2015 (10) TMI 2679 - HC - Money Laundering

Court affirms PMLA offences as cognizable, ASJ jurisdiction upheld, lawful arrest, and custody under scrutiny

The court dismissed the petitions, affirming that offences under the Prevention of Money Laundering Act (PMLA) are cognizable, requiring adherence to ... Cognizable and non-bailable nature of offences under PMLA - applicability of the Code of Criminal Procedure to investigation under PMLA - power of specified officers to arrest under PMLA - designation of Special Court and competence of Additional Sessions Judge - overriding effect of PMLA over other laws - procedure for grant of bail under PMLACognizable and non-bailable nature of offences under PMLA - Offences under the Prevention of Money Laundering Act are cognizable and non-bailable. - HELD THAT: - Section 4 of the PMLA prescribes punishment with rigorous imprisonment not less than three years and up to seven years. The Second Schedule to the Criminal Procedure Code classifies offences punishable with imprisonment of three years and upward but not more than seven years as cognizable and non-bailable. Section 45 of PMLA also provides that offences under the Act are cognizable and non-bailable. The court distinguished Om Prakash (which concerned a deeming provision in the Central Excise Act) and found that no comparable deeming fiction exists in PMLA; accordingly the reasoning in Om Prakash did not apply. A solitary, unreasoned statement in a High Court order (Rakesh Manekchand Kothari) was treated as persuasive only and insufficient to displace the statutory classification. The combined statutory scheme therefore supports the conclusion that PMLA offences are cognizable and non-bailable. [Paras 12, 13, 14]Offences under PMLA are cognizable and non-bailable.Applicability of the Code of Criminal Procedure to investigation under PMLA - overriding effect of PMLA over other laws - Investigations under PMLA must follow the provisions of the Code of Criminal Procedure insofar as they are not inconsistent with PMLA; where PMLA is silent, CrPC procedure is to be followed to ensure fair and proper investigation. - HELD THAT: - Section 71 of PMLA gives the Act overriding effect. Section 65 makes the CrPC applicable to arrest, search and seizure, attachment, confiscation, investigation, prosecution and related proceedings, insofar as CrPC is not inconsistent with PMLA. PMLA contains detailed provisions for certain processes (search, seizure, attachment, confiscation, arrest and forwarding of material to the Adjudicating Authority) but does not provide a procedure paralleling CrPC provisions such as registration of FIR (section 154), transmission of report to Magistrate (section 157), procedure where investigation cannot be completed within 24 hours (section 167) or maintenance of case diary (section 172). In view of the absence of procedural prescriptions in PMLA and the protective requirements of personal liberty and fair investigation, the court held that the CrPC procedure must be followed by investigating authorities to the extent not inconsistent with PMLA and directed investigation to be carried out accordingly. [Paras 16, 17, 18, 20, 21]Investigations under PMLA must follow CrPC procedures insofar as they are not inconsistent with PMLA; investigating authorities are directed to follow the CrPC procedure.Designation of Special Court and competence of Additional Sessions Judge - A Court of Additional Sessions Judge falls within the meaning of 'Court of Session' and is competent to act as Special Court designated under section 43 of PMLA where the Sessions Court has been notified. - HELD THAT: - Section 43 empowers the Central Government to designate one or more Courts of Sessions as Special Courts. The Central Government notification designated 'Sessions Court' at specified places as Special Courts. Section 9 of the CrPC includes Additional Sessions Judges within the meaning of Court of Session. The notification did not limit designation to the 'Sessions Judge' alone. Therefore, where the Sessions Court has been designated, the Additional Sessions Judge, being included within the Court of Session as per CrPC, is empowered to try offences under section 4 of PMLA and is a competent Special Court. [Paras 23]An Additional Sessions Judge is competent to function as the designated Special Court under section 43 of PMLA where the Sessions Court has been notified.Power of specified officers to arrest under PMLA - procedure for grant of bail under PMLA - The arrest and custody in the habeas corpus petition were lawful under PMLA; the Special Court has jurisdiction to consider bail and its rejection did not render custody illegal. - HELD THAT: - Section 19 of PMLA empowers specified officers (Director, Deputy Director, Assistant Director or other authorized officers) to arrest on the basis of recorded reasons and requires immediate communication of grounds and production of the arrested person before a Magistrate within twenty-four hours (excluding journey time). Rules framed under section 73 specify forwarding the order and material to the Adjudicating Authority in sealed cover. Section 45 prescribes the conditions and procedure for grant of bail in PMLA, with a non obstante clause and specified tests to be applied by the Special Court. In the present habeas corpus petition nothing was pointed out to show non-compliance with section 19 or that bail was rejected in violation of section 45. The Special Court (found competent) had rejected bail; accordingly, the court held that the petitioner was not in illegal custody and habeas corpus could not be issued. [Paras 25, 26, 28, 29, 31]Arrest and detention complied with PMLA procedure and the habeas corpus petition was rejected; no illegality in custody was found.Final Conclusion: Writ petitions are dismissed. Investigation under PMLA is to be conducted following applicable CrPC procedures insofar as they are not inconsistent with PMLA; the Additional Sessions Judge is a competent Special Court for trial under PMLA; and the habeas corpus relief is refused as arrest and custody complied with PMLA and the Special Court's order rejecting bail. Issues Involved:1. Cognizability of offences under the Prevention of Money Laundering Act (PMLA).2. Applicability of Criminal Procedure Code (CrPC) provisions to PMLA investigations.3. Competency of the Additional Sessions Judge as a Special Court under PMLA.4. Legality of arrest and custody under PMLA.Detailed Analysis:1. Cognizability of Offences under PMLA:The court examined whether offences under PMLA are cognizable or non-cognizable. It was determined that under Section 4 of PMLA, offences are punishable with rigorous imprisonment for 3 to 7 years, making them cognizable and non-bailable as per the Second Schedule of CrPC. The court rejected the petitioner's reliance on the Supreme Court judgment in Om Prakash v. Union of India, noting that PMLA lacks a deeming fiction like Section 9-A of the Central Excise Act, 1944. Consequently, offences under PMLA are cognizable.2. Applicability of CrPC Provisions to PMLA Investigations:The court addressed whether CrPC procedures for cognizable offences apply to PMLA investigations. Section 65 of PMLA stipulates that CrPC provisions apply insofar as they are not inconsistent with PMLA. Given PMLA's special status and overriding effect (Section 71), the court held that CrPC procedures, including FIR registration (Section 154), investigation (Sections 157 and 167), and case diary maintenance (Section 172), must be followed for PMLA investigations. The court directed investigating authorities to adhere to CrPC provisions during the investigation stage.3. Competency of the Additional Sessions Judge as a Special Court under PMLA:The court examined whether the Additional Sessions Judge is a competent Special Court under Section 43 of PMLA. The Central Government's notification designated Sessions Courts at specified locations as Special Courts. The court concluded that the designation includes Additional Sessions Judges, as they fall within the meaning of 'Court of Session' under Section 9 of CrPC. Therefore, the Additional Sessions Judge is competent to try offences under PMLA.4. Legality of Arrest and Custody under PMLA:The court evaluated the legality of the petitioner's arrest and custody under PMLA. Section 19 of PMLA empowers specified officers to arrest individuals based on material evidence and requires informing the arrested person of the grounds for arrest. The court found no contravention of Section 19 or Section 45 (relating to bail) in the petitioner's arrest and custody. Since the Special Court had already rejected the bail application, the court held that the petitioner was not in illegal custody, and thus, the writ of habeas corpus could not be issued.Conclusion:The court dismissed the petitions, concluding that:- Offences under PMLA are cognizable.- CrPC procedures must be followed in PMLA investigations.- Additional Sessions Judges are competent to act as Special Courts under PMLA.- The petitioner's arrest and custody were lawful, and no grounds existed for issuing a writ of habeas corpus.The writ petitions were disposed of accordingly, with specific directions for the investigation to comply with CrPC provisions.