TaxTMI 
TaxTMI 
2018 (2) TMI 1327
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....lso prayed for mandamus to the Directorate of Enforcement (DOE) (Respondent No. 2) and the Union of India through the Department of Revenue, Ministry of Finance (Respondent No. 1) to provide him a certified copy of ECIR/HQ/17/2017 dated 27th October 2017, and the application filed by Respondent No. 2 before the trial Court for issuance of warrants and the grounds of arrest, if any, recorded while arresting the Petitioner. 2. Accompanying the writ petition is Criminal Miscellaneous Application No. 2151 of 2018 in which the Petitioner has prayed for grant of interim bail in the aforesaid ECIR/HQ/17/2017 during the pendency of the writ petition. 3. The writ petition came up for hearing on 5th February 2018 when notice was issued to the Respondents and accepted by Mr. Amit Mahajan, learned Central Government Standing counsel. The notice was made returnable on 13th February 2018 and the Respondents were permitted to file a short reply. Pursuant thereto, on 13th February 2018 a short affidavit dated 12th February 2018 of Mr. Mohit Redhu, Assistant Director (PMLA), has been filed on behalf of the Respondents. 4. The Court has heard the submissions of Mr. Vikram Chaudhary, learned Senio....
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....nding. 8. Within two days thereafter, i.e., on 27th October 2017 the DOE registered another ECIR/HQ/17/2017 to undertake investigation into the related offence of money laundering under Section 3 PMLA punishable under Section 4 thereof. In the second ECIR/HQ/17/2017, summons was issued in the said ECIR to the Petitioner on 31st October, 20th November and 4th December 2017. Admittedly a copy of the said ECIR has till date not been furnished to the Petitioner. 9. Meanwhile, one Gagan Dhawan who was arrested by the DOE under Section 19 PMLA on 1st November 2017, filed Writ Petition (Crl) No. 202 of 2017 in the Supreme Court under Article 32 of the Constitution of India. Notice was issued in the said petition by the Supreme Court and is stated to be pending. 10. SBL filed Writ Petition (Crl) No. 262 of 2018 before this Court challenging the constitutional validity of Sections 3 and 45 of the PMLA and also sought quashing of the ECIRs against it. 11. The DOE on 23rd December 2017 filed a complaint under Section 45 PMLA before the learned Special Judge, PMLA with the prayer for further investigation. In the said complaint, cognizance was taken by the learned Special Judge on 23rd Dec....
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....remand for one day was granted to the DOE by the learned Duty Magistrate. The first two sentences of the order read: "Legal aid offered to accused, but he refused. Accused submits that he will engage his private counsel". Proceedings in the trial Court 17. On 27th January 2018 the Petitioner was produced before the trial Court before whom an application for extension of ED custody remand was filed by the DOE. By an order dated 27th January 2018, the trial Court extended the ED custody remand of the Appellant for 11 days. He was asked to be produced before the trial Court on 7th February 2018. 18. In the meanwhile two separate applications dated 31st January 2018 and 1st February 2018 were moved on behalf of the Petitioner before the trial Court. The applications were listed on 5th February 2018. While the first application dated 31st January 2018 was withdrawn, the second application dated 1st February 2018 seeking permission to permit the wife of the Petitioner to meet him and also permit his Advocate to get the vakalatnama signed was moved. These prayers were allowed by the trial Court. The Petitioner's wife was permitted to meet him in the office of the DOE at Jam Nagar Hous....
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....he interpretation of the amendment that was differently worded. Reference was made to the Statement of Objects and Reasons (SOR) for the 2005 Amendment and the Lok Sabha Debates during which the Finance Minster explained the reason for making the offences under the PMLA non-cognizable. (iii) If the offences under the PMLA were non-cognizable, compliance with the procedure under Section 155 (1) Cr PC was mandatory but not followed in the instant case. The investigation could not have commenced except upon information being entered in a book, and the informant being referred to the competent Magistrate. Further, no order for investigation into such non-cognizable offence was obtained from the Magistrate as mandated by Section 155 (2) Cr PC. No application was filed before the Magistrate under Section 155 (3) Cr PC for issuance of a warrant of arrest in a non-cognizable case. (iv) In the event the offence was, despite the amendment to Section 45 PMLA treated as cognizable, then the corresponding procedure of entering the substance of such information in a book as mandated by Section 154 Cr PC, forwarding a report to the Magistrate empowered to take cognisance as mandated by Section ....
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....rat at Ahmedabad in Special Criminal Application (Habeas Corpus) No. 4247 of 2015 (Rakesh Manekchand Kothari v. Union of India) which was affirmed by the Supreme Court by its order dated 23rd November 2015 in SLP (Crl) No. 9727 of 2015 (Union of India v. Rakesh Manekchand Kothari). (vii) Finally it is submitted that even the subsequent orders of remand orders passed by the learned Special Court could not cure the initial illegality of the arrest. Reliance was placed on the decision in Re: Madhu Limaye AIR 1969 SC 1014. (viii) A chart to show to what extent the provisions of Cr PC were displaced, if at all, by the corresponding provisions of the PMLA was handed over. It was pointed out that as far as the procedure for arrest was concerned, Section 19 PMLA read with the PML Arrest Rules constituted an even stricter regime than the Cr PC when it came to non-cognizable offences. The procedure outlined even under Section 19 PMLA was not followed. (ix) The Petitioner has been in custody pursuant to his illegal arrest on 25th January 2018. The trial Court has itself not extended his ED Custody. Therefore, his custody was no longer required. In any event the Petitioner is prepared to c....
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....have no applicability to the arrest and detention of the Petitioner for which the PMLA and not the CrPC applied. (iv) There was no violation of the procedure laid down in PMLA regarding arrest and detention of the Petitioner. It was only pursuant to the complaint filed before the learned trial Court under Section 45 PMLA, that further steps have been taken by the DOE in the matter. After the investigation against the Petitioner is completed, a supplementary complaint would be filed before the trial Court. The question of application of Chapter XII CrPC did not arise at this stage. (v) If the arrest of the Petitioner is held not to have been strictly in accordance with the PMLA Rules and Form III appended thereto, reason was that there was a genuine confusion in the DOE whether Section 19 PMLA with the PML Arrest Rules would apply in view of the fact that an NBW was obtained from the trial Court by filing an application under Section 70 read with Section 65 PMLA. Nevertheless, the DOE would now proceed to cure that irregularity by issuing an arrest order in Form III appended to PML Arrest Rules. For the same reason communication to the adjudicating authority of the fact of arrest ....
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....Director or any other officer authorised, may arrest an offender. Clearly, there was a conflict between these two provisions. Under Section 45(1) (b) of the Act, the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint made in writing by the Director or any other officer authorised by the Central Government. So, what would happen to an arrest made by any police officer in the case of a cognizable offence? Which is the court that will try the offence? Clearly, there were inconsistencies in these provisions. They have now been removed. We have now enabled only the Director or an officer authorised by him to investigate offences. Of course, we would, by rule, set up a threshold: and, below that threshold, we would allow State police officers also to take action ......... 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-cognisable so that only the Director could take action; and also making consequential changes in Section 73. I request hon.....
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....rovided 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 authorized in writing in this behalf by the Central Government by a general or special order made in this behalf by that Government. (2) The limitation on granting of bail specified in clause (b) of subPage 18 of 32 section (1) is in addition to the limitations under the Code of Criminal Procedure 1973 (2 of 1974) or any other law for the time being in force on granting of bail." 30. After the 2005 amendment, Section 45 reads as under: "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....
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....to the opposite conclusion and held that notwithstanding the 2005 amendment to Section 45 PMLA, there is no positive indication in Section 45 that the offences under the PMLA had become non-cognizable. Despite noting in para 28 of the judgment that "after the amendment, the police cannot take cognizance of the offence under Section 3 of the PMLA", the Division Bench observed that "even if the offence is no longer cognizable for the purposes of the Code, i.e., the police cannot take cognizance for the said offence, it does not follow that the authority under the Act would not carry out investigation on their own." 35. With respect, this Court is of the view that the said conclusion in Vakamulla Chandrashekhar v. Enforcement Directorate (supra) requires reconsideration since it is not in consonance with the express legislative intent that is so evident not only on a plain reading of the amended Section 45 PMLA but even with reference to the SOR to the PML Amendment Bill, and the debates in the Lok Sabha. The decision of the learned Single Judge in Virbhadra Singh v. Enforcement Directorate (supra) also does not appear to be correct in its understanding of the purport of the amendmen....
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....he Enforcement under FERA and taken to the Magistrate in compliance of Section 35(2) of FERA." We, thus, do not agree with the opinion of the High Court that the provisions of Section 167(2) Cr.P.C. would not be applicable to the proceedings under PMLA Act. " 37. Although the Supreme Court was specifically referring to a question of applicability of Section 167 (2) Cr PC to the PMLA it cannot be lost sight of that the Supreme Court was categorical that Sections 44 to 46 PMLA specifically incorporate the provisions of Cr PC prior to the PMLA and that there was no provision in the PMLA including the applicability of Cr PC. Further the Supreme Court was categorical that Section 65 of PMLA settled the controversy. 38. The decision of the Supreme Court in Ashok Munilal Jain was rendered on 22nd March 2017, whereas the decision in Vakamulla Chandrashekhar (supra) by a Division Bench of this Court was rendered later on 8th May 2017. Yet in Vakamulla Chandrashekhar (supra) without referring to the binding decision of the Supreme Court in Ashok Munilal Jain (supra) it was concluded that "the provisions of Chapter XII of the Code would not be attracted to investigation under the PMLA at a....
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.... the DOE has admittedly in fact not followed Section 19 of the PMLA. 43. In the first place it must be noticed that in para 19 of the short affidavit it has been wrongly asserted that in Deepak Mahajan (supra) the Supreme Court had laid down that offences under PMLA are cognizable. This is a plainly erroneous assertion since that decision had nothing to do with the PMLA. Mr. Mahajan was unable to explain how such an assertion could be made on affidavit and sought to characterise it as a mistake. 44. Nevertheless it is asserted in the short affidavit that in para 17 that: "consequent to the investigation and the material collected and after recording reasons to believe that the accused is guilty of the offence of money laundering, the accused was arrested on 25th January 2018 in terms of Section 19 of PMLA. In terms of the provisions of the Act, the Petitioner was immediately informed about the grounds of such arrest, and a copy of the arrest memo and the NBW dated 24th January 2018 were communicated supplied." 45. Although the file was not produced before the Court, even if the above assertion regarding reasons to believe having been recorded, is taken to be present in the file....
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....s of such arrest under sub Section (i) of Section 19 of the Act." The arrest order is specified in Form III. In terms of Rule 6 it is required to be signed by the arresting officer while exercising the power under Section 19 (1) PMLA. Form III itself indicates that the arrest order is to be communicated to the person arrested. The foot of Form III reads thus: "To ............................................. ............................................. [Name and complete address of the person arrested]" 49. When Form III uses the word 'order' that has to include, as per Rule 2 (1) (h) of the PML Arrest Rules, the grounds of arrest. The basic idea is not merely to inform the person arrested of the grounds of arrest but to also furnish him a copy thereof. Even Rule 3 (1) of the PML Arrest Rules requires the order and material to be forwarded to the Adjudicating Authority. 50. Admittedly the arrest of the Petitioner in the present case has taken place without following Section 19 PMLA read with the relevant PML Arrest Rules and Form III. The grounds of arrest were furnished not "as soon as may be" as mandated by Section 19 (1) PMLA but only along with the short reply filed on 1....
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....f habeas corpus is maintainable, the Court is again unable to subscribe to the view expressed in Moin Akhtar Qureshi (supra) that only because the trial Court is now seized of the matter and has ordered the remand of the Petitioner, this Court cannot entertain the present petition. In Re: Madhu Limaye (supra), the Supreme Court was categorical when it explained the legal position: "12. Once it is shown that the arrests made by the police officers were illegal, it was necessary for the State to establish that at the stage of remand the Magistrate directed detention in jail custody after applying his mind to all relevant matters. This the State has failed to do. The remand orders are patently routine and appear to have been made mechanically. All that Mr. Chagla has said is that if the arrested persons wanted to challenge their legality the High Court should have been moved under appropriate provisions of the Criminal Procedure Code. But it must be remembered that Madhu Limaye and others have, by moving this court under Article 32 of the Constitution, complained of detention or confinement in jail without compliance with the constitutional and legal provisions. If their detention in....
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....econsideration? 57. The writ petition now be placed before the Hon'ble the Acting Chief Justice for being referred to a larger Bench to answer the above questions. Crl.M.A. 2151/2018 (interim relief) 58. Now turning to the application for interim bail, the Court at the outset notes that the Supreme Court has in its decision dated 23rd November 2017 in W.P. (Crl.) No. 67 of 2017 (Nikesh Tarachand Shah v. Union of India) struck down the restrictive conditions in Section 45 (1) PMLA as regards the grant of bail to be unconstitutional. The prayer of the Petitioner for grant of interim bail during the pendency of the present petition would therefore have to be considered as any other bail application in a case involving an offence of a similar nature, without applying those restrictive conditions. 59. The Court finds that the Petitioner has made out a prima face case as explained in detailed in the above order. He has prima facie demonstrated that his arrest on 25th January 2018 was contrary to Section 19 PMLA. Further, he has prima facie shown that the procedure adopted qua him by the DOE was not inconsonance with the Chapter XII of Cr PC. 60. The Petitioner has been in custody s....