2024 (2) TMI 1024 - SCH - Money Laundering

Bail granted in money laundering case due to invalid summons under Section 61 without proper court order

The SC allowed the appellant's bail application in a money laundering case. The appellant surrendered after receiving a summons issued under Section 61, ... Grant of bail - Money Laundering - summons was issued and served upon the appellant, pursuant to which he surrendered himself before the Court - HELD THAT:- In the instant case though there was no order passed by the Special Court for issuance of summons or warrant against the appellant, a summons under Section 61 came to be issued on 22.12.2022 requiring the appellant to appear before the Special Court on 07.01.2023. The appellant appeared before the Special Court and applied for his release on bail. Since there was no order passed by the Special Court for issuance of the summons or warrant, in our opinion, the application of the appellant seeking bail could not have been entertained. There was a basic flaw in the proceedings conducted before the Special Court. As such Section 437 would come into play when the accused is arrested or detained or when the summons or warrant is issued against the accused for causing him to be brought or to appear before the Court. In absence of any order for issuance of summons or warrant under Section 204 or under any other provision of Cr.P.C., the summons could not have been issued or served upon the appellant nor he could have been arrested or taken into custody. The appellant-accused also appears to have filed the bail application before the Special Court under the misconception of fact and misconception of law, which application came to be dismissed by the Special Court. The appellant – accused No.10 is directed to be released on bail on the terms and conditions that may be imposed by the Special Court - Appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether a criminal court may issue and act upon a summons or take an accused into custody when its cognizance order expressly directs that summons in respect of certain accused will be issued at a later stage. 2. Whether an accused who voluntarily appears before a court in the absence of any summons or warrant can seek bail under Section 437 Cr.P.C., and whether the court can entertain such a bail application. 3. Whether a challenge to the legality of proceedings (non-issuance of summons/warrant and consequent custody) may be raised for the first time before a higher court when the point was not specifically urged before the High Court, when it is a pure question of law. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Legality of issuance and service of summons contrary to the cognizance order directing issuance later Legal framework: On taking cognizance, a court may, under Section 204 Cr.P.C., issue summons (for a summons case) or a warrant (for a warrant case). The form of summons is prescribed under Section 61 Cr.P.C.; the form of warrant under Section 70 Cr.P.C. A cognizance order that expressly provides that summons for certain accused will be issued at a later stage evidences the court's expressed intention regarding process against those accused. Precedent treatment: No specific precedent was relied upon or cited in the judgment; the Court applied statutory provisions and basic principles of court process control. Interpretation and reasoning: The Court observed that when the cognizance order expressly states that summons for other accused will be issued later, issuance and service of summons contrary to that clear direction is legally problematic. The Court could not comprehend how a summons was issued and served against the appellant when the cognizance order indicated summons would be issued later for the relevant group of accused. That procedural step amounted to a fundamental flaw in the proceedings before the trial court. Ratio vs. Obiter: Ratio - A court should not issue and act upon summons in respect of an accused where its own cognizance order expressly postpones issuance of summons; issuance in such circumstances vitiates subsequent custody and proceedings relating to that accused. This holding is outcome-determinative in the case. Conclusion: The impugned proceedings were fundamentally flawed because the trial court's cognizance order precluded immediate issuance of summons against the appellant, yet a summons was issued and acted upon. The Court accepted the challenge on this ground. Issue 2 - Availability and scope of Section 437 Cr.P.C. where no summons or warrant was ordered/issued Legal framework: Section 437 Cr.P.C. empowers a court (other than High Court or Sessions Court) to release on bail an accused who is arrested or detained without warrant, or who appears or is brought before the court, in relation to a non-bailable offence. Sections 61 and 70 prescribe forms of summons and warrants respectively; Section 204 deals with issuance of process on taking cognizance. Precedent treatment: The judgment did not identify or apply any binding precedent that modifies the statutory import of Section 437; the Court analyzed the statutory scheme. Interpretation and reasoning: The Court construed Section 437 as operative when the accused has been arrested or detained without warrant, or when summons or warrant is actually issued to cause appearance - not where there is no order for issuance of summons/warrant and no arrest by the investigating agency. The Court held that, in the absence of any issuance order under Section 204 (or other provision), there was no legal basis for issuing or serving summons or for taking the accused into custody. Consequently, a bail application purportedly filed under Section 437 in those circumstances was improperly entertained by the Special Court. The Court emphasized that the appellant had not been arrested during investigation or at complaint presentation, and had appeared and surrendered only because a summons (incorrectly) had been issued and served. Ratio vs. Obiter: Ratio - Section 437 comes into play only where there is arrest/detention without warrant or where process (summons/warrant) has been legitimately issued/served or where the accused is otherwise before the court in consequence of lawful process; absent such issuance or arrest, a bail application under Section 437 should not be entertained as if processes had lawfully issued. Obiter - Observations about the appellant's misconception of law and fact leading to voluntary surrender are explanatory rather than binding precedent. Conclusion: The Special Court should not have entertained the bail application under Section 437 because no lawful order for issuance of summons or warrant existed; the bail proceedings were vitiated by the foundational procedural defect. Issue 3 - Permissibility of raising for the first time before this Court the question of illegality of process when not pressed in the High Court Legal framework: Higher courts may, in appropriate circumstances, consider pure questions of law not pressed earlier when the issue affects fundamental jurisdictional or legal validity of proceedings; the power to examine such issues is exercised in the interest of justice. Precedent treatment: The judgment did not rely on specific precedents but applied the general principle that questions of law affecting the legality of custody and judicial process may be entertained even if not specifically argued earlier. Interpretation and reasoning: Although the learned A.S.G. pointed out that the appellant had not raised the issue before the High Court, the Court observed that the question - whether proceedings and custody were valid in the absence of a summons/warrant order - is a question of law going to the jurisdictional validity of the trial court's actions. The Court therefore permitted the appellant to raise the point in the appeal and proceeded to decide it. Ratio vs. Obiter: Ratio - A pure question of law concerning the legality of process and custody may be entertained for the first time on appeal before this Court when it pertains to jurisdictional or foundational legality. Obiter - The Court did not expand or formulate detailed doctrine on when such questions may be entertained; it applied the principle to the facts. Conclusion: The Court was justified in permitting and deciding the legal challenge to the issuance and service of summons and consequent custody despite the point not having been specifically advanced in the High Court. Relief and consequential directions (operative conclusions) 1. Without expressing any opinion on the merits of the underlying prosecution, the Court allowed the appeal on the limited ground of procedural illegality in issuance/service of summons and consequent custody. 2. The appellant was directed to be released on bail on such terms and conditions as the Special Court may impose. 3. The Court left open the power of the Special Court to pass appropriate orders and the power of the prosecution to initiate such proceedings as permissible under law, indicating that the decision addressed only the procedural defect and did not preclude lawful future action.