TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 309
X X X X Extracts X X X X
X X X X Extracts X X X X
....nces mainly under Section 132 of the Customs Act, 1962, which is a Scheduled Offence specified in Part B of the Schedule to Prevention of Money- Laundering Act (for short PMLA). He further contends that laundering of the proceeds of crime relating to this Scheduled Offence would attract offence under Section 3 of PMLA, which would be punishable under Section 4 thereof. 2. The instant petition challenges the vires of firstly Section 2(y)(ii) of PMLA as amended vide section 145( (ii) of the Finance Act, 2015 enhancing the monetary threshold for the offences specified under Part B of the Schedule from the total value involved in such offences from "Rs. 30 lakhs or more" to "Rs. One crore or more", and secondly the insertion of Section 132 of Customs Act, 1962 in Part-B of the Schedule in PMLA, vide section 151 of the said Finance Act, 2015. These impugned amendments, which are applicable with effect from 14.05.2015, are claimed by him as unconstitutional and ultra vires, unless read down so as to make them constitutional, stringent and harmonious with the objects of PMLA. According to him presently these impugned provisions are contrary to the objects of PMLA, which warrant stringent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r commission of these offences. However, according to him he would not be permitted to set the criminal law into motion by approaching the jurisdictional Magistrate as prescribed in the Code of Criminal Procedure, because the Customs Act, 1962 as well as PMLA are considered as complete Code in themselves and the provisions of Code such as Section 156(3) or Section 155(2) of the Code of Criminal Procedure may not have any application in the field occupied by these special statutes. 5. He has referred to a judgment by the Division Bench of this Court in the matter of Sunil Gupta vs. Union of India reported in 2000 (118) ELT 8 (P&H). As per the said judgment notwithstanding Section 155 of the Code, in exercise of powers under Section 13 of Central Excise Act, 1944, a Central Excise officer can arrest a person without a warrant, despite the offence being a non-cognizable offence. It was held that a Central Excise Officer cannot be equated with a 'police officer' for the purpose of section 155 of the Code for investigating a non-cognizable offence punishable under Central Excise Act, 1944. He has also placed on record a copy of the judgment of Hon'ble Constitution Bench of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction 137(1) of Customs Act, 1962 for launching prosecution and filing of complaint by appropriate authority under second proviso to section 45(1) of the PMLA, both of which otherwise stipulate a bar on taking of 'cognizance'. He relied upon the judgment of Hon'ble Supreme Court in Narayandas Bhagwandas Madhavdas vs. State of West Bengal, 1999 (110) ELT 85 (SC) to buttress his argument that Courts do not take 'cognizance' while ordering investigations either under Section 156(3) or Section 155(2) of the Code. 8. A compilation of judgments has been submitted by the petitioner in support of his submissions. The following prayers are made by him in the instant petition :- i) Issue appropriate writ, order or direction in the Petitioner's challenge to the vires qua criminal cases, of firstly the sub-clause (ii) of clause (y) of section 2 of PMLA, and secondly, the insertion of Part-B in the Schedule in PMLA, as amended vide section 145(ii) and section 151 of the Finance Act, 2015, with effect from 14.05.2015, for declaring these provisions of PMLA as unconstitutional and ultra vires as the same are contrary to the objects of PMLA warranting stringent condition....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt A was proposed to be substituted, while omitting paragraphs 1 to 25 in the then existing Part B. Consequently, all those offences which were earlier under these paragraphs 1 to 25 of Part B and all heinous offences which were under the then existing Part A, were proposed to be put together in the new proposed Part A. 12.3 For deciding the issues raised by him, we have perused the Objects and Reasons, Preamble of PMLA, various definitions and provisions as well as Rules framed under PMLA. (i) Section 4 of PMLA- "4. Punishment for money-laundering-Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extent to seven years and shall also be liable to fine. Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words "which may extent to seven years", the words "which may extend to ten years" had been substituted". (ii) Section 45 of PMLA- "45. Offences to be cognizable and non-bailable (1) Notwithstanding an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... OFFENCES UNDER THE INDIAN PENAL CODE Section Description of offence 121. Waging, or attempting to wage war or abetting waging of war, against the Government of India. 121A Conspiracy to commit offences punishable by Section 121 against the State. 489A Counterfeiting currency notes or bank notes. 489-B Using as genuine, forged or counterfeit currency notes or bank notes. PARAGRAPH 2 OFFENCES UNDER THE NARCOTIC DRUGS AND PHYSHOTROPIC SUBSTANCES ACT, 1985. Section Description of offence 15 Contravention in relation to poppy straw. 16 Contravention in relation to coca plant and coca leaves. 17 Contravention in relation to prepared opium. 18 Contravention in relation to opium poppy and opium. 19 Embezzlement of opium by cultivator. 20 Contravention in relation to cannabis plant and cannabis 21. Contravention in relation to manufactured drugs and preparations. 22. Contravention in relation to psychotropic substances. 23. Illegal import into India, export from India or transhipment of narcotic drugs and psychotropic substances. 24. External dealings in narcotic drugs and psychotropic substances in contravention of Section 12 of the Narcotic Drugs and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e for the purpose of Section 45(1) of the PMLA. This observation is supported by the following observations of a Constitution Bench of Hon'ble Supreme Court in Asgarali Nazarali Singaporewalia vs. State of Bombay, AIR 1957 SC 503- "16. The first question which we have to address to ourselves is whether there is in the impugned Act a reasonable classification for the purposes of legislation. If we look to the provisions of the impugned Act closely it would appear that the legislature classified the offences punishable under section 161, 165 or 165-A of the Indian Penal Code or sub-section (2) of Section 5 of the Prevention of Corruption Act, 1947 in one group or category. They were offences relating to bribery or corruption by public servants and were thus appropriately classified in one group or category. The classification was founded on an intelligible differentia which distinguished the offenders thus grouped together from those left out of the group. The persons who committed these offences of bribery or corruption would form a class by themselves quite distinct from those offenders who could be dealt with by the normal provisions contained in the Indian Penal Code or the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m a class by themselves quite distinct from those offenders who could be dealt with by the normal provisions for bail contained in the Code, and if the offenders falling within this group or category were thus singled out for special treatment by imposing stringent twin conditions contained in section 45(1), there would be no question of any discriminatory treatment being meted out to them as compared with other offenders accused of offences under Part B who did not fall within the same group or category i.e. Part A and who continued to be treated under the normal procedure. Thus, the intelligible differentia in such classification was absolutely reasonable prior to the said 2013 amendment in Schedule. 12.9 We have also perused the Prevention of Money laundering Bill, 1999. In the said Bill, the Schedule was proposed in Section 2 (t). The proposed Schedule consisted of five parts namely -Part IOffences under Indian Penal Code namely sections 121, 121A, 302, 304, 307, 308, 328, 327, 329, 364A, 384 to 389, 393 to 402, 467, 489A, 489B; Part II-Offences under the Immoral Traffic (Prevention) Act,1956 namely Sections 5, 6, 8 and 9. Part III- Offences under the Arms Act, 1959 namely Sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....liance is placed by the petitioner, was for cancellation of bail granted by the Hon'ble Bombay High Court in a case under PMLA in the circumstances peculiar to that case and the Hon'ble Supreme Court found it appropriate to treat the said case a little differently from other cases of similar nature by observing as under- "34. Having carefully considered the submissions made on behalf of the respective parties and the enormous amounts of money which Respondent 1 had been handling through his various bank accounts and the contents of the note signed by Respondent 1 and notarised in London, this case has to be treated a little differently from other cases of similar nature..... 39. Lastly, the manner in which Respondent 1 had procured three different passports in his name, after his original passport was directed to be deposited, lends support to the apprehension that, if released on bail, Respondent 1 may abscond. 41. Taking a different view of the circumstances which are peculiar to this case and in the light of what has been indicated hereinabove, we are of the view that the order of the High Court needs to be interfered with....." Evidently, in the said case, whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation. The offences which were in the earlier Part A of the Schedule (prior to 2013 Amendment) are evidently henious offences such as waging war against the country, offences under NDPS Act and Terrorist activities etc. Other scheduled offences, which prior to 2013 amendment were under Part B of the Schedule, cannot be equated with such heinous offences in the context of Section 45(1) of PMLA. 12.17 Despite the above substantive amendment in the Schedule, we find no corresponding amendment simultaneously carried out in 2013, in Section 45(1), in respect of application of the limitations in grant of bail to person accused of Schedule offences earlier falling under Part B of the Schedule. We do not find any legislative intent from the perusal of the aforesaid "Statement of Objects and Reasons" as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011 to apply such stringent limitations in grant of bail to person accused of Scheduled offences earlier falling under Part B of the Schedule, but now existing in Part A thereof. On the contrary, the only object sought to be achieved by the said 2013 amendment in Schedule was to overcome this monetary threshold limit of R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith the prevailing objects sought to be achieved, reasons and concepts and to make it an effective instrument for delivery of justice eschewing the construction which will lead to absurdity. The Hon'ble Constitution Bench in S.P. Gupta v. Union of India, 1981 Supp SCC 87 had observed as follows : "63.............The interpretation of every statutory provision must keep pace with changing concepts and values and it must, to the extent to which its language permits or rather does not prohibit, suffer adjustments through judicial interpretation so as to accord with the requirements of the fast changing society which is undergoing rapid social and economic transformation. The language of a statutory provision is not a static vehicle of ideas and concepts and as ideas and concepts change, as they are bound to do in a country like ours with the establishment of a democratic structure based on egalitarian values and aggressive developmental strategies, so must the meaning and content of the statutory provision undergo a change. It is elementary that law does not operate in a vacuum. It is not an antique to be taken down, dusted, admired and put back on the shelf, but rather it is a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. .....Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsman's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used." 26. In Seaford Court Estates Ltd. v. Asher Denning. L.J said: "When a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament.....and then he must supplement the written word so as to give 'force and life' to the intention of the legislature. A Judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases." 27. Though t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ral in meaning is to see the skin and miss the soul of the Regulation." 31. True, normally courts should be slow to pronounce the legislature to have been mistaken in its constantly manifested opinion upon a matter resting wholly within its will and take its plain ordinary grammatical meaning of the words of the enactment as affording the best guide, but to winch up the legislative intent,it is permissible for courts to take into account of the ostensible purpose and object and the real legislative intent. Otherwise, a bare mechanical interpretation of the words and application of the legislative intent devoid of concept of purpose and object will render the legislature inane." 12.20 Guided by the aforesaid principles laid down by the Hon'ble Supreme Court regarding statutory interpretation and the duty of the Court to secure the ends of justice, we have no hesitation in holding that in 2013, Part B of the Schedule was omitted and the Scheduled Offences falling thereunder were incorporated in Part A with the sole object to overcome the monetary threshold limit of Rs. 30 lakhs for invocation of PMLA in respect of the laundering of proceeds of crime involved in those offence....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation of offences in Part A and Part B in the context of Section 45(1) was absolutely reasonable prior to the said 2013 amendment in Schedule. However, it would not be so in respect of all those offences later shifted from Part B to Part A, which was for a limited purpose stated in the "Statement of Objects and Reasons" as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011. In this context we may rely on the following observations of the Constitution Bench of the Hon'ble Supreme Court in Kartar Singh v. State of Punjab, (1994) 3 SCC 569- "222. As pointed out supra, the persons who are to be tried for offences specified under the provisions of TADA Act are a distinct class of persons and the procedure prescribed for trying them for the aggravated and incensed nature of offences are under different classification distinguishable from the ordinary criminals and procedure. This distinction and classification of grouping of the accused and the offences to be tried under TADA are to achieve the meaningful purpose and object of the Act as reflected from the preamble as well as the 'Statement of Objects and Reasons' about which we have elaborately dealt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de would apply in relation to a person arrested under PMLA on accusation of commission of such scheduled offences, which were earlier listed under Part B of the Schedule. In respect of such persons of latter category, the following observations of the Hon'ble Constitution Bench in Gurbaksh Singh Sibbia v. State of Punjab, (1980) 2 SCC 565, may apply with full force: "27. .............It is, however, interesting that as long back as in 1924 it was held by the High Court of Calcutta in Nagendra v. King-Emperor that the object of bail is to secure the attendance of the accused at the trial, that the proper test to be applied in the solution of the question whether bail should be granted or refused is whether it is probable that the party will appear to take his trial and that it is indisputable that bail is not to be withheld as a punishment. In two other cases which, significantly, are the 'Merrut Conspiracy cases' observations are to be found regarding the right to bail which deserve a special mention. In K.N. Joglekar v. Emperor it was observed, while dealing with Section 498 which corresponds to the present Section 439 of the Code, that it conferred upon the Sessions....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... however create a bar on taking cognizance vide section 137(1) of the Customs Act,1962 and second proviso to Section 45(1) of PMLA. 15.1 The sub-section (4) of Section 104 of Customs Act, 1962 commences with a non-obstante clause-"notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974)..............". This sub-section provides as to which offences under Customs Act, 1962 would be cognizable. It is therefore clear that the purpose of non-obstante clause in Section 104(4) is to override the Part II of the Schedule-I of the Code of Criminal Procedure. Being a Special Statute, the said provision under Section 104(4) would thus override whatever is stipulated to the contrary in the Part II of the First Schedule of the Code. Whether offence under Customs Act, 1962 is 'cognizable' or 'non-cognizable' would thus be governed only by Sections 104(4) and 104(5) of the said Act. However, in view of Section 4(2) of the Code, this nonobstante clause in Section 104(4) would not come in the way of other procedures prescribed in the Code, if there is no overriding procedure prescribed under the Customs Act,1962 or Rules made thereunder. 15.2 We have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not be cognizable." Similarly in the case of the Central Excise Act,1944 in view of Section 9-A, all offences under the said Act were also made noncognizable. The judgment in the case of Sunil Gupta (supra) was rendered prior to the aforesaid amendments carried out to make two categories of offences, namely 'cognizable' and 'noncognizable'. The only issue involved therein was whether or not a Central Excise Officer was debarred from arresting a person without a warrant in the non-cognizable offence under Central Excise Act, 1944. 15.4 The very same issue came up for consideration before the Hon'ble Supreme Court in a batch of Writ Petitions filed under Article 32 of the Constitution of India. After considering the provisions of the Code, Customs Act, 1962, the Central Excise Act, 1944, and also the said judgment of this Court in Sunil Gupta (supra) and various other decisions, the Hon'ble Supreme Court in the matter of Om Parkash vs. Union of India, (2011) 14 SCC 1, was pleased to observe as follows - "11. Since the question of arrest is in issue in these sets of cases, Mr. Rohatgi then referred to the provisions of Section 13 of the 1944 Act, which de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....such a power is not abused, but is exercised on objective facts with regard to commission of any offence. 31. Reference was also made to the decision of the Punjab and Haryana High Court in Sunil Gupta v. Union of India and Bhavin Impex (P) Ltd. v. State of Gujarat, in which the issue, which is exactly in issue in the present case, was considered and, as submitted by the learned ASG, it has been held that the FIR or complaint or warrant is not a necessary precondition for an officer under the Act to exercise powers of arrest......" 39. This lead us to the next question as to meaning of the expression "non cognizable". 41. In our view, the definition of "non-cognizable offence" in Section 2(I) of the Code makes it clear that non-cognizable offence is an offence for which a police officer has no authority to arrest without warrant. As we have also noticed hereinbefore, the expression "cognizable offence" in Section 2(c) of the Code means an offence for which a police officer may, in accordance with the First Schedule or under any other law for the time being in force, arrest without warrant. In other words, on a construction of the definitions of the different expressions us....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n officer in charge of a police station has under the Code of Criminal Procedure, for the purpose of releasing the arrested person on bail or otherwise. Mr. Rohatgi submitted that as in the case of Section 20 of the 1944 Act, the provisions of sub-section (3) of Section 104 of the Customs Act, 1962, indicate that offences under the Customs Act would not only be non-cognizable, but would also be bailable. 62. The learned AAG submitted that while in a cognizable case a police officer could arrest without warrant in non-cognizable cases he could not, the offences under the Excise Act, Customs Act or Foreign Exchange Regulation Act, 1973, are offences under special Acts which deal with the evasion of excise, customs and foreign exchange. According to the learned ASG, in such matters, the police officers have been restrained from investigating into the offences and arresting without warrant, but the Customs, Excise, Foreign Exchange, Food Authorities concerned, are not police officers within the meaning of the Code, and, they could, accordingly arrest such persons for the purposes of the investigation, their interrogation and for finding out the manner and extent of evasion of the ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The key question that arises for consideration in this writ petition is as to whether the authorities under the Central Excise Act, 1944 (hereinafter referred to as 'the Act') have the power to arrest a person under Section 13 of the Act without a warrant and without filing an FIR or lodging a complaint before a Court of competent jurisdiction. "36. This Court is in agreement with the view taken by the Punjab and Haryana High Court, viz. A Central Excise Officer, (satisfying the conditions laid down under Section 13) is not debarred from arresting a person without a warrant when he has reason to believe that the person is liable to punishment under the Act or the rules made thereunder. ...." Neither the said two judgments in Sunil Gupta (supra) or Bhavin Impex (supra), nor the judgment of 2 Judge Bench of the Hon'ble Supreme Court in Padam Narain Agarwal (supra) can therefore have any precedent value in preference to the said binding precedent of a 3-Judge bench of the Hon'ble Supreme Court in Om Parkash (supra). We therefore do not find any merit in reliance placed by the petitioner on the judgment of a co-ordinate bench of this Court in Sunil Gupta (supra)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tible with Indian Penal Code and investigations by Police Officers, the same would not come in the way of application of the provisions of the Code of Criminal Procedure in the areas mentioned in Section 4(2) of the Code in respect of special statutes. We are fortified in our view from the various judgments in the context of special statutes such as Customs Act, 1962 and FERA investigated by the officers of Customs or the Enforcement Directorate, which are mentioned hereinafter. 15.8 In M. K. Ayoob v. Superintendent, CIU, Cochin, 1984 CRl. L. J. 949 the Hon,ble Kerala High Court was pleased to observe that- "10. Sub-Section (2) of S. 4 of the Code states that all offences under any other law (i.e. law other than the Penal Code) shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions (i.e. The provisions of the Code), but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. This would mean that in the absence of any provision in the Act, touching any such matter as mentioned in S. 4(2) of the Code, the provisions of the Cod....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved merely because a section in the Code uses expression which are compatible with an offence under Penal Code or with investigation being conducted by a police officer. In relation to a person arrested under the Act, the provisions of S. 167 of the Code must be read suitably, that is, reference to "officer in charge of a Police Station" must be read as "customs Officer". This view is strengthened by the Provisions in Sub-s. (3) of S. 104 of the Act also. 12. I therefore, hold that provisions in Sub-ss. (2) and (3) of S. 167 of the code apply to persons arrested under S. 104(1) of the Act and produced before a Magistrate under S. 104(2) of the Act. The benefit of the proviso to S. 167(2) of the Code is available to them. 15.9 In S. I. O. DRI, Madras v. M. K. S. Abu Bucker, 1990 Cri L J 704 the Hon'ble Madras High Court was pleased to hold that- "21.........it is in the context of Section 4(2)Cr. P. C the applicability of the provisions of Section 167(2) Cr. P. C. to the person arrested under the Customs Act and produced before a Magistrate, will have to be considered. A reading of Section 4 (2) Cr. P. C. renders the provisions of the Code applicable in the field not cove....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any contrary provision in the Special Act or any special provision excluding the jurisdiction or applicability of the Code. It was held that the operation of Section 4(2) of the Code is straightaway attracted to the area of investigation, inquiry and trial of the offences under the special laws including the FERA and Customs Act. The following observations merit reproduction- "44. Section 167 is one of the provisions falling under Chapter XII of the Code commencing from Section 154 and ending with Section 176 under the caption "Information to the police and their powers to investigate". Though Section 167(1) refers to the investigation by the police and the transmission of the case diary to the nearest Magistrate as prescribed under the Code etc., the main object of sub- Section (1) of Section 167 is the production of an arrestee before a Magistrate within twenty-four hours as fixed by Section 57 when the investigation cannot be completed within that period so that the Magistrate can take further course of action as contemplated under sub- Section (2) of Section 167." "105. Agreeing with the majority judgment in O. P. Gupta and with the view of the High Court of Kerala in Sup....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ice are the prevention, detention and investigation of crimes. As the powers and duties of the State have increased and are increasing manifold, various Acts dealing with Customs, Excise, Forest, Taxes etc. have come to be passed and consequently the prevention, detention and investigation of offences as prescribed under those Acts have come to be entrusted to officers with different nomenclatures appropriate to the subject with reference to which they function. However, as stated supra, through the powers of customs officers and enforcement officers are not identical to those of police officers qua the investigation under Chapter XII of the Code yet the officers under the FERA and Customs Act are vested with certain powers similar to the powers of police officers. 121. Lastly, it falls for our consideration whether Section 4(2) of the Code of Criminal Procedure can be availed of for investigating, inquiring or trying offences under any law other than the Indian Penal Code which expression includes FERA and Customs Act etc. 126. Desai, J. in Vishwa Mitter of Vijay Bharat Cigarette Stores v. O. P. Poddar speaking for the Bench on the import of Section 4(2) has stated thus: (SC....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovisions of this Code would be applicable to the extent in the absence of any contrary provision in the Special Act or any special provision excluding the jurisdiction or applicability of the Code. In fact, the second limb of Section 4(2) itself limits the application of the provisions of the Code reading, ".. but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences." 131. The submission that as there is no investigation within the terms of the Code in the field of FERA or Customs Act, Section 4(2) of the Code can have no part to play, has to be rejected for the reasons given by us while disposing of the contention "What investigation means and is" in the preceding part of this judgment. 132. For the aforementioned reasons, we hold that the operation of Section 4(2) of the Code is straightaway attracted to the area of investigation, inquiry and trial of the offences under the special laws including the FERA and Customs Act and consequently Section 167 of the Code can be made applicable during the investigation or inquiry of an offence under the special Acts also ina....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in sub-section (4), all other offences under the Act shall be non-cognizable." 15.14 Therefore, the Customs Act now prescribes 2 categories of offences, first being offences falling under sub-section (4) which are 'cognizable', and second being all offences other than those falling under sub-section (4), which shall be non-cognizable in terms of sub-section (5). 15.15 Words 'cognizable' or 'non-cognizable' offence are not defined under the Act, but are defined under the Code as follows :- "2. (c) 'cognizable offence' means an offence for which, and 'cognizable case' means a case in which, a police officer may, in accordance with the First Schedule or under any other law for the time being in force, arrest without warrant;' "2. (I) 'non-cognizable offence' means an offence for which, and 'non-cognizable case' means a case in which, a police officer has no authority to arrest without warrant;" 15.16 By application of Section 4(2) of the Code and in view of the aforesaid binding precedents, the words 'police officer' appearing in these definitions would be read as 'officer authorized under the Customs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at nothing contained in this sub-Section shall apply to-...." 15.18 In the Customs Act, 1962 the 'Chapter XIII-Searches, Seizure and Arrest', from Section 100 to 110A, uses the words "Customs officer" or "proper officer" or "adjudicating authority". Therefore, no police officer can commence investigation, carry search, investigate, arrest , or grant provisional release of seized goods under the Customs Act, 1962, unless authorized under the Act in this behalf. In the context of the provisions of the said Chapter XIII-Searches, Seizure and Arrest', from Section 100 to 110 A, the provisions of the Code would be applicable only to the extent there is nothing inconsistent therewith in the Act. There are certain provisions under the Customs Act, 1962 which override the provisions of the Code such as Section 135-B, 137, 138 and 140A. 15.19 In the customs Act, 1962 there is nothing which bars setting of the criminal law into motion by any individual by making a complaint either to the officer authorized to investigate under Section 154 or 155 of the Code, or to the jurisdictional Magistrate for seeking directions under Section 155(2) or 156(3) of the Code for investigations....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he had applied his mind and therefore had taken cognizance". 15.21 As evident from the above observations, passing an order directing or permitting investigation or issuing a warrant of arrest under Section 155(2) would not amount to taking cognizance of the offence. It is also a settled law that 'cognizance' is not taken at the time of directing investigations under Section 156(3) of the Code for investigating any 'cognizable' offence. In India Carat (P) Ltd. v. State of Karnataka, (1989) 2 SCC 132, the Hon'ble Supreme Court has clearly laid down how the criminal law is set into motion as per the Code of Criminal Procedure including taking of cognizance of an offence punishable under the Indian Penal Code as follows :- "9. Before we examine the contentions of the learned counsel for the appellant and the second respondent, we may briefly refer to some of the provisions in Chapters XII, XIV, XV and XVI of the Code. Section 155 in Chapter XII pertains to information laid to the police regarding non-cognizable cases and sub-Section (2) lays down that no police officer shall investigate a noncognizable case without the order of a Magistrate having power to try ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that a Magistrate taking cognizance of a case, upon complaint, may, if he thinks fit, postpone the issue of process against the accused, and either inquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding. Section 203 empowers the Magistrate to dismiss the complaint, if after considering the statements on oath (if any) of the complaint and of the witnesses and the result of the inquiry or investigation (if any) under Section 202, the Magistrate is of opinion that there is no sufficient ground for proceeding. 12. Chapter XVI deals with "Commencement of Proceedings before Magistrates" and Section 204 empowers a Magistrate to issue summons or a warrant as the case may be, to secure the attendance of the accused if in the opinion of the Magistrate taking cognizance of the offence there is sufficient ground for proceeding. 13. From the provisions referred to above, it may be seen that on receipt of a complaint a Magistrate has several courses open to him. The Magistrate may take cognizance of the offence at once and proceed to r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....resent and thereafter decide whether the complaint should be dismissed or process should be issued. 16. The position is, therefore, now well settled that upon receipt of a police report under Section 173(2) a Magistrate is entitled to take cognizance of an offence under Section 190(1)(b) of the Code even if the police report is to the effect that no case is made out against the accused. The Magistrate can take into account the statements of the witnesses examined by the police during the investigation and take cognizance of the offence complained of and order the issue of process to the accused. Section 190(1)(b) does not lay down that a Magistrate can take cognizance of an offence only if the investigating officer gives an opinion that the investigation has made out a case against the accused. The Magistrate can ignore the conclusion arrived at by the investigating officer and independently apply his mind to the facts emerging from the investigation and take cognizance of the case, if he thinks fit, in exercise of his powers under Section 190 (1) (b) and direct the issue of process to the accused. The Magistrate is not bound in such a situation to follow the procedure laid down....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in section 2(u) of PMLA, and the accused person shall necessarily derive or obtain such property, directly or indirectly as a result of criminal activity relating to such offence which is specified in the Schedule to PMLA. Therefore, any property derived or obtained, directly or indirectly as a result of any criminal activity relating only to such offence which is not specified in the Schedule to PMLA, would not be covered under the term "proceeds of crime" for the purpose of PMLA. Consequently, for invocation of section 3 against any person it is necessary that firstly there shall be such "proceeds of crime", and secondly such person shall knowingly project or claim such "proceeds of crime" as untainted property. For conducting search or seizure under Section 17 or 18 of PMLA, the first proviso to sub-Section (1) of Section 17 and also of Section 18, create an embargo and bars such search unless in relation to the 'Scheduled Offence, either a report under Section 157 of the Code is forwarded to a Magistrate, or a complaint has been filed for taking cognizance by an officer authorised to investigate Scheduled Offence or other conditions specified are fulfilled. 16.1 Second p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... financial institutions and intermediaries, forms for summons or authorization for search, seizure, freezing etc., forms of arrest order or acknowledgment slips for various matters and the manner of forwarding the same to the adjudicating authority, the manner of receiving the records authenticated outside India, Appeals to the Appellate Tribunal, adjudicating authority, issuance of provisional attachment orders, and taking possession of attached or frozen properties confirmed by the adjudicating authority. Similarly notifications have been issued for designating Special Courts for trial of offences punishable under PMLA for specified areas. 16.5 To the extent any of these Rules or any provision of PMLA is inconsistent with the provisions of the Code it will have overriding effect, and would have to be complied with. All other provisions of the Code, for which there is no inconsistent provision in PMLA or Rules made thereunder, however, would necessarily apply with full force. For example- In the matter of arrest under Section 19 of PMLA, the Rules notified by Central Government vide G. S. R. 446(E) dated 01.07.2005 would have overriding effect on the provisions of the Code of Cri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity to oppose the application for bail; and (ii) That the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not likely to commit any offence while on bail. 30. The conditions specified under Section 45 of the PMLA are mandatory and needs to be complied with which is further strengthened by the provisions of Section 65 and also Section 71 of the PMLA. Section 65 requires that the provisions of Cr. P. C. shall apply in so far as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of the PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of Cr. P. C. would apply only if they are not inconsistent with the provisions of this Act....." 33........ We have noted that Section 45 of the PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them....". 16.7. It is therefore evident from the above observations of the Hon'ble Supreme Court that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itioner so far as PMLA is concerned is premature. Unless as indicated above the alleged Scheduled Offence under Customs Act, 1962 is registered under Section 154 and a report thereof is sent under Section 157 of the Code to the Magistrate, or, a complaint is filed for taking cognizance of the Scheduled Offence by an officer authorized to investigate the said Scheduled Offence, the petitioner cannot seek from the jurisdictional Magistrate any directions under the Code for investigations by the authority under PMLA. 19. Strict compliance with the safeguards inbuilt in the criminal procedures prescribed under the Code read with those under the Special Statute, is essence of Article 21 of the Constitution of India. The importance of compliance with the procedural safeguards has been elaborately explained by the Hon'ble Constitution Bench of the Supreme Court in Lalita Kumari v. State of U. P.-2014(2) SCC 1. 20. In view of the above findings, we hold that such composite prayer seeking direction for investigation of offence under Section 3 r/w 4 of PMA along with the offence under Customs Act, 1962, would not be maintainable. Therefore, in our view, the writ petition is liable to b....