TaxTMI 
TaxTMI 
2016 (5) TMI 120
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.... accused 3 to 12 respectively. The Special Court has already taken cognizance of the offences against all the accused on 13.05.2013. Petitioners deny the charge sheet framed against them by CBI. (b) Based on the allegations in the said charge sheet, the first respondent registered a case on 30.08.2011 as ECIR/09/HZO/2011 for scheduled offences under the Prevention of Money-Laundering Act, 2002 (for short 'PMLA') in which the first petitioner is shown as accused at Sl.No.26, alleging that the same, prima facie, discloses an offence under Section 3 of the PMLA. Copy of the said ECIR is filed as annexure P2. (c) Based on the said ECIR, the first respondent served summons dated 20.10.2014 on the second petitioner requiring him to appear in person for making statement and for production of documents. The second petitioner, accordingly, is stated to have informed the first respondent, on legal advice, under reply dated 31.10.2014 that he was accused in CBI case and does not wish to give any statement by claiming protection under Article 20(3) of the Constitution of India. However, without responding to the said reply, the first respondent issued another summons dated 03.11.2014 to th....
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....an accused person involved in any scheduled offence, as otherwise, it would be ultravries Article 20(3) of the Constitution of India. Hence, petitioners seek a Mandamus, as sought for. 3. This writ petition was listed for admission on 02.12.2014 and on request of the learned standing counsel for respondents, the following proceeding was recorded: "Learned Standing Counsel requests time till 08.12.2014 to file counter. He further informs that he would advise his client to defer summoning of 2nd petitioner to any date other than 03.12.2014. At his request, post on 08.12.2014 in the motion list." Subsequently, the writ petition was heard in part on 16.12.2014 and subsequent thereto, the writ petition was listed before different benches including this Court on various dates. I had heard the learned senior counsel for the petitioners on 05.02.2016. WP.No.31143 of 2015: 4. As stated above, the petitioner in the aforesaid writ petition filed this writ petition on the ground that though the summons last issued was questioned in WP.No.36838 of 2014, during pendency thereof, the first respondent issued another summons dated 24.06.2015. On the alleged ground of defiance of the summ....
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....he first respondent is empowered under Section 50 of PMLA to issue summons to any person whose attendance is considered necessary to give evidence or to produce records during the course of investigation or proceeding under PMLA. The allegations of the petitioners on the basis of Article 20(3) of the Constitution of India is illogical and baseless, as the respondents have only taken up investigation to trace the proceeds of the crime and the trail of the money laundered, as there are sufficient reasons to believe that money-laundering has been resorted to in this particular case based on the FIR registered by CBI. It is stated that ECIR is registered with the Director of Enforcement, as the respondents had reason to believe that offence of money-laundering has been committed. (d) It is stated that in terms of Section 50 of PMLA, the proceedings initiated by the first respondent are judicial proceedings within the meaning of Sections 193 and 228 of the Indian Penal Code and petitioners are obliged to appear. It is stated that petitioners are assuming several things at the threshold and trying to evade the investigation. It is stated that the first respondent is a premiere investiga....
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....tatement or false information. Learned senior counsel submits that such testimonial compulsion against the second petitioner would, undoubtedly, amount to incriminating him not only in the CBI case but also in the ECIR registered. 9. Learned senior counsel submits that the second petitioner obtained legal advice and submitted detailed reply to the first respondent expressing inability of the second petitioner to incriminate himself. However, without responding to the said reply, summons were repeatedly sent and ultimately, leaving the petitioners no option but to question the impugned summons issued. 10. Placing strong reliance upon Sections 50 and 63 read with Section 22 of PMLA, learned senior counsel submits that the second petitioner is in a situation where if he gives a statement and produces documents that will amount to incriminating himself and causing serious prejudice to him in the CBI case as well as in ECIR. Learned senior counsel, therefore, submits that compelling attendance of second petitioner by virtue of the impugned summons is violative of Article 20(3) of the Constitution of India as well as provisions of Section 91 of Cr.P.C. Learned senior counsel also poin....
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.... Court room but may well extend to compelled testimony previously obtained from him. It is available therefore to a person against whom a formal accusation relating o the commission of an offence has been leveled which in the normal course may result in prosecution. Whether it is available to other persons in other situations does not call for decision in this case." Based on the above, it is contended that formal accusation relating to commission of an offence is sufficient to attract the protection available to the petitioners. 13. Another Larger Bench judgment of the Supreme Court in STATE OF BOMBAY v. KATHI KALU OGHAD [AIR 1961 SC 1808] is also relied upon for the proposition that guarantee against testimonial compulsion includes not only oral testimony given in a Court or out of Court but also statement in writing, which incriminate a maker figuring as a accused person. The relevant portion of para 9 of the said judgment is as under: "9. This Court did not accept the contention that the guarantee against testimonial compulsion is to be confined to oral testimony at the witness-stand when standing trial for an offence. The guarantee was, thus, held to include not only oral....
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....elsewhere, it does not extend to the use in criminal proceedings of material which may be obtained from the accused through the use of compulsory powers but which has an existence independent of the will of the suspect such as, inter alia, documents acquired pursuant to a warrant, breath, blood and urine samples and bodily tissue for the purpose of DNA testing ..." 16. A decision of the U.S. Supreme Court in ARMANDO SCHMERBER v. STAET OF CALIFORNIA [384 U.S. 757] is also relied upon wherein it was held as follows: "... We, therefore, must now decide whether the withdrawal of the blood and admission in evidence of the analysis involved in this case violated petitioner's privilege. We hold that the privilege protects an accused only from being compelled to testify against himself, or otherwise provide the State with evidence of a testimonial or communicative nature, and that the withdrawal of blood and use of the analysis in question in this case did not involve compulsion to these ends ... ... As the passage in Miranda implicitly recognizes, however, the privilege has never been given the full scope which the value it helps to protect suggest, History and a long line of autho....
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.... Supreme Court followed the earlier English Law and the judgment of the American Supreme Court in Miranda. Krishna Iyer J observed that the accused was entitled to keep his mouth shut and not answer any questions if the questions were likely to expose him to guilt. This protection was available before the trial and during the trial. The learned Judge observed as follows: "... whether we consider the Talmudic Law or the Magna Carta, the Fifth Amendment, the provisions of other constitutions or Article 20(3), the driving force behind the refusal to permit forced self incrimination is the system of torture by investigators and courts from medieval times to modern days. Law is response to life and the English rule of the accused's privilege of silence may easily be traced as a sharp reaction to the Court of Star Chamber when self-incrimination was not regarded as wrongful. Indeed then the central feature of the criminal proceedings, as Holdsworth noted, was the examination of the accused." Summary: A survey of the current law in various countries reveals that in USA, Canada and India in view of the constitutional provisions against self incrimination the Courts have required t....
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....sistent contained in any other law. Learned Additional Solicitor General placed strong reliance upon Section 108 of the Customs Act and the decisions rendered thereunder to submit that the provisions of PMLA and the Customs Act, as aforesaid, are similar and have already been interpreted by the Supreme Court. 20. Reliance is, accordingly, placed upon the decision of the Supreme Court in VEERA IBRAHIM v. THE STATE OF MAHARASHTRA [(1976) 2 SCC 302] where the phrase 'accused of an offence' with reference to Section 108 of the Customs Act, 1962 was interpreted. Paras 6 and 9 of the judgment is relied upon where the Supreme Court quoted a passage from R.C. MEHTA v. STATE OF WEST BENGAL [AIR 9170 SC 940]. At this stage, it is appropriate to notice the said passage from the decision above referred, as under: "7. In R. C. Mehta v. State of West Bengal, this point came up for consideration in the context of a statement recorded by an officer of Customs in an enquiry under Section 171-A of the Sea Customs Act. One of the contentions raised was, that a person against whom such an enquiry is made is a `person accused of an offence', and on that account, he cannot be compelled to be a wi....
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.... an offence has been levelled which in the normal course may result in his prosecution, would fall within its ambit. ... 9. The above-quoted observations are a complete answer to the contention of the appellant. In the light of these principles, it is clear that when the statement of the appellant was recorded by the Customs officer under Section 108, the appellant was not a person "accused of any offence" under the Customs Act, 1962. An accusation which would stamp him with the character of such a person was, levelled only when the complaint was filed against him, by the Assistant Collector of Customs complaining of the commission of offences under Section 135 (a) and Section 135 (b) of the Customs Act." Learned Additional Solicitor General contends, therefore, that since Section 108 of the Customs Act is similar to Section 50(2) of PMLA, it cannot be said that the petitioners are accused merely because investigating is taken up against them and they are only suspects of an offence under Section 3 of PMLA. 21. Another decision of the Supreme Court in POOLPANDI v. SUPERINTENDENT, CENTRAL EXCISE [(1992) 3 SCC 259] is relied upon where Sections 107 and 108 of the Customs Act....
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....revent smuggling and to recover duties of customs when collecting evidence in respect of smuggling against a person suspected of infringing the provisions of the Sea Customs Act, he is not accusing the person of any offence punishable at a trial before a Magistrate." The above conclusion was reached after consideration of several relevant decisions and deep deliberation on the issue, and cannot be ignored on the strength of certain observations in the judgment by three learned Judges in Nandini Satpathy case which is, as will be pointed out hereinafter, clearly distinguishable." 22. Another decision of the Supreme Court in RAMANLAL BHOGILAL SHAH v. D.K. GUHA [(1973) 1 SCC 696] is also relied upon by the learned Additional Solicitor General and particularly, para 24 thereof, which discusses the meaning of accused under the Foreign Exchange (Regulations) Act, 1947 vis-à-vis Article 20(3) of the Constitution of India. Para 24 is extracted hereunder: "24. Although we held that the petitioner is a person accused of an offence within the meaning of Article 20(3), the only protection that Article 20(3) gives to him is that he cannot be compelled to be a witness against himse....
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.... a witness when he produces some document not in his own hand- writing even though it may tend to prove facts in issue or relevant facts against him." 24. Learned Additional Solicitor General submitted that mere issue of summons does not give raise to any cause of action and the power of judicial review of this Court does not deserve to be exercised at this stage. Learned Additional Solicitor General placed reliance upon a decision of the Supreme Court in UNION OF INDIA v. PADAM NARAIN AGGARWAL [(2008) 13 SCC 305] which also dealt with Section 108 of the Customs Act. In the said decision, the Supreme Court followed the ratio of the decision in RAMESH CHANDRA MEHTA v. STATE OF W.B. [AIR 1970 SC 940] and CCE v. DUNCAN AGRO INDUSTRIES LTD. [(2007) 7 SCC 53] and the relevant paras 40, 41 and 46 are extracted hereunder: "40. As held by Constitution Bench of this Court in Ramesh Chandra Mehta v. State of W.B, a person called upon to make a statement before the Custom Authorities cannot be said to be an accused of an offence. It is, therefore, clear that if a person is called upon to make a statement under Section 108 of the Act and summon is issued for the said purpose, he is bound t....
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....C 4134] is also relied upon wherein seeking quashing of the summons issued by the Enforcement Directorate, being the subject matter of the writ petition, it was held in paras 59 and 60 as follows: "59. To put it succinctly, the initiation of proceedings like issuance of summons etc. in Prevention of Money-Laundering Act are selfcontained, in-built and independent procedure mainly to prevent the act of money-laundering and connected activities. Furthermore, the Respondent has issued only summons dated 10.04.2013 to the Petitioners and the issuance of summons cannot be categorized as an act of prosecuting the Petitioners twice. As such, the plea of 'double jeopardy' taken on behalf of the Petitioners is not acceded to by this court. 60. In the light of foregoing discussions and on appreciation of the entire gamut of the facts and circumstances relating to the subject matters in issue, this Court comes to an inevitable conclusion that the present Writ Petitions filed by the Writ Petitioners are not maintainable because of the simple reason that through the summons dated 10.04.2013 they were directed to appear before the Respondent/Assistant Director, Directorate of Enforcement, C....
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....erpretation of the statute has to be given and the Court would prefer the former. Learned counsel reiterated that the provisions of Sections, 91, 161(2), 313(3) and 315(16) of Cr.P.C are, therefore, couched in a language, which is in conformity with the protection under Article 20(3) of the Constitution of India and submits that Section 50 of PMLA also deserves to be given a restrictive meaning by reading down the provision. Learned counsel submits that registration of ECIR is equivalent to an FIR under Cr.P.C and supports the prayers in the writ petitions. WP.No.36838 of 2014: 29. In the light of the detailed submissions of the learned senior counsel on either side, the point for consideration is: Whether the summons issued to the second petitioner under Section 50 (2) and (3) of PMLA is violative of the Constitutional protection and guarantee under Article 20(3) of the Constitution of India. POINT: 30. Section 50 of PMLA may be noticed at this stage under: "50. Powers of authorities regarding summons, production of documents and to give evidence, etc.- (1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the ....
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....st of the submissions on behalf of the learned senior counsel for the petitioners is on the premise that the petitioners stand in the capacity of accused in the pending CBI case, as referred to above. Based on the selfsame case instituted by the CBU, the authorities under PMLA have registered an Enforcement Case Information Register (ECIR) where also the second petitioner figures at Sl.No.4 in Annexure C and at Sl.No.26 in Annexure B. 34. Learned senior counsel would, therefore, contend that in the counter affidavit filed by the first respondent in both the writ petitions, first petitioner is named in the ECIR filed before the Metropolitan Sessions Judge and second petitioner, being Managing Director of first petitioner, is also accused by virtue of Section 70 of PMLA. Reliance is placed upon the counter affidavit of the first respondent about the commission of offence under Section 3 of PMLA by the petitioners and it is contended that the investigation in such case has to be conducted in terms of Section 65 of PMLA under Cr.P.C. Based on the above, further contention is raised that testimonial compulsion is impermissible not only under Cr.P.C but also under Article 20(3) of the C....
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.... the respondents in para 4.6 of the counter, which is appropriate to be noticed, as under: "4.6 The scope of investigation which the respondent herein restricts itself is to probe into the aspect of proceeds of crime and the subsequent money laundering only. There is a clear distinction with respect to the scheduled offences and the offence under the money laundering. The investigation under the predicate offences is taken by the principal investigation agency which registered the case against any of the offenders. The role of the respondent is to investigate the aspect of proceeds of crime derived from the commission of scheduled offences and the subsequent money laundering and not to investigate the predicate offences." 38. In that context, learned Additional Solicitor General submits that the summons is issued to any person whose attendance is considered necessary to give evidence or produce any records during the course of investigation or proceedings under PMLA. Learned Additional Solicitor General would place strong reliance upon Section 108 of the Customs Act and decisions of the Supreme Court with reference thereto are as follows: VEERA IBRAHIM's case (11 supra); POOLPA....
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.... the investigation stage. Investigation is defined under Section 2(na) of PMLA, which is as follows: "2 (na) "investigation" includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence." Proceeds of crime are defined under Section 2(u) and person is defined under Section 2(s) of PMLA, which is an inclusive definition. "2(u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property; "2(s) "person" includes;- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) every artificial juridical person, not falling within any of the preceding sub-clauses, and (vii) any agency, office or branch owned or controlled by any of the above persons mentioned in the preceding sub-clauses;" 43. At this stage, therefore, investigation is only for the purpose of collecting evidence with regard to proceeds of cr....
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....A of the Sea Customs Act in Haroon Haji Abdulla vs. State of Maharashtra [AIR 1968 SC 832 = 1968 (2) SCR 641]. Hidayatullah, J. (as he then was) made the following observations: "These statements are not confessions recorded by a Magistrate under Section 164 of the Code of Criminal Procedure but are statements made in answer to a notice under sec.171-A of the Sea Customs Act. As they are not made subject to the safeguards under which confessions are recorded by Magistrates they must be specially scrutinised to finding out if they were made under threat or promise from some one in authority. If after such scrutiny they are considered to be voluntary, they may be received against the maker and in the same way as confessions are received, also against a co-accused jointly tried with him." 45. We may also notice the decision of the Supreme Court in RAMESH CHANDRA MEHTA's case (21 supra) and para 14 thereof, being relevant, is extracted hereunder: "14. In the two earlier cases M.P. Sharma case and Raja Narayanlal Bansilal case this Court in describing a person accused used the expression "against whom a formal accusation had been made", and in Kathi Kalu Oghad case this Court use....
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....fore, the protection against testimonial compulsion as under Cr.P.C as well as under Article 20(3) of the Constitution of India, in my view, would not be available, as claimed by the petitioners. 48. Learned senior counsel for the petitioners would, however, submits that keeping in view the Constitutional guarantee under Article 20(3) of the Constitution of India, the provisions of Section 50 of PMLA are required to be read down so as to ensure that petitioners are not prejudiced in the CBI case as well as under PMLA. Reliance is placed upon M. RATHINASWAMI'S case (19 supra) and particularly paras 27 and 28 and also on a decision of the Supreme Court in SHYAMLAL MOHANLAL CHOKSI's case (1 supra). 49. In view of the point already answered that petitioners are not accused under PMLA, in my view, the reading down of Section 50 of PMLA, even if permissible, would not arise on the facts and circumstances of the case. Point No.3 is accordingly answered. Consequently the writ petition fails and is accordingly dismissed. WP.No.31143 of 2015: 50. This writ petition was also filed by the petitioners questioning the further action taken by the respondents against the petitioners under Sec....