TMI Blog2016 (5) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... e offence under Section 3 of PMLA. Therefore, i am unable to equate ECIR registered by the first respondent to an FIR under Section 154 Cr.P.C and consequently, agreed with the learned Additional Solicitor General that under PMLA the petitioners are not accused at present. Consequently, therefore, the submission of the petitioners on the assumption that petitioners are accused under PMLA is liable to be rejected. Therefore, the summons issued to the second petitioner under Section 50(2) and (3) of PMLA is non-violative of the Constitutional protection and guarantee under Article 20(3) of the Constitution of India. Seeking protection against testimonial compulsion - Held that:- in view of the various decision of Supreme Court, when an ECIR is lodged with the Directorate of Enforcement there is no Magisterial intervention unlike an FIR and mere registration of ECIR against the suspects of offence under Section 3 of PMLA cannot go to mean that such persons are accused under Section 3 of PMLA. Therefore, the protection against testimonial compulsion as under Cr.P.C as well as under Article 20(3) of the Constitution of India, would not be available. Also as the petitioners are not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second petitioner sent a further reply dated 14.11.2014 requesting to consider earlier reply dated 31.10.2014. However, again, without responding to the reply of the second petitioner, further summons was issued on 19.11.2014 to appear in person and produce documents, which is challenged in this writ petition and the grounds raised in support of this writ petition, are, briefly, as follows: 1) The ECIR registered by the first respondent is based upon the CBI case. However, the facts involved and the allegations in both the cases are same and offences alleged are substantially same, which are also scheduled offences under PMLA. Petitioners, being accused in the CBI case, the statement of second petitioner and the production of documents by him, as insisted upon by the first respondent under the impugned summons, would compel the second petitioner to give incriminating statement and documents under compulsion, thereby violate the protection available to him under the Constitution of India as well as under Criminal Procedure Code. 2) It is stated that the impugned summons is issued in exercise of powers under Section 50 of PMLA and Section 63 of PMLA provides for punishment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated penal proceedings. Hence, questioning the said action of the first respondent in taking further steps including initiation of penal proceeding for alleged noncompliance of the summons issued, the present writ petition is filed seeking a Mandamus, as prayed for. 5. This writ petition came up before me on 23.09.2015 wherein I had granted stay of prosecution of the petitioners pending further orders, as per the order extracted below: In view of the fact that W.P.No.36838 of 2014 filed by the petitioners is already pending before this Court and was in fact heard in part, the prosecution of the petitioners as proposed under the impugned summons shall remain stayed, pending further orders. Learned Standing Counsel for respondents takes notice and seeks time to file counter within two weeks. I find from the record that W.P.No.36838 of 2014 was in fact heard in part as per the orders of this Court, dated 16.12.2014, by the Hon ble Sri Justice P. Naveen Rao and the present Writ Petition is interlinked to the issue involved in that Writ Petition. It is therefore appropriate for the Registry to take necessary orders from the Hon ble the Acting Chief Justice for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f crime and money-laundering and there is no necessity for the respondents to use force or coercive methods on any person. It is contended that Section 50 of PMLA empowers that first respondent to issue summons and petitioners are obliged to cooperate with the investigation. Lastly, it is contended that the extraordinary jurisdiction of this Court cannot be invoked to nullify the summons issued for the purpose of investigation and Article 20(3) of the Constitution of India is not attracted. 7. The counter affidavit in WP.No.31143 of 2015 traverses the same allegations, as above and further states that in WP.No.36838 of 2014 no direction was given against taking further steps till eternity, as is evident from the order of the Court dated 02.12.2014 (extracted above). It is stated that the said writ petition was, no doubt, heard in part with a direction to list on 23.12.2014 but the Court did not give any direction to the respondents not to take any further steps and in view of that, fresh summons was issued to the petitioners on 09.02.2015. As the petitioners have not appeared in response to the summons issued and opportunity given on six different occasions, a petition under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den of proof on the accused rather than on the prosecution, unlike any criminal case tried before ordinary criminal courts. 11. In order to substantiate his contentions, learned senior counsel places strong reliance upon a Constitution Bench judgment of the Supreme Court in STATE OF GUJARAT v. SHYAMLAL MOHANLAL CHOKSI [AIR 1965 SC 1251 ] wherein the Supreme Court held that language under Section 94 Cr.P.C of 1898 (equivalent to Section 91 Cr.P.C of 1973) does not include accused persons and that it would be an odd procedure for the court to issue summons to an accused person to attend and produce a document and would equally apply to a police officer, who issues a writing order to the accused in his custody to attend and produce a document. Learned senior counsel submits that the same analogy, while construing Section 50 of PMLA, would be applicable to the petitioners. Learned senior counsel also placed reliance upon the following decisions: MAHENDRAKUMAR KANHYALAL JAIN v. MAHAVIR URBAN COOPERATIVE CREDIT SOCIETY LTD. [2013 (6) Mh.L.J. ] wherein the aforesaid decision SHYAMLAL MOHANLAL CHOKSI (1 supra) was followed. The decision in M/S. TATA CONSTRUCION PROJECT LTD. V STATE O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of Court, but also to statements in writing which incriminated the maker when figuring as an accused person. After having heard elaborate arguments for and against the views thus expressed by this Court, after full deliberation, we do not find any good reasons for departing from those views. But the Courts went on to observe that to be a witness means to furnish evidence and includes not only oral testimony or statement in writing of the accused but also production of a thing or of evidence by other modes 14. Learned senior counsel also relied upon a decision of the Supreme Court in SELVI v. STATE OF KARNATAKA [AIR 2010 SC 1974] and particularly, paras 91, 107, 109, 112, 123, 216, 221 and 224 are quoted to support the proposition that the respondents cannot resort to testimonial compulsion against the petitioners. 15. Learned senior counsel also relied upon a decision of the European Court of Human Rights in SAUNDERS v. UNITED KINGDOM [(1997) B.C.C. 872] . Learned senior counsel also elaborated on right of silence and of a right not to incriminate himself, which was also discussed in the aforesaid decision at paras 68 and 69 as follows: 68. The court recalls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have consistently limited its protection to situations in which the State seeks to submerge those values by obtaining the evidence against an accused through the cruel, simple expedient of compelling it from his own mouth In sum, the privilege is fulfilled only when the person is guaranteed the right to remain silent unless he chooses to speak in the unfettered exercise of his own will. It is clear that the protection of the privilege reaches an accused s communications, whatever form they might take, and the compulsion of responses which are also communications, for example, compliance with a subpoena to produce one s papers. Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746. On the other hand, both federal and state courts have usually held that it offers no protection against compulsion to submit to fingerprinting, photographing, or measurement, to write or to speak for identification, to appear in court, to stand, to assume a stance, to walk, or to make a particular gesture. The distinction which has emerged, often expressed in different ways, is that the privilege is a bar against compelling communications or testimony , but that compulsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution to prove guilt beyond reasonable doubt and there has been no encroachment whether at the stage of interrogation or trial, into the right to silence vested in the suspect or accused The Law Commission, ultimately, was of the opinion that no change in the law relating to right to silence of accused is necessary and if made, they will be ultravries Article 20(3) and Article 21 of the Constitution of India. 18. Mr. G. Rajagopalan, learned Additional Solicitor General of India, appearing for the respondents, submits at the outset that so far as respondents are concerned, petitioners are not accused but are only suspects of commission of offence under Section 3 of PMLA and therefore, all the contentions of the petitioners, as if they are accused, are misconceived. Learned Additional Solicitor General submits that PMLA comprises of three distinct parts viz. investigation, adjudication and ultimate prosecution. Learned Additional Solicitor General submits that proceedings as to investigation and adjudication are with reference to tracing out and tracking the proceeds of crime being alienated or transferred so as to defeat the process of law and submits that till the appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... witness against himself and the statement obtained or evidence collected under the aforesaid provision by the officer of Customs is inadmissible. This contention was repelled. Shah J., speaking for the Court, made these apposite observations: Under Section 171-A of the Sea Customs Act, a Customs officer has power in an enquiry in connection with the smuggling of goods to summon any person whose attendance he considers necessary, to give evidence or to produce a document or any other thing, and by clause (3) the person so summoned is bound to state the truth upon any subject respecting which he is examined or makes statements and to produce such documents and other things as may be required. The expression any person includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling is not when called upon by the Customs officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20(3) of the Constitution. The steps taken by the Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 108 of the Customs Act were considered. Para 6 of the decision, being relevant, is extracted hereunder: 6. Clause (3) of Article 20 declares that no person accused of any offence shall be compelled to be a witness against himself. It does not refer to the hypothetical person who may in the future be discovered to have been guilty of some offence. In Ramesh Chandra Mehta case, the appellant was searched at the Calcutta Airport and diamonds and jewelleries of substantial value were found on his person as also currency notes in a suitcase with him, and in pursuance to a statement made by him more pearls and jewellery were recovered from different places. He was charged with offences under the Sea Customs Act. During the trial, reliance was placed on his confessional statements made before the Customs Authorities, which was objected to on the ground that the same were inadmissible in evidence inter alia in view of the provisions of Article 20(3). While rejecting the objection, the Supreme Court held that in order that the guarantee against testimonial compulsion incorporated in Article 20(3) may be claimed by a person, it has to be established that when he made the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompelled to be a witness against himself. But this does not mean that he need not give information regarding matters which do not tend to incriminate him. This Court observed in State of Bombay v. Kathi Kalu Oghad [AIR 1961 SC 1808] as follows: In order that a testimony by an accused person may be said to have been self- incriminatory the compulsion of which comes within the, prohibition of the constitutional provision, itmust be of such a character that by itself it should have the tendency of incriminating the accused, if not also of actually doing so. In. other words, it should be a statement which makes the case against the accused person at least probable, considered by itself. 23. Learned Additional Solicitor General relied upon Section 177 of IPC under which also the petitioners are bound to disclose information within his knowledge read with Section 27 of the Indian Evidence Act. Learned Additional Solicitor General also referred to KATHI KALU OGHAD S case (7 supra) by inviting the attention of the Court to paras 34 and 35, which are extracted hereunder: 34. This view, it may be pointed out, does not in any way militate against the policy underlying the ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and summon is issued for the said purpose, he is bound to comply with such direction. This view has been reiterated in several cases thereafter. 41. In CCE v. Duncan Agro Industries Ltd., this Court stated: 11. Section 108 of the Customs Act does not contemplate any magisterial intervention. The power under the said section is intended to be exercised by a gazetted officer of the Customs Department. Sub-section (3) enjoins on the person summoned by the officer to state the truth upon any subject respecting which he is examined. He is not excused from speaking the truth on the premise that such statement could be used against him. The said requirement is included in the provision for the purpose of enabling the gazetted officer to elicit the truth from the person interrogated. There is no involvement of the magistrate at that stage. The entire idea behind the provision is that the gazetted officer questioning the person must gather all the truth concerning the episode. If the statement so extracted is untrue its utility for the officer gets lost . It is thus clear that statements recorded under Section 108 of the Act are distinct and different from statements rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to appear before the Respondent/Assistant Director, Directorate of Enforcement, Chennai with records mentioned therein for the purpose of enquiry/investigation under the Prevention of Money-Laundering Act to ascertain the proceeds of crime, in the considered opinion of this Court. The proceedings under the Prevention of Money-Laundering Act are deemed to be judicial proceedings within the meaning of Section 193 and under Section 228 of the Indian Penal Code. However, the charge sheet filed by the Police in C.C.No.88 of 2011 relates to investigation for predicate offences under Sections 419, 420 read with Section 34 I.P.C. for criminal offences. However, since the charged offences under Sections 419 and 420 I.P.C. are the Scheduled Offences under clause I of sub-section (y) of 2 of the Prevention of Money-Laundering Act 2002, the Respondent registered an Enforcement Case Information Report (ECIR) bearing No.CEZO/2/2013 dated 25.03.2013 to carry out investigation under the Prevention of Money-Laundering Act against the Petitioners. Moreover, the summons issued to the Petitioners is a preliminary one relating to the investigation under the Prevention of Money- Laundering A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:- (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a [reporting entity], and examining him on oath; (c) compelling the production of records; (d) receiving evidence on affidavits; (e) issuing commissions for examination of witnesses and documents; and (f) any other matter which may be prescribed. (2) The Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act. (3) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (4) Every pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Based on the above, further contention is raised that testimonial compulsion is impermissible not only under Cr.P.C but also under Article 20(3) of the Constitution of India. Elaborating further it is also contended that Section 50(2) of PMLA does not include an accused person. 35. Several decisions of the Supreme Court are relied upon in support of the contentions, as above, which are already referred to in detail in the foregoing paras. Reference is, however, made to the proposition as envisaged by the said decisions, as under: (a) That the protection under Article 20(3) of the Constitution of India is available at the stage of investigation viz. M.P. SHARMA s case (6 supra) (para 11); KATHI KALU OGHAD s case (7 supra) (para 22) and SELVI s case (8 supra) (para 109). (b) The aforesaid protection applies to oral testimony as well as statement in writing and production of documents viz. SHYAMLAL MOHANLAL CHOKSI s case (1 supra) (paras 31 and 36). 36. It is also contended that Section 50 (2) of PMLA would not apply to and include accused persons on the basis of decision in SHYAMLAL MOHANLAL CHOKSI s case (1 supra) and that principle was reiterated in various decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace strong reliance upon Section 108 of the Customs Act and decisions of the Supreme Court with reference thereto are as follows: VEERA IBRAHIM s case (11 supra); POOLPANDI s case (12 supra); RAMANLAL BHOGILAL SHAH s case (13 supra) and RAMESH CHANDRA MEHTA v. STATE OF WEST BENGAL [AIR 1970 SC 940] . It is contended that the aforesaid provision is similar to Section 50(2) of PMLA and it cannot be held, at this stage, that petitioners are accused under PMLA. 39. Undoubtedly, the protection under Cr.P.C as well as under Article 20(3) of the Constitution of India against testimonial compulsion is now well settled by several decisions of the Supreme Court, which are already referred to above and the law declared thereunder, undoubtedly, would assist the petitioners, if it is shown that petitioners are accused under PMLA. 40. The counter affidavit of the first respondent states in para 8 that CBI has filed a charge sheet with the name of the petitioners as accused in the predicate offences whereas ECIR No.09/HZO/2011 dated 30.08.2011 has been registered by the Directorate of Enforcement, as the respondents had reasons to believe that an offence of money-laundering has been commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned or controlled by any of the above persons mentioned in the preceding sub-clauses; 43. At this stage, therefore, investigation is only for the purpose of collecting evidence with regard to proceeds of crime in the hands of the persons suspected and their involvement, if any, in the offence under Section 3 of PMLA. I am, therefore, unable to equate ECIR registered by the first respondent to an FIR under Section 154 Cr.P.C and consequently, I agree with the learned Additional Solicitor General that under PMLA the petitioners are not accused at present. Consequently, therefore, the submission on behalf of the petitioners on the assumption that petitioners are accused under PMLA is liable to be rejected. Point is accordingly answered in the negative. 44. The Supreme Court had an occasion to interpret Section 108 of the Customs Act, which is in parameteria with Section 171-A of the Sea Customs Act. Hence, at this stage, it is relevant to notice the decision of the Supreme Court in ASSTT. CCE v. DUNCAN AGRO INDUSTRIES LTD. [(2000) 7 SCC 53] . Paras 9, 11 and 13 are relevant for our purpose, which are extracted hereunder: 9. It must be remembered that Section 171A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the two earlier cases M.P. Sharma case and Raja Narayanlal Bansilal case this Court in describing a person accused used the expression against whom a formal accusation had been made , and in Kathi Kalu Oghad case this Court used the expression the person accused must have stood in the character of an accused person . Counsel for Mehta urged that the earlier authorities were superseded in Kathi Kalu Oghad case and it was ruled that a statement made by a person standing in the character of a person accused of an offence is inadmissible by virtue of Article 20(3) of the Constitution. But the Court in Kathi Kalu Oghad case has not set out a different test for determining the stage when a person may be said to be accused of an offence. In Kathi Kalu Oghad case the Court merely set out the principles in the light of the effect of a formal accusation on a person viz. that he stands in the character of an accused person at the time when he makes the statement. Normally a person stands in the character of an accused when a first information report is lodged against him in respect of an offence before an Officer competent to investigate it, or when a complaint is made relating to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Consequently the writ petition fails and is accordingly dismissed. WP.No.31143 of 2015: 50. This writ petition was also filed by the petitioners questioning the further action taken by the respondents against the petitioners under Section 63(4) of PMLA, which is punitive. 51. Petitioners contend that they received summons from the respondents commencing from 20.10.2014, which was duly replied by the petitioners through their counsel. However, without responding thereto, again summons was issued on 03.11.2014, once again petitioners replied thereto, but without reference to the reply again summons was issued on 19.11.2014. Thereupon, WP.No.36838 of 2014 was filed and at the time of admission, this Court directed the respondents to defer the proposed examination of the second petitioner. While the said writ petition was heard in part and was pending, the respondents are stated to have issued another summons on 09.02.2015 contrary to the direction of this Court and a further summons dated 11.06.2015, which was also replied to. However, the respondents initiated further proceedings under Section 63(4) of PMLA, which is questioned in this writ petition. 52. Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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