2015 (10) TMI 2679 - HC - Money Laundering

Proceeding and investigation initiated under Prevention of Money Laundering Act - is the offence under PMLA is cognizable offence or it is non-cognizable offence? - Held that - The offence under PMLA is cognizable. In the present case the offence is registered under PMLA. Under the provisions of PMLA the investigating officers are not the police officers but since for investigation of offence Provisions of Criminal Procedure Code are held to be applicable therefore they are required to follow the same. Keeping in view the provisions of section 65 of PMLA and also the fact that there is no procedure prescribed in PMLA for investigation of the offence it is of the opinion that the procedure which has been prescribed under the Criminal Procedure Code is required to be followed while investigating the offence under PMLA. Whether the Court of Additional Sessions Judge is the Special Court within the meaning of section 43 of PMLA? - Held that - Section 43 of PMLA empowers Central Government to designate one or more Courts of Sessions as Special Court or Special Courts for notified areas and places for trial of the offences punishable under section 4. The Central Government vide Notification dated 1-6-2006 issued under section 43(1) of the PMLA has designated the Courts of Sessions at Gwalior Indore Bhopal Sagar and Jabalpur as Special Courts for trial of offences punishable under section 4 of the Act. Exercising the power under section 43 of PMLA Central Government vide Notification dated 1-6-2006 has designated the Sessions Court at Gwalior Indore Bhopal Sagar and Jabalpur as Special Court therefore the Additional Sessions Judge who in terms of section 9 of Criminal Procedure Code is covered within the meaning of Court of Session is empowered to try the offences under section 4 of PMLA being the designated Court. The Central Government has not confined the designation of the Special Court to Sessions Judge only but it has notified Sessions Court as designated Court therefore the contention of the petitioner that the Additional Sessions Judge is not the designated Court cannot be accepted. Issue of grant of bail - Held that - In the present case nothing has been pointed out to show that the respondents have acted in contravention of the aforesaid provision relating to arrest as contained in section 19 or the bail has been rejected in violation of section 45 of the Act. Hence it cannot be held that the petitioner is in illegal custody. The Special Court which has been found to be the competent Court has already rejected the application for bail hence no ground is made out for issuing the writ of Habeas Corpus. No case is made out for quashing the offence which has been registered against the petitioner under PMLA and so far as the issue of investigation is concerned the parties are required to take appropriate steps in terms of Paragraphs 22 and 23 of the judgment.

Summary

Issues Involved:
1. Cognizability of offences under the Prevention of Money Laundering Act (PMLA).
2. Applicability of Criminal Procedure Code (CrPC) provisions to PMLA investigations.
3. Competency of the Additional Sessions Judge as a Special Court under PMLA.
4. Legality of arrest and custody under PMLA.

Detailed Analysis:

1. Cognizability of Offences under PMLA:
The court examined whether offences under PMLA are cognizable or non-cognizable. It was determined that under Section 4 of PMLA, offences are punishable with rigorous imprisonment for 3 to 7 years, making them cognizable and non-bailable as per the Second Schedule of CrPC. The court rejected the petitioner's reliance on the Supreme Court judgment in Om Prakash v. Union of India, noting that PMLA lacks a deeming fiction like Section 9-A of the Central Excise Act, 1944. Consequently, offences under PMLA are cognizable.

2. Applicability of CrPC Provisions to PMLA Investigations:
The court addressed whether CrPC procedures for cognizable offences apply to PMLA investigations. Section 65 of PMLA stipulates that CrPC provisions apply insofar as they are not inconsistent with PMLA. Given PMLA's special status and overriding effect (Section 71), the court held that CrPC procedures, including FIR registration (Section 154), investigation (Sections 157 and 167), and case diary maintenance (Section 172), must be followed for PMLA investigations. The court directed investigating authorities to adhere to CrPC provisions during the investigation stage.

3. Competency of the Additional Sessions Judge as a Special Court under PMLA:
The court examined whether the Additional Sessions Judge is a competent Special Court under Section 43 of PMLA. The Central Government's notification designated Sessions Courts at specified locations as Special Courts. The court concluded that the designation includes Additional Sessions Judges, as they fall within the meaning of "Court of Session" under Section 9 of CrPC. Therefore, the Additional Sessions Judge is competent to try offences under PMLA.

4. Legality of Arrest and Custody under PMLA:
The court evaluated the legality of the petitioner's arrest and custody under PMLA. Section 19 of PMLA empowers specified officers to arrest individuals based on material evidence and requires informing the arrested person of the grounds for arrest. The court found no contravention of Section 19 or Section 45 (relating to bail) in the petitioner's arrest and custody. Since the Special Court had already rejected the bail application, the court held that the petitioner was not in illegal custody, and thus, the writ of habeas corpus could not be issued.

Conclusion:
The court dismissed the petitions, concluding that:
- Offences under PMLA are cognizable.
- CrPC procedures must be followed in PMLA investigations.
- Additional Sessions Judges are competent to act as Special Courts under PMLA.
- The petitioner's arrest and custody were lawful, and no grounds existed for issuing a writ of habeas corpus.

The writ petitions were disposed of accordingly, with specific directions for the investigation to comply with CrPC provisions.