AI Drafter 
TaxTMI 
TaxTMI 
2017 (7) TMI 177
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....ioner is that when the petitioner joins the investigation in pursuance of the said summons, he may be arrested by resort to power of arrest under Section 19 of the PMLA. 3. We have heard Mr. Kirti Uppal, learned senior counsel for the petitioner and Mr. Vinod Diwakar, learned counsel for the respondents at some length on the application, and for the disposal of the application, we are recording our prima facie findings. 4. The submission of the petitioner is that the petitioner has not been informed whether he has been summoned as an accused or as a witness. The submission is that the statements recorded under Section 50 of the PMLA are admissible in evidence, since every proceeding under sub-sections (2) and (3) of Section 50 are deemed to be judicial proceedings within the meaning of Sections 193 and 228 of the Indian Penal Code by virtue of subsection (4) of Section 50. The argument is that the statement made by the summoned person may be used against his own interest, in case he is named as an accused after the recording of his statement. That would be violative of Article 20(3) of the Constitution of India, since "no person accused of any offence shall be compelled to be....
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....f arrest vested by Section 19 of the Act. In this respect, he relies on Section 65 of the Act, which provides that the provisions of the Code of Criminal Procedure 1973 (the Code for short) apply "insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act". He submits that the provisions contained in Chapter V of the Code-and in particular Sections 41, 41A and 41B, are not inconsistent with any of the provisions of the Act dealing with the power of arrest conferred by Section 19 of the Act. Thus, even though the decision in Arnesh Kumar (supra) has been rendered in the context of the power of arrest without a warrant by the police under Section 41 of the Cr.P.C., principles laid down by the Supreme Court appear to be of universal application, and should be applied even while deciding whether, or not to arrest a person under Section 19 of the PMLA. 8. On the other hand, the submission of learned counsel for the respondents is that it would be premature on the part of the respondents to label the summoned person either as a witness, or as an accus....
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....section 17), and search persons (see Section 18); to arrest any person (see Section 19), and; to attach property involved in money laundering (see Section 5). 11. The act of money laundering has both civil and criminal consequences for the perpetrator. To deal with the civil consequences, the Act creates, and empowers the adjudicating authority (under Section 2(1)(a) read with Section 6) with powers of a Civil Court to summon, direct production of documents and evidence (see Section 11), and adjudicate on the issue whether any property is involved in money laundering (Section 8). It also creates the right of appeal from orders of the Adjudicating Authority (Section 26), and designates the Appellate Tribunal authorized to hear appeals (Section 2(b) read with Section 25). It also creates a right of further appeal before the High Court (Section 42). 12. The offence of money laundering under Section 3, punishable under Section 4, and any scheduled offence (defined in Section 2(1)(y)) connected to the offence of money laundering, is triable by the Special Courts (see Section 44), created under Section 43 of the PMLA. The Special Court may, upon a complaint made by the Director or ....
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....s, there was no need to empower and oblige the officers of police to assist the authorities under the Act in the implementation of the Act. Moreover, this issue is also judicially considered and settled by a catena of decisions, which may now be taken note of. 15. The first decision we may take note of is Badku Joti Savant v. State of Mysore, 1966 (3) SCR 698. The Constitution Bench of the Supreme Court was concerned with the interpretation of the provisions of the Central Excises and Salt Act, 1944. The contention urged by the appellant before the Supreme Court was that a Central Excise Officer appointed under the Central Excises and Salt Act is a Police Officer within the meaning of the said expression used in Section 25 of the Evidence Act. Section 21 of the Central Excises and Salt Act, insofar as it was relevant, was set out in the judgment and the same reads as follows: "21. (1) When any person is forwarded under Section 19 to a Central Excise Officer empowered to send persons so arrested to a Magistrate, the Central Excise Officer shall proceed to inquire into the charge against him. (2) For this purpose the Central Excise Officer may exercise the same powers and sh....
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....ers do not include the power to submit a charge-sheet under Section 173 of the Code of Criminal Procedure for unlike the Bihar and Orissa Excise Act, The Central Excise Officer is not deemed to be an officer incharge of a police station". The Supreme Court further observed: "10. ... ... that mere conferment of powers of investigation into criminal offences under Section 9 of the Act does not make the Central Excise Officer a police officer even in the broader view mentioned above. Otherwise any person entrusted with investigation under Section 202 of the Code of Criminal Procedure would become a police officer. "11. .... .... In these circumstances we are of opinion that even though the Central Excise Officer may have when making enquiries for purposes of the Act powers which an officer incharge of a police station has when investigating a cognizable offence, he does not thereby become a police officer even if we give the broader meaning to those words in Section 25 of the Evidence Act ... ...". (emphasis supplied) 17. In para 8 of this decision, the Supreme Court analysed the provisions of the Central Excises and Salt Act. It observed that the main purpose of the sa....
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.... was whether the expression "police officer", even if liberally construed, would take in its fold officers of departments including the DRI, who are invested with powers of investigation under Section 53 of The Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). Section 53 of the NDPS Act reads as follows: "53. Power to invest officers of certain departments with powers of an officer-in-charge of a police station. - (1) The Central Government, after consultation with the State Government may, by notification published in the official Gazette, invest any officer of the department of central excise, narcotics, customs, revenue intelligence or Border Security Force or any class of such officers with the powers of an officer-in-charge of a police station for the investigation of the offences under this Act. (2) The State Government may, by notification published in the official Gazette, invest any officer of the department of drugs control, revenue or excise of any class of such officers with the powers of an officer-in-charge of a police station for the investigation of offences under this Act". 20. The Supreme Court, inter alia, referred to and relied upon Badak....
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....the factors set out in Section 52-A. The role of the officers effecting arrest or seizure, except in the case of a police officer, ends with the disposal of the person arrested and the article seized in the manner provided by Sections 52 and 52-A of the Act. Section 57 obliges the officer making the arrest or seizure to report the same to his superior within 48 hours. These powers are more or less similar to the powers conferred on Customs Officers under the Customs Act, 1962. 22. For the offences under the Act, the investigation is entrusted to officers in whom powers of an officer-in-charge of a police station are vested by a notification issued under Section 53 of the Act by the concerned government. Thus a special investigating agency is created to investigate the commission of offences under the Act. There is no doubt that the Act creates new offences, empowers officers of certain departments to effect arrest, search and seizure, outlines the procedure therefor, provides for a special machinery to investigate these offences and provides for the constitution of Special Courts for the trial of offences under the Act, notwithstanding anything contained in the Code ... ...". ....
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.... shall be cognizable; (b) no person accused of an offence punishable for a term of imprisonment or more than three years under Part A of the Schedule shall be released on bail or on his own bond unless" (emphasis supplied) 25. After amendment, section 45(1), insofar as it is relevant reads as follows: "(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 bound unless -] (i) the Public Prosecutor has been given a 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:" 26. Thus, the Parliament consciously deleted clause (a) in the pre-existing section 45(1) which provided that every offence punishable under this Act shall be cognizable. It is on this premise that the petitioners contend that the offence of money laundering under sectio....
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....3 of the PMLA. 29. However, the aforesaid amendment - by deletion of clause (a) of section 45(1), does not mean that the authorities under the Act cannot, or would not act in exercise of their powers, which are coupled with statutory duties, under the provisions of the PMLA. Even if the offence is no longer cognizable for the purposes of the Code i.e. the police cannot take cognizance of the said offence, it does not follow that the authority under the Act would not carry out investigation on their own. Under the PMLA, the authorities under the Act are bound to carry out investigation i.e. to collect evidence - and for that purpose they have been sufficiently empowered to summon persons; require production of evidence; record statements; carry out search (of property and persons), seize and attach property, and; even to arrest any person on the basis of material in possession of the arresting officer (i.e. the Director, Deputy Director, Asst. Director or any other person authorized in this behalf by the Central Government by general or special order), which leads him to believe that the person has been guilty of an offence punishable under this Act, by recording the reasons for ....
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....Court, the said statutory scheme would prevail over the general procedural law in respect of criminal matters to which the Code applies. PMLA is a special statute, whereas the Code is a general law. In this regard, we may also notice Section 65 of the Act, as also Sections 4 & 5 of the Code. 33. We may also refer to the decision of the Jharkand High Court in Hari Narayan Rai v. Union of India, 2010 SCC Online Jhar 475. In this case, the petitioner sought to invoke section 167(2) of the Code and sought a direction to the Special Court dealing with a case under the PMLA to grant bail to the petitioner. The Jharkand High Court, inter alia, held as follows: "13. From reading the Act as a whole it is manifestly clear that the Prevention of Money Laundering Act being a special statute, the procedure for dealing with the offences are regulated by the provisions contained in the said Act. Section 44(1b) clearly provides that cognizance for the offence punishable under the Act shall be taken only upon a complaint made by an authority authorized in that behalf under the Act. Further Section 45 of the Act put restrictions in the release of the persons on bail unless conditions mentioned....
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....d counsel for the petitioner that the offences are now only bailable in view of the amendment and non-cognizable cannot be accepted as the petitioners are covered under Section 4 of the Act. Chapter V, as noticed above, provides the power of summons, searches and seizures as per the investigation which has been carried out and the same is to be done by the authorities appointed under the Act to the exclusion of the police officers under Section 45(1A) until duly authorized. Section 19 further provides the powers of arrest upon the reasons to believe and to be recorded in writing. The investigation, for the purposes of money laundering for the collection of evidence gives the power to the authorities to arrest. The definition of the cognizable offence provided under Section 2(c) of the Cr.P.C. reads thus:- (c) "cognizable offence" means an offence for which, and "cognizable case" means a case in which, a police officer may, in accordance with the First Schedule or under any other law for the time being in force, arrest without warrant; 31. The definition of investigation under Section 2(h) of the Cr.P.C. pertains to the proceedings under the said Code and, therefore, one ha....
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....ve been specifically excluded from investigating into the matters under Section 45(1A) except with special authorization of the Central Government. Similarly, reference to Section 157 which provides the procedure for investigation by the officer in charge of the police station would not be applicable as the same pertains to the information received under Section 154 of the Cr.P.C. Perusal of Rule 73(ua) would rather go on to show that rules could be made which provide the conditions to which the police officer could be authorized to investigate into the offence under sub-section (1A) of Section 45. It has not been pointed out in any manner that any such rules have been framed or that any police officers were investigating the offences so that the procedure under Cr.P.C. has to be followed". (emphasis supplied) 36. At this stage itself we may observe that the taking of cognizance of an offence by the Special Court upon filing of a complaint as provided in section 45 of the Act, is not the same thing as taking of cognizance of an offence by the police in respect of a cognizable offence as defined in section 2(c) of the Code. That is why the Division Bench has qualified the words ....
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.... of the matter, the police report being not a complaint and vice-versa, it was obligatory on the part of the respondent to choose the said method invoking the jurisdiction of the Magistrate concerned for taking cognizance of the offence only in the manner laid down therein and not by any other mode. The procedure laid down in TOHO, thus, would permit the respondent to file a complaint and not a report which course of action could have been taken recourse to but for the special provisions contained in Section 22 of TOHO." 38. In our view, the observations made by the Supreme Court in Jeevan Kumar Raut (supra) in the paragraph quoted herein above squarely apply in respect of the PMLA - which too is a special statute. 39. The Division Bench of the Punjab & Haryana High Court also referred to its earlier decision in Naveed Masih v. State of Punjab, 2013 SCC Online P&H 21981. The submission before the Division Bench in this case was that the Narcotic Control Bureau (NCB) could not file a complaint in the Court of the special judge, and that the procedure under Chapter XII of the Code had to be followed. This argument was rejected by holding that the empowered officers of NCB are n....
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....eport under Section 173 of the Code, so as to enable the defence to contradict a witness while stepping into witness-box. But it is not necessary for the empowered Officer to record statements of the witnesses contemplated under Section 161 of the Code, as such statements can be recorded only by a Police Officer during the course of investigation. In the present case, the empowered Officer produced a list of 40 documents sought to be relied upon to prove the charges against the appellants including the statements recorded under Section 67 of the Act as well furnished list of witnesses to be examined. Since there is no obligation to record statements by the empowered Officer analogous to Section 161 of the Code, the disclosing the names of the witnesses along with the complaint is compliance of Chapter XV of the Code. The providing of different procedures for filing of complaint by the empowered officers and a report by the police cannot be said to discriminatory as both of these procedures is to enable the court to pronounce on the guilt of an accused. 41. Therefore, we do not find any merit in the argument that the empowered officers of the NCB under the Act are the police offi....
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....er does not become either infructuous or a fait accompli before the final hearing. 22. The observations and directions in Kapil Hingorani (I) and (II) being interim directions based on tentative reasons, restricted to the peculiar facts of that case involving an extraordinary situation of human rights violation resulting in starvation deaths and suicides by reason of non-payment of salaries to the employees of a large number of public sector undertakings for several years, have no value as precedents. The interim directions were also clearly in exercise of extraordinary power under Article 142 of the Constitution. It is not possible to read such tentative reasons, as final conclusions, as contended by the respondent. If those observations are taken to be a final decision, it may lead to every disadvantaged group or every citizen or every unemployed person, facing extreme hardship, approaching this Court or the High Court alleging human right violations and seeking a mandamus requiring the State, to provide him or them an allowance for meeting food, shelter, clothing, salary, medical treatment, and education, if not more. Surely that was not the intention of Kapila Hingorani (I) ....
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....s violated - since he has been summoned u/s 50 to give evidence and to produce records in the course of investigation, without knowing whether he would eventually be cited as a witness or arrayed as an accused, if at all, has no merit. Article 20(3) of the Constitution, which provides that "No person accused of an offence shall be compelled to be a witness against himself" would come into play only, if and when, the petitioner is named as an accused in the complaint to be filed before the Special Court by an authority authorized in this behalf under the Act. That stage has not arrived. Therefore, there is no question of infringement of Article 20(3) of a person who may have been summoned under Section 50(2) of the PMLA as a part of the investigative process. 44. We find merit in the submission of learned counsel for the respondent that during the stage of investigation, it would be premature on the part of the respondent to label the summoned person (u/s 50 (2) of the Act) either as a witness, or as an accused. The purpose of summoning a person u/s 50 is to record his/ her statement, and to require such person to produce evidence and records as a part of an ongoing investigation....
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....for the journey from the place of arrest to the Magistrate's Court". (emphasis supplied) 47. Section 19 uses the expression, 'may' in respect of the decision to arrest a person. Thus, it grants discretion to the Director, Deputy Director, Assistant Director or any other officer authorized in this behalf by the Central Government, whether or not to arrest a person. This discretion has to be exercised judiciously. Before the concerned officer decides to arrest any person, it is essential that he has, in his possession, material on the basis of which he has reason to believe that the concerned person has been guilty of offence punishable under the Act. Section 19 also lays down the procedure to be adopted by the concerned officer at the time of arrest of a person. Firstly, he must record the reasons for his belief that the person is guilty of an offence punishable under the Act and, secondly, the person arrested "shall, as soon as may be", informed "of the grounds for such arrest". 48. Arnesh Kumar (supra) is a decision which had been rendered in the context of the provisions of the Code. The case pertained to an FIR registered under Section 498 A IPC and Section 4 of the Dowry ....
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....with or without fine, if the following conditions are satisfied, namely- (i) *** (ii) the police officer is satisfied that such arrest is necessary- (a) to prevent such person from committing any further offence; or (b) for proper investigation of the offence; or (c) to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; or (d) to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the court or to the police officer; or (e) as unless such person 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." 50. The Supreme Court thereafter proceeded to observe as follows: "7.1. From a plain reading of the aforesaid provision, it is ....
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....e a notice directing the person against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence, to appear before him or at such other place as may be specified in the notice. (2) Where such a notice is issued to any person, it shall be the duty of that person to comply with the terms of the notice. (3) Where such person complies and continues to comply with the notice, he shall not be arrested in respect of the offence referred to in the notice unless, for reasons to be recorded, the police officer is of the opinion that he ought to be arrested. (4) Where such person, at any time, fails to comply with the terms of the notice or is unwilling to identify himself, the police officer may, subject to such orders as may have been passed by a competent court in this behalf, arrest him for the offence mentioned in the notice." In respect of Section 41A Cr.P.C., the Supreme Court observed; "9. ........The aforesaid provision makes it clear that in all cases where the arrest of a person is not required under Section 41(1) CrPC, the police officer is required to issue noti....
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....that the provisions of the Code shall apply, insofar as they are not inconsistent with the provisions of the PMLA, to arrest, search and seizure, attachment, confiscation, investigation, prosecution, and all other proceedings under the said Act. In our view, there is nothing in the scheme of the Act to suggest that Sections 41 and 41A of the Code would not apply to the exercise of power of arrest under Section 19 of the PMLA by one of the authorised officers. There is no provision in the PMLA, in respect of which it could be said that Sections 41 and 41A are not in accord. The scheme of PMLA does not even impliedly exclude the application of Sections 41 and 41A of the Code. The provisions contained in Sections 41 and 41A of the Code are meant to safeguard the liberty of citizens against arbitrary, whimsical or malafide exercise of the power of arrest by the police officers. Even though Sections 41 and 41A expressly relate to exercise of their powers by the police, in our view, the guidelines laid down in Sections 41 and 41A of the Code would equally apply to the exercise of the power of arrest by the authorised officers under Section 19 thereof. 55. At the same time, Section 71 ....