TaxTMI 
TaxTMI 
2017 (7) TMI 109
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....f a case under investigation with Enforcement Directorate of Ministry of Finance in the Government of India (Headquarters Investigation), it having been described as Enforcement Case Information Report No. ECIR/HQ/02/HIU/2015 registered on 27.10.2015 (for short, "ECIR") and, therefore, have been heard together and are being decided through this common judgment. THE PETITIONS 2. It may be mentioned at the outset that the first petitioner (Shri Virbhadra Singh) in the first above captioned petition (the first petition or case) has been in active political and public life for last several decades, having been a member of the Union legislature or the legislature of the State of Himachal Pradesh from where he hails, and during such period having served as a Minister of the Union of India or Minister in the cabinet in the Government of Himachal Pradesh, he presently being the Chief Minister. The second petitioner (Smt. Pratibha Singh) of the said first petition is his wife. 3. The names of the other three petitioners (Shri Chunni Lal Chauhan, Shri Vikramaditya Singh and Picheswar Gadde) in the above captioned matters are stated to have figured during the course of investigation,....
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....mission agent at Parwanoo Mandi in the State of Himachal Pradesh, it being alleged that certain acts of commission or omission committed by the petitioners of the first petition constituting certain offences, inter alia, punishable under the Prevention of Corruption Act, 1988 (for short, "POC Act"), as also under PMLA, with his tacit help and support had necessitated investigation into his role. After the registration of the ECIR, summons were issued to this petitioner under Section 50(2) and (3) of PMLA, the validity whereof is questioned by him through the second petition pressed with the prayer for following reliefs: "a) issue writ of certiorari or any other writ to quash the ECIR/HQ/02/HIU/2015 dated 27.10.2015 registered by the Enforcement Directorate and proceedings initiated under PMLA against the petitioner; and b) pass such other order or orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case." 7. In the counter affidavit filed by the respondents in the third petition, it has been stated that the statement of second petitioner of the first petition (Smt. Pratibha Singh) was recorded on 09.08.2016 which brought out that acqu....
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....stered in the office of Sub-Registrar Mehrauli on 27.08.2011. The said acquisition being part of the subject matter of investigation, inter alia, of the ECIR, summons were issued under Section 50(2) and (3) PMLA requiring his presence for purposes of investigation on 07.01.2016. Alleging that he was illegally detained and tortured so as to be coerced to write or sign certain false statements during interrogation on 07.01.2016, when he had appeared in compliance, he filed the said petition seeking the following reliefs: "I. issue a writ of mandamus directing the respondent no.1 to supply a copy of the statements of the petitioner recorded on 07.01.2016 so as to enable the petitioner to contest the proceedings effectively; II. issue a writ of mandamus directing the respondents to not investigate/interrogate the petitioner without informing the reasons for such interrogation / investigation; III. issue a writ of mandamus directing the respondents to permit the petitioner to be accompanied with his advocate or to be represented through his advocate/representative in case of any further investigation and the said investigation be undertaken in normal timings and video recording....
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....ts referring, in brief, to the role of various individuals including Anand Chauhan, Joginder Singh Ghalta, Prem Raj, Lawan Kumar Roach, Vakamulla Chandrashekar and Ram Prakash Bhatia and certain others, besides the petitioners before this court, the narration statedly revealing that in order to project the disproportionate assets as untainted they have knowingly indulged in certain transactions of money laundering. The allegations are summarized thus: (a) Shri Virbhadra Singh was Minister of Steel from 28.05.2009 to 18.01.2011 and Minister of Micro Small and Medium Enterprises (MSME) from 19.01.2011 to 26.06.2012 in Govt. of India. Huge cash deposits were made in Bank Accounts of Shri Anand Chauhan, an LIC agent, maintained with Punjab National Bank and HDFC Bank, both located at Sanjauli, Shimla during the period 2009-12. The said cash deposits were utilized for purchasing LIC policies in the name of Shri Virbhadra Singh and members of his family for a sum of Rs. 5,14,87,200/-. (b) In the wake of assessment proceedings intitiated by the Income Tax authorities against Shri Anand Chauhan, allegedly as a cover-up to justify the source of money utilized for purchase of LIC polic....
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....either non-existent or not suitable for transporting such cargo (apples), they being oil tanker, two-wheeler, open tipper or car. (f) According to the assessment of the Director of Horticulture of the State of Himachal Pradesh, the yield of apple crop from the orchard admeasuring 105 bighas of land during the financial years corresponding to the AYs mentioned above would be approximately 112.812 metric tonnes, 55.860 metric tonnes and 191.604 metric tonnes which would translate to 5500, 2700 and 9300 number of boxes of the fruit. The total assessed harvest of apples during the relevant period was much lower than what was claimed by inflated figures reflected in the revised ITRs, the claim being false based on fake sale proceeds vouchers provided by the petitioner Chuni Lal Chauhan. (g) On the basis, inter alia, of the statements of Ram Prakash Bhatia and Vineet Mishra former HDFC Manager, recorded under Section 50 of PMLA, it is stated that huge cash amounts belonging to Shri Virbhadra Singh were adjusted with various unrelated entities (entry operators), transferred to the personal accounts of one Vakamulla Chandrashekar, Promoter Tarini Group of Companies and subsequently t....
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....ioners themselves referred to the previous proceedings in the courts primarily commencing with Writ Petition (Civil) No.4063 of 2015, filed on 29.09.2015, before the High Court of Himachal Pradesh in the wake of search and seizure operation conducted by CBI on 26.09.2015 wherein "interim protection" was granted to Shri Virbhadra Singh and Smt. Pratibha Singh (the petitioners in the first case). The said writ petition was transferred from the High Court of Himachal Pradesh to this court, in terms of order dated 05.11.2015, by the Supreme Court of India on Transfer Petition (Crl.) No.425 of 2015 and appears to have been registered in this court as Writ Petition (Civil) No.2757/2015. The said writ petition came up before a learned Single Judge of this Court on 06.04.2016 when directions were given to the petitioners to join investigation, though taking note of the assurance held out earlier that they would not be arrested when they so appear before the investigating agency at that stage. 15. It appears that in response to the summons under PMLA issued to Shri Virbhadra Singh and Smt. Pratibha Singh on 16.11.2015, by a reply dated 30.11.2015, request was made to CBI for copies of do....
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....tions is from the perspective of the application primarily of Section 5 of PMLA which is distinct from the investigative process taken up under the ECIR as is statedly intended by the respondents to lead to criminal prosecution, possibly of the petitioners, for offence under Section 4 of PMLA, the questions raised in the present proceedings being entirely distinct. 19. Shri Picheswar Gadde, in his pleadings, refers to certain assessment proceedings of 2014-2015 by the authorities under the Income Tax Act and Wealth Tax Act, 1957 leading, inter alia, to writ proceedings taken out in this court in such context, his contention also being that the dragging of his name in the present case under investigation into suspected offence under PMLA allegedly committed by the other petitioners is motivated, the design being to coerce him into making false statements. THE CONTENTIONS 20. The document in the nature of Enforcement Case Information Report (ECIR) is concededly not prescribed by law contained in PMLA or rules framed there under. The respondents, however, seek to refer to it as "an internal document of Directorate of Enforcement for proper identification of a particular case"....
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....h role unless there is a specific authorization by general or special order to that effect. It also needs to be flagged here that the law confers, by Section 19 PMLA, on the Director (or some other functionaries specified in the provision) the power to arrest any person if on the basis of material in his possession there is reason to believe that such person is guilty of the offence of money-laundering. 23. These petitions were filed raising a number of contentions but have been pressed primarily on the submission that the offence of money-laundering, defined in Section 3 and made punishable under Section 4 PMLA, is a "non-cognizable offence" and, therefore, there cannot be an investigation undertaken without there being an order of a court competent to try such case authorizing such investigation. It is the contention of the petitioners that since the Special Court under PMLA cannot take cognizance, except upon a complaint in writing by the authority specified in the law, there being no complaint submitted till date, adoption of "coercive measures" under PMLA, merely on the basis of ECIR, was not permissible in law, it being designed to circumvent the complaint procedure mandat....
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...., therefore, deserve outright rejection. It has been submitted that the authorities under the PMLA, represented by the respondents, have embarked upon the investigation bearing in mind the circumspection within which they are expected under the law to conduct themselves and that the arguments questioning the investigative process are misconceived, there being no legal requirement of authorization from the Special Court to be taken as a condition precedent, the questioning of the validity of ECIR being premature, the role of the Special Court to take over the criminal action upon cognizance being taken in the event of complaint being filed. It is the submission of the respondents that the offence of money laundering continues to be a cognizable offence, even after amendment of 2005, the only change thereby brought about being the clarity that police officers cannot, unless specially authorized for such purposes, cause an investigation into the offences under PMLA nor have the power to arrest any person for such offence, such power of arrest being restricted to the authorities specified by the statute under Section 19. Taking this submission further, it was argued that there is no re....
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....omicide), when committed, have a deep impact on the general feeling of well-being in the society at large, in addition to the serious repercussions they have on the victim and his kin. In contrast, some offences affect primarily the individual victim (e.g. in the offence of cheating), he being, at times, open to forgive and forget, inclined to bury the hatchet if suitable amends were to be made. From these perspectives, the offences under IPC are classified variously: cognizance or non-cognizable; bailable or non-bailable; compoundable or non-compoundable, etc. 28. Under the general procedural law (Cr.P.C.), the police is duty bound to initiate action, in the event of information related to commission of a cognizable offence being made to it in terms of Section 154 Cr.P.C. The police registers the First Information Report (FIR) and is, thereafter, obliged in law to take up investigation which must eventually culminate in report under Section 173 Cr.P.C. being submitted. If the information about the cognizable offence is substantiated by the evidence gathered during investigation, such report under Section 173 Cr.P.C. may possibly take the shape of a charge sheet wherein the pers....
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....commit such offence) Cr.P.C., Section 197 (Prosecution of Judges and Public Servants) Cr.P.C, etc. 30. The procedure for dealing with non-cognizable offences under the general criminal law is distinct from that of cognizable offences. Such offences (non-cognizable) may or may not be reported to the police. If information of a non-cognizable offence is given to the police it is required by Section 155 Cr.P.C. to register the same in the manner prescribed, the informant (who may or may not be the victims) being referred to the Magistrate. Section 155 (2) Cr.P.C., in clear terms, prohibits investigation into non-cognizable offence by a police officer unless there is an order of a magistrate having the power to try or commit such case for trial. Section 155 (3) Cr.P.C. , however, makes it clear that if such direction were to be given to a police officer (by a magistrate) for investigation into a non-cognizable offence, he would exercise all such power and jurisdiction as would vest in him in law while causing investigation into a cognizable offence, except, and this is to be marked, the power to arrest without warrant. 31. The occasion for a magistrate to issue directions for inv....
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....al criminal law (substantive or procedural) envisages criminal action being initiated not only by the police but also by a complaint, as indeed by a complaint or information lodged by a person other than a police officer. The simple illustration of the last mentioned category would be a complaint by a public servant respecting offence relating to contempt of lawful authority or by a court for offences relating to evidence or documents given in evidence (Section 195 Cr.P.C.) This last category is covered by the provision contained in Section 190 (1) (c) Cr.P.C. - "own knowledge" of the Magistrate being an additional facet of the said provision - upon which a competent Magistrate "may take cognizance of any offence". MEANING OF "COGNIZABLE OFFENCE" - GENERAL LAW 34. The expressions "cognizance" and "cognizable offence" are distinct from each other. While the word "cognizable", qualifying the word "offence", relates to the classification in which the latter would fall, the expression "cognizance" is defined to mean "jurisdiction" or "the exercise of jurisdiction" or "power to try and determine causes". [see Black's Law Dictionary]. In common parlance, it simply means "taking....
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....ression "cognizable offence" refers one to the First Schedule appended to the Code of Criminal Procedure, 1973 (Cr.P.C.), its caption "Classification of Offences" being indicative of its purpose. The First Schedule, it is of import here, is in two parts, the first relating to offences under the Indian Penal Code (for short, "the IPC offences") and the second relating to offences against other laws (say, "special law offences"). The fourth column of the tabulation indicates in the first part (IPC offences) as to which offences are cognizable or non cognizable, the fifth and sixth column indicating its nature (bailable or non-bailable) and the court by which a particular offence is to be tried respectively. The second part (Special Law Offences) of the first schedule to Cr.P.C. is general in nature. It could not conceivably refer to the offences by the name or label given to each of them by the law. Therefore, it refers to them by the gravity seen from the perspective of the punishment prescribed under the applicable law. Such special law offences are put in three categories, the one of least gravity being those punishable with imprisonment for less than three years or with fine, all....
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....fences (cognizable or non-cognizable, bailable or non-bailable, etc.). Illustrations on the subject are far too many to be of any doubt on this score; Official Secrets Act, 1923; Prevention of Food Adulteration Act, 1954 (since replaced by Food Safety and Standards Act, 2006); the Customs Act, 1962; Narcotics Drugs and Psychotropic Substances Act, 1985; Prevention of Corruption Act, 1988; Maharashtra Control of Organized Crime Act, 1999; Prevention of Terrorism Act, 2002 and Protection of Children from Sexual Offences Act, 2012, etc. Section 2(c) Cr.P.C., as extracted above, it is pertinent to highlight, therefore, refers not merely to the First Schedule of Cr.P.C. but also, if need be, to the provisions of "other law" for determining if the offence is to be construed as "cognizable" or otherwise. 41. What, however, needs to marked for further discussion is the fact the definitions of both cognizable offence or non-cognizable offence, refer to the power or jurisdiction of a police officer "to arrest without warrant" to be the crucial test. The provisions relating to the action expected to be undertaken by the police, upon information relating to a crime reaching its notice (the ....
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.... is arrested, his presence in the Court whenever required cannot be ensured, and the police officer shall record while making such arrest, his reasons in writing: Provided that a police officer shall, in all cases where the arrest of a person is not required under the provisions of this sub-section, record the reasons in writing for not making the arrest. (ba) against whom credible information has been received that he has committed a cognizable offence punishable with imprisonment for a term which may extend to more than seven years whether with or without fine or with death sentence and the police officer has reason to believe on the basis of that information that such person has committed the said offence; (c) who has been proclaimed as an offender either under this Code or by order of the State Government; or (d) in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing; or (e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or (f) who is reasona....
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....ficer has virtually a clear (unrestricted) power to arrest provided, of course, he has "reason to believe" on the basis of "credible information" about the complicity. In the crimes of lesser gravity, those covered by Section 41(1)(b), in contrast, the police officer does not have a blanket power of arrest. In order to cause arrest without warrant in such cases, he must put on record the satisfaction about the necessary criteria having been met which includes not only credible information about complicity but also the need to do so for preventing commission of further offences or for proper investigation or for preventing tampering with or destruction of evidence or influencing of witnesses or to ensure that the person in question is brought to justice. 44. It needs to be remembered that the provision contained in Section 41(1)(a) Cr.P.C. originally conferred a very wide power on the police officer giving him authority in law to arrest a person without warrant even on "reasonable suspicion" of his complicity in the commission of a cognizable offence. The law was amended by the Code of Criminal Procedure (Amendment) Act 2008 (Act 5 of 2009), coming into effect from 1.11.2000, it ....
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....ng to say that a police officer has the power of arrest and quite another to say that the power was properly or justifiably exercised. It has been the consistent view of the courts in India that power is not to be exercised merely because it exists. [see Arnesh Kumar Vs. State of Bihar, (2014) 8 SCC 273 and Court on its own motion Vs. Central Bureau of Investigation, ILR (2004) 1 Delhi 47]. By various pronouncements, guidelines have been given by the courts to the law enforcement agencies as to the manner in, or circumspection with, which a power of such import as of arrest is to be exercised. The amended provision of Section 41 Cr.P.C. incorporates some of such guidelines putting certain restrictions on the general power of police officer to arrest in the case of a cognizable offence, thereby seeking to regulate (if not minimize) its use. The objective of the amendment brought into force by Act no.5 of 2009 referred to above was primarily to check abuse of the power of arrest vested in a police officer. 48. Thus, the power to arrest a person involved in a cognizable offence still vests in a police officer but he is inhibited by law from exercising it except in cases or situatio....
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....ation and cognizance by the court. As held in Board of Muslim Wakfs, Rajasthan Vs. Radha Kishan and Ors., (1979) 2 SCC 468, "it is not a sound principle of construction to interpret expressions used in one Act with reference to their use in another Act, and decisions rendered with reference to construction of one Act cannot apply with reference to the provisions of another Act unless the two Acts are in pari materia". 52. For the foregoing reasons, comment on the issue as to whether the offence of money-laundering is cognizable or as to whether authorization from the court is a pre-requisite to investigation or arrest in its relation is presently reserved till the scheme and the provisions of the law have been properly understood. Before one proceeds in that direction, however, the meaning of "cognizable offence" in the context of some other criminal statutes may also be noted. MEANING OF "COGNIZABLE OFFENCE" - SPECIAL LAW(S) 53. The general substantive law providing for offences punishable in India is supplemented by numerous enactments which create subject-specific offences, they including, as mentioned earlier, Official Secrets Act, 1923; Prevention of Food Adulteration....
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....ce report under Section 190(1)(b) but upon a complaint of the authorized officer in terms of Section 13(3), the cognizance in such case thus being under Section 190(1)(c) Cr.P.C. Because the offences under this special law are cognizable and since the police is empowered to investigate, there being no provision to such effect, only because the cognizance by the court would eventually be on a complaint rather than a police report it cannot be said that arrest cannot be effected without proper authorization from the court. 56. The special law on food adulteration provides a slightly different dispensation. The erstwhile enactment, the Prevention of Food Adulteration Act, 1954, was primarily a criminal law which created offences defined and provided for by various clauses of Section 16. Section 20(3) classified one of them, the one specified in Section 16(1AA), to be "cognizable" and "non-bailable", making it clear that such special stipulation was necessary because under the ordinary law governed by the Section Part of First Schedule of Cr.P.C. it would be otherwise have been a non-cognizable and bailable offence, in as much as the maximum punishment would be imprisonment for a te....
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....or bailable) or not would have to be regulated by the Second Part of the First Schedule appended to the Code of Criminal Procedure, 1973, thus guided by the maximum punishment prescribed. Generally speaking, all offences other than those prescribed in Section 59(iii) and (iv) attract punishment which falls in the least grave category of the Second Part of the First Schedule to Cr.P.C., and consequently they would have to be treated as non-cognizable and bailable. But, keeping in view the punishment prescribed (imprisonment for term which may extend to six years) therefor, the offence (manufacture, sale, distribution etc. of food articles resulting in grievous injury) under Section 59(iii) would be cognizable and non-bailable and, by virtue of Section 74 triable by the special court. In contrast, the offence (manufacture, sale, distribution etc. of food articles resulting in death) under Section 59(iv) which attracts imprisonment which shall not be less than seven years but may extend to imprisonment for life would fall in the most grave category of Second Part of the First Schedule to Cr.P.C. and thus also be cognizable and non-bailable, but triable by the special court under Secti....
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.... of arrest (under Section 104) in cases where there is reason to believe commission of certain specified offences under the special law, such power being akin to that of a police officer and mandatorily required to be subject to the provisions of Code of Criminal Procedure, 1973. The enactment creates special offences (Sections 132 to 135-A and Section 136) and directs, by Section 138, all such offences to be triable by a Magistrate following the summary procedure. A customs officers, duly empowered or authorized, is entitled to examine any person acquainted with the facts and circumstances of the case and, for such purposes, may compel appearance by issuing summons either to give evidence or to produce documents in terms of Section 107 and 108. 62. Having regard to the overall scheme of the Customs Act the investigation carried out by the authorities under the law results in the prosecution in the court of a Magistrate, it taking cognizance, subject to appropriate sanction where required, in terms of Section 137, the nature of the smuggled goods "prohibited goods" or the value of the duty thereby evaded (Rs.50 lacs or more) controlling the classification of the offence as "cogn....
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.... into a non-cognizable offence under the Customs Act, it being a special law not controlled, for such purposes by the general law relating to the powers of police to investigate, as stipulated in Chapter XII of the Code of Criminal Procedure, 1973 (Sections 154 to 176). 66. In summing up on this issue, it may be observed that the expression "cognizable" in relation to an offence cannot have a uniform or static meaning. Its connotation may differ from one law to the other. Further, only because there are restrictions regulating the power of arrest in a cognizable case, or because there are certain pre-requisites to the taking of cognizance - say, filing of a complaint - it does not necessarily lead to the inference, unless there is a statutory provision to such effect, that the empowered agency cannot investigate or arrest without authorization from the court. 67. The above conclusion emerging from the scheme and plain language of the law is reinforced by the fact that the marginal heading of Section 45 PMLA continues to remain unamended, it declaring that the offences under this special law are cognizable. The speeches (and the intervention) of the mover(s) of the amending bi....
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....se in such a manner so as to facilitate the party involved (or complicit) to be in a position to project or claim it to be an "untainted" asset. To put it simply, the money or the asset should be "tainted" (say, undeclared or result of criminal activity) but being shown as legitimate by being routed through (the impugned) transactions meant to give it the colour of legitimacy. 69. As in the case of Customs Act, PMLA seeks to deal with the scourge of money-laundering both by civil action (attachment, adjudication and confiscation) and criminal action (prosecution for the offence of money-laundering leading to punishment), the former by special machinery (Adjudicating Authorities) created for such purposes (Section 6), the remedies being available initially before an Appellate Tribunal (established under Section 25), and the latter before the Special Courts (under Section 43). 70. Section 48 of PMLA specifies the authorities specially created for its purposes, the highest being the Director (generally known as Director of Enforcement), an appointee of the Central Government, the other authorities (Additional Director, Joint Director, Deputy Director, Assistant Director and othe....
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....ion 5(1) clarifies that the Director (of Enforcement) cannot proceed to order provisional attachment of a tainted property unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 173 Cr.P.C. or a complaint has been filed by person duly authorized to do so under the law, the second proviso creating an exception in case the wait for the submission of such police report or filing of complaint may lead to frustration of the proceedings. 74. The Authorities under the PMLA have been vested with the powers and jurisdiction, inter alia, for gathering of evidence, if required by search and seizure, summoning and enforcing the attendance of any person acquainted with facts or for production of records, examination of witnesses and documents including by issuance of commission etc. While the powers of survey, seizure, search, etc. conferred on the enforcement authorities are spelt out in various provisions of the fifth chapter, some such powers (as of the civil courts) are vested in the Adjudicating Authority by Section 11. The fourth chapter creates certain obligations of Banking Companies, Financial Institutions and Intermediaries to share ....
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....f which he may entertain "reason to believe" that the person being arrested is guilty of the offence of money-laundering (or some other offence under the special law, such as those provided in Section 62 and 63). The pre-requisite for a lawful arrest in terms of Section 19(1) PMLA is recording of the reasons for such belief "in writing" and after effecting arrest the person so arrested to be informed of the "grounds of such arrest". That the two actions, one for attachment leading to confiscation of the tainted asset and the other leading to criminal prosecution, are inter-connected is brought out vividly by Section 19(2) obliging the arresting officer to forward a copy of the order (including of authorization) setting out the reasons for belief of complicity of the arrestee, along with copy of the material on the basis of which such belief was drawn, to the Adjudicating Authority which, in normal course, would be already privy to the ongoing investigation in terms of similar submission made under Section 5(2). The Adjudicating Authority is obliged by the law to keep in its safe custody and control such submission concerning the arrest during investigation under PMLA "in a sealed e....
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....o file a complaint under this Act, commit the case relating to the scheduled offence to the Special Court and the Special Court shall, on receipt of such case proceed to deal with it from the stage at which it is committed. (d) a Special Court while trying the scheduled offence or the offence of money-laundering shall hold trial in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), as it applies to a trial before a Court of Session. (2) Nothing contained in this section shall be deemed to affect the special powers of the High Court regarding bail under Section 439 of the Code of Criminal Procedure, 1973 (2 of 1974) and the High Court may exercise such powers including the power under clause (b) of sub-section (1) of that section as if the reference to "Magistrate" in that section includes also a reference to a "Special Court" designated under Section 43." 79. Though Section 71 declares unequivocally that provisions of PMLA "shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force" which resonates what in effect is the import of Section 4(2) Cr.P.C. which has already been taken ....
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....eption being where there is a special authorization. At the cost of repetition it needs to be recalled that the power of arrest in terms of Section 19 is also conferred generally on the senior officers of Enforcement Department (Director, Deputy Director or Assistant Director), though provision is made for authorization of other officers as well. 83. The moot question raised in these proceedings is as to whether the offence of money-laundering punishable under Section 4 PMLA is cognizable or not. The law, as it presently stands amended, contains the following provision in Section 45: "45. Offences to be cognizable and non-bailable.-(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part-A of the Schedule shall be released on bail or on his own bond unless- (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that....
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....competent. 85. The above aspect would need consideration of the effect of amendment. CONSTRUING THE AMENDED SECTION 45 PMLA 86. The law contained in PMLA, as originally enacted, declared by Section 45 that every offence under this special enactment would be cognizable. The original provision of Section 45 (prior to amendment of 2005) must be quoted here: "45. Offences to be cognizable and non-bailable.- (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),- (a) every offence punishable under this Act shall be cognizable; (b) no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond unless- (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person, who, is under the age of sixteen years, or is a woman or is sick o....
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....offence of money-laundering under Section 4 PMLA is non-cognizable and consequently, it is urged, any arrest without authorization from the competent court, or even investigation by summoning any person under Section 50 PMLA should be taboo. 89. Per contra, it is the argument of the respondents that the heading of Section 45 remains un-amended and that the changes brought about by Act No.20 of 2005 have the effect only of clarifying that the investigation of PMLA offences is entrusted to the Enforcement officers and not to the police at large which, consequently, cannot embark upon such probes or exercise their power of arrest under the general law. It is the argument of the respondents that the Parliament debates cannot be used for construing the intention of the legislature since the provisions of the law are clear and unambiguous. Relevance of marginal head 90. The petitioners rely on Dr. Sham Lal Narula vs. CIT, 53 ITR 151 (SC); Chandroji Rao vs. Commissioner of Income Tax, M.P. Nagpur, (970) 2 SCC 23; Thakurain Balraj Kunwar & Anr. vs. Rae Jagatpal Singh, 1904 Indian Appeals (Volume XXXI) 132; Prakash Nath Khanna vs. CIT, (2004) 9 SCC 686; Guntaiah & Ors. vs. Hambamma....
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....at "the headings or titles prefixed to a section or a group of sections can be referred to in determining the meaning of doubtful expressions", such headings or title of a section, however, being "very broad and general indicators of the nature of the subject matter dealt with thereunder" and consequently having "a limited role to play in the construction of statutes", as held by a bench of three Hon'ble Judges in Forage & Co. (of Ushala) vs. Municipal Corporation of Greater Bombay & Ors., (1999) 8 SCC 577 and by a Constitution Bench of the Supreme Court in Sarah Mathew vs. Institute of Cardio Vascular Diseases & Ors., (2014) 2 SCC 62. 94. The view that marginal headings of different sections of a legislation are not part of the statute has been junked over the years. In Bhagirath vs. Delhi Administration, (1985)2 SCC 580, it was held by a Constitution bench that "marginal notes are now legislative and not editorial exercises". Similar view was earlier expressed in K.P. Varghese Vs. Income Tax Officer, Ernakulam and Anr., AIR 1981 SC 1922. Instances are galore of amendment Acts modifying, altering, substituting, deleting or making some changes even in the marginal headings o....
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....ndment, the court must apply the Heydon's Mischief Rule and find out as to what was the mischief which the legislature wants to remove by the amendment. Relevance of legislative debate 99. The learned counsel for the petitioners relied upon the speeches of the Union Ministers who piloted the amendment Bill in the two Houses of Parliament, it being the Minister of Finance introducing the amendment Bill in the Lok Sabha (on 06.05.2005) and, after its passage in the said House, it being the Minister of Home Affairs in Rajya Sabha (on 11.05.2005). From the copies of the said speeches and the report of debates that followed, as submitted at the hearing, it appears the speeches of both the Ministers were verbatim the same. The said speeches, may be quoted (as taken from Lok Sabha reports) as under: "Sir, the Money-Laundering Act was passed by this House in the year 2002, and number of steps have to be taken to implement it. Sir, two kinds of steps were required. One was to appoint an authority who will gather intelligence and information, and the other was an authority to investigate and prosecute. This Act was made to implement the political declaration adopted by the Speci....
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....l. An Appellate Tribunal means a lot of money. There are other Appellate Tribunals in similar Acts. So, we could authorise those Appellate Tribunals to function as Appellate Tribunal under this Act. After all, it is the same retired High Court Judge or a serving High Court Judge who is going to be there. So, part of the time, he would devote to dealing with appeals arising under some other Acts; and, part of the time, he would deal with appeals arising under this Act. At least in the initial years, we do not think, there would be enough work for a full-time Appeallate Tribunal. What we are doing is, we are inserting a new Section, 2 (n) (a) defining the term, 'investigation'; making an amendment to Sections 28, 29 and 30, dealing with tribunals; amending Sections 44 and 45 of the Act to make the offence non-cognizable so that only the Director could take action; and also making consequential changes in Section 73. I request hon. Members to kindly approve of these amendments so that the Act could be amended quickly and we could bring it into force." (emphasis supplied) 100. It was further pointed out during the arguments that in the course of the debate that followed i....
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....ory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the Mover of the Bill explaining the reason for the introduction of the Bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and purpose for which the legislation is enacted. This is in accord with the recent trend in juristic thought not only in western countries but also in India that interpretation of a statute being an exercise in the ascertainment of meaning, everything which is logically relevant should be admissible." (emphasis supplied) 106. In Kesavananda Bharati vs. State of Kerala, (1973) 4 SCC 225, it was concluded that: "2140. It is hazardous to rely upon Parliamentary Debates as aids to statutory construction. Different Speakers have different motives and the system of „Party Whip‟ leaves no warrant for assuming that those who voted but did not speak were of identical persuasion. That assumption may be difficult to make even in regard to those who speak. The safest course is to gather the intention of the legislature from the language it uses. T....
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....ecrecy and stealth and their detection requires expertise and specially trained personnel. A general power of scrutiny of business transactions at large cannot be allowed to be undertaken for unearthing such activity. A probe of this nature requires due circumspection in as much as the initial suspicions may not necessarily be correct. A probe on the lines of investigative process by the police would perhaps generally not suit the special demands of an investigation qua money-laundering. 111. The provision contained in Section 45(1)(a), as appearing in the original enactment, seemingly was in conflict with the overall scheme of the law wherein the police had been kept out of the investigative process which was placed, instead, in the hands of a special machinery created by the legislation for its purposes. It appears the legislature was concerned that the layperson's perspective and understanding of the expression "cognizable offence" - which was perhaps correct in the light of the provisions of the Code of Criminal Procedure as they stood prior to the amendment of 2010 - would create confusion and might result in police also exercising jurisdiction in relation to PMLA offen....
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....the declaration in Sections 65 and 71, concluding that the conditions for release on bail imposed by Section 45 are "mandatory and need to be complied with", particularly in view of the presumption under Section 24 shifting the onus to prove to the contrary on the accused. 116. The case reported as Hari Narayan Rai Vs. Union of India and Anr., 2010 SCC Online Jhar 475, is one of the early cases dealing with the subject. A complaint under PMLA had been filed in that case. The challenge against the proceedings taken out in its wake was repelled by the Jharkhand High Court, inter alia, observing that the right to investigate under this special law was part of its scheme, it having the overriding effect and consequently, rendering the provision contained in Section 167(2) Cr. P.C. inapplicable. Since the issues presently raised here have no connection with the effect of Section 167(2) Cr. P.C., this court refrains from making any observations on that subject. What needs to be picked up from this ruling, however, is the finding that the special law (PMLA) has its own scheme for investigation. 117. The case of Karam Singh and Ors. Vs. Union of India and Anr., 2015 SCC Online P&H 19....
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....rovisions contained in Sections 154 and 157 relating to a cognizable offence and Section 155 relating to a non-cognizable offence (that being an argument in the alternative), as indeed the requirements of Sections 167 and 172 Cr. P.C. regarding entering of the proceedings relating to investigation in a case diary and its production at the time of seeking remand of the person arrested. A learned single judge of the High Court of Gujarat found no merit in the petitions holding, inter alia, that there was nothing shown on which it could be said that such procedure of investigation applicable to the police is required to be followed by the investigating agency under the special law referring in this context to the decisions of the Supreme Court in Gautam Kundu (supra), of Punjab and Haryana High Court in Karam Singh (supra) and of Jharkhand High Court in Hari Narayan Rai (supra), eventually concluding that PMLA is a complete code and its provisions would override the general law. 119. The case Dalmia Cement (Bharat) Ltd. and Ors., Vs. Assistant Director of Enforcement Directorate and Ors., 2016 (4) ALD 47, had also come up against the backdrop of summons issued under Sections 50(2) ....
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.... either the registration of FIR (under Section 154 Cr.P.C.) or of obtaining permission of a Magistrate (or of Court) before effecting arrest of an accused, the power of arrest in terms of Section 19 being not subject to any such restrictions. It may be added that the contentions about the authorization of the arresting officer in that case and the procedure followed by him were also rejected on the basis of material placed before the court. 121. A division bench of this court has also had the occasion to hear and form opinion vis-a-vis similar contentions in the context of PMLA in a batch of writ petitions led by Gurucharan Singh Vs. Union of India and Ors. WP (Crl.) 307/2016 in which the applications for bail pending consideration of the main petitions were decided by order dated 27.04.2016. The learned division bench noted the contentions that the provisions of the Code of Criminal Procedure governing the investigation by police, particularly those contained in Sections 154, 155, 157, 167 and 172 had not been followed. It observed that "prima facie ... it was mandatory" for the respondents to do so and on the basis of such tentative conclusion the directions for release of the....
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....on, may be prima facie tainted. Further, if during the course of investigation, on the basis of material in his possession, he has reason to believe the complicity of a person in an offence under PMLA, he is authorised by the law to proceed to arrest him, after recording reasons for such belief in writing. Both recorded reasons, one leading to the attachment of the suspect property and the other leading to the arrest, are to be made over to the Adjudicating Authority with copies of the material from which inferences or conclusions had been drawn. The powers of survey, search and seizure, search of persons, retention of property or of records, to issue summons to enforce attendance of any person and compel him to give evidence or produce records, discovery or inspection, as indeed the power to arrest, as conferred by various provisions of PMLA on the investigative agency created by the law equip such agency with all the necessary tools to conduct an effective investigation without the aid or assistance of police. For purposes of criminal prosecution, the initiative is placed in the hands of the authorities established by PMLA, the cognizance by the court mandatorily required to be o....
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....of possibility of abuse vis-a-vis the power of arrest and interrogation having a bearing on the fundamental rights of freedom and rule against self-incrimination. It was submitted that the procedure must be regulated according to the classification under which the PMLA offences would fall, the investigation being impermissible in absence of registration of an FIR if the nature of the crimes is taken as cognizable, such conclusion obliging the investigating agency to abide by the requirements of Chapter XII of Cr. P.C. Conversely, it was urged that if the offences are non-cognizable, the investigating agency must take prior approval from the court (the Magistrate) before commencing the probe or exercising the power of arrest. 128. In the above context, reliance has been placed on the cases of Madhu Limaye Vs. State of Maharashtra, (1969) 1 SCC 292; Bhajan Lal (supra); D.K. Basu Vs. State of West Bengal, (1997) 1 SCC 416 and Joginder Kumar Vs. State of U.P. and Ors., (1994) SCC 260, reference being made to the guidelines regulating the power of arrest. 129. There can be no doubt as to the fact that the law declared by the Supreme Court, and the various pronouncements of the Hig....
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....reduction of their statements into writing, if the officer thinks fit, (b) the search of places or seizure of things considered necessary for the investigation and to be produced at the trial, and (5) Formation of the opinion as to whether on the material collected there is a case to place the accused before a Magistrate for trial and if so taking the necessary steps for the same by the filing of a charge-sheet under Section 173..." 131. The above observations hold good qua all criminal investigations though, it must be added in the context of special law offences the same will have to be read mutatis mutandis. Thus, in special legislations if the cognizance is to be taken not on a police report but on a complaint, there would be no occasion for filing of chargesheet under Section 173 Cr. PC. Necessarily, the same would apply to a prosecution even for IPC offence, if initiated through the complaint mechanism. 132. Article 20 of the Constitution of India guarantees certain protections in respect of conviction for offences including against double jeopardy. Article 20(3) guarantees that "(n)o person accused of any offence shall be compelled to be a witness against himself". The....
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....al protection under Article 20(3) vis-a-vis the mandate in Section 108(3) of the Customs Act. The court rejected the contentions in the light of decisions in Ramesh Chandra Mehta (supra), Illias (supra) and Nandini Satpathy Vs. P. L. Dani, (1978) 2 SCC 424. It was observed that the protection against self-incrimination in Article 20(3) would not inure vis-a-vis a "hypothetical person who may in the future be discovered to have been guilty of some offence". 135. Noticeably, in Poolbandi (supra) exception was also taken to the summoning of a person by the Customs officer for recording his statement during the inquiry under the law, the contention being that this was violative of the Constitutional right guaranteed under Article 21 and amounted to mental torture. Similar submissions have been made by the petitioners before this court on the ground they apprehend harassment or unlawful detention. Rejecting the plea that the petitioner at the time of his appearance for statement before the Customs officer be given the liberty of having company of his choice during questioning, the court observed thus: "...The purpose of the enquiry under the Customs Act and the other similar statu....
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....thorised by the Central Government under FERA to search, confiscate, recover, arrest, record statements of witnesses, etc. FERA contains provisions for trial of the offences under FERA and imposition of punishment for such offences. FERA, being a special law, containing provisions for investigation, enquiry, search, seizure, trial and imposition of punishment for offences under FERA, Section 5 of the Code of Criminal Procedure is not applicable in respect of offences under FERA..." 137. The decision in Directorate of Enforcement Vs. Deepak Mahajan and Anr., (1994) 3 SCC 440, also concerned the procedure governing a person arrested under Section 35(1) FERA which was in pari materia with Section 104(1) of the Customs Act. The court noted that the scheme of both the legislations was more or less the same, the provisions relating to arrest and production of the arrestee before Magistrate identical. It was observed that the "proper officer" referred in various provisions of the Customs Act denoted an officer of the Customs assigned to perform the functions under the law and would not include officers of the police and, therefore, the police officers had no independent role to play in....
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....te as, an accused person". Referring to earlier decisions reported as Pakala Narayana Swami Vs. Emperor, AIR 1939 PC 47 and Mahabir Mandal Vs. State of Bihar, (1972) 1 SCC 748, the court ruled thus: "36. ... We hold that "any person supposed to be acquainted with the facts and circumstances of the case" includes an accused person who fills that role because the police suppose him to have committed the crime and must, therefore, be familiar with the facts. The supposition may later prove a fiction but that does not repel the section. ... Moreover, the suppositions accused figures functionally as a witness. "To be a witness", from a functional angle, is to impart knowledge in respect of a relevant fact, and that is precisely the purpose of questioning the accused under Section 161 CrPC. The dichotomy between "witnesses" and "accused" used as terms of art, does not hold good here ... The appellant squarely fell within the interrogational ring. To hold otherwise is to hold up investigative exercise, since questioning suspects is desirable for detection of crime and even protection of the accused. Extreme positions may boomerang in law as in politics." (emphasis supplied) 140. It ....
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....heir procedure for investigation to be read appropriately modified in relation to officers empowered by PMLA to investigate. 142. There are safeguards available under this special law (PMLA) which correspond in equal measure to the safeguards under the general law some of which are represented by the above quoted provisions of Cr.P.C. Some of the safeguards under PMLA may be highlighted as under: (i) No action affecting the rights of any person to property may be initiated on unfounded suspicion. The Director (or Deputy Director) must have "material in his possession" and must record reasons "in writing" for forming belief about a person having in his possession proceeds of crime or about their possible use or retention before he can lawfully proceed to have such property attached for adjudication or confiscation. [Section 5 (1)] (ii) A provisional attachment order of property cannot generally be ordered in case it is suspected to be proceeds of a scheduled offence unless the police investigation in such regard has been concluded and a report already submitted. [first proviso to Section 5(1)] (iii) The officer directing provisional attachment of a property is obliged by....
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....ial of release on bail, the judicial authority would have regard to the considerations on which such further detention is permitted under the general criminal procedure, such scrutiny including the issue as to whether "the accusation or information is well founded" and "adequate grounds exist" for authorizing such continued detention for completion of investigation, satisfaction in such regard being upon perusal of the record of investigation, it always being mandatory for the person arrested to be physically brought before such Magistrate. [Section 167 Cr.P.C.] CONCLUSIONS 143. It is clear from the above discussion that the Prevention of Money-Laundering Act, 2002 is a complete Code which overrides the general criminal law to the extent of inconsistency. This law establishes its own enforcement machinery and other authorities with adjudicatory powers and jurisdiction. The enforcement machinery is conferred with the power and jurisdiction for investigation, such powers being quite exhaustive to assure effective investigation and with built-in safeguards to ensure fairness, transparency and accountability at all stages. The powers conferred on the enforcement officers for purp....