TaxTMI 
TaxTMI 
2016 (5) TMI 120
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....ous accused and petitioners 1 and 2 are shown as 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 ....
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....dent to summon any person to give evidence and produce documents, does not include 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 f....
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....the commission of scheduled offence and the subsequent money-laundering and not to investigate predicate offences. (c) It is stated that the 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....
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.... under the summons, would further compel them to make statement and produce incriminating documents with a threat of prosecution for giving false statement 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 im....
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....ollows that the protection afforded to an accused in so far as it is related to the phrase "to be a witness" is not merely in respect of testimonial compulsion in the 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 ag....
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....f is primarily concerned, however, with respecting the will of an accused person to remain silent. As commonly understood in the legal systems of the contracting parties to the Convention and 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 e....
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....mple tested, his hair or other bodily material used for DNA testing etc. ...The right to silence has been considered by the Supreme Court of India in a three-Judge Bench in Nandini Satpati vs. P.L. Dani 1978 (2) SCC 424 where the 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 Holdswo....
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.... under Section 2(s) as well as Section 71 of PMLA. Learned Additional Solicitor General submits that the definition of a person is an inclusive definition, which covers the second petitioner and Section 71 of PMLA has given overriding effect over anything inconsistent 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 rec....
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....atement was "accused of any offence" secondly, that he made this statement under compulsion. The phrase "accused of any offence" has been the subject of several decisions of this Court so that by now it is well settled that only a person against whom a formal accusation relating to the commission of 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 ....
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....r the purpose of holding an enquiry under the Sea Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected or infringing the provisions of the Sea Customs Act with the commission of any office. His primary duty is to prevent 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 Exchan....
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.... his fingers, palm or foot to the investigating officer or under orders of a court for the purpose of comparison under the provisions of S.73 of the Indian Evidence Act; though we have not been able to agree with the view of our learned brethren that "to be a witness" in Art.20(3) should be 'equated with the imparting of personal knowledge or that an accused does not become 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 h....
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....ent authority to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under the Act." It is, however, to be noted that the contentions as raised in these writ petitions were not raised therein. 27. The decision of the Madras High Court in M. SHOBANA v. THE ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT [CDJ 2013 MHC 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....
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.... to contend that the provisions of Section 50 of PMLA deserves to be read down in the facts and circumstances of the case so as to restrict its operation and exclude the accused person. Reliance is also placed on another decision of the Supreme Court in M. RATHINASWAMI v. STATE OF TAMIL NADU [(2009) 5 SCC 625] for the proposition that in order to save a statutory provision from the views of unconstitutionality, sometimes restricted or extended interpretation 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....
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.... can be appropriately appreciated by examining Section 108 of the Customs Act and Section 117 of the Sea Customs Act. It also cannot be lost sight of that fact that the validity of Section 50 of PMLA is not questioned in this writ petition. 32. In order to answer the above point, the provisions of Section 50(2) and (3) of PMLA, as extracted above, have to be understood in the context of objects and reasons for enacting PMLA and the legal position is required to be understood in the light of corresponding provisions in the analogous Acts. 33. The thrust 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 ....
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....d at this stage and merely suspects. It is specifically contended that only when the Enforcement Directorate files a complaint under Section 3 of PMLA read with Section 200 Cr.P.C, the petitioners can be termed as accused so far as PMLA is concerned. It is contended that investigation, adjudication and criminal prosecution are separate stages and at present, the proceedings are only at the stage of investigation. The filing of charge sheet by the CBI before the Special Court is, therefore, different from the investigation under PMLA. A specific stand has been taken by 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 co....
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.... appear, as noted above, thus, actually appears to be annexure to the charge sheet filed by CBI. 42. It would be noticed from the above that the ECIR is not filed before any jurisdictional Magistrate and is only an information report with the Directorate of Enforcement. The stage of filing of complaint for prosecution under PMLA is envisaged under Section 44(1)(b) of PMLA. Admittedly, that stage has not yet reached. Thus, though the charge sheet filed by the CBI is to the extent of predicate offences, so far as offence under Section 3 of PMLA is concerned, the matter is clearly at 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 schedu....
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....ubject respecting which he is examined. He is not excused from speaking the truth on the premise that such statement could be used against him. The said requirement is included in the provision for the purpose of enabling the gazetted officer to elicit the truth from the person interrogated. There is no involvement of the magistrate at that stage. The entire idea behind the provision is that the gazetted officer questioning the person must gather all the truth concerning the episode. If the statement so extracted is untrue its utility for the officer gets lost. 13. As early as in 1968 this Court had considered the scope of the statement made under Section 171-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 t....
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.... in PADAM NARAIN AGGARWAL's case (14 supra) also considered Section 108 of the Customs Act comparing with the provisions of Cr.P.C and held in paras 39, 40 and 41 that a person called upon to make statement before the customs authority cannot be an accused of a offence. Reference may also be made to the decision in VEERA IBRAHIM's case (11 supra). 47. From the above decisions, it would be clear that when an ECIR is lodged with the Directorate of Enforcement there is no Magisterial intervention unlike an FIR and mere registration of ECIR against the suspects of offence under Section 3 of PMLA cannot go to mean that such persons are accused under Section 3 of PMLA. Consequently, therefore, 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....