Section 292B of the Income Tax Act. It was not a mere technicality and it is a question of jurisdiction. ..... On this basis, we hold that the Appellate Tribunal was in error in holding that Section 292B is applicable in the instant case and in reversing the orders of the Appellate Assistant Commissioner for these four assessment years. "
27. In such circumstances referred to above, the learned counsel prays that there being merit in the petitions, the same be allowed and the reliefs as prayed for may be granted.
28. On the other hand, all the petitions have been vehemently opposed by Ms. Trusha Patel, the learned standing counsel appearing for the Union of India. Ms. Patel gave more than a fair idea as to how the PMLA was enacted. She also gave a fair idea as regards the object of enacting the PMLA. Ms. Patel drew a fine distinction between the provisions of the PMLA and the Cr.PC as under.
PMLA Cr.P.C. Object: Object: " to present money laundering "to provide law relating to Criminal Procedure..." it is meant to regulate procedure only.
Thus, it has an independent object to Thus, it has no independent object to be fulfilled. be fulfilled.
It's a substantive law. It is only a procedural law. Therefore, while considering the Therefore, while examining the provisions of this act, one need to validity of any proceeding, one must keep in mind the object of the Act and keep in mind the object of the statute any procedural lacuna or infirmity, under which it is being undertaken, even if has remained in any action of and not the procedure that is being Page 24 of 68 HC-NIC Page 24 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER the authorities acting under this act, adopted.
should not be given much importance, if the said Act is in consonance with the object of this statute.
S. 68 Notice etc. not to be invalid on Cr.P.C should act as an aid and certain grounds; should assist the officer to discharge his duties under the PMLA rather than "other proceedings" would include coming In their way....
investigation. See the definition of 'investigation' S.4(2), 5 of Cr.P.C.
Thus, the legislature has given paramount importance to the object of the Act rather than the procedure to be followed for attaining the object.
29. According to Ms. Patel, the PMLA is a Special Act and it provides complete guidelines as to how the investigation is to be carried out. So far as the procedure which the Designated Court has followed, the same would be governed by the Cr.P.C. She submitted that the PMLA, being a Code in itself, the investigation could be carried out according to the definition of section 2 (na) for collection of the evidence for the offence of Money Laundering under section 3 when the offence is cognizable and non-bailable.
30. Ms. Patel placed strong reliance upon sections 46 and 65 to submit that the provisions of the Cr.P.C would apply insofar as they are not inconsistent with the provisions of the PMLA.
31. Reference was made to section 44 to submit that not only a Special Court, upon a complaint, could take cognizance upon sections 44 and 45 and that also upon a complaint in writing by the Director or any Officer of the Central Government or the Page 25 of 68 HC-NIC Page 25 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER State Government, authorized in writing in that behalf by the State Government by general or special order. Section 48 was referred to, to show the classes of authorities who can be appointed for the purpose of the Act which is headed by the Director, Additional Director, Joint Director, Deputy Director and the Assistant Director.
32. Ms. Patel placed strong reliance on the following decisions;
1 Officers under Special Act, though AIR 1966 SC 1746;
carries out investigation, does not Para 9-11 become 'Police officer' and hence no charge sheet is required to be filed.
2 Officers of ED- are Not Police Officers AIR 2011 SC 2490= 2011 GLHEL SC 50045 AIR 1991 SC 45: Para 11 3 Powers of arrest given under the AIR 2009 SC 254:
special Act (Customs Act) not to be Para 51-60 interfered with by the Courts.
4 Procedure under Cr.P.C would not Cr. M.P. 46 of 2010:
apply 26.3.2010 Jharkhand HC:
Para: 1,2,13-15
5 S.71: PMLA will have an overriding 2013 Cr. LJ 2230
effect, if any provision is inconsistent (Jharkhand HC): Para:34, 35, with any other law. 37-39 6 Procedural Law should be liberally 2014.2.SCC Para :49 construed to serve the object of the Act.
33. In such circumstances referred to above, Ms. Patel prays that there being no merit in any of the matters, all the petitions may be rejected.
34. Having heard the learned counsel appearing for the parties and having considered the materials on record, the Page 26 of 68 HC-NIC Page 26 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER only question that falls for my consideration is whether the petitioners are entitled to any of the reliefs as prayed for in their respective petitions.
35. In order to appreciate the arguments raised by the petitioners, it would be necessary to refer to the relevant provisions of the Act. The offence of money laundering as defined under Section 3 is directed against the proceeds of crime and is admittedly punishable with not less than 3 years which may extend to 7 years under Section 4.
36. Money laundering has been defined under Section 2(p) and 2(u) and Section 3. The proceeds of crime as per Section 2(u) pertain to any property derived, obtained directly or indirectly, as a result of criminal activity by any person relating to a scheduled offence or the value of such property. The scheduled offences have been defined under Section 2(y) and admittedly, Sections 419, 420, 467, 471 are part of the scheduled offences as described under part A of the schedule.
37. Section 2(p), 2(u), 3 and 4 reads thus:-
"2(p) "money-laundering" has the meaning assigned to it in section 3;
2(u) "Proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property."
3. Offence of money-laundering.--Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected [proceeds of crime including its concealment, possession, acquisition or use and Page 27 of 68 HC-NIC Page 27 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER projecting or claiming] it as untainted property shall be guilty of offence of money-laundering.
4. Punishment for money-laundering.--Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words "which may extend to seven years", the words "which may extend to ten years" had been substituted. "
[***]
38. Under Section 2(na), investigation includes all the proceedings under the Act conducted by the Director or any authority authorized by the Central Government for collection of evidence. The said Section reads thus:-
"2(na) "investigation" includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence;"
39. Section 49, confers power to the Central Government to appoint such persons as it thinks fit to be the authorities for the purpose of the Act and Section 48 provides the class of authorities which reads thus:-
"48. Authorities under the Act.-- There shall be the following classes of authorities for the purposes of this Act, namely:--
(a) Director or Additional Director or Joint Director,
(b) Deputy Director,
(c) Assistant Director, and
(d) such other class of officers as may be appointed for the purposes of this Act."Page 28 of 68
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40. Section 46 reads as under;
"46. Application of the Code of Criminal Procedure, 1973 to proceedings before Special Court (1) Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) (including the provisions as to bails or bonds), shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the persons conducting the prosecution before the Special Court, shall be deemed to be a Public Prosecutor:
Provided that the Central Government may also appoint for any case or class or group of cases a Special Public Prosecutor.
(2) A person shall not be qualified to be appointed as a Public Prosecutor or a Special Public Prosecutor under this section unless he has been in practice as an advocate for not less than seven years, under the Union or a State, requiring special knowledge of law.
(3) Every person appointed as a Public Prosecutor or a Special Public Prosecutor under this section shall be deemed to be a Public Prosecutor within the meaning of clause (u) of section 2 of the Code of Criminal Procedure, 1973 (2 of 1974) and the provisions of that Code shall have effect accordingly.
41. Section 65 reads as under;
"65. Code of Criminal Procedure, 1973 to apply The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, in so far as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act.
42. Section 75 reads as under:
"75. Power to remove difficulties Page 29 of 68 HC-NIC Page 29 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty:
Provided that no order shall be made under this section after the expiry of two years from the commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
43. Section 23 reads as under;
"23. Presumption in inter-connected transactions Where money-laundering involves two or more inter- connected transactions and one or more such transactions is or are proved to be involved in money- laundering, then for the purposes of adjudication or confiscation 1 ["under section 8 or for the trial of the money-laundering offence, it shall unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court" ] be presumed that the remaining transactions form part of such inter-connected transactions."
44. Section 24 reads as under;
24. Burden of proof In any proceeding relating to proceeds of crime under this Act,-(a) in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and
(b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering."
45. Section 68 reads as under;
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"68. Notice, etc., not to be invalid on certain grounds No notice, summons, order, document or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid, or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such notice, summons, order, document or other proceeding if such notice, summons, order, document or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.
46. Section 18 reads as under;
"18. Search of persons (1) If an authority, authorized in this behalf by the Central Government by general or special order, has reason to believe (the reason for such belief to be recorded in writing) that any person has secreted about his person or in anything under his possession, ownership or control, any record or proceeds of crime which may be useful for or relevant to any proceedings under this Act, he may search that person and seize such record or property which may be useful for or relevant to any proceedings under this Act. 1 ["Provided that no search of any person shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of 2 of 1974. the Code of Criminal Procedure, 1973, or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head ofthe office or Ministry or Department or Unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.";] (2) The authority, who has been authorized under sub-Page 31 of 68
HC-NIC Page 31 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed.
(3) Where an authority is about to search any person, he shall, if such person so requires, take such person within twenty-four hours to the nearest Gazetted Officer, superior in rank to him, or a Magistrate:
Provided that the period of twenty-four hours shall exclude the time necessary for the journey undertaken to take such person to the nearest Gazetted Officer, superior in rank to him, or Magistrate's Court.
(4) If the requisition under sub-section (3) is made, the authority shall not detain the person for more than twenty-four hours prior to taking him before the Gazetted Officer, superior in rank to him, or the Magistrate referred to in that sub-section:
Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of detention to the office of the Gazetted Officer superior in rank to him, or the Magistrate's Court.
(5) The Gazetted Officer or the Magistrate before whom any such person is brought shall, if he sees no reasonable ground for search, forthwith discharge such person but otherwise shall direct that search be made.
(6) Before making the search under sub-section (1) or sub-section (5), the authority shall call upon two or more persons to attend and witness the search, and the search shall be made in the presence of such persons.
(7) The authority shall prepare a list of record or property seized in the course of the search and obtain the signatures of the witnesses on the list.
(8) No female shall be searched by any one except a Page 32 of 68 HC-NIC Page 32 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER female.
(9) The authority shall record the statement of the person searched under sub-section (1) or subsection (5) in respect of the records or proceeds of crime found or seized in the course of the search:
Provided that no search of any person shall be made unless, in relation to an offence under-
(a) Paragraph 1 of Part A or Paragraph 1 or Paragraph 2 or Paragraph 3 or Paragraph 4 or Paragraph 5 of Part B of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974); or
(b) Paragraph 2 of Part A of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-
section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).
(10) The authority, seizing any record or property under sub-section (1) shall, within a period of thirty days from such seizure, file an application requesting for retention of such record or property, before the Adjudicating Authority."
47. In the course of the hearing of the matters, Mr. Chaudhary, the learned counsel appearing for the petitioners, took me through the discussion in the parliament in connection with the bill to amend the Prevention of Money Laundering Act, 2002, which reads as under;
""That the Bill to amend the Prevention of Money- Laundering Act, 2002, be taken into consideration."
Sir, the Money-Laundering Act was passed by this House in the year 2002, and number of steps have to be taken to implement it. Sir, two kinds of steps were required. One was to appoint an authority who will gather intelligence and information, and the other was an authority to investigate and prosecute. This Act was made to implement the political declaration adopted by the Special Session of the UN General Assembly in 1999.
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Section 1 (3) of the Act stipulates that the Act will come into force on such date as the Central Government may by notification appoint. While we were examining the question of notifying the Act, I found that there was certain lacunae in the Act. I regret to say that not enough homework had been done in the definitions, and in the division of responsibility and authority. So, in consultation with the Ministry of Law, we came to the conclusion that these lacunae had to be removed. Broadly, the reasons for the amendment are the following.
Under the existing provisions in Section 45 of the Act, every offence is cognizable. If an offence is cognizable, then any police officer in India can arrest an offender without warrant. At the same time, under Section 19 of the Act, only a Director or a Deputy Director or an Assistant Director or any other officer authorised, may arrest an offender. Clearly, there was a conflict between these two provisions. Under Section 45(1)(b) of the Act, the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint made in writing by the Director or any other officer authorised by the Central Government. So, what would happen to an arrest made by any police officer in the case of a cognizable offence? Which is the court that will try the offence? Clearly, there were inconsistencies in these provisions.
They have now been removed. We have now enabled only the Director or an officer authorised by him to investigate offences. Of course, we would, by rule, set up a threshold; and, below that threshold, we would allow State police officers also to take action. The second anomaly that we found was that the expression "investigation officer" and the word "investigation" occur in a number of sections but they were not defined in the Act. Consequently, one has to go to the definition in the Criminal Procedure Code and that Code provides only "investigation by a police officer or by an officer authorised by a magistrate". So, clearly, there was a lacuna in not enabling the Director or the Assistant Director under this Act to investigate offences. That has been cured now.
The third difficulty that I found was that the Act Page 34 of 68 HC-NIC Page 34 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER contemplates an Appellate Tribunal under Section 25 but there might not be enough cases for a full-time Appellate Tribunal. An Appellate Tribunal means a lot of money. There are other Appellate Tribunals in similar Acts. So, we could authorise those Appellate Tribunals to function as Appellate Tribunal under this Act. After all, it is the same retired High Court Judge or a serving High Court Judge who is going to be there. So, part of the time, he would devote to dealing with appeals arising under some other Acts; and, part of the time, he would deal with appeals arising under this Act. At least in the initial years, we do not think, there would be enough work for a full-time Appellate Tribunal.
What we are doing is, we are inserting a new Section, 2
(n) (a) defining the term, investigation; making an amendment to Sections 28, 29 and 30, dealing with tribunals; amending Sections 44 and 45 of the Act to make the offence non-cognizable so that only the Director could take action; and also making consequential changes in Section 73. I request hon. Members to kindly approve of these amendments so that the Act could be amended quickly and we could bring it into force.
MR.CHAIRMAN : Motion moved:
"That the Bill to amend the Prevention of Money- laundering Act, 2002, be taken into consideration."
48. Money laundering is an activity sought to be criminalised in the various countries. Various definitions exist and have been used to explain what money laundering is. Money laundering is termed thus because the term perfectly describes what takes place: illegal (or 'dirty') money is put through a cycle of transactions (or is 'washed'), so that it comes out at the other end as legal (or 'clean') money.
Jefferey Robinson, an acknowledged authority on the subject, has stated:
"the source of illegally obtained funds is obscured through a succession of transfers and deals in order that those same funds can eventually be made to appear as legitimate Page 35 of 68 HC-NIC Page 35 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER income."
The internationally accepted definition is laid down in the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (1990) in Article 6. Each Party shall adopt such legislative and other measures as may be necessary to establish as offences under its domestic law, when committed intentionally:
a) The conversion or transfer of property knowing that such property is proceeds, for the purpose of concealing or disguising the illicit offences of the property or of assisting any person who is involved in the commission of the predicate offence to evade the legal consequences of his actions;
b) The concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property, knowing that such property is proceeds;
And subject to its constitutional principles and the basic concepts of its legal system:
c) The acquisition, possession or use of property, knowing, at the time of receipt, that such property was proceeds;
d) Participation in, association or conspiracy to commit and aiding, abetting, facilitating and counselling the commission of any of the offences established in accordance with this Article. The words 'knowing', 'intentionally' and 'abetting' have been used in this accord thereby laying down the mens rea requirements for money laundering.
49. Money laundering transactions can, theoretically, be divided into three distinct stages:
(a) Placement;
(b) Layering;
(c)Integration It is through these stages that monetary proceeds from illegal or criminal sources, which would otherwise leave a trail Page 36 of 68 HC-NIC Page 36 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER leading to the criminal, are moved through a series of dealings which result in the trail becoming more 'confusing' and complex for enforcement officials. This obviously lessens the possibilities of the money being confiscated as illegal, or of the criminals being identified. This legitimate money is also used to fund criminal activities after a period and is thus circulated after temporary storage. If a crime is committed abroad and through the money laundering process, the same money becomes legitimate in India, such that it is apparently traceable to a legitimate source of income, beyond which lies a network of complex transactions, the complexity of which cannot be broken through to lead to the ultimate criminal activity which had occurred, is very difficult for enforcement officials to enforce anti-crime laws because the chain of causation has been broken.
50. The first question that falls for my consideration is whether the offence under the PMLA is cognizable and non- bailable.
51. By prevention of Money Laundering (Amendment) Act, 2005 (20 of 2005) sub-clause (a) of the Money Laundering Act, 2002 (15 of 2003) stands deleted. The said sub-clause (a) provided that "every offence punishable under this Act shall be cognizable." Sub-section 1A introduced by the Prevention of Money Laundering (Amendment) Act of 2005 provides that "notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) or any other provision of this Act, no police officer shall investigate into an offence under this Act, unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions Page 37 of 68 HC-NIC Page 37 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER as may be prescribed.
52. There are no words in the body of the section to declare the offences under the Act to be non-bailable. Since the Act has created new offences, it was necessary that there ought to have been a specific provision in that respect. However, the marginal note to the section reads as "offences to be cognizable and non-bailable". It is true that at one time the judicial view was that the marginal notes are not part of statute for they are not inserted by the Parliament, nor under the authority of the Parliament. But this view no longer holds good in India. The Supreme Court, in the case of Bhagirath vs. Delhi Administration, AIR1985 SC 1050, while dealing with the interpretation of section 428 of the Cr.P.C., observed as under;
"We see but little warrant for qualifying the word 'term' by the adjective 'fixed' which is not to be found in section
428. The assumption that the word 'term' implies a concept of ascertainability or conveys a sense of certainty is contrary to the letter of the law, as we find it in that section. Even the marginal note to the section does not bear out that assumption. It rather belies it. And, marginal notes are now legislative and not editorial exercises. The marginal note of S. 428 shows that the object of the Legislature in enacting the particular provision was to provide that the period of detention undergone by the accused should be set off against the sentence of imprisonment imposed upon him. There are no words of limitation either in the section or in its marginal note which would justify restricting the plain and natural meaning of the word 'term' so as to comprehend only sentences which are imposed for a fixed or ascertainable period."
53. Thus, the marginal note of a section is to be read as a Page 38 of 68 HC-NIC Page 38 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER part of the legislation. Further, the objects sought to be achieved would be a relevant consideration. The Court should lean in favour of reading the section for giving effect to the provisions made and for the fulfillment of the purpose of the Act. Therefore, in my view, the section cannot be construed to lay down that the offences under the Act are non-bailable. (see commentary on the Prevention of Money Laundering Act, 2002 Tushar V. Shah)
53. From reading the Act as a whole it is manifestly clear that the Prevention of Money Laundering Act being a special statute. the procedure for dealing with the offences are regulated by the provisions contained in the said Act. Section 44(1b) clearly provides that cognizance for the offence punishable under the Act shall be taken only upon a complaint made by an authority authorized in that behalf under the Act. Further Section 45 of the Act put restrictions in the release of the persons on bail unless conditions mentioned therein are fulfilled. It further provides that special Court shall not take cognizance of any offence under Section 4 except on a complaint made by the Director or any Officer authorized by the Central Government or the State Government. Sub- section (1-A) of Section 45 specifically provides that notwithstanding the provisions contained in the Code of Criminal Procedure, no police officer shall investigate into an offence under the Act unless specifically authorized by the Central Government by a general or special order The provisions of the Act has been given over-riding effect upon any other law and further categorically mentioned that any provision of Code of Criminal Procedure which are inconsistent with the provision of this Act Page 39 of 68 HC-NIC Page 39 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER which deals with attachment, confiscation investigation and prosecution etc. shall not apply. There is no provision in the Act which is a special statute for filing of police report. It could file a complaint only after completion of investigation by the authorized authority, which shall be the basis of taking cognizance.
54. As noticed above, the word 'investigation' as defived in Section 2(na) has been inserted by virtue of Amendment Act 20 of 2005. According to the definition the word 'investigation' includes all the proceedings under the Act conducted by the Director or by an authority authorized by the Central Government under the Act for the collection of evidence.
55. The provision contained in Sections 44 and 45 of the Act prohibits taking of cognizance except on a complaint made by the appropriate authority who can file a complaint only after completion of investigation.
56. I have to my advantage a very lucid, exhaustive and erudite judgment delivered by a Division Bench of the Punjab & Haryana High Court in the case of Karamsingh & Ors. vs. Union of India, CWP No.3317 of 2015 dated 22.12.2015, practically answering all the contentions raised before me. Incidentally, Mr. Chaudhary himself had appeared before the Division Bench of the Punjab & Haryana High Court. I may quote the observations made by the Division Bench of the Punjab & Haryana High Court as under;
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"26. The first legal issue which, thus, arises for
consideration before this Court is that whether the
offence is cognizable or non-cognizable in view of the
amendment made and whether the authorities under the
Act have any jurisdiction to investigate into the
cognizable offence.
27. Section 45 of the Act, as it originally was and thereafter amended reads thus:-
Unamended Section 45 Amended Section 45:-
"45. Offences to be "45. Offences to be cognizable cognizable and non and non-bailable.-
bailable.- (1)Notwithstanding anything (1) Notwithstanding contained in the Code of anything contained in the Criminal Procedure, 1973 (2 of Code of Criminal 1974), no person accused of Procedure, 1973 (2 of an offence punishable for a 1974), term of imprisonment of more
(a) every offence than three years under Part A punishable under this Act of the Schedule shall be shall be cognizable; released on bail or on his own bond unless-
(b) No person accused of
an offence punishable for (i) the Public Prosecutor has
a term of imprisonment been given an opportunity to
of more than three years oppose the application for
under Part A of the such release; and
Schedule shall be
released on bail or on his (ii) where the Public
own bond unless- Prosecutor opposes the
application, the court is
(i) the Public Prosecutor satisfied that there are
has been given an reasonable grounds for
opportunity to oppose believing that he is not guilty
the application for such of such offence and that he is
release; and not likely to commit any
offence while on bail:
(ii) where the Public
Prosecutor opposes the Provided that a person who is
application, the court is under the age of sixteen years
satisfied that there are or is a woman or is sick or
reasonable grounds for infirm, may be released on
believing that he is not bail, if the special court so
guilty of such offence directs:
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and that he is not likely
to commit any offence Provided further that the while on bail : Special Court shall not take cognizance of any offence Provided that a person, punishable under section 4 who, is under the age of except upon a complaint in sixteen years, or is a writing made by-
woman or is sick or infirm, may be released (i) the Director; or on bail, if the Special (ii) any officer of the Central Court so directs: Government or State Government authorised in Provided further that the writing in this behalf by the Special Court shall not Central Government by a take cognizance of any general or a special order offence punishable under made in this behalf by that section 4 except upon a Government.
complaint in writing 2[(1A) Notwithstanding
made by - anything contained in the
Code of Criminal Procedure,
(i) the Director, or 1973 (2 of 1974), or any other
(ii) any officer of the provision of this Act, no police Central Government of officer shall investigate into an State Government offence under this Act unless authorised in writing in specifically authorised, by the this behalf by the Central Central Government by a Government by a general general or special order, and, or a special order made subject to such conditions as in this behalf by that may be prescribed.] Government.
(2) The limitation on granting (2) The limitation on of bail specified in [***] sub- granting of bail specified section (1) is in addition to the in sub-section (1) is in limitations under the Code of addition to the limitations Criminal Procedure, 1973 (2 of under the Code of 1974) or any other law for the Criminal Procedure, 1973 time being in force on (2 of 1974) or any other granting of bail." law for the time being in force on granting of bail."
28. The amended provisions specifically provide that no person accused of an offence punishable for a term of imprisonment for more than 3 years under Part A of the Schedule shall be released on bail on his own bond unless Page 42 of 68 HC-NIC Page 42 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER the public prosecutor is given an opportunity to oppose the application for said release.
29. In our considered opinion, the above provisions are of no help to the petitioners and only lay down certain terms and conditions for the Courts while deciding the application for bail. Reference has been made to the said provisions to persons who are accused of the offences which are provided under Part A of the Schedule which are punishable for a term of imprisonment for a period of more than 3 years. Thus, restriction is sought to be imposed upon that category of accused and the Court has to comply with certain conditions while deciding their bail application. In the present case, the petitioners are not accused of the said offence but are being investigated for the offence of money laundering under Section 3. Section 4, as noticed above, provides that the punishment for the offence of money laundering shall not be less than 3 years but which may extend to 7 years. The first schedule of the Cr.P.C. specifically provides the classification of offences which are cognizable or non- cognizable, bailable or non-bailable and by what Court triable apart from the punishment which is provided for the said offences. Under Part II of the first schedule, classification of offences against other laws provide that offences punishable with imprisonment for more than 3 years and upwards would be cognizable and non-bailable. The same reads as under:-
Offence Cognizable Bailable or By what
or non- non-bailable court
cognizable triable
1 2 3 4
Cognizable Non-bailable Court of
If punishable Session
with death,
imprisonment
for life, or
imprisonment
for more than
7 years
Cognizable Non-bailable Magistrate
If punishable of the First
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with Class
imprisonment
for 3 years,
and upwards
but not more
than 7 years
If punishable Non- bailable Any
with Cognizable Magistrate
imprisonment
for less than
3 years or
with fine only
30. Thus, the argument which is being sought to be raised by learned counsel for the petitioner that the offences are now only bailable in view of the amendment and non-cognizable cannot be accepted as the petitioners are covered under Section 4 of the Act. Chapter V, as noticed above, provides the power of summons, searches and seizures as per the investigation which has been carried out and the same is to be done by the authorities appointed under the Act to the exclusion of the police officers under Section 45(1A) until duly authorized. Section 19 further provides the powers of arrest upon the reasons to believe and to be recorded in writing. The investigation, for the purposes of money laundering for the collection of evidence gives the power to the authorities to arrest. The definition of the cognizable offence provided under Section 2(c) of the Cr.P.C. Reads thus:-
(c) "cognizable offence" means an offence for which, and "cognizable case" means a case in which, a police officer may, in accordance with the First Schedule or under any other law for the time being in force, arrest without warrant;
31. The definition of investigation under Section 2(h) of the Cr.P.C. pertains to the proceedings under the said Code and, therefore, one has to fall back on the definition under Section 2(na) of the PMLA, which specifically provides that all proceedings under the Act are to be conducted by the authorized authorities for the collection of evidence.
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32. In the present case, as noticed, investigation is in progress of the serious offences of money laundering pertaining to 38 accounts and some of the petitioners are account holders of the said accounts which have been detailed in paragraph no. 15. It has already been noticed that there are serious allegations of money laundering and incriminating documents including 214 blank signed cheques relating to several shell companies without any business activity but having heavy financial dealings which have been unearthed by the investigating agencies in pursuance of the investigation carried out under the provisions of the Act.
33. As noticed, the punishment is not less than 3 years for the said offences and prosecution can only be launched in the Special Court and the purpose of the Act is to prosecute the persons who are involved in such proceeds of crime and the said Act is a special Legislation to curtail the organized crime and to confiscate and prosecute the offenders therein.
34. The Jharkhand High Court had occasion to consider the provisions of the PMLA in Hari Narayan Rai vs. Union of India and another, 2010 (2) AIR Jhar R. 692 and noticed that a complaint can be filed by the authority made by the authorized officer and the police officer is not to investigate. The Act was a special Statute in which there was no police report which has to be filed and only a complaint could be filed after completion of investigation by the authorized authority on the basis of which cognizance could be taken. The relevant observations read thus:-
"12. From reading the Act as a whole it is manifestly clear that the Prevention of Money Laundering Act being a special statute, the procedure for dealing with the offences are regulated by the provisions contained in the said Act. Section 44(1b) clearly provides that cognizance for the offence punishable under the Act shall be taken only upon a complaint made by an authority authorized in that behalf under the Act. Further Section 45 of the Act put restrictions in the release of the persons on bail unless conditions mentioned therein are fulfilled. It further provides that special Court shall not take cognizance of any offence under section 4 except on a Page 45 of 68 HC-NIC Page 45 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER complaint made by the Director or any Officer authorized by the Central Government or the State Government. Sub- Section (1-A) of Section 45 specifically provides that notwithstanding the provisions contained in the Code of Criminal Procedure, no police officer shall investigate into an offence under the Act unless specifically authorized by the Central Government by a general or special order. The provisions of the Act has been given over-riding effect upon any other law and further categorically mentioned that any provision of Code of Criminal Procedure which are inconsistent with the provision of the this Act which deals with attachment, confiscation, investigation and prosecution etc. shall not apply. There is no provision in the Act which is a special statute for filing of police report. It could file a complaint only after completion of investigation by the authorized authority, which shall be the basis of taking cognizance.
13. As noticed above, the word "investigation" as defined in Section 2(na) has been inserted by virtue of Amendment Act 20 of 2005. According to the definition the word "investigation" includes all the proceedings under the Act conducted by the Director or by an authority authorized by the Central Government under the Act for the collection of evidence.
14. The provision contained in Sections 44 and 45 of the Act prohibits taking of cognizance except on a complaint made by the appropriate authority who can file a complaint only after completion of investigation. In my considered opinion, therefore, in view of nonobstante clause contained in various provisions of the Act, which has overriding effect, the provision contained in section 167(2) of the Cr.P.C. will not apply."
35. The submission that the offence is non-cognizable mainly because a complaint has to be filed by the authorities before the Special Court to take cognizance does not take away the power of the authorities to investigate and arrest. We are in consonance with the view taken above by the Jharkhand High Court that the right to investigate under the Act is very much part of the scheme of the Act. The argument that the offence is a non-cognizable offence and bailable as defined under Section 2(l) of Cr.P.C.
thus, cannot be accepted.
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36. As noticed, Section 65 of the Act specifically provides that the provisions of the Cr.P.C. are only to apply in so far as they are not inconsistent with the provisions of the PMLA, 2002. Section 65 reads thus:-
"65. Code of Criminal Procedure, 1973 to apply.--The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act."
37. Section 71 would further be a hurdle in the way of the petitioners which provides that the PMLA has to have an over riding effect and notwithstanding anything inconsistent herewith contained in any other law for the time being in force. Section 71 of PMLA reads thus:-
"71. Act to have overriding effect.--The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force."
38. Sections 44 and 46 read together would go on to show that a complaint has to be made by the authorities before the Special Court by the authority authorized and the Special Court can take cognizance of the offence under Section 3 without the accused being committed to it for trial. Section 46 further provides that the provisions of the Cr.P.C. shall apply to the proceedings before a Special Court. Sections 44 and 46 of the PMLA read thus:-
"44. Offences triable by Special Courts.--(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--
[(a) an offence punishable under section 4 and any scheduled offence connected to the offence under that section shall be triable by the Special Court constituted for the area in which the offence has been committed:
Provided that the Special Court, trying a scheduled offence before the commencement of this Act, shall continue to try such scheduled offence; or] Page 47 of 68 HC-NIC Page 47 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER
(b) a Special Court may, [***] upon a complaint made by an authority authorised in this behalf under this Act take [cognizance of offence under Section 3, without the accused being committed to it for trial].
[(c) if the court which has taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering under sub-clause (b), it shall, on an application by the authority authorised to file a complaint under this Act, commit the case relating to the scheduled offence to the Special Court and the Special Court shall, on receipt of such case proceed to deal with it from the stage at which it is committed.] [(d) a Special Court while trying the scheduled offence or the offence of money laundering shall hold trial in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), as it applies to a trial before a Court of Session.] (2) Nothing contained in this section shall be deemed to affect the special powers of the High Court regarding bail under section 439 of the Code of Criminal Procedure, 1973 (2 of 1974) and the High Court may exercise such powers including the power under clause (b) of sub- section (1) of that section as if the reference to "Magistrate" in that section includes also a reference to a "Special Court" designated under section 43.
46. Application of the Code of Criminal Procedure, 1973 to proceedings before Special Court.--(1) Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) (including the provisions as to bails or bonds), shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the persons conducting the prosecution before the Special Court, shall be deemed to be a Public Prosecutor:
Provided that the Central Government may also appoint for any case or class or group of cases a Special Public Prosecutor.
(2) A person shall not be qualified to be appointed as a Page 48 of 68 HC-NIC Page 48 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER Public Prosecutor or a Special Public Prosecutor under this section unless he has been in practice as an Advocate for not less than seven years, under the Union or a State, requiring special knowledge of law.
(3) Every person appointed as a Public Prosecutor or a Special Public Prosecutor under this section shall be deemed to be a Public Prosecutor within the meaning of clause (u) of section 2 of the Code of Criminal Procedure, 1973 (2 of 1974) and the provisions of that Code shall have effect accordingly."
39. The Special Court as notified under Section 43 is to be the Sessions Judge of various divisions and for separate revenue districts as per the notification issued by the Central Government after consultation with the Chief Justice of this Court. Thus, it is apparent that the offence under Section 3 as per the first schedule of Cr.P.C. would be a cognizable offence and a non-bailable offence and Special Court would only take cognizance of the offence upon the complaint made by the authorities under the Act in writing in view of the provisions of the Act. A reading of Section 46 would rather go on to show that it has been specifically provided that Cr.P.C. would apply to the proceedings before the Special Court for the purposes of bails or bonds. Thus, it would be apparent that it is at this stage the procedure prescribed under the Code would come into play for the limited purpose where a person has been taken into custody by the authorized officers under the Act and produced before the competent Court, who will, then proceed to decide the right of bail in accordance with the provisions of the Cr.P.C. The reference to the provisions of Section 155(2) Cr.P.C. whereby, there is a bar for the police officer to investigate the non-cognizable offence without the order of the Magistrate having power to try such case or commit the case for trial thus would be without any basis in view of the fact that the police officers have been specifically excluded from investigating into the matters under Section 45(1A) except with special authorization of the Central Government. Similarly, reference to Section 157 which provides the procedure for investigation by the officer in charge of the police station would not be applicable as the same pertains to the information received under Section 154 of the Cr.P.C. Perusal of Rule 73 (ua) would rather go on to show that rules could be Page 49 of 68 HC-NIC Page 49 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER made which provide the conditions to which the police officer could be authorized to investigate into the offence under sub-section (1A) of Section 45. It has not been pointed out in any manner that any such rules have been framed or that any police officers were investigating the offences so that the procedure under Cr.P.C. has to be followed.
40. The provisions of the Act have already been discussed in detail above which provide that the offences are punishable with not less than 3 years and can go upto 7 years alongwith attachment and confiscation of the properties. The Special Court constituted by the Central Government which is duly notified is to take cognizance of the offences on the complaint filed by the authorities and which is to be tried by the Sessions Judge.
41. It is settled principle of law that the plain meaning of the Statute is to be taken into consideration and the Court is not to read anything into the statutory provisions and only the legislative intent is to be found out and neither any words are to be added, altered or modified unless it is necessary to do so. The Statute has to be read in its whole for the purpose of finding out its object and nothing could be shown that there was any absurdity or manifest injustice which has been caused once the investigation was being done into the offences of money laundering and, therefore, keeping in view the purpose of the Act, it would be not possible to hold that the jurisdiction being exercised by the authorities was without any basis.
42. The argument of Mr. Vikram Chaudhary thus that there is an implied repeal in view of the amendment and the offence under Sections 3 and 4 is non-cognizable and also bailable as per the amended Section 45 is untenable. The said section only provides that persons who are accused of the offence punishable for a term of imprisonment for more than 3 years under part A of the Schedule would have to satisfy the conditions laid down before bail is granted to them by the Special Court. The petitioners are admittedly not those accused who are accused of the offences under Part A, proceedings against whom are already pending separately.
43. The said argument cannot be accepted as if the Page 50 of 68 HC-NIC Page 50 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER offence is to be bailable, it would have specifically been provided so by the Legislature. The doctrine of implied repeal was subject matter of consideration of the Apex Court in Harshad S. Mehta and others vs. State of Maharashtra, 2001 (8) SCC 257. The Apex Court dealt with the issue as to whether the Special Court had the inherent power to grant pardon. The argument raised was that it was excluded by necessary implication as there was no such provision in the Special Court (Trial of Offences relating to Transactions Insecurities) Act, 1992. It was the argument that there was no legislative intendment of conferring the power of pardon on the Special Court which was repealed by noticing that Courts lean against implied repeal. The relevant observations read thus:-
"Mr.Jethmalani further contends that simply to confer on the Special Court the power to tender pardon by itself is not enough without conferring on it the power to punish the person who accepts tender of pardon in case of violation by him of terms and conditions on which the pardon is tendered. The submission is that a reading of the provisions of the Act clearly shows that the power as contained in Section 308 of the Code to punish the accomplice for violation of the terms and conditions of the pardon has not been conferred on the Special Court and, therefore, it is evident that the power to tender pardon has also not been conferred on that court. Counsel submits that for deciding these matters the paramount question one is required to ask himself is why provisions similar to the one in 1952 Act and other such enactments conferring specific power to grant pardon and to inflict punishment in the event of violation of the terms and conditions of the pardon were omitted from the Act. The obvious and the only answer of the question, according to learned counsel, is that the intention of the legislature was not to confer the power of pardon on the Special Court and any other interpretation will defeat that intention of the legislature.
Mr. Jethmalani also sought to invoke the doctrine of implied repeal. Pointing out that the Code is a general law and the Act - a special later enactment, Section 13 whereof shows its predominance and superiority, this Court should not have any reluctance to accept the applicability of doctrine of implied repeal in these Page 51 of 68 HC-NIC Page 51 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER matters, was the submission of learned counsel though he, very fairly and rightly, conceded that there is a presumption against a repeal by implication.
The reason for the presumption as aforesaid is that the legislature while enacting a law has a complete knowledge of the existing laws on the subject matter and, therefore, when it does not provide a repealing provision, it gives out an intention not to repeal the existing legislation. The burden to show that there has been a repeal by implication lies on the party asserting it. Relying upon statutory interpretation by Francis Bennion (1984 Edition), counsel contends that where, as in the present case, the provisions of the later enactment (the Act) are contrary to those of the earlier (the Code), the later by implication repeals the earlier in accordance with the maxim leges posteriores priores contrerios abrogant (later laws abrogate earlier contrary laws). This is, however, subject to the exception embodied in the maxim generatia specialitous non derogant (a general provision does not derogate from a special one). One of the important test to determine the issue of implied repeal would be whether the provisions of the Act are irreconcilably inconsistent with those of the Code that the two cannot stand together or the intention of the legislature was only to supplement the provisions of the Code. This intention is to be ascertained from the provisions of the Act. Courts lean against implied repeal.
If by any fair interpretation both the statutes can stand together, there will be no implied repeal. If possible implied repeal shall be avoided. It is, however, correct that the presumption against the intent to repeal by implication is overthrown if the new law is inconsistent with or repugnant to the old law, for the inconsistency or repugnancy reveals an intent to repeal the existing laws. Repugnancy must be such that the two statutes cannot be reconciled on reasonable construction or hypothesis. They ought to be clearly and manifestly irreconcilable. It is possible, as contended by Mr. Jethmalani, that the inconsistency may operate on a part of a statute. Learned counsel submits that in the present case the presumption against implied repeal stands rebutted as the provisions of the Act are so inconsistent with or repugnant to the provisions of the earlier Acts that the two cannot stand together. The contention is that the provisions of Sections 306 and 307 cannot be complied Page 52 of 68 HC-NIC Page 52 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER with by the Special Court and thus the legislature while enacting the Act clearly intended that the said existing provisions of the Code would not apply the proceedings under the Act. Learned counsel contends that this court will not construe the Act in a manner which will make Sections 306 and 307 or at least part of the said sections otiose and thereby defeat the legislative intendment whatever be the consequences of such an interpretation."
44. That if the argument of Mr. Chaudhary is to be accepted then Section 19 which pertains to the power of arrest would be rendered a dead letter on the Statute book if the offence under Section 3 is to be treated as non-cognizable and bailable, as argued by him.
45. Reference to the judgment of the Apex Court in Om Parkash's case (supra), in the above facts and circumstances, is without any basis as the issue before the Apex Court was as to whether the offences under the Central Excise Act, 1944 and The Customs Act, 1962 are bailable since the offences were non-cognizable under the provisions of the Act itself. The offences and penalties pertained to punishment which may extend to 3 years or to 7 years and as per Section 18 of the Central Excise Act, the provisions of Cr.P.C. would apply relating to searches and arrests. It was in such circumstances, the Apex Court held that the offences are bailable in nature. In the present case, as noticed, Section 4 provides for punishment for more than 3 years and thus offences would be cognizable as provided in the Cr.P.C. itself and thus, the first submission raised by counsel for the petitioner is without any basis.
46. Similarly, reliance upon the judgment in Bhajan Lal's case (supra) would not be applicable in view of the findings recorded since admittedly, the offences are punishable for more than 3 years and in such case, it would be a cognizable offence and the authorities under Section 19 would have the power to arrest in view of the special procedure prescribed under the Act. Similarly, the judgment in Kishan Lal Thakur's case (supra) would not be applicable since it pertained to the police registering the case under Section 31 of the Representation of the Peoples Act, 1950, which was a non-cognizable offence.
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47. The second issue raised that the petitioners have been prejudiced and that the authorities are acting as a law unto themselves and that the procedure provided under Chapter 12 of the Cr.P.C. has to be followed has partly been answered against the petitioners in view of the provisions of Sections 65 and 71 while answering the first issue. Sections 4 and 5 of Cr.P.C. specifically provide that offences under any other law shall be investigated and dealt with in accordance with the same provisions but subject to any enactment for the time being in force regulating the manner or place of investigation. Similarly, Section 5 provides that nothing contained in the Code shall in the absence of specific provision to the contrary shall affect the special or local law for the time being. Sections 4 and 5 of Cr.P.C. reads thus:-
Sections 4 and 5 Cr.P.C.
"4. Trial of offences under the Indian Penal Code and other laws (1) All offences under the Indian Penal Code (45 of 1860) shall be investigated, inquired into, tried, and otherwise dealt with according to the provisions hereinafter contained (2) All offences under any other law shall be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences
5. Saving Nothing contained in this Code shall, in the absence of a specific provision to the contrary, affect any special or local law for the time being in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force."
48. The judgment relied upon by counsel for the petitioner in Deepak Mahajan's case (supra) does not come to his help. The Apex Court in that case had held that a person arrested under the Foreign Exchange Page 54 of 68 HC-NIC Page 54 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER Regulation Act, 1973 and which was pari materia with Section 104 of the Customs Act could be further detained under Section 167(2) of Cr.P.C. Accordingly, it was held that the provisions of Section 167(1) and (2) were applicable with regard to the production or detention of person arrested and the Magistrate could commit to custody a person taken from him or the customs officer. The power of investigation rather was held not only with the police officers but by the prosecuting agency who was invested with the power of investigation. The relevant observations read thus:-
"104. In our considered opinion, the view taken in O.P. Gupta' and M.K.S. Abu Bucker35 and also of the Kerala High Court and Gujarat High Court is the logical and correct view and we approve the same for the reasons we have given in the preceding part of this judgment. We, indeed, see no imponderability in construing Section 35(2) of FERA and Section 104(2) of Customs Act that the said provisions replace Section 167(1) and serve as a substitute thereof substantially satisfying all the required basic conditions contained therein and that consequent upon such replacement of sub-section (1) of Section 167, the arrested person under those special Acts would be an accused person to be detained by the Magistrate under subsection (2) of Section 167. In passing, it may be stated that there is no expression 'police officer' deployed in Section 167(1) nor does it appear in any part of Section 167 (2). The authority for detaining a person as contemplated under Section 167(2) is in aid of investigation to be carried on by any prosecuting agency who is invested with the power of investigation.
xx xx xx xx
115. It should not be lost sight of the fact that a police officer making an investigation of an offence representing the State files a report under Section 173 of the Code and becomes the complainant whereas the prosecuting agency under the special Acts files a complaint as a complainant i.e. under Section 61(ii) in the case of FERA and under Section 137 of the Customs Act. To say differently, the police officer after consummation of the investigation files a report under Section 173 of the Code upon which the Magistrate may take cognizance of any offence disclosed in the report under Section 190(1) (b) Page 55 of 68 HC-NIC Page 55 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER of the Code whereas the empowered or authorised officer of the special Acts has to file only a complaint of facts constituting any offence under the provisions of the Act on the receipt of which the Magistrate may take cognizance of the said offence under Section 190(1)(a) of the Code. After taking cognizance of the offence either upon a police report or upon receiving a complaint of facts, the Magistrate has to proceed with the case as per the procedure prescribed under the Code or under the special procedure, if any, prescribed under the special Acts. Therefore, the word 'investigation' cannot be limited only to police investigation but on the other hand, the said word is with wider connotation and flexible so as to include the investigation carried on by any agency whether he be a police officer or empowered or authorised officer or a person not being a police officer under the direction of a Magistrate to make an investigation vested with the power of investigation."
49. Similarly, it was held that provisions of Section 167(2) would be applicable as the operation of Section 4(2) Cr.P.C. was applicable if there was no specific provision contrary to that excluding operation of Section 167(2). The above observations, thus, would be squarely applicable in the case of the persons accused under Sections 3 and 4 on the account of their being arrested in view of violation of Sections 3 and 4 and the competent court would then proceed to decide the application for bail keeping in mind the provisions under Section 46 of the PMLA.
50. It was also noticed that investigation was permissible under various regulations like the Foreign Exchange Regulation Act, 1973, Customs Act, 1962, The erstwhile Gold (Control) Act, 1968, The Prevention of Food Adulteration Act, 1954 and The Railways Property (Unlawful Possession) Act, 1966 which provided that the power of investigation was with other officers but there was no power to file a final report and the offences were to be taken cognizance by Special Courts on a complaint being filed. There are similar provisions under the Fertilizer Control Order and the Drugs and Cosmetics Act, 1940 whereby, investigation is done initially by the authorized officers and thereafter complaints are filed in the Special Courts and, therefore, no such fault can be found with the procedure which has been adopted by the Page 56 of 68 HC-NIC Page 56 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER respondents.
51. The Apex Court in Jeewan Kumar Raut and another vs. Central Bureau of Investigation, 2009 (7) SCC 526 also noticed that in an investigation conducted by the CBI under the Transplantation of Human Organs Act, 1994, (in short 'TOHO') a complaint had been filed in view of the specific provisions under the Special Act and the argument that the complaint petition was not maintainable and only a police report could have been filed due to the investigation conducted was rejected. Section 22 of the said Act was taken into consideration to notice that only a complaint could be filed by the appropriate authority. It was thus held that under special Statutes, investigation could be conducted and there was no provision to file a police report and a specific bar had been created by the Parliament. The relevant observations read thus:-
"19. Section 22 of TOHO prohibits taking of cognizance except on a complaint made by an appropriate authority or the person who had made a complaint earlier to it as laid down therein. Respondent, although, has all the powers of an investigating agency, it expressly has been statutorily prohibited from filing a police report. It could file a complaint petition only as an appropriate authority so as to comply with the requirements contained in Section 22 of TOHO. If by reason of the provisions of TOHO, filing of a police report by necessary implication is necessarily forbidden, the question of its submitting a report in terms of Sub-section (2) ofSection 173 of the Code did not and could not arise. In other words, if no police report could be filed, Sub- section (2) of Section 167 of the Code was not attracted.
20. It is a well-settled principle of law that if a special statute lays down procedures, the ones laid down under the general statutes shall not be followed. In a situation of this nature, the respondent could carry out investigations in exercise of its authorization under Section 13(3)(iv) of TOHO. While doing so, it could exercise such powers which are otherwise vested in it. But, as it could not file a police report but a complaint petition only; Sub-section (2) of Section 167 of the Code may not be applicable. The provisions of the Code, thus, for all intent and purport, would apply only to an extent Page 57 of 68 HC-NIC Page 57 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER till conflict arises between the provisions of the Code and TOHO and as soon as the area of conflict reaches, TOHO shall prevail over the Code. Ordinarily, thus, although in terms of the Code, the respondent upon completion of investigation and upon obtaining remand of the accused from time to time, was required to file a police report, it was precluded from doing so by reason of the provisions contained in Section 22 of TOHO.
To put it differently, upon completion of the investigation, an authorized officer could only file a complaint and not a police report, as a specific bar has been created by the Parliament. In that view of the matter, the police report being not a complaint and vice-versa, it was obligatory on the part of the respondent to choose the said method invoking the jurisdiction of the Magistrate concerned for taking cognizance of the offence only in the manner laid down therein and not by any other mode. The procedure laid down in TOHO, thus, would permit the respondent to file a complaint and not a report which course of action could have been taken recourse to but for the special provisions contained in Section 22 of TOHO."
52. A Division Bench of this Court in Naveed Masih vs. State of Punjab, 2014 (1) RCR (Criminal) 56 also rejected a similar contention raised while placing reliance upon the judgment of the Apex Court in Deepak Mahajan's case (supra) itself. The submission that the Narcotics Control Bureau (for short 'NCB') could not file a complaint in the Court of the Special Judge and the procedure under Chapter XII of the Cr.P.C. had to be followed was rejected by holding that the empowered officers of NCB are not police officers and are not bound to carry out the investigations under the Act. The relevant observations read thus:-
"38. Apart from the police constituted under the Police Act, 1861, certain Officers of specified organizations have been invested powers of an Officer in- charge of a Police Station. With such conferment of powers, the investigation of the offences can be conducted by the officers, but such power of investigation is under a special Act and not under the Code. After such investigation, which is not any way analogous to the investigation carried out by police under Section 2 (h) of the Code, the empowered Officer can file a complaint in Page 58 of 68 HC-NIC Page 58 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER terms of Section 190 of the Code.
39. Though Section 193 of the Code prohibits that no Court of Sessions shall take cognizance of any offence as a Court of Original Jurisdiction unless the case has been committed to it by a Magistrate, but such provision being in conflict with Section 36A of the Act, the police report or a complaint can be filed before the Court of Sessions directly. When a complaint is filed, the Court of Sessions commences proceedings regulated by Chapter XV of the Code. Such provision inter alia contemplates that if a complaint is made in writing, the Magistrate is not required to examine the complainant and the witnesses, if a public servant acting or purporting to act in the discharge of his official duties files a complaint. The Code contemplates investigation by the police culminating with the filing of a police report and also proceedings to be initiated on the basis of a complaint by an empowered Officer in terms of Chapter XV of the Code. Therefore, when a police in terms of Code investigates into an offence including an offence under the Act, it files a report under Section 173 of the Code, whereas the investigation by an empowered officer under the Act leads to filing of a complaint in terms of Section 190 of the Code.
40. Thus, the argument that the statements of PW- 4 Constable Satpal Singh and PW-5 Shyam Kumar were neither recorded nor supplied to the appellants while filing complaint is not tenable in law. Such witnesses were not examined by the "police officials" during the course of investigations so as to record their statements as provided under Section 161 of the Code. It is the duty of the police official to record statement, supply copy of such statement, as part of the report under Section 173 of the Code, so as to enable the defence to contradict a witness while stepping into witness-box. But it is not necessary for the empowered Officer to record statements of the witnesses contemplated under Section 161 of the Code, as such statements can be recorded only by a Police Officer during the course of investigation. In the present case, the empowered Officer produced a list of 40 documents sought to be relied upon to prove the charges against the appellants including the statements recorded under Section 67 of the Act as well furnished list of witnesses to be examined. Since there is Page 59 of 68 HC-NIC Page 59 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER no obligation to record statements by the empowered Officer analogous to Section 161 of the Code, the disclosing the names of the witnesses along with the complaint is compliance of Chapter XV of the Code. The providing of different procedures for filing of compliant by the empowered officers and a report by the police cannot be said to discriminatory as both of these procedures is to enable the court to pronounce on the guilt of an accused.
41. Therefore, we do not find any merit in the argument that the empowered officers of the NCB under the Act are the police officers and are bound to carry investigations under the Act in accordance with Chapter XII of the Code after lodging of an FIR"
57. The Division Bench of the Punjab & Haryana High Court also considered a Division Bench judgment of this Court rendered in the case of Rakesh Manekchand Kothari vs. Union of India, decided on 3rd August, 2015 which has been relied upon on behalf of the petitioners. While dealing with the same, the Bench observed in para-62 as under;
"62 The Division Bench judgment in Rakesh Manekchand's case (supra) can be of no assistance to the counsel for the petitioners as admittedly, the order dated 03.08.2015 is interim in nature. Rather, a perusal of the order would also go on to show that there were observations that the issue required deeper consideration though various observations have been made in favour of the petitioners which are sought to be highlighted. Interim orders of this nature cannot be held to be a precedent or of any persuasive value since there has to be a final decision. Interim directions always go with the final decision and cannot be taken into consideration. For precedent to be binding, there has to be final decision and interim directions, issued in a pending case, would go with the final decision and cannot be taken into consideration. The said principle as to what is the "ratio decidendi" and the authoritative and binding element of the final judgment, laying down the precedent is to be taken into consideration and not the Page 60 of 68 HC-NIC Page 60 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER interim orders. Reference can be made to the observations made by the Apex court in State of Assam Vs. Barak Upatyaka D.U. Karmachari Sanstha (2009) 5 SCC 694. Relevant observations of the judgment read as under:
"21. A precedent is a judicial decision containing a principle, which forms an authoritative element termed as ratio decidendi. An interim order which does not finally and conclusively decide an issue cannot be a precedent. Any reasons assigned in support of such non-final interim order containing prima facie findings, are only tentative. Any interim directions issued on the basis of such prima facie findings are temporary arrangements to preserve the status quo till the matter is finally decided, to ensure that the matter does not become either infructuous or a fait accompli before the final hearing.
22. The observations and directions in Kapil Hingorani (I) and (II) being interim directions based on tentative reasons, restricted to the peculiar facts of that case involving an extraordinary situation of human rights violation resulting in starvation deaths and suicides by reason of non- payment of salaries to the employees of a large number of public sector undertakings for several years, have no value as precedents. The interim directions were also clearly in exercise of extraordinary power under Article 142 of the Constitution. It is not possible to read such tentative reasons, as final conclusions, as contended by the respondent. If those observations are taken to be a final decision, it may lead to every disadvantaged group or every citizen or every unemployed person, facing extreme hardship, approaching this Court or the High Court alleging human right violations and seeking a mandamus requiring the state, to provide him or them an allowance for meeting food, shelter, clothing, salary, medical treatment, and education, if not more. Surely that was not the intention of Kapila Hingorani (I) and Kapila Hingorani (II)."
58. The view taken by the Division Bench of the Punjab & Haryana High Court is very commendable and I propose to follow the same.
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59. In a very recent pronouncement of the Supreme Court in the case of Goutam Kendu vs. Manoj Kumar, Assistant Director, AIR 2016 SC 106, the Supreme Court considered the plea for bail of an accused arrested in connection with the offence under section 3 of the Prevention of Money Laundering Act, 2002. I may quote the observations made by the Supreme Court from paragraphs-26 to 36 as under;
"[26] The learned Solicitor General submitted that Section 45 of PMLA refers only to the term 'Special Court' and therefore has to be given restricted meaning. According to him, PMLA is a 'Special Law' applicable to the subject of money laundering, and deals with economic offenders and white collar criminals. The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money- laundering. To enable the scheme of the Act, reliance was placed on various provisions of the PMLA. He further submitted that Section 44 of the PMLA only confers jurisdiction on the Special Court to deal with offences under the PMLA. Section 45 of PMLA makes the offence of money laundering cognizable and non-bailable and also provides that notwithstanding the provisions of Criminal Procedure Code, 1973, no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond, unless the Public Prosecutor has been given an opportunity to oppose the application for such release.
[27] The learned Solicitor General lastly submitted that 'money laundering' being an economic offence poses a serious threat to the National Economy and National Interest and committed with cool calculation and deliberate design with the motive of personal gain regardless of the consequences to the society. Hence, for Money Launderers 'jail is the rule and bail is an exception, which finds support from many landmark judgments of this Court.
[28] Before dealing with the application for bail on merit, it is to be considered whether the provisions of Section 45 of the PMLA are binding on the High Court while Page 62 of 68 HC-NIC Page 62 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that PMLA deals with the offence of money laundering and the Parliament has enacted this law as per commitment of the country to the United Nations General Assembly. PMLA is a special statute enacted by the Parliament for dealing with money laundering. Section 5 of the Code of Criminal Procedure, 1973 clearly lays down that the provisions of the Code of Criminal Procedure will not affect any special statute or any local law. In other words, the provisions of any special statute will prevail over the general provisions of the Code of Criminal Procedure in case of any conflict.
[29] Section 45 of the PMLA starts with a non obstante clause which indicates that the provisions laid down in Section 45 of the PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 of the PMLA imposes following two conditions for grant of bail to any person accused of an offence punishable for a term of imprisonment of more than three years under Part-A of the Schedule of the PMLA: (i) That the prosecutor must be given an opportunity to oppose the application for bail; and (ii) That the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not likely to commit any offence while on bail. [30] The conditions specified under Section 45 of the PMLA are mandatory and needs to be complied with which is further strengthened by the provisions of Section 65 and also Section 71 of the PMLA. Section 65 requires that the provisions of Cr.P.C. shall apply in so far as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of the PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of Cr.P.C. would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 of Cr.P.C. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the Authority or the Court shall presume that proceeds of crime are involved in money laundering and the burden to prove that the Page 63 of 68 HC-NIC Page 63 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER proceeds of crime are not involved, lies on the appellant. [31] It was submitted on behalf of the appellant that Section 12A read with Section 24 of the SEBI Act does not include Section 24 of the said Act as a scheduled offence but it is only Section 12A which is to be construed as a scheduled offence as the description of offence against Section 24 of the SEBI Act mentioned under paragraph 11 of the Schedule to PMLA is part of Section 12A of the said Act. In this context it was submitted by the learned Solicitor General that PMLA being a Special Statute cannot be given restricted meaning while interpreting its provisions including the Schedule which is an integral part of this Act. PMLA has been enacted by the Parliament as per commitment of the country to the United Nations and having global dimensions and cannot be confined to national boundaries of our country. Moreover, its legislative intent has to be gathered from the plain reading of the language used in the provisions of the Act and the Schedule appended thereunder. Hence, there is no ambiguity that Section 24 of the SEBI Act is a scheduled offence under Paragraph 11 of the Schedule.
The fact remains that Section 24 of the SEBI Act is inclusive in nature and also includes Section 12A within its ambit and scope. Further, on perusal of various offences listed in the Schedule in 28 Paragraphs, it could be seen that only penal provisions of the Statutes have been incorporated in the Schedule. There is no denying the fact that Section 24 of the SEBI Act is a penal provision of inclusive nature and thus it clearly reflects the legislative intent of a scheduled offence under PMLA. Admittedly, the complaint was filed by SEBI against the appellant on the allegation of committing offence punishable under Section 4 of PMLA. The complaint reveals that SEBI received a letter from the Ministry of Corporate Affairs, Office of the Registrar of Companies ("ROC"), West Bengal, with reference to Rose Valley in which the ROC had stated that Rose Valley has repeatedly issued debentures in the years 2001-2002, 2004-2005, 2005-2006 and 2007- 2008 to more than 49 persons in each financial year without filing offer documents with either the ROC or the SEBI and requested SEBI to investigate into the matter. From the information provided by ROC, it was observed that Rose Valley had raised a total sum of Rs.1282.225 lakhs from 2585 persons by issuing secured debentures to the Page 64 of 68 HC-NIC Page 64 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER general public without complying with the norms related to IPO of securities as per first provision to Section 67(3) of the Companies Act, 1956. Rose Valley by making public issue of debentures during the period between 2001-2002 to 2007-2008, without complying with the public issue norms, violated the provisions of erstwhile SEBI (Disclosure and Investor Protection) Guidelines, 2000 and the provisions of Section 117(A) of the Companies Act, 1956 and other provisions of SEBI Act which is a Scheduled Offence under PMLA.
[32] We have heard the learned counsel for the parties. At this stage we refrained ourselves from deciding the questions tried to be raised at this stage since it is nothing but a bail application. We cannot forget that this case is relating to "Money Laundering" which we feel is a serious threat to the national economy and national interest. We cannot brush aside the fact that the schemes have been prepared in a calculative manner with a deliberative design and motive of personal gain, regardless of the consequence to the members of the society.
[33] With regard to the questions raised by Mr. Gopal Subramanium, learned senior counsel appearing on behalf of the appellant, at this stage, we do not think that we should answer or deal with the same in view of the fact that the matter is pending before a Division Bench of the High Court in writ jurisdiction, as has been pointed out before us. Hence, any observation or remarks made by us may cause prejudice to the case of both the sides. Therefore, we feel that it would be proper for us only to deal with the matter concerning bail. We note that admittedly the complaint is filed against the appellant on the allegations of committing the offence punishable under Section 4 of the PMLA. The contention raised on behalf of the appellant that no offence under Section 24 of the SEBI Act is made out against the appellant, which is a scheduled offence under the PMLA, needs to be considered from the materials collected during the investigation by the respondents. There is no order as yet passed by a competent court of law, holding that no offence is made out against the appellant under Section 24 of the SEBI Act and it would be noteworthy that a criminal revision praying for quashing the proceedings initiated against the appellant under Section 24 of SEBI Act is still pending for hearing before the High Court. We have noted that Section 45 of the PMLA will have Page 65 of 68 HC-NIC Page 65 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. As mentioned earlier, Section 45 of the PMLA imposes two conditions for grant of bail, specified under the said Act. We have not missed the proviso to Section 45 of the said Act which indicates that the legislature has carved out an exception for grant of bail by a Special Court when any person is under the age of 16 years or is a woman or is a sick or infirm. Therefore, there is no doubt that the conditions laid down under Section 45A of the PMLA, would bind the High Court as the provisions of special law having overriding effect on the provisions of Section 439 of the Code of Criminal Procedure for grant of bail to any person accused of committing offence punishable under Section 4 of the PMLA, even when the application for bail is considered under Section 439 of the Code of Criminal Procedure.
[34] We have further noted the directions given by this Court in Subrata Chattoraj v. Union of India and Ors., 2014 8 SCC 768, in particular to paragraph 35.4. [35] We cannot brush aside the fact that the appellant floated as many as 27 companies to allure the investors to invest in their different companies on a promise of high returns and funds were collected from the public at large which were subsequently laundered in associated companies of Rose Valley Group and were used for purchasing moveable and immoveable properties. [36] We do not intend to further state the other facts excepting the fact that admittedly the complaint was filed against the appellant on the allegation of committing offence punishable under Section 4 of the PMLA. The contention made on behalf of the appellant that no offence under Section 24 of the SEBI Act is made out against the appellant, which is a scheduled offence under the PMLA, needs to be considered from the material collected during the investigation and further to be considered by the competent court of law. We do not intend to express ourselves at this stage with regard to the same as it may cause prejudice the case of the parties in other proceedings. We are sure that it is not expected at this stage that the guilt of the accused has to be established beyond reasonable doubt through evidences. We have noted that in Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation, 2013 7 SCC 439, this Court has observed that the economic offences having deep rooted conspiracies and involving huge loss Page 66 of 68 HC-NIC Page 66 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of country. In Union of India v. Hassan Ali Khan, 2011 10 SCC 235, this Court has laid down that what will be the burden of proof when attempt is made to project the proceeds of crime as untainted money. It is held in the said paragraph that allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifted on the accused persons under Section 24 of the PML Act, 2002. The same proposition of law is reiterated and followed by the Orissa High Court in the unreported decision of Smt. Janata Jha v. Assistant Director, Directorate of Enforcement (CRLMC No. 114 of 2011 decided on December 16, 2013). Therefore, taking into account all these propositions of law, we feel that the application for bail of the appellant should be seen at this stage while the appellant is involved in the economic offence, in general, and for the offence punishable under Section 4 of the PMLA, in particular."
60. The decision of the Supreme Court referred to above would also make it clear that, by no stretch of imagination, the offence under the PMLA could be termed as bailable and non- cognizable.
61. Having considered all the relevant aspects of the matter threadbare, I have reached to the conclusion that none of the fundamental rights, or any legal rights of any of the applicants could be said to have been infringed in any manner. So far as the issue as regards the admissibility and evidentiary value of the statement recorded under section 50 of the PMLA is concerned, the same would be looked in to by the Trial Court. I have reached to the conclusion that the procedure which has been adopted for the purpose of proceeding against the applicants under the PMLA has not deprived any of the Page 67 of 68 HC-NIC Page 67 of 68 Created On Sat May 07 07:45:04 IST 2016 R/SCR.A/5002/2015 CAV ORDER applicants of their personal liberty as embodied under Article 21 of the Constitution of India. I have also considered the facts of each case and the affidavit-in-replies filed on behalf of the department. There are serious allegations against each of the applicants.
62. In view of the above, all the petitions fail and are hereby rejected. Rule/notice stands discharged. The ad-interim orders are vacated forthwith. The Trial Court shall now proceed further with the trial in accordance with law.
(J.B.PARDIWALA, J.) Vahid Page 68 of 68 HC-NIC Page 68 of 68 Created On Sat May 07 07:45:04 IST 2016