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        Money Laundering

        2022 (2) TMI 1011 - HC - Money Laundering

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        Special PMLA arrest safeguards override Section 41-A, remand must be judicially decided, and anticipatory bail remains stringent. Section 41-A of the Code of Criminal Procedure, 1973 does not apply to arrests under Section 19 of the Prevention of Money Laundering Act, 2002, because ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                          Special PMLA arrest safeguards override Section 41-A, remand must be judicially decided, and anticipatory bail remains stringent.

                          Section 41-A of the Code of Criminal Procedure, 1973 does not apply to arrests under Section 19 of the Prevention of Money Laundering Act, 2002, because the special statute provides its own arrest safeguards and overriding effect. A remand application under Section 167(2) of the Code cannot be returned like a plaint; the Designated Court must decide it by a judicial order on the merits of custody. Anticipatory bail in money-laundering matters is controlled by Section 45 of the Act, requiring satisfaction of its stringent conditions, and pre-arrest protection was not warranted on the facts described.




                          Issues: (i) Whether Section 41-A of the Code of Criminal Procedure, 1973 applies before arrest under Section 19 of the Prevention of Money Laundering Act, 2002; (ii) whether the Designated Court can return a remand application filed under Section 167(2) of the Code of Criminal Procedure, 1973; (iii) whether anticipatory bail can be granted in a proceeding under the Prevention of Money Laundering Act, 2002.

                          Issue (i): Whether Section 41-A of the Code of Criminal Procedure, 1973 applies before arrest under Section 19 of the Prevention of Money Laundering Act, 2002.

                          Analysis: The statutory scheme of the Prevention of Money Laundering Act, 2002 contains a special procedure for arrest under Section 19, requiring reasons to believe based on material in possession, recording of reasons in writing, communication of grounds of arrest, forwarding of the arrest order and material to the Adjudicating Authority, and production before the competent court within twenty-four hours. Sections 65 and 71 of the Act give the special enactment overriding force where there is inconsistency with the Code of Criminal Procedure, 1973. The protection contemplated by Section 41-A of the Code is a general pre-arrest safeguard for police arrests, but the Act itself provides its own safeguards, including the power to summon under Section 50 and penal consequences for illegal or false arrest-related action. In this setting, the general notice mechanism under Section 41-A cannot be read into arrests under Section 19.

                          Conclusion: Section 41-A of the Code of Criminal Procedure, 1973 is not applicable to arrests made under Section 19 of the Prevention of Money Laundering Act, 2002.

                          Issue (ii): Whether the Designated Court can return a remand application filed under Section 167(2) of the Code of Criminal Procedure, 1973.

                          Analysis: An application for judicial remand requires the court to perform a judicial function and apply its mind to the material placed before it. The Code of Criminal Procedure, 1973 does not contemplate return of a remand application in the manner of a civil plaint. Even if the court finds a defect in compliance with arrest procedure, the proper course is to pass a judicial order on the remand request, not to return it without adjudication. Returning the application results in the absence of a reasoned judicial determination on custody, which is impermissible in remand proceedings.

                          Conclusion: The Designated Court cannot return a remand application filed under Section 167(2) of the Code of Criminal Procedure, 1973 and must decide it by a judicial order.

                          Issue (iii): Whether anticipatory bail can be granted in a proceeding under the Prevention of Money Laundering Act, 2002.

                          Analysis: Anticipatory bail in money-laundering matters must be tested against the special bail regime of Section 45 of the Act, which requires the court to be satisfied that there are reasonable grounds for believing that the accused is not guilty and is not likely to commit any offence while on bail, in addition to other limitations under the Code of Criminal Procedure, 1973. The allegations involved serious economic offence, large-scale proceeds of crime, and asserted non-cooperation during investigation. In such circumstances, and applying the statutory rigour of Section 45, the court was not satisfied that the accused had made out a case for pre-arrest protection.

                          Conclusion: Anticipatory bail was not warranted under the Prevention of Money Laundering Act, 2002.

                          Final Conclusion: The challenge to the returned remand orders succeeded, but the request for anticipatory protection failed; the remand applications were to be reconsidered afresh in accordance with law, while pre-arrest relief was declined.

                          Ratio Decidendi: Where a special statute prescribes its own arrest safeguards and overriding mechanism, the general notice requirement under Section 41-A of the Code of Criminal Procedure, 1973 does not control arrests made under the special statute; remand must be decided judicially; and anticipatory bail in money-laundering matters is governed by the stringent conditions of Section 45 of the Prevention of Money Laundering Act, 2002.


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