$~38. * % IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision:
08. 05.2017 + W.P.(CRL) 852/2017 VAKAMULLA CHANDRASHEKHAR .....
... PetitionerThrough: Mr. Kirti Uppal, Sr. Adv. with Mr.Sidhant Asthana,Sahiba Pantel, Peeyush Ranjan, Sidharth Chopra, Adv versus ENFORCEMENT DIRECTORATE & ANR. .....
... RESPONDENTSThrough: Mr. Vinod Diwakar, CGSC Mr. Anup Singh Rauthan, Asstt. Director (IO) CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MS. JUSTICE DEEPA SHARMA VIPIN SANGHI, J.
(ORAL) Crl.M.A.7706/2017 (u/s 482 Cr.P.C. on behalf of the petitioner) 1. Issue notice. Mr. Vinod Diwakar, Central Government Standing Counsel accepts notice on behalf of the respondents.
2. This application has been preferred by the petitioner to seek an order of restraint against the respondents from taking any coercive steps against the petitioner during the course of proceedings under Section 50(2) and W.P.(Crl.) No.852/2017 Page 1 of 41 Section 50(3) of the Prevention of Money Laundering Act, 2002 (‘PMLA’ or ‘Act’ for short), in consequence of ECIR/HQ/02/HIU/2015-wherein the petitioner was lastly summoned vide summons dated 27.04.2017. The apprehension of the petitioner 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 sub- section (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 a witness against himself”.
5. The submission of Mr. Uppal is that since the petitioner has not been named as an accused, and no complaint has still been filed before the special court naming the petitioner as an accused of the offence under Section 3 of W.P.(Crl.) No.852/2017 Page 2 of 41 the Act, the petitioner is not in a position to apply for and seek anticipatory bail. Thus, the fundamental right of the petitioner to preserve his liberty is seriously impaired. Mr. Uppal submits that the offence under section 3 of the PMLA is a non cognizable offence. Thus, the power of arrest under section 19 of the Act cannot be exercised without obtainment of a warrant of arrest from the Magistrate concerned.
6. The petitioner also places reliance on the order passed by the Division Bench of this Court in Gurucharan Singh v. Union of India, W.P. (Crl.) No.307/2016 dated 27.04.2016. By this common order, the applications of three petitioners, in three different writ petitions, were considered by the Division Bench, to seek bail during pendency of the writ petitions. In course of its discussion, the Division Bench, inter alia, observed that “it is mandatory for the respondents to follow the procedure prescribed under the Code of Criminal Procedure in the absence of any inconsistent provision under the PMLA concerning investigation, arrest and or other proceedings. Prima facie we are of the view that it was mandatory for the respondents to comply with the provision of Sections 155, 177(1) and 172 of the Code of Criminal Procedure in case the offence is non-cognizable. However, should this court reach a conclusion that the offence under PMLA is held to be cognizable, the respondents were bound to follow and comply with Sections 154, 157 of the Code of Criminal Procedure”. The Court held that in the absence of procedure having been followed, the right of the petitioners under Article 21 of the Constitution stood violated. The Division Bench allowed the bail applications of the petitioners before it, upon compliance of several terms and conditions. We are also informed that the Special Leave W.P.(Crl.) No.852/2017 Page 3 of 41 Petition preferred before the Supreme Court against the order passed in Gurucharan Singh (supra) stands dismissed in limine.
7. Lastly, the submission of the petitioner is that the principles laid down by the Supreme Court in Arnesh Kumar Vs. State of Bihar (2014) 8 SCC273would apply in respect of the power of 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 accused. The purpose of summoning the person is to record his/her statement as a part of the ongoing investigation, only whereafter-on the basis of the evidence emerging, the person may (or may note) be labelled as a witness, or an accused in respect of an offence under Section 3 of PMLA. It is not W.P.(Crl.) No.852/2017 Page 4 of 41 necessary that an accused under Section 3 of PMLA may be an accused in the scheduled offence (defined under Section 2(y) of the PMLA). Learned counsel has relied upon the scheme of PMLA to submit that it is a complete code in itself, and the power of arrest vested in the authorities mentioned in section 19 of the Act is not subject to the procedure prescribed in the Code. Learned counsel submits that the authorities under the Act are not police officers, and the statements recorded by them are, therefore, admissible in evidence. He also submits that since the petitioner has not been named as an accused, the protection against self incrimination guaranteed by Article 21 of the Constitution is not available at this stage to the petitioner.
9. We have heard learned counsels on both sides and given our thoughtful consideration to the matter. We have examined the provisions of the PMLA as also the order passed by the Division Bench in Gurucharan Singh (supra). The petitioner by way of this application is seeking a relief in the nature of anticipatory bail. At the outset, we may notice that under the PMLA, there is no specific provision dealing with the grant of anticipatory bail. It is for this reason, that the petitioner has moved the present application in these proceedings, rather than preferring an independent proceeding to seek anticipatory or pre-arrest bail. We may now proceed to notice the statutory scheme envisaged under the PMLA to appreciate and deal with the submissions of the parties. .
10. The PMLA, inter alia, creates the offence of money laundering (see Section 3); prescribes the punishment for the said offence (see Section 4); creates and empowers the authorities for the purpose of the Act (see Section 49 read with Section 2(c), 2(j) and 2(k)), inter alia, to carry out investigation W.P.(Crl.) No.852/2017 Page 5 of 41 to collect evidence (see Section 2(na)); to summon any person to give evidence or produce any record during the course of any investigation or proceeding under the Act (see Section 50(2)); to survey (see Section 16); to search and seize premises, lockers, vessel etc. (see 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 an authorised officer in this behalf under the PMLA, take cognizance of offence under Section 3 (see Section 44(1)(b)). The trial of the scheduled offence, or offence of money laundering shall be held by the Special Court in accordance with the provisions of the Code of Criminal Procedure (Code) as it applies to trial W.P.(Crl.) No.852/2017 Page 6 of 41 before a Court of Sessions (see Section 44(1)(d)).
13. The authorities for the purposes of the Act are the Director, Additional Director, Deputy Director, Joint Director, Assistant Director and such other class of officers as may be appointed for the purpose of the Act (Section 48). The Central Government is empowered to appoint such persons as it thinks fit to be authorities for the purposes of the Act. (Section
49) 14. The authorities for the purposes of the Act referred to and appointed under Sections 48 and 49 of the said Act are not police officers. Firstly, this position is clear from the provisions of the Act, taken note of hereinafter. Pertinently, notwithstanding anything contained in the Code or any other provisions of the PMLA, the offence under the PMLA shall not be investigated by a police officer (see Section 45(1A), unless specifically authorized by the Central Government generally or by a special order, and subject to the conditions that may be prescribed (see Section 45(1A). “Investigation” includes all the proceedings under the Act conducted by the Director or by an authority authorised by the Central Government for collection of evidence (see Section 2(na)). Thus, investigation is tasked to the Director or an authority authorised by the Central Government, who (unless specifically authorised) cannot be a police officer. A range of officers – including “officers of police” are “empowered and required to assist the authorities in the enforcement of this Act” (see Section 54). The fact that the authorities for the purposes of the Act are not police officers is evident from the aforesaid provisions, which provide that the investigation to collect evidence under the Act shall be conducted by authorities under the W.P.(Crl.) No.852/2017 Page 7 of 41 Act, and not by a police officer, and inter alia, police officers are empowered and required to assist the authorities under the Act in the enforcement of the Act. If the authorities under the Act – who are authorised to carry out investigation under the Act, were considered by the Parliament to be police officers, 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) SCR698 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 shall be subject to the same provisions as the officer incharge of a police station may exercise and is subject to under the Code of Criminal Procedure, 1898, when investigating a cognizable case: Provided that….” W.P.(Crl.) No.852/2017 Page 8 of 41 16. The argument of the appellant was that under Section 21(2), a Central Excise Officer has all the powers of an officer in charge of a police station under Chapter XIV of the Code and, therefore, he must be deemed to be a police officer within the meaning of those words in Section 25 of the Evidence Act. While agreeing with the submission of the appellant that Section 21(2) confers on the Central Excise Officer the same power as an officer in charge of a police station when investigating a cognizable case, the Supreme Court observed that the said power is conferred for the purpose of sub section (1) of Section 21 i.e. to investigate the violation of the said Act. The Supreme Court observed: “9. … … It does not however appear that a Central Excise Officer under the Act has power to submit a charge-sheet under Section 173 of the Code of Criminal Procedure. Under Section 190 of the Code of Criminal Procedure a Magistrate can take cognizance of any offence either (a) upon receiving a complaint of facts which constitute such offence, or (b) upon a report in writing of such facts made by any police officer, or (c) upon information received from any person other than a police officer, or upon his own knowledge or suspicion, that such offence has been committed. A police officer for purposes of clause (b) above can in our opinion only be a police officer properly so-called as the scheme of the Code of Criminal Procedure shows and it seems therefore that a Central Excise Officer will have to make a complaint under clause (a) above if he wants the Magistrate to take cognizance of an offence, for example, under Section 9 of the Act. Thus though under sub-section (2) of Section 21 the Central Excise Officer under the Act has the powers of an officer incharge of a police station when investigating a cognizable case, that is for W.P.(Crl.) No.852/2017 Page 9 of 41 the purpose of his inquiry under sub-section (1) of Section 21… …”. “… … All that Section 21 provides is that for the purpose of his enquiry, a Central Excise Officer shall have the powers of an officer incharge of a police station when investigating a cognizable case. But even so it appears that these powers 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) In para 8 of this decision, the Supreme Court analysed the provisions 17. of the Central Excises and Salt Act. It observed that the main purpose of the said Act was to levy and collect Excise Duties and Central Duties, and Central Excise Officers have been appointed thereunder for this main purpose. In order that they may carry out their duties under the Act, powers W.P.(Crl.) No.852/2017 Page 10 of 41 had been conferred on them to see that duties are not evaded and persons guilty of evasion of duty are brought to book. The said Act provides punishment which may extend to imprisonment upto six months or fine, or both (u/s
9) for commission/ omission of the acts set out in the said Act and the Rules framed thereunder. In this respect, the Supreme Court, inter alia, observed: “8. … …. Under Section 13 of the Act, any Central Excise Officer duly empowered by the Central Government in this behalf may arrest any person whom he has reason to believe to be liable to punishment under the Act. Section 18 lays down that all searches made under the Act or any rules made thereunder and all arrests made under the Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 relating respectively to searches and arrests made under that Code. Section 19 lays down that every person arrested under the Act shall be forwarded without delay to the nearest Central Excise Officer empowered to send persons so arrested to a Magistrate, or, if there is no such Central Excise Officer within a reasonable distance, to the officer incharge of the nearest police station. These sections clearly show that the powers of arrest and search conferred on Central Excise Officers are really in support of their main function of levy and collection of duty on excisable goods”. (emphasis supplied) 18. The situation is no different under the PMLA. The PMLA is a special Act, the object whereof is to prevent money laundering and to confiscate properties derived from or involved in money laundering. The authorities under the Act are empowered to work the Act and while doing so, inter alia, to carry out investigation i.e. to summon persons and require them to give evidence and produce records; to record their statements; to attach properties involved in money laundering; to carry out search and seizure of properties; W.P.(Crl.) No.852/2017 Page 11 of 41 to search persons, and; to even arrest persons.
19. We may next refer to the decision of the Supreme Court in Raj Kumar Karwal v. Union of India & Ors., (1990) 2 SCC409 The issue considered by the Supreme Court in this decision 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 Badaku Joti Savant (supra); Romesh Chandra Mehta v. State of Bengal, (1969) 2 SCR461 and Illias v. Collector of Customs, Madras, (1969) 2 SCR613(both of which held that Customs Officers are not Police Officers); State of U.P. v. Durga Prasad, (1975) 3 SCC210and Balkishan A. Devidayal v. W.P.(Crl.) No.852/2017 Page 12 of 41 State of Maharashtra, (1980) 4 SCC600(holding that the Investigation Officers under the Railway Property (Unlawful Possession) Act, 1966 are not police officers).
21. In all the aforesaid cases, the Supreme Court held that the concerned investigating authorities could not be called Police Officers, since they had no power to file a final report u/s 173 of the Code before the Magistrate. The said statutory investigating authorities, if they were of the opinion that there is sufficient evidence or reasonable ground for suspicion against the accused, had to file a complaint before the competent court, and it was for the competent court to take cognizance of the offence. The Supreme Court proceeded to examine the provisions of the NDPS Act and concluded that: “20. … … These provisions found in Chapter V of the Act show that there is nothing in the Act to indicate that all the powers under Chapter XII of the Code, including the power to file a report under Section 173 of the Code have been expressly conferred on officers who are invested with the powers of an officer-in-charge of a police station under Section 53, for the purpose of investigation of offences under the Act”. (emphasis supplied) The Supreme Court further observed that in respect of the NDPS Act:
21. The Act was enacted for the control and regulation of operations relating to narcotic drugs and psychotropic substances. Under Sections 41, 42, 43, 44 and 49 of the Act certain powers of arrest, search and seizure have been conferred on certain officers of different departments. If the arrest or seizure is made pursuant to a warrant issued under Section 41(1), the person arrested or the article seized has to be forwarded to the Magistrate with despatch. If the arrest or seizure is made under Section 41(2), 42, 43 or 44 the person arrested or the article seized has to be forwarded to the officer- W.P.(Crl.) No.852/2017 Page 13 of 41 in-charge of the nearest police station or the officer empowered under Section 53 of the Act. Special procedure has been prescribed for the disposal of narcotic drugs and psychotropic substances having regard to 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 … …”. It also observed: “… … The important attribute of police power is not only the power to investigate into the commission of cognizable offence but also the power to prosecute the offender by filing a report or a charge-sheet under Section 173 of the Code. That is why this Court has since the decision in Badku Joti Savant [(1966) 3 SCR698: AIR1966SC1746:
1966. Cri LJ1353 accepted the ratio that unless an officer is invested under any special law with the powers of investigation under the Code, including the power to submit a report under W.P.(Crl.) No.852/2017 Page 14 of 41 Section 173, he cannot be described to be a ‘police officer’ under Section 25, Evidence Act …. …”. (emphasis supplied) 22. The Supreme Court held that a confessional or self incriminating statement made by a person to an officer invested with the power of investigation u/s 53 of the said Act, who may have been accused of having committed crime under the NDPS Act, was not hit by section 25 of the Evidence Act. The decision in Raj Kumar Karwal (supra) was subsequently followed in Ram Singh v. Central Bureau of Narcotics, (2011) 11 SCC347 23. Chapter XII of the Code deals with the aspect of “Information to police and their powers to investigate”. The provisions of Chapter XII of the Code, in our view, would have no application to an investigation done under the provisions of the PMLA, since Chapter XII deals with the powers and duties of the police to register a cognizable case and carry out investigation in respect of the cognizable offence i.e. in respect of an offence of which the police is empowered, authorised and duty bound to act, without any requirement of obtaining any orders of the concerned Magistrate. The expression “cognizable offence” is defined in the Code in section 2(c) to mean “an offence for 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;”. (emphasis supplied) 24. Since the submission of the petitioner is that the offence under Section 3 of the Act is “non-cognizable”, we may take note of a part of the legislative history of section 45 of the Act. Section 45(1) of the PMLA, prior to its amendment by Act of 2005 w.e.f. 01.07.2005, read as follows: W.P.(Crl.) No.852/2017 Page 15 of 41 “Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), - every offence punishable under this Act shall be (a) 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 section 3 of the Act is not a cognizable offence, and, consequently, the power to arrest conferred by section 19 of the PMLA cannot be exercised, except upon the filing of a complaint and W.P.(Crl.) No.852/2017 Page 16 of 41 upon issuance of a warrant of arrest by the Special Court.
27. This submission of the petitioner is meritless. Though, at first blush, the exclusion of clause (a) from section 45(1) as it earlier existed does given an impression that the Parliament intended to relax the power of arrest under the PMLA, a perusal of the statement made by the Finance Minister in Parliament while introducing the Prevention of Money Laundering (Amendment) Bill, 2002 brings out the purport of the said amendment.
28. The consequence of labeling the offence u/s 3 as a “cognizable offence” was that a police officer, upon disclosure of information relating to commission of the said offence was obliged to register the said information as a First Information Report u/s 154 Cr PC; carry out investigation (under Section 156), and arrest the accused without a warrant, and; even file a report u/s 173 of the Code before the concerned Magistrate. However, the Act provides that u/s 19 a Director or Deputy Director or Assistant Director or any other officer authorized may arrest an offender under the Act. It also provides in Section 44 that 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 authorized by the Central Government. The Act, as we have noticed above, vests extensive powers of investigation under the Act, upon the authorities under the Act, who are not police officers. Thus, there were serious inconsistencies resulting on account of the labeling of the offence u/s 3 of the PMLA as a “cognizable offence”. It is for this reason that section 45 of the PMLA was amended, inter alia, by deleting clause (a) of section 45(1), and introducing sub section (1A) in Section 45 which provided that “Notwithstanding anything W.P.(Crl.) No.852/2017 Page 17 of 41 contained in the Code of Criminal Procedure, 1973, or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed”. Consequently, after the amendment, the police cannot take cognizance of the offence u/s 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 his belief in writing and informing the grounds of arrest to the arrested person.
30. It is also pertinent to note that the Code in Section 4(1) provides that “All offences under the Indian Penal Code shall be investigated, inquired W.P.(Crl.) No.852/2017 Page 18 of 41 into, tried and otherwise dealt with according to the provisions” thereof. The IPC creates a host of offences, some of which are classified by the Code as cognizable (i.e. in respect of which the police officer may, in accordance with the First Schedule or under any other law for the time being in force, carry out investigation and arrest without a warrant), while others are classified by the Code as non-cognizable (i.e. an offence for which a police officer has no authority to investigate without an order or arrest without warrant). Similarly, some of the offences are bailable (i.e. where the bail would be granted by the police itself), while others are non bailable (i.e. where bail would have to be obtained from the competent court). It is for this reason that in respect of certain offences, the police is empowered and duty bound to take cognizance on its own, (i.e. register the case; carry out investigation; if necessary arrest the accused, and; file a final report before the concerned Magistrate).
31. On the other hand, the PMLA deals with one and only one offence i.e. of money laundering as defined in section 3 of the Act. The information received by the authorities under the Act in respect of an offence u/s 3 of the Act is actionable by the authorities under the Act, i.e. it is for the authorities under the Act to take notice of the offence, and not the police. The exclusion of clause (a) from section 45(1) of the PMLA as it earlier stood, only has the effect of divesting the jurisdiction of the police to take cognizance of the offence of money laundering. However, the offence is still actionable by the authorities under the Act.
32. Whereas the PMLA is a substantive law, the Code is merely a procedural law. Insofar as the PMLA creates and sets down the statutory W.P.(Crl.) No.852/2017 Page 19 of 41 scheme, inter alia, for the opening/ registration of the case; its investigation; the officers by whom the case would be investigated; the powers of investigation - which includes the power to summon any person; to record statements; to require production of evidence; to search, to seize; to arrest, and; the manner of filing a complaint before the Special 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 therein are fulfilled. It further provides that special Court shall not take cognizance of any offence under section 4 except on a complaint made by the Director or any Officer authorized by the Central Government or the State Government. Sub-Section (1-A) of Section 45 specifically provides that notwithstanding the provisions contained in the Code of Criminal Procedure, no police officer shall investigate into an offence under the Act unless specifically authorized by the Central Government by a W.P.(Crl.) No.852/2017 Page 20 of 41 general or special order. The provisions of the Act has been given over-riding effect upon any other law and further categorically mentioned that any provision of Code of Criminal Procedure which are inconsistent with the provision of the this Act which deals with attachment, confiscation, investigation and prosecution etc. shall not apply. There is no provision in the Act which is a special statute for filing of police report. It could file a complaint only after completion of investigation by the authorized authority, which shall be the basis of taking cognizance.
14. As noticed above, the word “investigation” as defined in Section 2(na) has been inserted by virtue of Amendment Act 20 of 2005. According the word “investigation” includes all the proceedings under the Act conducted by the Director or by an authority authorized by the Central Government under the Act for the collection of evidence. the definition to 15. The provision contained in Sections 44 and 45 of the Act prohibits taking of cognizance except on a complaint made by the appropriate authority who can file a complaint only after completion of investigation. In my considered opinion, therefore, in view of nonobstante clause contained in various provisions of the Act, which has overriding effect, the provision contained in section 167(2) of the Cr.P.C. will not apply”. (emphasis supplied) Thus, the provisions of Section 167(2) of the Code was held to be inapplicable to proceedings under the Act.
34. We may also take note of the judgment of a Division Bench of the Punjab & Haryana High Court in Karam Singh & Ors. v. Union of India, 2015 SCC Online P&H19739 It was argued before the Division Bench that the offence u/s 3 of the Act is bailable and non cognizable. The Division Bench in its decision, inter alia, observed: W.P.(Crl.) No.852/2017 Page 21 of 41 “30. Thus, the argument which is being sought to be raised by learned 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 has to fall back on the definition under Section 2(na) of the PMLA, which specifically provides that all proceedings under the Act are to be conducted by the authorized authorities for the collection of evidence”.
35. The Division Bench took notice of the judgment of the Jharkand High Court in Hari Narayan Rai (supra), and observed in para 35 as follows: “35. The submission that the offence is non-cognizable mainly because a complaint has to be filed by the authorities before the Special Court to take cognizance does not take away the power of the authorities to investigate and arrest. We are in consonance with the view taken above by the Jharkhand High Court that the right to investigate under the Act is very much part of the scheme of the Act. The argument that the offence W.P.(Crl.) No.852/2017 Page 22 of 41 is a non-cognizable offence and bailable as defined under Section 2(1) of Cr.P.C. thus, cannot be accepted”. In para 39, the Division Bench observed as follows: issued by the notification “39. The Special Court as notified under Section 43 is to be the Sessions Judge of various divisions and for separate revenue districts as per the Central Government after consultation with the Chief Justice of this Court. Thus, it is apparent that the offence under Section 3 as per the first schedule of Cr.P.C. would be a cognizable offence and a non-bailable offence and Special Court would only take cognizance of the offence upon the complaint made by the authorities under the Act in writing in view of the provisions of the Act. A reading of Section 46 would rather go on to show that it has been specifically provided that Cr.P.C. would apply to the proceedings before the Special Court for the purposes of bails or bonds. Thus, it would be apparent that it is at this stage the procedure prescribed under the Code would come into play for the limited purpose where a person has been taken into custody by the authorized officers under the Act and produced before the competent Court, who will, then proceed to decide the right of bail in accordance with the provisions of the Cr.P.C. The reference to the provisions of Section 155(2), Cr.P.C. whereby, there is a bar for the police officer to investigate the non-cognizable offence without the order of the Magistrate having power to try such case or commit the case for trial thus would be without any basis in view of the fact that the police officers have 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 W.P.(Crl.) No.852/2017 Page 23 of 41 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 “... ... would be a cognizable offence ... ...” by the words “... and Special Court would only take cognizance under the Act in writing in view of the provisions of the Act”.
37. The Division Bench also took note of the judgment of the Supreme Court in Jeewan Kumar Raut & Anr. v. Central Bureau of Investigation, (2009) 7 SCC526 In that case, the investigation was conducted by the CBI under the Transplantation of Human Organs Act, 1994 (in short, TOHO). A complaint had been filed in view of the provisions contained in TOHO. The argument of the accused was that the complaint was not maintainable and only a police report could have been filed. This argument was rejected by the Supreme Court. The Supreme Court dealt with Section 22 of TOHO, which provide that only a complaint could be filed by the appropriate authority. The Supreme Court held that under the special statute, investigation could be conducted and there was no provision to file a police report and a specific bar had been created by the Parliament. The relevant extract from the decision of the Supreme Court in Jeevan Kumar Raut W.P.(Crl.) No.852/2017 Page 24 of 41 (supra) reads as follows: “26. It is a well-settled principle of law that if a special statute lays down procedures, the ones laid down under the general statutes shall not be followed. In a situation of this nature, the respondent could carry out investigations in exercise of its authorization under Section 13(3)(iv) of TOHO. While doing so, it could exercise such powers which are otherwise vested in it. But, as it could not file a police report but a complaint petition only; sub-section (2) of Section 167 of the Code may not be applicable.
27. The provisions of the Code, thus, for all intent and purport, would apply only to an extent till conflict arises between the provisions of the Code and TOHO and as soon as the area of conflict reaches, TOHO shall prevail over the Code. Ordinarily, thus, although in terms of the Code, the respondent upon completion of investigation and upon obtaining remand of the accused from time to time, was required to file a police report, it was precluded from doing so by reason of the provisions contained in Section 22 of TOHO.
28. To put it differently, upon completion of the investigation, an authorized officer could only file a complaint and not a police report, as a specific bar has been created by the Parliament. In that view 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 W.P.(Crl.) No.852/2017 Page 25 of 41 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&H21981 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 not police officers. In the said decision, the Division Bench of Punjab & Haryana High Court, inter alia, observed:
"38. Apart from the police constituted under the Police Act, 1861, certain Officers of specified organizations have been invested powers of an Officer in-charge of a Police Station. With such conferment of powers, the investigation of the offences can be conducted by the officers, but such power of investigation is under a special Act and not under the Code. After such investigation, which is not any way analogous to the investigation carried out by police under Section 2(h) of the Code, the empowered Officer can file a complaint in terms of Section 190 of the Code.
39. Though Section 193 of the Code prohibits that no Court of Session shall take cognizance of any offence as a Court of Original Jurisdiction unless the case has been committed to it by a Magistrate, but such provision being in conflict with Section 36A of the Act, the police report or a complaint can be filed before the Court of Session directly. When a complaint is filed, the Court of Session commences proceedings regulated by Chapter XV of the Code. Such provision inter alia contemplates that if a complaint is made in writing, the Magistrate is not required to examine the complainant and the witnesses, if a public servant acting or purporting to act in the discharge of his official duties files a complaint. The Code contemplates investigation by the police culminating with the filing of a W.P.(Crl.) No.852/2017 Page 26 of 41 police report and also proceedings to be initiated on the basis of a complaint by an empowered Officer in terms of Chapter XV of the Code. Therefore, when a police in terms of Code investigates into an offence including an offence under the Act, it files a report under Section 173 of the Code, whereas the investigation by an empowered officer under the Act leads to filing of a complaint in terms of Section 190 of the Code.
40. Thus, the argument that the statements of PW- 4 Constable Satpal Singh and PW-5 Shyam Kumar were neither recorded nor supplied to the appellants while filing complaint is not tenable in law. Such witnesses were not examined by the "police officials" during the course of investigations so as to record their statements as provided under Section 161 of the Code. It is the duty of the police official to record statement, supply copy of such statement, as part of the report 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 officers and are bound to carry investigations under the Act in W.P.(Crl.) No.852/2017 Page 27 of 41 accordance with Chapter XII of the Code after lodging of an FIR."
40. Pertinently, the order of the Division Bench of the Gujarat High Court dated 03.08.2015 in Rakesh Manekchand Kothari v. Union of India, Special Criminal Application (Habeas Corpus) No.4247/2015 which was also relied upon by the Division Bench of this Court in Gurucharan Singh (supra), was also considered in Karam Singh (supra). The Division Bench in Karam Singh (supra) rejected the said reliance on Rakesh Manekchand Kothari (supra) by observing as follows:
"62. The Division Bench judgment in Rakesh Manekchand's case (supra) can be of no assistance to the counsel for the petitioners as admittedly, the order dated 03.08.2015 is interim in nature. Rather, a perusal of the order would also go on to show that there were observations that the issue required deeper consideration though various observations have been made in favour of the petitioners which are sought to be highlighted. Interim orders of this nature cannot be held to be a precedent or of any persuasive value since there has to be a final decision. Interim directions always go with the final decision and cannot be taken into consideration. For precedent to be binding, there has to be final decision and interim directions, issued in a pending case, would go with the final decision and cannot be taken into consideration. The said principle as to what is the "ratio decidendi" and the authoritative and binding element of the final judgment, laying down the precedent is to be taken into consideration and not the interim orders. Reference can be made to the observations made by the Apex Court in State of Assam v. Barak Upatyaka D.U. Karmachari Sanstha (2009) 5 SCC694: (AIR2009SC2249 Para 10). Relevant observations of the judgment read as under:
"21. A precedent is a judicial decision containing a principle, which forms an authoritative element termed as ratio decidendi. An interim order which W.P.(Crl.) No.852/2017 Page 28 of 41 facie such non-final does not finally and conclusively decide an issue cannot be a precedent. Any reasons assigned in interim order support of containing prima findings, are only tentative. Any interim directions issued on the basis of such prima facie findings are temporary arrangements to preserve the status quo till the matter is finally decided, to ensure that the matter does not become either infructuous or a fait accompli before the final hearing. to read such tentative facts of that case 22. The observations and directions in Kapil Hingorani (I) and (II) being interim directions based on tentative reasons, restricted to the peculiar involving an extraordinary situation of human rights violation resulting in starvation deaths and suicides by reason of non-payment of salaries 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 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) and Kapila Hingorani (II) :” (emphasis supplied) reasons, as W.P.(Crl.) No.852/2017 Page 29 of 41 41. In the light of the aforesaid analysis of the scheme of PMLA, it appears to us that the provisions of Chapter 12 of the Code would not be attracted to an investigation under the PMLA at all.
42. So far as the decision of the Division Bench of this Court in Gurucharan Singh (supra) is concerned, we are of the considered view that the prima facie findings of law recorded therein do not reflect the correct legal position. With utmost respect, we cannot agree with the same. Pertinently, the Division Bench relied on Rakesh Manekchand Kothari (supra) with which the Division Bench of the Punjab & Haryana High Court has not agreed in Karam Singh (supra). The view taken by the Division Bench of the Punjab & Haryana High Court in Karam Singh (supra) commends to us, and we propose to adopt the same. Gurucharan Singh (supra) is not a final judgment. The same is only an interlocutory order. The relevant extract from the decision in Gurucharan Singh (supra) quoted above itself shows that the Division Bench recorded only a prima facie view while observing that “it is mandatory for the respondents to follow the procedure prescribed under the Code of Criminal Procedure in the absence of any inconsistent provision under the PMLA concerning investigation, arrest and or other proceedings. Prima facie we are of the view that it was mandatory for the respondents to comply with the provision of Sections 155, 177(1) and 172 of the Code of Criminal Procedure in case the offence is non-cognizable. However, should this court reach a conclusion that the offence under PMLA is held to be cognizable, the respondents were bound to follow and comply with Sections 154, 157 of the Code of Criminal Procedure”. The same does not, therefore, constitute a binding precedent W.P.(Crl.) No.852/2017 Page 30 of 41 for the reasons recorded in para 62 of Karam Singh (supra) which we have quoted herein above. The fact that the Special Leave Petition against the decision in Gurucharan Singh (supra) has been dismissed in limine, would not make a difference, because in limine dismissal of the Special Leave Petition does not mean that the view of the Division Bench on the legal issues stated by it are affirmed by the Supreme Court (see Kundrayammed & Ors. v. State of Kerala & Anr., (2006) 6 SCC359 43. The submission of the petitioner that his fundamental right under Article 20(3) is 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. Only upon scrutiny of the W.P.(Crl.) No.852/2017 Page 31 of 41 evidence collected, in case the officer authorized in this behalf forms the opinion that the offence u/s 3 of the Act is made out, would he file a complaint before the Special Court u/s 44 of the Act.
45. We may now turn to the submission of the petitioner premised on Arnesh Kumar (supra). A perusal of Section 44(2) of the PMLA shows that the power of the High Court to deal with a regular bail application under Section 439 of Cr.P.C. has been preserved. However, there is no similar provision made in the PMLA with respect of the power of the High Court/Court of Sessions to grant anticipatory bail under Section 438 Cr.P.C. Thus, it, prima facie, appears to us that under the Scheme of the PMLA, the relief of statutory anticipatory bail is excluded. Such exclusion of the provision for grant of Anticipatory Bail is not violative of Article 21 of the Constitution of India (see Kartar Singh v. State of Punjab, (1994) 3 SCC569. At the same time, a person may seek protective orders by invoking the writ jurisdiction of the concerned High Court. (see Hema Mishra v. State of Uttar Pradesh & Ors., (2014) 4 SCC453 46. Section 19 of the PMLA reads as follows: “19. Power to arrest.— in this behalf by (1) If the Director, Deputy Director, Assistant Director, or any other officer authorised the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. W.P.(Crl.) No.852/2017 Page 32 of 41 (2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed. (3) Every person arrested under sub-section (1) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary 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 W.P.(Crl.) No.852/2017 Page 33 of 41 registered under Section 498 A IPC and Section 4 of the Dowry Prohibition Act. The anticipatory bail application of the petitioner having been rejected, he approached the Supreme Court. The decision in Arnesh Kumar (supra) came in the background of the misuse of the provisions contained in Section 498A IPC and Section 4 of the Dowry Prohibition Act by the complainants, and the exercise of the power of arrest by the police in such cases by resort to Section 41 of the Code indiscriminately, of all and sundry relatives of the accused husband. The Supreme Court, in paras 4 and 5 of the said decision has set out the background in which the said decision came to be rendered. In the aforesaid context, the Supreme Court in para 6 observed; “6. ....... Police officers make arrest as they believe that they possess the power to do so. As the arrest curtails freedom, brings humiliation and casts scars forever, we feel differently. We believe that no arrest should be made only because the offence is non-bailable and cognizable and therefore, lawful for the police officers to do so. The existence of the power to arrest is one thing, the justification for the exercise of it is quite another. Apart from the power to arrest, the police officers must be able to justify the reasons thereof. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent and wise for a police officer that no arrest is made without a reasonable satisfaction reached after some investigation as to the genuineness of the allegation. Despite this legal position, the legislature did not find any improvement. Numbers of arrest have not decreased. ...............”.
49. In view of the fact that the offence under Section 498A and Section 4 of the Dowry Prohibition Act provide for maximum punishment of a term which may extend to 7 years and fine, the Supreme Court focussed its W.P.(Crl.) No.852/2017 Page 34 of 41 attention on Section 41(1)(b) of the Code which reads as follows: “41. When police may arrest without warrant.—(1) Any police officer may without an order from a Magistrate and without a warrant, arrest any person— (a)*** (b) 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 punishable with imprisonment for a term which may be less than seven years or which may extend to seven years whether 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 W.P.(Crl.) No.852/2017 Page 35 of 41 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 evident that a person accused of an offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years with or without fine, cannot be arrested by the police officer only on his satisfaction that such person had committed the offence punishable as aforesaid. A police officer before arrest, in such cases has to be further satisfied that such arrest is necessary to prevent such person from committing any further offence; or for proper investigation of the case; or to prevent the accused from causing the evidence of the offence to disappear; or tampering with such evidence in any manner; or to prevent such person from making any inducement, threat or promise to a witness so as to dissuade him from disclosing such facts to the court or the police officer; or unless such accused person is arrested, his presence in the court whenever required cannot be ensured. These are the conclusions, which one may reach based on facts. 7.2. The law mandates the police officer to state the facts and record the reasons in writing which led him to come to a conclusion covered by any of the provisions aforesaid, while making such arrest. The law further requires the police officers to record the reasons in writing for not making the arrest. 7.3. In pith and core, the police officer before arrest must put a question to himself, why arrest?. Is it really required?. What purpose it will serve?. What object it will achieve?. It is only after these questions are addressed and one or the other conditions as enumerated above is satisfied, the power of arrest W.P.(Crl.) No.852/2017 Page 36 of 41 needs to be exercised. In fine, before arrest first the police officers should have reason to believe on the basis of information and material that the accused has committed the offence. Apart from this, the police officer has to be satisfied further that the arrest is necessary for one or the more purposes envisaged by sub-clauses (a) to (e) of clause (1) of Section 41 CrPC.” 51. The Supreme Court also took notice of Section 41A Cr.P.C. which was aimed to “avoid unnecessary arrest or threat of arrest looming large on the accused.............”. The said provision reads as follows: “41-A. Notice of appearance before police officer.—(1) The police officer shall, in all cases where the arrest of a person is not required under the provisions of sub-section (1) of Section 41, issue 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.” W.P.(Crl.) No.852/2017 Page 37 of 41 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 notice directing the accused to appear before him at a specified place and time. Law obliges such an accused to appear before the police officer and it further mandates that if such an accused complies with the terms of notice he shall not be arrested, unless for reasons to be recorded, the police officer is of the opinion that the arrest is necessary. At this stage also, the condition precedent for arrest as envisaged under Section 41 CrPC has to be complied and shall be subject to the same scrutiny by the Magistrate as aforesaid.
10. We are of the opinion that if the provisions of Section 41 CrPC which authorises the police officer to arrest an accused without an order from a Magistrate and without a warrant are scrupulously enforced, the wrong committed by the police officers intentionally or unwittingly would be reversed and the number of cases which come to the Court for grant of anticipatory bail will substantially reduce. We would like to emphasise that the practice of mechanically reproducing in the case diary all or most of the reasons contained in Section 41 CrPC for effecting arrest be discouraged and discontinued.” 52. In paragraph 11, the Supreme Court issued several directions in respect of the manner in which police officers may proceed for arrest of an accused in case under Section 498A IPC. However, in para 12 of the decision, the Supreme Court clarified that the “directions shall not only apply to cases under Section 498A IPC or Section 4 of the Dowry Prohibition Act, but also such cases where offence is punishable with W.P.(Crl.) No.852/2017 Page 38 of 41 imprisonment for a term which may be for less than 7 years or which may extend to seven years whether with or without fine.” 53. The decision in Arnesh Kumar (supra) was rendered in the context of the provisions of the Code, where the arrest is made by police officers without a warrant. The dissimilarity between exercise of power of arrest by the police officer and the arrest made under the PMLA, is that the designated/authorized officers authorised to effect arrest under Section 19 of the PMLA are not police officers. At the same time, the similarity is that the arrest under the PMLA – like in the case of arrest of an accused in respect of a cognizable offence, is without obtaining a warrant from the special court or any other court or Magistrate.
54. As we have noticed herein above, Section 65 of the PMLA provides 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 W.P.(Crl.) No.852/2017 Page 39 of 41 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 of the Act provides that the provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any law for the time being in force. The PMLA seeks to check and punish the activity of money laundering. The activity of money laundering poses a serious threat not only to the financial systems of the country, but also to its integrity and sovereignty. It invariably involves secretive actions and dealings by the perpetrators, of transfer and rotation of moneys within and outside the country. It is also likely to involve fabrication and fudging of documents and records. The persons involved in money laundering invariably cover their tracks, and conceal their identities. The challenge faced by the investigating authorities is to uncover the money trail, so as to expose the process and mechanism of money laundering. The propensity and likelihood of the suspects involved in money laundering, to further cover their tracks and destroy the evidence, whenever there is an effort underway to unearth their crime, would obviously be high. Thus, while scrutinizing the decision of the authorized officer concerned to arrest the suspect in exercise of the power conferred under Section 19 of the PMLA by applying the principles and guidelines laid down in Section 41 and 41A of the Code, the same would be tested in the aforesaid light, and while keeping in view the object and purpose of the PMLA.
56. In the light of the aforesaid discussion, we are not inclined to pass any orders of restraint as sought by the petitioner in the present application. W.P.(Crl.) No.852/2017 Page 40 of 41 However, in case the authorities under the PMLA invoke their power under Section 19 of the said Act, they shall comply with the requirements of Section 19 of the Act and also adhere to the guidelines laid down in Sections 41 and 41A of the Code as explained herein above.
57. The application stands disposed of in the aforesaid terms. MAY08 2017 sr/sl VIPIN SANGHI, J DEEPA SHARMA, J W.P.(Crl.) No.852/2017 Page 41 of 41