TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 109
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....ent 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, amongst others, into the ECIR thereby giving ri....
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....esh, 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 acquisition of certain assets (which include property at Greater Kailas....
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....ition 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 of the same be done; IV. Award costs in favour of the petitioner; and V. Any o....
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....ingh 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 policies, Shri Virbhadra Singh (HUF) filed, on 02-03-2012, revised returns of income for three years th....
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....eler, 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 transferred to the accounts of Shri Virbhadra Singh, his wife Smt. Pratibha Singh and son Sh. Vikramaditya Si....
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.... 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 documents seized during the searches to be made available so that the same could be provided to the respondent in the co....
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....cess 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" . It was submitted at the hearing that this document is official report of the Enforcement Directorate setting the process of inv....
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....w 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 mandatorily required to be followed for Section 45. It has been argued that the general law contained in the Code of Criminal Procedure, 1973 wo....
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....d 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 requirement for the statutory authorities under PMLA to take prior permission from the Special Court for taking up an investigation. It was submit....
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....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 persons who are found to have committed the offence are properly identified and brought before the court with the request for they to be tried. Conversely....
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....fences 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 investigation into a non-cognizable offence would generally not arise unless a complaint alleging such offence were to be laid before him. The expression "comp....
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....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 notice of". The word "cognizance" is generally applied with reference to the act of a court taking judicial notice of a fact or cause and, therefore, is expressed in....
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....ve 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 such least grave special law offences having been classified as "non-cognizable", "bailable", and triable by "any Magistrate". Noticeably, all special law offences which attrac....
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....ntion 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 starting point being the lodging of the FIR whether under Section 154 or under Section 155 Cr.P.C.) do not control the meaning or import of the expressions "cognizable" or "non-cognizabl....
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....all, 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 reasonably suspected of being a deserter from any of the Armed Forces of the Union; or (g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received....
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.... 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 having taken the shape quoted above. The broad meaning of the expression "cognizable offence", as all along understood in relation to the power or jurisdiction of a police officer to arrest "without warrant", guided ....
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....d 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 situations, where he is permitted to do so by the amended provision of Section 41 Cr.P.C., though only by scrupulously following its requirements. This, however, does not mean that such offences as have been specified to be "cogniza....
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....eir 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 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; Prev....
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....d 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 term upto two years with fine. The rest of the offences under the old law on food adulteration were clearly non-cognizable and bailable. The law conferred the power for investigation and launching of prosecution for such offences generally on t....
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....ed 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 Section 74. 59. The Food Safety and Standards Act, 2006 does not modify the Code of Criminal Procedure, 1973 to such effect as to independently specify the classification of offences different from the general prescription or the powers of the police....
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....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 "cognizable" or otherwise, in terms of Section 104(4), the clause immediately following clarifying that all other offences under the Customs Act shall be "non-cognizable". It needs to be noted for clarity that an enforcement of the Customs Act resulting in cr....
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....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 bill in each House of the Parliament, as one shall see in due course, also did not state that the offences were to be declared as non-cognizable. They only clarified that the amendment was necessary so as to ensure that police did not exercise the general power of arr....
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.... 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 other class of officers) being appointed by the Central Government for aiding and assisting. The said Authorities, appointed for purposes of PMLA, are conferred with the responsibility of initiating all action leading, inter alia, to proceedings for attachment, adjudication or ....
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....uly 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 information, the ninth chapter dealing with reciprocal arrangement for mutual assistance requisite with authorities in foreign countries. 75. It is primarily the action that begins with recording in writing under Section 5 the reasons for belief of a person being in possession of ....
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....g 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 envelope". Both the report under Section 5(2) to the Adjudicating Authority immediately after the provisional attachment of the tainted (or suspect) property and the grounds of arrest in terms of Section 19(2), along with the material on the basis of which each such action has been taken, are ....
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....ney-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 note of, at the same time it further brings out, for clarity, by Sections 46 and 65 that the provisions of the Code of Criminal Procedure, 1973 shall apply, in so far as they are not inconsistent with the provisions of this law, to the proceedings before the special court and in the matters relating to "....
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....horization 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 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 or infirm, may be released on bail, if the Special Court so directs: Provided further that the Special Court shall not take cognizance of any offence punishable under Se....
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....ent 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 or infirm, may be released on bail, if the Special Court so directs: Provided further that the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint in writing made by- (i) the Director; or (ii) any officer of the Central Government or a State Government authorised in writing in this....
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....d 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 & Ors., (2005) 6 SCC 228 ; and Union of India & Anr. vs. National Federation of the Blind & Ors., (2013) 10 SCC 772 to argue that the marginal heading cannot control the interpretation of the words of the section particularly when the language of the section is clear and unambiguous. It was pointed out that in Guntaiah (supra) a bench of two Hon'bl....
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....es", 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 of the existing law thereby affected. It would not be wrong to say that marginal headings are internal aids available for interpretation, should a recourse thereto become necessary in the event of some ambiguity in the language of the provisions or scheme of the law. 95. In view of the above authoritative pronouncements of the Supreme Court, including by a Constituti....
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.... 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 Special Session of the UN General Assembly in 1999. Section 1 (3) of the Act stipulates that the Act will come into force on such date as the Central Government may by notification appoint. While we were examining the question of notifying the Act, I found that there was certain lacunae in the Act. I regret to say that not enough homework had been done in the definitions, and in the divi....
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....er 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 in Lok Sabha, in answer to a query of an Hon'ble Member, the Minister explained the amendment as under:- "Sir, first to answer Mr. Sudhakar Reddy, Section 45(1)(a) is being omitted because, if the offence is cognizable, then any police officer in this country can arrest without a warrant. Section 19 says, only the Director or Assistant Director should investigate the offence. There is a....
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....cent 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. Therefore, parliamentary proceedings can be used only for a limited purpose as explained in Gopalan case." 107. In Ashoka Kumar Thakur v. Union of India, (2008) 6 SCC 1, another Constitution Bench while holding that "reference to Parliamentary Debates can only be made for a limited purpose", observed: "9.3 Thus, it is clear that debates in Parliament are not usually relevant for construction of the provisions of....
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.... 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 offences by registering the same. Since this would not have fit in within the scheme of law, given the fact that PMLA requires launching of prosecution by submission of a complaint by the Director (Enforcement), it appears the legislature wanted to preclude all possibility of meddling by the police. 112. This court need not consider or decide whether the possible conflict or confusion required the above-mentioned amendment or n....
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....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 19739, had come up before a division bench of the High Court of Punjab and Haryana with similar challenge to the registration of ECIR under PMLA and to the summons issued to the petitioners under Section 50(2) and (3). The court repelled the said challenge and dismissed the petitions, inter alia, rejecting the contentions that the offence of money-laundering is non-cognizable and therefore, investigation carried out in absence of prior san....
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....nd 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) and (3) of PMLA in an ongoing investigation. The validity of the said summons had been questioned invoking the jurisdiction of the High Court of Judicature at Hyderabad. The petitions were dismissed finding no good case made out for reading down Section 50 of PMLA observing, inter alia, that mere registration of ECIR would not render any person an accused of the offence of money-laundering, the purpose of investigation being to collect evide....
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....21. 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 petitioners were issued. 122. With due deference to the learned division bench, it may be observed here that the views expressed in the order dated 27.04.2016 on the applications for bail in the aforesaid writ petitions do not bind this court for the simple reason such observations were of prima facie nature and only interim. It is trite that interim orders of this nature are not to be treated as binding precedents since there has to be a fina....
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....ing 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 on their complaint. 125. From the above, it is clear, that the Enforcement officers under PMLA do not require the powers of police for investigation as granted by the general law contained in Chapter XII of the Code of Criminal Procedure. On the contrary, to hold that the said part of Code of Criminal Procedure applies to PMLA investigations or proceedings would bring in inconsistency - in breach of the mandate of Section 65 PMLA. There is nothing in PML....
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....y 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 High Courts touching upon the circumspection with which the power of arrest is to be exercised by the authorities that be, as indeed the safeguards created by the guidelines generally set out in the Code of Criminal Procedure, and supplemented by judicial dicta controls and regulates the arrest procedures and the detention that follows in such wake, irrespective of the fact whether it concerns an investigation into an IPC offence or a crime under special laws. The arre....
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....d 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". These fundamental rights including against self-incrimination are available to all persons facing criminal charge, whether under the general law represented by IPC or under the special statutes. But, it is well settled that to claim protection of Article 20(3), the person should be an accused of an offence. Formal accusation of a person is generally necessary to make him an accused. Whether or not a person is an accused depends on the facts and circumstances of the case and th....
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....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 statutes will be completely frustrated if the whims of the persons in possession of useful information for the departments are allowed to prevail. For achieving the object of such an enquiry if the appropriate authorities be of the view that such persons should be dissociated from the atmosphere and the company of persons who provide encouragement to them in adopting a non-cooperative attitude to the machineries of law, there cannot be any legitimate objection in depriving them of such ....
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....7. 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 exercise of powers under the Customs Act as in Sections 45 and 46 of FERA. While observing that "conclusions (had) to be drawn which are in the tenor of the law though not within the letter of the law" and for this the matter required to be considered "by ascertaining the purposeful meaning of the language deployed, the spirit and sense which the legislature has aimed and intended to convey", and while rejecting the argument of possible breach of fundamental right under Article 20(3), t....
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....tion 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 is not correct to contend that investigation under PMLA dehors the procedure prescribed for police investigation under the general criminal law (Chapter XII of Cr.P.C.) would denude the process of crucial safeguards rendering it unfair or prone to misuse. References made particularly to the need for registration of FIR (under Section 154 in the case of cognizable offence and under Section 155 in case of non-cognizable offence), communication of copy of FIR to the Magistrate (under Section 157) or ....
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....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 the law to report the fact to a superior independent statutory authority (Adjudicating Authority) by making over to it, in confidence, copy of the material, the recorded reasons and connected proceedings, such authority, in turn, being obliged by law to retain the said record in its safe custody, the procedure and period prescribed by the Rules being such as to ensure transparency and accountability. [Section 5(2) read with corresponding Rules] (iv) No action affecting the rights of any person to personal....
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....efore 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 purposes of complete and effective investigation include the power to summon and examine "any person". The law declares that every such person who is summoned is bound to state the truth. At the time of such investigative process, the person summoned is not an accused. Mere registration of ECIR does not make a person an accused. He may eventually turn out to be an accused upon being arrested or upon being prosecuted. No person is entitled in law to evade the command of the summons issued under Section 50 PMLA on the ground tha....