TaxTMI 
TaxTMI 
2021 (11) TMI 288
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....rics in a folk song in the vernacular intones, 'we are petty smugglers unduly labelled as terrorists', resulting in their continued incarceration pending investigation and trial, infringing their right to life guaranteed under Article 21 of the Constitution. Accused Nos.1, 2, 3, 4, 5, 8, 10 & 11 as per the Final Report (who are accused Nos.1, 2, 5, 6, 7, 10, 12 & 13 as per the FIR) in S.C.No.1/2021/NIA are the appellants in the Criminal Appeals, which impugn the common order of the Special Court for NIA Cases, Ernakulam, rejecting their bail applications. 2. The bulwark of the appellants' contentions is a decision of another Division Bench of this Court in Muhammed Shafi P. v. NIA Kochi, 2021 KHC 145; which is under challenge before the Hon'ble Supreme Court, as appealed against by the National Investigation Agency (for brevity 'NIA'). In the cited decision, the bail granted by the Special Court to the various accused, in the same transaction in which the present appellants were also involved, was affirmed, as was the order declining bail to A7 (now A5), who was again before the Special Court and now in appeal before us. 3. Briefly put, the allegations aga....
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.... provisions are attracted only if the alleged actions of the accused amount to a terrorist activity, under Section 15(1) & (iiia) of UA(P)A. In addition to the reasoning of the Division Bench, the definition of 'high quality counterfeit Indian currency' in the Explanation to Section 15 is pointed out along with the Third Schedule of the Act and Investigation of High Quality Counterfeit Indian Currency Rules, 2013. This further fortifies the reasoning in Muhammed Shafi P. (supra) that the threat to economic security, which is brought under the definition of a 'terrorist act' is only relating to counterfeiting of currency or coins, that too of a high quality. The requirement as per Explanation (b) of Section 15 of a declaration by a forensic authority about the quality of the counterfeit currency makes it explicit that an ordinary smuggling of gold, with motive of mere profit and evasion of duty, would not be threat to 'economic security' as defined under the UA(P)A. Learned Senior Counsel also took us through the explanation of the Ministry of Home Affairs before the Department Related Parliamentary Standing Committee on Home Affairs to further buttress the a....
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....ge sheet now placed before Court. There is no allegation that the sale proceeds or profit generated from the activity was used in any terrorist act and by reason of Section 6 of the NIA Act, 2008, the NIA is dis-entitled from prosecuting the offence, since it is not a 'Scheduled Offence' under that Act. 8. Adv. Sooraj T. Elenjical appears for A2 (Crl.A.No.438 of 2021) and refers us to the FIR to argue that she has been roped in merely for the reason that she had earlier worked as Secretary to Consul General at the UAE Consulate. The order which rejected the earlier application for bail produced as Annexure A2 in Crl.A.438 of 2021 and paragraph 12 therein is read over. Even at that stage, as noted by the Special Court, there was nothing on record to show that the proceeds of gold were used or intended to be used for terrorism. But, the learned Judge rejected the bail applications opining that a deeper probe would be required in view of the transnational forces likely to have been involved in the case. Now the final report is before Court and there is neither an inkling of evidence connecting any of the accused to any terrorist act or organization nor has the involvement of ....
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....ffering from acute mental depression. She has no antecedents which would necessitate her further incarceration. 9. Adv. Nireesh Mathew appears for A7 (now A5) (Crl.A.No.356 of 2021), A10 (now A8) (Crl.A.No.370 of 2021) and A12 (now A10) (Crl.A.No.648 of 2021). It is pointed out that at the earlier instance the Special Court had declined the bail applications, not only of A7 but also of A12 and A13. A12 and A13 did not appeal and in the appeal of A7, the order declining grant of bail was affirmed only since he was seen to have travelled to other countries also. The final report does not allege any trans-national forces having been involved. Para 37 of Muhammed Shafi P. (supra) is read out to argue that the apprehension expressed therein does not survive at this point when the final report has been filed. 10. Adv.Manu Tom Cheruvally appearing for A13 (Crl.A.No.426 of 2021 - shown as A11) asserted that he has no direct connection or link with the alleged act of smuggling and is a mere victim of circumstances. He is alleged to have only assisted one of the accused to dismantle the electronic items. It is pointed out that one of the accused who is said to have been declared an approve....
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....eeted as front-runners in the smuggling transactions, accused of graver offences than that of the back-runners. K.A.Najeeb (supra) is not applicable, since there, the accused granted bail was incarcerated for five years and the trial had not commenced. The learned ASGI has also argued relying on D.K.Trivedi & Sons. v. State of Gujarat [1986 (supp). SCC 20] that since the legal issue is under consideration of the Hon'ble Supreme Court, it is best that this Court waits for an authoritative pronouncement from the Hon'ble Supreme Court. 13. The appellants have been consistently requiring a hearing, especially since the other accused, in the same transaction, were granted bail. The appellants alone are kept behind bars for reason of the opinion forged in the impugned order that they are the front-runners and those released are back-runners. It is pertinent that Muhammed Shafi P. (supra) confirmed the grant of bail made by the Special Court for reason of there being no evidence of any counterfeiting of high quality currency having been unearthed. In the case of A7, bail was declined by the Special Court on the reasoning that there should be a deeper probe, since at that time the....
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....ar as this Court, there is a binding precedent, of a coordinate bench, which is in operation and if the dictum of that decision is followed, there is no question of distinguishing the various accused arrayed as front-runners or back-runners. Whatever be the role of the accused, the activity being smuggling of gold, which cannot be deemed to be a terrorist act under S.15 of the UA(P)A. 14. The Division Bench, in Muhammed Shafi P.(supra) held that sub-sec.(iiia) of Sec. 15(1) can only rope in production, smuggling or circulation of high quality counterfeit Indian paper currency, coin or any other material; the last of which is relatable solely to Indian currency or coin. Any material connected with counterfeiting including high quality paper and machinery or implements to produce, would come within the ambit of the provision; but not smuggling of gold, was the finding. The learned Judges relied on the principles of 'ejusdem generis" and 'noscitur a sociis', to hold that the arrangement of words in the provision would not include gold smuggling with a mere motive for illegal profiteering; which cannot, by any means, be defined to be a 'terrorist act'. Nor was it t....
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....made speaks of "the fact that gold is a form of global currency and acts as a medium for exchange in criminal transactions" (sic). True; acts of destabilization of the economy, as distinguished from a physically violent subversive act could also be deemed to be a subversive act against the nation. If the intention was to widen the definition of terrorism, to bring in acts, destabilizing the economy; surely the Parliament had the power. But, the Parliament by inserting economic security in Sec. 15(1) and simultaneous insertion of sub-clause (iiia) of clause (a) by the very same amending act, restricted the definition of a terrorist activity, in so far as destabilizing the economy, to counterfeiting of high quality currency or coins. The words employed in sub-clause (iiia) of clause (a), 'any other material', has to be restricted adopting the principles of ejusdem generis and noscitur a sociis; as held by the Division Bench in Muhammed Shafi P. (supra). 16. We perfectly accept the argument that counterfeiting is not the only activity which could threaten the economic security of a nation and it is also not the mere use of explosive substances or lethal weapons that could be ....
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....trictly only an aid to interpretation we cannot but notice the relevant Ministry's stand before the Parliamentary Standing Committee, which reads as under: "(ii) The second major category of amendments comes from the requirement to make high quality fake Indian currency notes and the production and distribution thereof also a terrorist offence. Government of India wants to do that because there is mounting evidence to suggest that this high quality fake Indian currency note is actually being printed across the border and being distributed from there, both for financing terrorism as well as for disturbing the monetary stability of our country. With regard to high quality Counterfeit Indian Currency, it is understood that it can only be breached by sovereign support. Therefore, the Government wanted to make it a terrorist offence. This necessitated some amendments and some insertions; ..." The following clarification is also relevant : "There are two things. One is the point which you made about some people being caught because of some fake currency notes coming out, four or five. I think, what you wanted to put across was that counterfeiting can also be for purposes other....
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....nk of that nation, in our case, the Reserve Bank of India. The observation made by the Division Bench with respect to smuggling of other precious metals with a profit motive to find smuggling of gold having no distinctive status from those other precious metals is significant. Gold as was observed by the FATF is global currency and is a medium of exchange more so in India where there is a tendency to hoard that particular metal. In fact in our humble view even smuggling of gold and other precious metals which aims at destabilizing the economy would be covered under threats to economic security, as generally understood. But this element was not contemplated by the Parliament as is evident from the debates on the bill, which the members of the Treasury Bench supported on the specific ground of state/sovereign sponsored counterfeiting from across the borders. A petty counterfeiting carried on by a small operator/s was not intended to be covered under the UA(P)A. This is explicit from the Explanation to Sec. 15(1), requiring a declaration from a forensic expert of the counterfeit currency comprising of the key security features as specified in the Third schedule. The Rules of 2013 regu....
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....rned in the first information report, must prevail until contradicted and overcome or disproved by other evidence, and on the face of it, shows the complicity of such accused in the commission of the stated offence"(sic). It was held that the degree of satisfaction is a tad lighter when the Court has to opine that the accusation is 'prima facie true' as compared to the opinion of the accused being 'not guilty' of the offence alleged. However, under the UA(P)A the rigour definitely would be more and the degree of satisfaction will be higher than in considering an application for bail under Section 437 Cr.P.C. If the provisions of UA(P)A are not attracted prima facie, then obviously the consideration of bail need not be on the stricter terms contemplated in Sec. 43D(5), since then, there would be no prima facie truth in the accusations. 21. Admittedly, the charge-sheet has been filed in the above case, which we refer to, from Crl. Appeal No.379 of 2021, produced as Annexure-B. We have the responsibility at this stage, only of determining whether the accusations are prima facie true, in deciding the issue of grant of bail. We keep in mind the caution expressed by Muha....
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.... charges speak of " ... threatening the security and economic security of the country, destabilizing Indian economy and damage to the friendly relation to UAE and thus co-jointly committing the terrorist act. The accused had the motive to gain money, by causing extensive and irreparable damage to the security and economic stability of the country. For committing this terrorist act, the accused had conspired together, recruited people, formed a terrorist gang, raised funds and smuggled around 167 Kg of gold from UAE. With this intention, the accused had also conspired and contemplated smuggling of more gold from other countries, such as Saudi Arabia, Bahrain and Malaysia." [sic.para17.12 of Annexure B]. The charge also as enumerated under the various paragraphs under serial No.18 reiterate the facts and we think it appropriate to extract paragraph 18.1: "The accused in this case had the knowledge that an act of smuggling of gold into India, in large quantity, would threaten the security and economic security of the country, destabilize the Indian economy and damage the friendly relations with UAE. The accused had the motive to gain money, by causing extensive and irreparable damag....
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....nomic security of the country; deemed to be a terrorist act under S.15(1) of UA(P)A. The definition restricts it to counterfeiting of high quality currency. Needless to say that neither the charge-sheet nor the learned Special Court speak of any other terrorist act as defined under S.15(1), but for the threat to economic security, which is confined to subclause (iiia) of clause (a) of S.15(1). We also do not find any allegation or accusation, from the records now before us, of the profit generated having been used in for any terrorist activities as spoken of in Sections 15 to 18 of the UA(P)A. The prima facie truth of the accusation under S.43(D)(5) has to be, regarding an offence under the special enactment, the UA(P)A. That being not discernible, as of now from the available records, we cannot but set aside the order impugned and allow the bail applications of all the accused. We do not think the findings in Muhammed Shafi P. (supra), which led to the refusal of bail to one of the accused any longer applies, since on a deeper probe there is no element of terrorist activity unearthed and as of now the accusations and allegations are summarized in the charge-sheet; which, but for t....