2024 (1) TMI 835 - HC - Money Laundering

Special Investigation Team formed with CBI and State police to probe money laundering cases

Enforcement Directorate Versus The State of West Bengal & Ors.

Calcutta HC ordered formation of a Special Investigation Team (SIT) comprising CBI and State police personnel to investigate money laundering cases. The ... Money Laundering - Transfer of investigation from the State police to the Central Bureau of Investigation - HELD THAT:- The thrust of the petitioner that only the CBI should investigate the case and be able to arrest the suspect has to be juxtaposed with the inability of the ED itself, another powerful central agency accompanied by the CRPF personnel, to search and seize, far less arrest the suspect. However, the involvement of the CBI personnel in the inveastigation of the present cases would be an imperative considering the ineptitude of the local police to handle the matter as discussed above and in view of the allegation of bias levelled by the petitioner, a premiere investigating agency - A pan-India organisation like the CBI would also be able to deal better with inter-State or inter-country measure if it becomes necessary to undertake the same. One cannot rule out the possibility of any accused illegally crossing over to a neighbouring country. In order to unearth the truth and to apprehend the miscreants responsible, a concerted effort is required from both the Central and the State agencies. Thus, to instil confidence in the people and to have a fair and effective investigation, for the present, a Special Investigation Team (SIT) consisting of personnel from both the CBI and the State police need to investigate the alleged offences. As FIR Nos. 8 and 9 of 2024 of the Nazat Police Station both pertain to allegations made in this same line, the cases need to investigated by the same agency. It is directed that further investigation of the Nazat Police Station case Nos. 8 and 9 of 2024 shall be conducted by a Special Investigation Team headed by an officer of the CBI of the rank of a Superintendent of Police to be nominated by the CBI and Mr. Jaspreet Singh, IPS, presently posted as the Superintendent of Police, Islampur Police District. The CBI shall make the nomination by tomorrow i.e., 18.01.2024. List this matter under the heading “To Be Mentioned” on 12.02.2024 at 2.00 p.m. ISSUES PRESENTED AND CONSIDERED 1. Whether the investigation of alleged mob violence, robbery and assault on central agency officials by a large armed mob should be transferred from the State police to a Central agency. 2. Whether allegations of police partiality, procedural irregularities in FIR registration and omissions of serious penal provisions justify exclusion of local police personnel from investigation. 3. Whether, instead of a complete transfer, a Special Investigation Team (SIT) comprising personnel of a Central agency and the State police should be formed, and on what terms it should operate. 4. Whether the scope of the FIRs and the addition/omission of specific penal provisions (e.g., Sections corresponding to attempt to murder, grievous hurt by dangerous means, dacoity) bears on the propriety of allowing the State police to continue investigation. 5. What supervisory and reporting mechanisms (Magistrate/Court monitoring/final report conditions) should govern any further investigation to ensure fairness and effectiveness. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Appropriateness of transfer to a Central agency Legal framework: The power to transfer criminal investigations to a Central agency arises where impartiality, effectiveness or inter-state/international dimensions warrant such transfer; principles established by higher courts guide neutrality and propriety of central agency involvement. Precedent treatment: The Court noted the petitioner relied upon the conditions articulated in Vinit Narayan for ensuring neutrality of a central investigation agency. The State relied on precedents cautioning against transfer absent satisfaction of specified criteria (as invoked from State jurisprudence). Interpretation and reasoning: The Court found a grave incident involving assault, robbery and near-fatal injury to central agency officers. Although the central petitioner sought exclusive transfer, the Court weighed (a) the seriousness of alleged police conduct (irregular FIR registration and omissions), (b) the State police's investigative defects and inability to apprehend a prominent local accused, and (c) practical considerations (need for inter-State or international measures). The Court balanced the central agency's role against the fact that a central investigating agency accompanying armed forces had itself not effected entry/arrest, and that the predicate financial-offence investigations remained with State police. Ratio vs. Obiter: Ratio - Where impartiality and investigative inadequacy are sufficiently indicated, involvement of a central agency is warranted; however, exclusive transfer is not automatically required. Obiter - Practical observations on central agency capabilities vis-à-vis predicate offence investigations and the ED's own operational limitations. Conclusions: The Court declined to order an outright exclusive transfer to a Central agency but held that involvement of a Central agency in a cooperative investigatory structure was imperative given the demonstrated investigative shortcomings and allegations of bias. Issue 2 - Effect of alleged police partiality and FIR irregularities on exclusion of local police Legal framework: Fair and effective investigation requires impartial FIR registration and adherence to procedure; material irregularities, tampering/interpolations or improper prioritisation of FIRs can vitiate confidence in local investigation. Precedent treatment: The Court referenced earlier adverse observations made by a co-ordinate Bench in relation to a counter FIR and noted precedent principles requiring impartiality; the State's reliance on limiting transfer absent clear criteria was considered. Interpretation and reasoning: The Court identified facts: a counter version FIR (allegedly registered as the first FIR despite an earlier GD entry), alleged interpolations (addition of outraging modesty), omission of serious offences in subsequent FIRs, and a stay by a co-ordinate Bench with adverse remarks against police. These facts, taken collectively, cast serious doubt on the impartiality of the Nazat Police Station personnel. The Court concluded that such doubt justified excluding personnel of that station (and its outposts) from participating in further investigation. Ratio vs. Obiter: Ratio - Material irregularities in FIR registration and demonstrable judicial censure of police conduct justify exclusion of the implicated local station's personnel from investigation. Obiter - Comment on interpolation and sequence of GD entries as illustrative of bias. Conclusions: Personnel of the implicated local police station/outposts must be excluded from the investigation; the existing investigating officer must cease further action and hand over the case diary and materials to the new team. Issue 3 - Formation, composition and powers of a Special Investigation Team (SIT) Legal framework: Where neither exclusive transfer nor sole State investigation is appropriate, courts may direct constitution of an SIT incorporating Central and State officers; such SITs must have clear leadership, composition, powers, reporting obligations and independence to ensure effectiveness. Precedent treatment: The Court considered the governing principles for central involvement and collaborative investigation and observed the CBI's willingness to investigate subject to nomination delays. Interpretation and reasoning: Given the need for impartiality, competence to pursue inter-State/international leads, and the State's operational capacity, the Court directed formation of an SIT headed by a Central agency officer (rank: SP) nominated by the Central agency together with a named State SP; each head may induct equal numbers from CBI and State police. The SIT is empowered to seek assistance from State and Central forces for search, seizure and arrest. The Court specified exclusion of implicated local station personnel and stoppage of ongoing State-led investigation. Ratio vs. Obiter: Ratio - An SIT headed by a Central agency officer, with balanced representation and operational autonomy to seek force assistance, is an appropriate investigatory mechanism where impartiality and capacity concerns exist but exclusive Central agency control is not ordered. Obiter - Practical comments on the CBI's ability to handle inter-State/international measures. Conclusions: A constitutionally permissible, court-supervised SIT comprising CBI and State personnel, led by a CBI SP and a State SP, with specified powers and exclusion of Nazat station personnel, should investigate the linked FIRs. Issue 4 - Sufficiency of the FIRs and addition/omission of serious penal sections Legal framework: Proper investigation requires that FIRs and subsequent charge sheets include applicable serious provisions when facts prima facie disclose them; omission may indicate deliberate narrowing of scope or negligence. Precedent treatment: The Court noted the State's subsequent attempts to add graver sections and the petitioners' contention that serious provisions were deliberately omitted; earlier judicial criticism of the initial counter FIR was relevant. Interpretation and reasoning: The Court observed omissions (e.g., attempt to murder, grievous hurt by dangerous means, dacoity) despite evidence such as serious injuries and looting. The suo moto FIR was described as watered-down. These omissions, combined with unconventional FIR sequencing and interpolations, contributed to the finding of investigative inadequacy and potential bias, thereby reinforcing the need for an SIT and judicial oversight. Ratio vs. Obiter: Ratio - Failure to include prima facie applicable serious penal provisions in FIRs supports judicial intervention to ensure complete and impartial investigation. Obiter - Specific evaluation of evidentiary sufficiency for each omitted section was not finally adjudicated. Conclusions: The omissions in the FIRs are material to the Court's decision to supervise and reconstitute investigation through an SIT; the SIT must properly examine and, if justified, frame all applicable offences. Issue 5 - Supervisory/control mechanisms for continued investigation Legal framework: Courts can impose reporting obligations, Magistrate-supervision and conditions on filing final reports to safeguard fair investigation; monitoring is warranted where impartiality or effectiveness is in question. Precedent treatment: The Court balanced respect for prosecutorial independence with the need for judicial oversight in compromised investigations. Interpretation and reasoning: To ensure transparency and fairness, the Court directed that the SIT report to the jurisdictional Magistrate for regular steps, that the SIT shall not report to State or Centre but to the Magistrate, that the Court will monitor the investigation, and that no final report shall be filed without the leave of the Court. The Court also preserved existing security measures (pickets, CCTV) and required progress reporting. Ratio vs. Obiter: Ratio - Where investigative impartiality is in doubt, judicially-mandated Magistrate supervision coupled with Court monitoring and leave-before-final-reporting are appropriate safeguards. Obiter - Procedural preference for Magistrate reporting rather than reporting to executive authorities. Conclusions: The SIT shall operate under Magistrate supervision, with Court monitoring and a prohibition on filing any final report without leave of the Court; interim security arrangements to continue until SIT decides otherwise.