2025 (5) TMI 576 - SC - Money Laundering

Accused in money laundering cases entitled to copies of documents under Section 44(1)(b) PMLA for fair trial rights

Sarla Gupta & Another Versus Directorate of Enforcement

The SC held that accused persons in PMLA cases are entitled to copies of documents relied upon in complaints under Section 44(1)(b) PMLA, applying ... Money Laundering - Right to Copies of Documents Relied Upon in Complaint under Section 44(1)(b) PMLA and Sections 207/208 CrPC - Right to Documents Not Relied Upon by the Prosecution-Stage of Entitlement - Right to seek copies of documents not relied upon by prosecution-framing of charge - Right to seek documents not relied upon by prosecution at the stage of entering upon defence - Right to Seek Documents During Bail Proceedings under Section 45(1)(ii) PMLA. Right of an accused to get copies of the documents relied upon in the complaint u/s 44(1)(b) of PMLA and the documents produced along with the complaint - HELD THAT:- Both Sections 207 and 208, on the face of it, do not specifically apply to a complaint under Section 44(1)(b) of the PMLA. But, there is no reason why the principles laid down under Sections 207 and 208 should not be applied to a complaint under Section 44(1)(b) of the PMLA. The provisions are consistent with the principles of fair play. The object of the provisions is to protect the rights of accused persons. An accused is entitled to a fair trial as he has the right to defend himself. That is the essence of Article 21 of the Constitution. Therefore, once cognizance is taken on the basis of a complaint under Section 44(1)(b) of the PMLA, the learned Special Judge must direct that along with the process, a copy of the complaint and the following documents must be provided to the accused - After cognizance is taken on the basis of the complaint, the ED cannot be heard to say that a document has been produced with the complaint or in the proceedings of the complaint, but it is not a relied upon document. The copies of documents must be supplied along with a copy of the complaint as required by sub- section (3) of Section 204 of the CrPC (sub-section (3) of Section 227 of the BNSS). Right to Documents Not Relied Upon by the Prosecution-Stage of Entitlement - HELD THAT:- The accused has the right to ask for the supply of documents not relied upon by the prosecution by making an application to the Court. The question is at what stage the accused can demand copies of the documents. Right to seek copies of documents not relied upon by prosecution-framing of charge - HELD THAT:- The entitlement of the accused to seek an order under Section 91 of the CrPC for the production of the documents that are not relied upon would ordinarily not come till the stage of defence. These observations are in the context of what constitutes ‘the record of the case’ for the purposes of Section 227 of the CrPC. Even this judgment recognizes the right of the accused to seek documents at the time of leading defence evidence by invoking Section 91 of the CrPC. We may note here that what is observed by this Court is that there is no absolute prohibition on an accused making an application under Section 91 of CrPC, before the stage of entering upon defence. It is held that ordinarily, the entitlement of the accused to apply under Section 91 will not arise till the stage of defence. At the time of hearing for framing of charge, reliance can be placed only on the documents forming part of the chargesheet. In case of the PMLA, at the time of framing charge, reliance can be placed only on those documents which are produced along with the complaint or supplementary complaint. Though the accused will be entitled to the list of documents, objects, exhibits etc. that are not relied upon by the ED at the stage of framing of charge, in ordinary course, the accused is not entitled to seek copies of the said documents at the stage of framing of charge. Right to seek documents not relied upon by prosecution at the stage of entering upon defence - HELD THAT:- At the stage of entering upon defence, an accused can apply for the issue of process for the production of any document or thing. At this stage, he can also apply for the production of a document or a thing that is in the custody of the prosecution but has not been produced. A fair trial is a part of the right guaranteed to an accused under Article 21 of the Constitution. The right to a fair trial of the accused includes the right to defend. The right to defend consists of the right to lead the defence evidence by examining the witnesses and producing the documents. Therefore, the accused is entitled to exercise his right at the stage of entering upon defence by compelling the prosecution or a third party to produce a document or a thing in their possession or custody. The Court can decline the request of the accused for issuing process for the production of documents only on the limited grounds set out in sub-section (3) of section 233 of the CrPC. The power under sub-section (1) of Section 91 can be exercised by a Court when the production of any document or any other thing is necessary or desirable for the purposes of any investigation, inquiry, trial or other proceedings under the CrPC. The consistent line of judgments of this Court hold that at the stage of framing of charge, the accused is ordinarily not entitled to apply under Section 91 of the CrPC for producing the documents which are not relied upon by the complainant. For the purposes of his defence, the accused has a right to seek production of a document or a thing at the stage of leading defence evidence as Section 233 of CrPC will apply to the trial of an offence under the PMLA, due to the fact that Chapter XVIII of the CrPC is made applicable to such trial in view of clause (d) of Section 44(1) of the PMLA. As compared to traditional penal statutes, at the time of trial of the offence under the PMLA, there is a huge negative burden put on the accused. Therefore, it is all the more necessary that sub-section (3) of Section 233 of CrPC (Sub-section (3) of Section 256 of the BNSS) should be liberally construed in favour of the accused. The reason is that the constitutional validity of Section 24 has been upheld on the ground that the accused has a full opportunity to show that he has not violated the provisions of the PMLA. He is entitled to rebut the presumption. Therefore, if the Special Court refuses the prayer made by the accused in terms of Sub-section (3) of Section 233 for compelling the attendance of any witness or for production of a document in custody of ED or a third party, the accused will not be in a position to discharge the onerous burden on him under Section 24 of the PMLA. Hence, the valuable right of the accused under Section 233(3) of the CrPC needs to be protected. Right to Seek Documents During Bail Proceedings under Section 45(1)(ii) PMLA - HELD THAT:- When the Legislature has felt a need to bring out a legislation like the PMLA, it is the duty of the Court to interpret Article 21 in such a way that the right of a fair trial available to the accused is not affected. The object of the provisions of Section 24 or 45(1)(ii) is not to take away the fundamental right of fair trial conferred on the accused. These provisions are different in the sense that they put a burden on the accused. When such a burden is put on the accused, it is all the more necessary that the right of fair trial guaranteed under Article 21 to the accused is protected by permitting the accused to lead defence evidence by seeking the production of witnesses and documents not relied upon by the prosecution. Similarly, for discharging the burden under Section 45(1)(ii), the accused has the right to invoke Section 91 of CrPC (Section 94 of the BNSS) for seeking production of documents at the stage of hearing of bail application. Conclusion - i) When records, instruments or documents of title of the property are seized along with the property under Sections 17 and 18 of the PMLA, the accused from whom the same are seized is entitled to true copies thereof. ii) When records, instruments or documents of title of the property are seized along with the property under Sections 17 and 18 of the PMLA, the accused from whom the same are seized is entitled to true copies thereof - a) Statements recorded by the learned Special Judge of the complainant and the witnesses, if any, before taking cognizance b) The documents including the copies of the Statements under Section 50 of the PMLA produced before the Special Court, along with the complaint, and the documents produced subsequently by the ED till the date of taking cognizance c) Copies of the supplementary complaints and the documents, if any, produced with supplementary complaints. iii) A copy of the list of statements, documents, material objects and exhibits that are not relied upon by the investigating officer must also be furnished to the accused. As held by this Court, the object is to ensure that the accused has knowledge of the documents, objects, etc. in the custody of the investigating officer which are not relied upon so that at the appropriate stage, the accused can apply by invoking the provisions of Section 91 of the CrPC (Section 94 of the BNSS) for providing copies of the documents which are not relied upon by the prosecution. iv) At the time of hearing for framing of charge, reliance can be placed only on the documents forming part of the chargesheet. In case of the PMLA, at the time of framing charge, reliance can be placed only on those documents which are produced along with the complaint or supplementary complaints. Though the accused will be entitled to a list of documents, objects, exhibits etc. that are not relied upon by the ED at the stage of framing of charge, in ordinary course, the accused is not entitled to seek copies of the said documents at the stage of framing of charge. v) At the stage of entering upon defence, an accused can apply for the issue of process for the production of any document or thing in accordance with Section 233(3) of the CrPC (Section 256(3) of the BNSS). At this stage, he can also apply for the production of a document or a thing that is in the custody of the prosecution but has not been produced. A fair trial is a part of the right guaranteed to an accused under Article 21 of the Constitution. The right to a fair trial of the accused includes the right to defend. The right to defend consists of the right to lead the defence evidence by examining the witnesses and producing the documents. Therefore, the accused is entitled to exercise his right at the stage of entering upon defence by compelling the prosecution or a third party to produce a document or a thing in their possession or custody. The Court can decline the request of the accused for issuing process for the production of documents only on the limited grounds set out in sub-section (3) of section 233 of the CrPC. vi) When at the stage of defence evidence of the accused, documents are produced on the prayer of the accused and the accused desires to cross-examine any of the prosecution witnesses based on the said documents, it is always open for the accused to apply under Section 311 of the CrPC (Section 348 of the BNSS) to recall a prosecution witness already examined for further cross-examination. The reason is that the right to effectively cross-examine the prosecution witnesses is also a part of the right to have a fair trial. The accused can exercise this right even if evidence of both sides is closed. vii) As compared to traditional penal statutes, at the time of trial of the offence under the PMLA, there is a huge negative burden put on the accused. Therefore, it is all the more necessary that sub-section (3) of Section 233 of CrPC (Sub- section (3) of Section 256 of the BNSS) should be liberally construed in favour of the accused. The reason is that the constitutional validity of Section 24 has been upheld on the ground that the accused has a full opportunity to show that he has not violated the provisions of the PMLA. He is entitled to rebut the presumption. Therefore, if the Special Court refuses the prayer made by the accused in terms of Sub- section (3) of Section 233 for compelling the attendance of any witness or for production of a document in custody of ED or a third party, the accused will not be in a position to discharge the onerous burden on him under Section 24 of the PMLA. Hence, the valuable right of the accused under Section 233(3) of the CrPC needs to be protected. viii) At the time of hearing of an application for bail governed by Section 45(1)(ii) in connection with the offences under Section 3 of the PMLA, an accused is entitled to invoke Section 91 of the CrPC (Section 94 of the BNSS) seeking production of unrelied upon documents. If investigation or further investigation in progress, the ED is entitled to raise objection to production of documents sought by the accused on the ground that if the documents are disclosed at this stage to the accused, it may prejudice the investigation. Only if the Court after perusing the documents is satisfied that the disclosure of the documents at that stage may prejudice the ongoing investigation, it can deny the prayer for the production of such documents. Appeal allowed. The core legal questions considered by the Court in these appeals primarily revolve around the rights of accused persons under the Prevention of Money Laundering Act, 2002 (PMLA), and the Code of Criminal Procedure, 1973 (CrPC), with specific reference to:Whether the accused are entitled to copies of all documents collected during investigation or only those relied upon in the complaint or chargesheet under Section 44(1)(b) of the PMLA and Sections 207 and 208 of the CrPC;The scope of the right of accused to obtain copies of seized documents and records under Sections 17 and 18 of the PMLA;The stage at which the accused can demand documents not relied upon by the prosecution-whether at the framing of charge or at the stage of entering defence;The applicability of Sections 207 and 208 of the CrPC to complaints under Section 44(1)(b) of the PMLA;The right of the accused to seek production of documents during bail proceedings under Section 45(1)(ii) of the PMLA;The extent of the Special Court's powers to direct supply of documents not relied upon by the prosecution;The interplay between the PMLA and the CrPC, particularly regarding procedural safeguards and rights of the accused.Issue-wise Detailed Analysis:1. Right to Copies of Documents Relied Upon in Complaint under Section 44(1)(b) PMLA and Sections 207/208 CrPCThe Court examined the provisions of Section 44(1)(b) of the PMLA, which mandates that cognizance of offences under Section 3 of the PMLA can be taken by a Special Court upon a complaint without committal. The Court held that the provisions of Sections 200 to 204 of the CrPC apply to such complaints. Particularly, Section 204(3) CrPC requires that every summons issued on a complaint be accompanied by a copy of the complaint and documents produced along with it.The Court reasoned that the documents annexed or produced with the complaint form an integral part of the complaint and hence must be supplied to the accused as a matter of right. This principle extends to supplementary complaints and accompanying documents. The Court relied on recent precedents affirming that the accused is entitled to copies of such documents to ensure a fair trial under Article 21 of the Constitution.The Court rejected the contention that Sections 207 and 208 CrPC do not apply mutatis mutandis to PMLA complaints, holding that the principles underlying these provisions-fair disclosure to the accused-must be applied to protect the accused's rights.2. Right to Copies of Seized Documents and Records under Sections 17 and 18 of the PMLASections 17 and 18 of the PMLA empower the Directorate of Enforcement (ED) to conduct searches and seizures of records and property. Section 21(2) specifically entitles the person from whom records are seized to obtain copies thereof.The Court emphasized that 'records' include books, computer-stored data, and other forms of documents, while 'property' includes deeds and instruments evidencing title. The Court held that the accused from whose custody documents or instruments of title are seized is entitled to true copies of such documents, even if the originals are retained or frozen.The Court found fault with the Special Court and High Court for denying copies of seized documents to the accused, ruling that such denial is arbitrary and violates Article 14. The Court directed the ED to supply true or soft copies of seized documents within a stipulated time.3. Right to Documents Not Relied Upon by the Prosecution-Stage of EntitlementThe Court examined the scope of the accused's right to obtain documents not relied upon by the prosecution. It referred to the decision in Criminal Trials Guidelines Regarding Inadequacies and Deficiencies, In Re, which mandates that the accused be furnished not only with relied-upon documents but also a list of documents, material objects, and exhibits seized but not relied upon, to enable the accused to seek production of such documents at an appropriate stage.Relying on the decision in State of Orissa v. Debendra Nath Padhi, the Court held that at the stage of framing charge, the Court can consider only the documents forming part of the chargesheet or complaint. The accused is ordinarily not entitled to copies of documents not relied upon at this stage but is entitled to a list thereof.The Court clarified that the accused's right to seek production of unrelied documents arises at the stage of entering defence, where Sections 233 and 243 of the CrPC apply. At this stage, the accused can apply for issuance of process compelling production of any document or witness, and the Court must grant such process unless the application is vexatious or for delay.The Court distinguished Section 91 CrPC (discretionary power to summon documents) from Sections 233 and 243 (mandatory power to issue process on accused's application at defence stage), emphasizing the stronger right at the defence stage.4. Applicability of Sections 207 and 208 CrPC to PMLA ProceedingsThe Court held that while Sections 207 and 208 CrPC do not explicitly apply to complaints under Section 44(1)(b) of the PMLA, their principles of fair disclosure must be applied to ensure the accused's right to a fair trial. The Court underscored that the Special Court must supply copies of complaint documents and statements before taking cognizance.5. Right to Seek Documents During Bail Proceedings under Section 45(1)(ii) PMLASection 45(1)(ii) of the PMLA imposes a stringent condition on bail, requiring the accused to satisfy the Court that there are reasonable grounds to believe he is not guilty. The Court held that this places a heavy burden on the accused at the bail stage.Accordingly, the Court ruled that the accused must be allowed to invoke Section 91 CrPC at the bail stage to seek production of documents not relied upon by the prosecution, as denial would prejudice the accused's right to liberty and fair trial under Article 21. However, the ED may resist disclosure if it can demonstrate that such disclosure would prejudice ongoing investigation, with the Court deciding on such objections after perusing the documents.6. Powers of the Special Court and High Court Regarding Supply of DocumentsThe Court noted that the Special Court under the PMLA does not possess inherent powers akin to the High Court under Section 482 CrPC to direct supply of documents not relied upon by the prosecution. The Special Court's power to supply documents is limited to those relied upon in the complaint or chargesheet at the framing stage.The Court observed that interlocutory orders by the Special Court refusing supply of unrelied documents are generally not interfered with by the High Court unless there is a manifest error or miscarriage of justice.7. Interplay Between PMLA and CrPCThe Court analyzed Sections 65 and 71 of the PMLA, which make the CrPC applicable to PMLA proceedings insofar as they are not inconsistent with the PMLA, and give the PMLA overriding effect respectively. The Court held that where CrPC provisions are applicable under Section 65 and not inconsistent with the PMLA, they continue to apply notwithstanding Section 71.The Court confirmed that Sections 197, 207, 208, 233, 243, and 91 of the CrPC apply to PMLA proceedings, ensuring procedural safeguards and rights of the accused are preserved.Significant Holdings:'When records, instruments or documents of title of the property are seized along with the property under Sections 17 and 18 of the PMLA, the accused from whom the same are seized is entitled to true copies thereof.''Once cognizance is taken on the basis of a complaint under Section 44(1)(b) of the PMLA, the learned Special Judge must direct that along with the process, a copy of the complaint and the following documents be provided to the accused: (i) Statements recorded of the complainant and witnesses before taking cognizance; (ii) Documents including copies of Statements under Section 50 of the PMLA produced before the Special Court, along with the complaint and subsequently produced documents; and (iii) Copies of supplementary complaints and accompanying documents.''A copy of the list of statements, documents, material objects and exhibits that are not relied upon by the investigating officer must also be furnished to the accused to enable him to seek production of such documents at the appropriate stage.''At the time of hearing for framing of charge, reliance can be placed only on the documents forming part of the chargesheet or complaint. The accused is not ordinarily entitled to seek copies of unrelied documents at this stage.''At the stage of entering upon defence, the accused can apply for the issue of process for production of any document or thing, including those not produced by the prosecution, and the Court shall issue such process unless the application is vexatious or for delay.''At the time of hearing of bail applications under Section 45(1)(ii) of the PMLA, the accused is entitled to invoke Section 91 CrPC to seek production of documents not relied upon by the prosecution, subject to the Court's satisfaction that disclosure will not prejudice ongoing investigation.''The provisions of Sections 207 and 208 of the CrPC, though not explicitly applicable to PMLA complaints, embody principles of fair disclosure which must be applied to ensure the accused's right to a fair trial.''The Special Court does not have inherent powers akin to the High Court under Section 482 CrPC to direct supply of documents not relied upon by the prosecution at the framing stage.''The provisions of the CrPC apply to PMLA proceedings under Section 65 PMLA, except where inconsistent, and such application cannot be negated by Section 71 PMLA.'The Court accordingly set aside the impugned orders denying supply of documents, directing the ED to provide copies of documents produced with the complaint and seized documents within one month, allowing soft copies where appropriate.