TMI Blog2016 (6) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislation. The offences which were in the earlier Part A of the Schedule (prior to 2013 Amendment) are evidently henious offences such as waging war against the country, offences under NDPS Act and Terrorist activities etc. Other scheduled offences, which prior to 2013 amendment were under Part B of the Schedule, cannot be equated with such heinous offences in the context of Section 45(1) of PMLA. Despite the above substantive amendment in the Schedule, we find no corresponding amendment simultaneously carried out in 2013, in Section 45(1), in respect of application of the limitations in grant of bail to person accused of Schedule offences earlier falling under Part B of the Schedule. We do not find any legislative intent from the perusal of the aforesaid “Statement of Objects and Reasons” as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011 to apply such stringent limitations in grant of bail to person accused of Scheduled offences earlier falling under Part B of the Schedule, but now existing in Part A thereof. On the contrary, the only object sought to be achieved by the said 2013 amendment in Schedule was to overcome this monetary threshold limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Statement of Objects and Reasons of the 2013 amendment in Schedule as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011. We, therefore, in light of the “Statement of Objects and Reasons” as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011 and the above discussion and findings, have no hesitation in holding that the reference to the offences under Part A of the Schedule in the context of Section 45(1) has to be necessarily read down to apply only to those persons who are arrested under Section 19 of PMLA on accusation of money laundering, who are accused of commission of scheduled offences which were listed under the Part A of the Schedule existing prior to 2013 amendment. In other words, the limitations in grant of bail under Section 45(1) of PMLA are not applicable to those persons who are arrested under PMLA on accusation of commission of such scheduled offences which were earlier listed under Part B of the Schedule (prior to amendment in Schedule carried out in 2013). Consequently, the provisions containing twin limitations in grant of bail under Section 45(1) would override the normal principles governing bail under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, carry search, investigate, arrest , or grant provisional release of seized goods under the Customs Act, 1962, unless authorized under the Act in this behalf. In the context of the provisions of the said Chapter XIII-Searches, Seizure and Arrest', from Section 100 to 110 A, the provisions of the Code would be applicable only to the extent there is nothing inconsistent therewith in the Act. There are certain provisions under the Customs Act, 1962 which override the provisions of the Code such as Section 135-B, 137, 138 and 140A. So far as approaching a Magistrate and seeking directions for investigations into any offence under Customs Act, 1962 by any officer authorised under the said Act is concerned, there is no bar and the Magistrate may direct such investigations under Section 155(2) or 156(3) depending upon whether the alleged offence under Customs Act, 1962 in the complaint is 'cognizable' or 'non-cognizable'. However, the Magistrate cannot take cognizance of the offence unless the conditions specified in the overriding provisions of Section 137(1) or 137(2) are satisfied. Once such directions are issued by the Court, the officer authorised under the said act will fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or commenced by an authority under PMLA, unless the Scheduled Offence is registered under Section 154 and a report thereof is sent under Section 157 of the Code to the Magistrate, or, a complaint is filed for taking cognizance of a Scheduled Offence by an officer authorised to investigate Scheduled Offence. Further, cognizance of offence under PMLA can be taken only by a Special Court notified and designated under Section 43 for the specified area, and trial shall be in accordance with Section 44 read with Section 46 of PMLA. Section 46 of PMLA specifies that save as otherwise provided under PMLA, the provisions of Code, including the provisons of bails or bond, shall apply to the proceedings before a Special Court. Any such directions by a Court to the authority under PMLA to investigate an offence under PMLA would not amount to taking 'cognizance'. However, for taking cognizance under PMLA specific bar contained in the second proviso to Section 45(1) would necessarily be applicable and the Special Court cannot take cognizance of any offence punishable under Section 4 except upon a complaint in writing made by the officer specified therein. As of now for the alleged Schedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome customs officials in such mis-declared imports. However, for the limited purpose of the instant petition, any detailed elaboration of the allegations and particulars is not necessary. According to him the allegations would construe offences mainly under Section 132 of the Customs Act, 1962, which is a Scheduled Offence specified in Part B of the Schedule to Prevention of Money- Laundering Act (for short PMLA). He further contends that laundering of the proceeds of crime relating to this Scheduled Offence would attract offence under Section 3 of PMLA, which would be punishable under Section 4 thereof. 2. The instant petition challenges the vires of firstly Section 2(y)(ii) of PMLA as amended vide section 145( (ii) of the Finance Act, 2015 enhancing the monetary threshold for the offences specified under Part B of the Schedule from the total value involved in such offences from Rs. 30 lakhs or more to Rs. One crore or more , and secondly the insertion of Section 132 of Customs Act, 1962 in Part-B of the Schedule in PMLA, vide section 151 of the said Finance Act, 2015. These impugned amendments, which are applicable with effect from 14.05.2015, are claimed by him as unconsti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence. 4. The petitioner has argued that he intends to apply before the Jurisdictional Magistrate for issuance of directions to the Respondent no. 2 and 3 for commencing investigations into these criminal offences and prosecuting the accused for commission of these offences. However, according to him he would not be permitted to set the criminal law into motion by approaching the jurisdictional Magistrate as prescribed in the Code of Criminal Procedure, because the Customs Act, 1962 as well as PMLA are considered as complete Code in themselves and the provisions of Code such as Section 156(3) or Section 155(2) of the Code of Criminal Procedure may not have any application in the field occupied by these special statutes. 5. He has referred to a judgment by the Division Bench of this Court in the matter of Sunil Gupta vs. Union of India reported in 2000 (118) ELT 8 (P H). As per the said judgment notwithstanding Section 155 of the Code, in exercise of powers under Section 13 of Central Excise Act, 1944, a Central Excise officer can arrest a person without a warrant, despite the offence being a non-cognizable offence. It was held that a Central Excise Officer cannot be equated wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such private complaint under the provisions of the Code can be filed by the petitioner before the Magistrate to set the criminal law into motion for investigating offence under PMLA and Customs Act,1962, pending grant of requisite sanction under Section 137(1) of Customs Act, 1962 for launching prosecution and filing of complaint by appropriate authority under second proviso to section 45(1) of the PMLA, both of which otherwise stipulate a bar on taking of 'cognizance'. He relied upon the judgment of Hon'ble Supreme Court in Narayandas Bhagwandas Madhavdas vs. State of West Bengal, 1999 (110) ELT 85 (SC) to buttress his argument that Courts do not take 'cognizance' while ordering investigations either under Section 156(3) or Section 155(2) of the Code. 8. A compilation of judgments has been submitted by the petitioner in support of his submissions. The following prayers are made by him in the instant petition :- i) Issue appropriate writ, order or direction in the Petitioner's challenge to the vires qua criminal cases, of firstly the sub-clause (ii) of clause (y) of section 2 of PMLA, and secondly, the insertion of Part-B in the Schedule in PMLA, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5(1) of PMLA are applicable in respect of all offence now falling under Part A of the Schedule to PMLA, after the amendment carried out in 2013 pursuant to proposal contained in Clause 33 of the Prevention of Money-Laundering (Amendment) Bill, 2011 whereby for the then existing Part A, a new Part A was proposed to be substituted, while omitting paragraphs 1 to 25 in the then existing Part B. Consequently, all those offences which were earlier under these paragraphs 1 to 25 of Part B and all heinous offences which were under the then existing Part A, were proposed to be put together in the new proposed Part A. 12.3 For deciding the issues raised by him, we have perused the Objects and Reasons, Preamble of PMLA, various definitions and provisions as well as Rules framed under PMLA. (i) Section 4 of PMLA- 4. Punishment for money-laundering-Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extent to seven years and shall also be liable to fine. Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 12.5 We have perused the Part A and Part B of the Schedule existing prior to the amendment proposed vide Prevention of Money-Laundering (Amendment) Bill, 2011, which was carried out in 2013. Under the then existing Part A of the Schedule, before it's substitution, the following scheduled offences were listed- PART A PARAGRAPH 1 OFFENCES UNDER THE INDIAN PENAL CODE Section Description of offence 121. Waging, or attempting to wage war or abetting waging of war, against the Government of India. 121A Conspiracy to commit offences punishable by Section 121 against the State. 489A Counterfeiting currency notes or bank notes. 489-B Using as genuine, forged or counterfeit currency notes or bank notes. PARAGRAPH 2 OFFENCES UNDER THE NARCOTIC DRUGS AND PHYSHOTROPIC SUBSTANCES ACT, 1985. Section Description of offence 15 Contravention in relation to poppy straw. 16 Contravention in relation to coca plant and coca leaves. 17 Contravention in relation to prepared opium. 18 Contravention in relation to opium poppy and opium. 19 Embezzlement of opium by cultivator. 20 Contravention in relation to cannabis plant and cannabis 21. Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid Part A offences. These offences under Part B included even those which were compoundable and / or bailable. 12.7 It is thus beyond any doubt that there existed an intelligible differentia in the classification which distinguished the offenders thus grouped together in Part A from those left out of that group and grouped together in Part B. The said classification therefore was reasonable for the purpose of Section 45(1) of the PMLA. This observation is supported by the following observations of a Constitution Bench of Hon'ble Supreme Court in Asgarali Nazarali Singaporewalia vs. State of Bombay, AIR 1957 SC 503- 16. The first question which we have to address to ourselves is whether there is in the impugned Act a reasonable classification for the purposes of legislation. If we look to the provisions of the impugned Act closely it would appear that the legislature classified the offences punishable under section 161, 165 or 165-A of the Indian Penal Code or sub-section (2) of Section 5 of the Prevention of Corruption Act, 1947 in one group or category. They were offences relating to bribery or corruption by public servants and were thus appropriately classifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing in force. In view of Section 71 of PMLA, the said limitations under section 45(1) has overriding effect on the general provisions of bail under the Code of Criminal Procedure under Sections 438 and 439. These limitations were not applicable in relation to any persons accused of any offence under Part B of the schedule. The legislative intent was that the persons who committed any scheduled offence under Part A would form a class by themselves quite distinct from those offenders who could be dealt with by the normal provisions for bail contained in the Code, and if the offenders falling within this group or category were thus singled out for special treatment by imposing stringent twin conditions contained in section 45(1), there would be no question of any discriminatory treatment being meted out to them as compared with other offenders accused of offences under Part B who did not fall within the same group or category i.e. Part A and who continued to be treated under the normal procedure. Thus, the intelligible differentia in such classification was absolutely reasonable prior to the said 2013 amendment in Schedule. 12.9 We have also perused the Prevention of Money launder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Part B for the purpose of applicability of twin conditions in grant of bail under Section 45(1) of the PMLA. 12.11 So far as the effect of the omission in Section 45(1) of words every offence punishable under this Act shall be cognizable is concerned, we do not find it necessary to go into that issue at this stage. 12.12. The judgment of the Hon'ble Supreme Court in Union of India vs. Hassan Ali Khan, (2011) 10 SCC 235, on which reliance is placed by the petitioner, was for cancellation of bail granted by the Hon'ble Bombay High Court in a case under PMLA in the circumstances peculiar to that case and the Hon'ble Supreme Court found it appropriate to treat the said case a little differently from other cases of similar nature by observing as under- 34. Having carefully considered the submissions made on behalf of the respective parties and the enormous amounts of money which Respondent 1 had been handling through his various bank accounts and the contents of the note signed by Respondent 1 and notarised in London, this case has to be treated a little differently from other cases of similar nature..... 39. Lastly, the manner in which Respondent 1 had pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o overcome this monetary threshold limit of ₹ 30 Lakhs so that for invocation of PMLA in respect of the laundering of proceeds of crime involved in offences earlier listed under Part B of the Schedule, there is no embargo of minimum value of ₹ 30 Lacs. 12.16 In our opinion the presumption of the petitioner that rigors in grant of Bail contained in Section 45(1) of PMLA extends to all the offences mentioned in such amended Part A is neither logical nor intended by the legislation. The offences which were in the earlier Part A of the Schedule (prior to 2013 Amendment) are evidently henious offences such as waging war against the country, offences under NDPS Act and Terrorist activities etc. Other scheduled offences, which prior to 2013 amendment were under Part B of the Schedule, cannot be equated with such heinous offences in the context of Section 45(1) of PMLA. 12.17 Despite the above substantive amendment in the Schedule, we find no corresponding amendment simultaneously carried out in 2013, in Section 45(1), in respect of application of the limitations in grant of bail to person accused of Schedule offences earlier falling under Part B of the Schedule. We do no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule in the context of Section 45 (1) requires to read down to apply only to those scheduled offences, which existed under the Part A of the Schedule prior to the said 2013 amendment in Schedule. Having arrived at the said opinion, we have also given our anxious consideration to the issue whether we can simply fold our hands and blame the draftsman, or whether we are duty bound to work on the constructive task of finding the intention of Parliament and to iron out the creases to harmonise the law with the prevailing objects sought to be achieved, reasons and concepts and to make it an effective instrument for delivery of justice eschewing the construction which will lead to absurdity. The Hon'ble Constitution Bench in S.P. Gupta v. Union of India, 1981 Supp SCC 87 had observed as follows : 63.............The interpretation of every statutory provision must keep pace with changing concepts and values and it must, to the extent to which its language permits or rather does not prohibit, suffer adjustments through judicial interpretation so as to accord with the requirements of the fast changing society which is undergoing rapid social and economic transformation. The langua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to legislate, nonetheless the legislature cannot be asked to sit to resolve the difficulties in the implementation of its intention and the spirit of the law. In such circumstances, it is the duty of the court to mould or creatively interpret the legislation by liberally interpreting the statue. 25. In Maxwell on interpretation of Statutes, Tenth Edn. at page 229, the following passage is found : Where the language of a statute, in its ordinary meaning and grammatical construction, lead to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. .....Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsman's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. 26. In Seaford Court Estates Ltd. v. Asher Denning. L.J said: When a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the existing law nugatory. A.P. Sen, J. in Organo Chemical Industries v. Union of India has stated thus: (SCR p. 586, para 23) A bare mechanical interpretation of the words 'devoid of concept or purpose' will reduce most of legislation to futility. It is a salutary rule, well established, that the intention of the legislature must be found by reading the 30. Krishna Iyer, J. has pointed out in his inimitable style in Chairman, Board of Mining Examination and Chief Inspector of Mines vs. Ramjee: To be literal in meaning is to see the skin and miss the soul of the Regulation. 31. True, normally courts should be slow to pronounce the legislature to have been mistaken in its constantly manifested opinion upon a matter resting wholly within its will and take its plain ordinary grammatical meaning of the words of the enactment as affording the best guide, but to winch up the legislative intent,it is permissible for courts to take into account of the ostensible purpose and object and the real legislative intent. Otherwise, a bare mechanical interpretation of the words and application of the legislative intent devoid of concept of purpose and obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further shift and liberalisation in the earlier legislative intent of removing the monetary threshold for invoking PMLA. If it is construed that the limitation imposed by Section 45(1) on granting bail would apply to the persons arrested on accusation of offences which were earlier listed under Part B, but not to a person arrested on accusation of offence punishable under Section 132 of the Customs Act, 1962 which is now in Part B, the same would be unreasonable and in violation of Article 14 and 21 of the Constitution of India. We findthat the intelligible differentia in classification of offences in Part A and Part B in the context of Section 45(1) was absolutely reasonable prior to the said 2013 amendment in Schedule. However, it would not be so in respect of all those offences later shifted from Part B to Part A, which was for a limited purpose stated in the Statement of Objects and Reasons as incorporated in the Prevention of Money-Laundering (Amendment) Bill, 2011. In this context we may rely on the following observations of the Constitution Bench of the Hon'ble Supreme Court in Kartar Singh v. State of Punjab, (1994) 3 SCC 569- 222. As pointed out supra, the perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons who are arrested under PMLA on accusation of commission of such scheduled offences which were earlier listed under Part B of the Schedule (prior to amendment in Schedule carried out in 2013). 12.24. Consequently, the provisions containing twin limitations in grant of bail under Section 45(1) would override the normal principles governing bail under Sections 438 and 439 qua the persons arrested on accusation of commission of such Scheduled Offences which were earlier listed under Part A of the Schedule. However, only the normal principles governing bail under Section 438 or 439 of the Code would apply in relation to a person arrested under PMLA on accusation of commission of such scheduled offences, which were earlier listed under Part B of the Schedule. In respect of such persons of latter category, the following observations of the Hon'ble Constitution Bench in Gurbaksh Singh Sibbia v. State of Punjab, (1980) 2 SCC 565, may apply with full force: 27. .............It is, however, interesting that as long back as in 1924 it was held by the High Court of Calcutta in Nagendra v. King-Emperor that the object of bail is to secure the attendance of the accused at the tria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, we find that the basis on which vires of the 2015 amendments has been challenged do not have any merit and the first two prayers in this regard are accordingly rejected. 13 The petitioner has also raised another important issue. He intends to file a composite private complaint to seek an order for investigating the alleged schedule offence punishable under the Customs Act, 1962 and also the offence under PMLA. 14 After perusing both the Acts, we do not find any specific provision which completely overrides in this regard the provisions of Sections 200,156(3) and 155(2) of the Code. Both the Acts however create a bar on taking cognizance vide section 137(1) of the Customs Act,1962 and second proviso to Section 45(1) of PMLA. 15.1 The sub-section (4) of Section 104 of Customs Act, 1962 commences with a non-obstante clause- notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974).............. . This sub-section provides as to which offences under Customs Act, 1962 would be cognizable. It is therefore clear that the purpose of non-obstante clause in Section 104(4) is to override the Part II of the Schedule-I of the Code of Criminal Procedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto the different provisions of different Acts. 25. In view of the above, we hold that the contention of the counsel for the petitioners that no arrest can be made without a warrant cannot be accepted. Consequently, it is rejected. 15.3 Sub-sections (4) and (5) of Section 104 of the Customs Act, 1962 were inserted by substitution vide sections 126 of Act 23 of 2012 for the earlier sub-section (4) with effect from 28.05.2012. The sub-section (4) prior to the substitution stood as under - (4) Notwithstanding anything contained in the Code of Criminal Procedure. 1898 (5 of 1898), any offence under this Act shall not be cognizable. Similarly in the case of the Central Excise Act,1944 in view of Section 9-A, all offences under the said Act were also made noncognizable. The judgment in the case of Sunil Gupta (supra) was rendered prior to the aforesaid amendments carried out to make two categories of offences, namely 'cognizable' and 'noncognizable'. The only issue involved therein was whether or not a Central Excise Officer was debarred from arresting a person without a warrant in the non-cognizable offence under Central Excise Act, 1944. 15.4 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, but is a person who would become an accused after the filing of a complaint or lodging of an FIR, as was held by this Court in Directorate of Enforcement v. Deepak Mahajan. 30. Mr.Parasaran also urged that the power to arrest must necessarily be vested in the officer concerned under the 1944 Act for the efficient discharge of his functions and duties, inter alia, in order to prevent and tackle the menace of black money and moneylaundering. Mr. Parasaran submitted that in Union of India v. Padam Narain Aggarwal, this Court has held that even though personal liberty is taken away, there are norms and guidelines providing safeguards, so that such a power is not abused, but is exercised on objective facts with regard to commission of any offence. 31. Reference was also made to the decision of the Punjab and Haryana High Court in Sunil Gupta v. Union of India and Bhavin Impex (P) Ltd. v. State of Gujarat, in which the issue, which is exactly in issue in the present case, was considered and, as submitted by the learned ASG, it has been held that the FIR or complaint or warrant is not a necessary precondition for an officer under the Act to exercise powers of arrest...... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Act, 1962, namely, WP (Cri) No. 74 of 2010, Choith Nanikram Harchandani v. Union of India, which has been heard as the lead case, and WPs (Cri) Nos. 36, 37, 51, 76 and 84 of 2011 and Crl. MP No. 10673 of 2011 in WP (Cri) No. 76 of 2011, all deal with offences under the Customs Act, though the issues are exactly the same as those canvassed in the cases relating to the provisions of the Central Excise Act, 1944. 52. It was further pointed out that as in the case of Section 20 of the Central excise Act, 1944, under subsection (3) of Section 104 of the customs Act, an officer of Customs has been vested with the same power and is subject to the same provisions as an officer in charge of a police station has under the Code of Criminal Procedure, for the purpose of releasing the arrested person on bail or otherwise. Mr. Rohatgi submitted that as in the case of Section 20 of the 1944 Act, the provisions of sub-section (3) of Section 104 of the Customs Act, 1962, indicate that offences under the Customs Act would not only be non-cognizable, but would also be bailable. 62. The learned AAG submitted that while in a cognizable case a police officer could arrest without warra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 15.5 From a perusal of the above extracts from the said binding precedent of a 3-Judge Bench decision of the Hon'ble Supreme Court, it is clear that the Hon'ble Supreme Court held the question earlier decided in Sunil Gupta (supra) to the contrary, and thus the decision in Sunil Gupta (supra) stands over-ruled by the Hon'ble Supreme Court. Similarly, the decision of the Hon'ble Gujarat High Court in Bhavin Impex Pvt. Ltd. v. State of Gujarat, 2010 (260) E.L.T. 526 (Guj.) which followed the view taken in Sunil Gupta (supra) on the same question of law was also over-ruled in Om Parkash (supra). The relevant extract of Bhavin Impex Pvt. Ltd. (supra) is as follows - 1. The key question that arises for consideration in this writ petition is as to whether the authorities under the Central Excise Act, 1944 (hereinafter referred to as 'the Act') have the power to arrest a person under Section 13 of the Act without a warrant and without filing an FIR or lodging a complaint before a Court of competent jurisdiction. 36. This Court is in agreement with the view taken by the Punjab and Haryana High Court, viz. A Central Excise Officer, (satisfying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the conclusions of the Constitution Bench of Hon'ble Supreme Court that the Customs Officer is not a police officer are only in the context of Section 25 of the Indian Evidence Act or Article 20(3) of the Constitution of India, and not for the purpose of excluding applicability of the provisions of Code in those areas covered by Section 4(2) of the Code in respect of which the special statute do not have any overriding provision. 15.7 The Code of Criminal Procedure is - An Act to consolidate and amend the law relating to Criminal Procedure. The application thereof is not restricted only to Indian Penal Code. We are of the view that merely because the Code uses the expressions which are compatible with Indian Penal Code and investigations by Police Officers, the same would not come in the way of application of the provisions of the Code of Criminal Procedure in the areas mentioned in Section 4(2) of the Code in respect of special statutes. We are fortified in our view from the various judgments in the context of special statutes such as Customs Act, 1962 and FERA investigated by the officers of Customs or the Enforcement Directorate, which are mentioned herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the Code applicable in areas not covered by the provisions of the Act. The code mainly purports to deal with offences under the Indian Penal Code and investigation by police officer or officers in charge of police station. That is why S.167(1) refers to S. 57 of the Code and officer in charge of police station. This cannot lead to the conclusion that provisions of S. 167 of the Code cannot be applied to cases under the Customs Act. In relation to matters of investigation, inquiry, trial or other matter not covered by the provisions of the Act, the parallel provisions of the code must necessarily be applied. That is the clear affect of the operation of S. 4(2) of the code. Such operation cannot be negatived merely because a section in the Code uses expression which are compatible with an offence under Penal Code or with investigation being conducted by a police officer. In relation to a person arrested under the Act, the provisions of S. 167 of the Code must be read suitably, that is, reference to officer in charge of a Police Station must be read as customs Officer . This view is strengthened by the Provisions in Sub-s. (3) of S. 104 of the Act also. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence Act, vide lllias v. The Collector of Customs, Madras AIR 1970 SC 1065: (1970 Cri LJ 998) and Ramesh Chandra Mehta v. State of West Bengal AIR 1970 SC 940 : (1970 Cri LJ 863). In both the cases, it is nowhere mentioned that the provisions of Chapter XII of the Code and the provision of Section 167(2) thereof, would not be available when the person is detained under the Customs Act and produced before the Magistrate by the Officer appointed under the said Act. 15.10 The said two judgments were approved by the Hon'ble Supreme Court in Directorate of Enforcement v. Deepak Mahajan, (1994) 3 SCC 440. It was also held that in view of Section 4(2), provisions of the Code would necessarily apply to the extent in the absence of any contrary provision in the Special Act or any special provision excluding the jurisdiction or applicability of the Code. It was held that the operation of Section 4(2) of the Code is straightaway attracted to the area of investigation, inquiry and trial of the offences under the special laws including the FERA and Customs Act. The following observations merit reproduction- 44. Section 167 is one of the provisions falling under Chapter XII of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the purpose of Section 167. On the other hand, all those decisions are rendered only on the question of admissibility or otherwise of the statement of a person arrested under the provisions of the general Act or special Acts concerned and recorded while in the custody of the arrester. 110. As we have pointed out in the preceding part of this judgment, Section 167(1) falls under Chapter XII relating to Information to the Police and their powers to investigate . Sub Section (1) of Section 167 speaks of the arrest by a police officer and the follow up investigation by him.... 111. Neither the Police Act , 1861 (Act V of 1861) nor any other statute defines the expression 'police officer'. Shortly stated, the main duties of the police are the prevention, detention and investigation of crimes. As the powers and duties of the State have increased and are increasing manifold, various Acts dealing with Customs, Excise, Forest, Taxes etc. have come to be passed and consequently the prevention, detention and investigation of offences as prescribed under those Acts have come to be entrusted to officers with different nomenclatures appropriate to the subject with ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 16) In the absence of a specific provision made in the statute indicating that offences will have to be investigated, inquired into, tried and otherwise dealt with according to that statute, the same will have to be investigated, inquired into, tried and otherwise dealt with according to the Code of Criminal Procedure. In other words, Code of Criminal is the parent statute which provides for investigation, inquiring into and trial of cases by criminal courts of various designations. 128. To sum up, Section 4 is comprehensive and that Section 5 is not in derogation of Section 4(2) and it only relates to the extent of application of the Code in the matter of territorial and other jurisdiction but does not nullify the effect of Section 4(2). In short, the provisions of this Code would be applicable to the extent in the absence of any contrary provision in the Special Act or any special provision excluding the jurisdiction or applicability of the Code. In fact, the second limb of Section 4(2) itself limits the application of the provisions of the Code reading, .. but subject to any enactment for the time being in force regulating the manner or place of investigating, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 5 of the Code. 15.13 All the aforesaid judgments in the context of Customs Act, 1962 or Central Excise Act, 1944 are in respect of noncognizable offences under these Acts. After the judgment in Om Parkash (supra) amendments were carried out and now some of the offences specified under these Acts are made 'cognizable' and rest remain 'non-cognizable' After substitution of sub-section (4) with effect from 28.05.2012, sub-section (4) and (5) of section 104 of the Customs Act read as under -- (4) Notwithstanding anything contained in the Code of Criminal Procedure. 1973 (2 of 1974), any offence relating to - (a) Prohibited goods: or (b) Evasion or attempted evasion of duty exceeding fifty lakh rupees, shall be cognizable (5) Save as otherwise provided in sub-section (4), all other offences under the Act shall be non-cognizable. 15.14 Therefore, the Customs Act now prescribes 2 categories of offences, first being offences falling under sub-section (4) which are 'cognizable', and second being all offences other than those falling under sub-section (4), which shall be non-cognizable in terms of sub-section (5). 15.15 Wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Customs. (2) No Court shall take cognizance of any offence under Section 136,- (a) where the offence is alleged to have been committed by an officer of customs not lower in rank than Assistant Commissioner of Customs, except with the previous sanction of the Central Government; (b) where the offence is alleged to have been committed by an officer of customs lower in rank than Assistant Commissioner of Customs, except with the previous sanction of Commissioner of Customs. (3) Any offence under this chapter may, either before or after the institution of prosecution, be compounded by the Chief Commissioner of Customs on payment, by the person accused of the offence to the Central Government, of such compounding amount and in such manner of compounding as may be specified by rules. Provided that nothing contained in this sub-Section shall apply to-.... 15.18 In the Customs Act, 1962 the 'Chapter XIII-Searches, Seizure and Arrest', from Section 100 to 110A, uses the words Customs officer or proper officer or adjudicating authority . Therefore, no police officer can commence investigation, carry search, investigate, arrest , or gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ray that you will kindly permit to investigate the case under Section 155, Criminal P.C. That is to say that the Additional District Magistrate was not being asked to take cognizance of the offence. He was merely requested to grant permission to the police officer to investigate a non-cognizable offence. The petition requesting the Additional District Magistrate to issue a warrant of arrest and his order directing the issue of such a warrant cannot also be regarded as orders which indicate that the Additional District Magistrate thereby took cognizance of the offence ....... Obviously, it is only when a Magistrate applies his mind for the purpose of proceeding under Section 200 and subsequent sections of Chapter XVI of the Code of Criminal Procedure or under Section 204 of Chapter XVII of the Code that it can be positively stated that he had applied his mind and therefore had taken cognizance . 15.21 As evident from the above observations, passing an order directing or permitting investigation or issuing a warrant of arrest under Section 155(2) would not amount to taking cognizance of the offence. It is also a settled law that 'cognizance' is not taken at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. For our purpose it is enough if we extract Section 190(1) alone. 190. (1) Cognizance of offences by Magistrates.- Subject to the provisions of this Chapter, any Magistrate of the first class, and any Magistrate of the second class specially empowered in this behalf under sub-section (2), may take cognizance of any offence- (a) upon receiving a complaint of facts which constitute such offence; (b) upon a police report of such facts; (c) upon information received from any person other than a police officer, or upon his own knowledge, that such offence has been committed. 11. Chapter XV which contains Sections 200 to 203 deals with Complaints to Magistrates . A Magistrate taking cognizance of an offence on complaint is required by Section 200 to examine the complainant and the witnesses present, if any. Section 202 provides that a Magistrate taking cognizance of a case, upon complaint, may, if he thinks fit, postpone the issue of process against the accused, and either inquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olice report under Section 173(2) will contain the facts discovered or unearthed by the police as well as the conclusion drawn by the police therefrom. If the Magistrate is satisfied that upon the facts discovered or unearthed by the police there is sufficient material for him to take cognizance of the offence and issue process, the Magistrate may do so without reference to the conclusion drawn by the Investigating Officer because the Magistrate is not bound by the opinion of the police officer as to whether an offence has been made out or not. Alternately the Magistrate, on receiving the police report, may without issuing process or dropping the proceeding proceed to act under Section 200 by taking cognizance of the offence on the basis of the complaint originally submitted to him and proceed to record the statement upon oath to the complainant and the witnesses present and thereafter decide whether the complaint should be dismissed or process should be issued. 16. The position is, therefore, now well settled that upon receipt of a police report under Section 173(2) a Magistrate is entitled to take cognizance of an offence under Section 190(1)(b) of the Code even if the poli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence unless the conditions specified in the overriding provisions of Section 137(1) or 137(2) are satisfied. Once such directions are issued by the Court, the officer authorised under the said act will follow the procedure specified under the Customs Act, 1962, Rules made thereunder and all those provisions of the Code for which there is no inconsistent provision in the Act. 16. In PMLA, the position would be slightly different than Customs Act, 1962, although the principles governing the application of the procedure prescribed under the Code would remain the same. The offence of Money Laundering punishable under Section 4 is defined in Section 3. As per the said Section 3, the offence of money laundering necessarily requires knowingly projecting or claiming any proceeds of crime as untainted property. The property covered under the term proceeds of crime is defined in section 2(u) of PMLA, and the accused person shall necessarily derive or obtain such property, directly or indirectly as a result of criminal activity relating to such offence which is specified in the Schedule to PMLA. Therefore, any property derived or obtained, directly or indirectly as a result of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Section 46 of PMLA. Section 46 of PMLA specifies that save as otherwise provided under PMLA, the provisions of Code, including the provisons of bails or bond, shall apply to the proceedings before a Special Court. Section 65 of PMLA provides that- 65. Code of Criminal Procedure, 1973 to apply. The provisions of the Code of Criminal Procedure, 1973(2 of 1974) shall apply, in so far 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. 16.4 Under PMLA, various notifications have been issued by the Central Government notifying the procedural rules in respect of the procedures required to be complied with for different purposes such as - provisional attachment, receipt and management of confiscated properties, maintenance of records by the banking companies, financial institutions and intermediaries, forms for summons or authorization for search, seizure, freezing etc., forms of arrest order or acknowledgment slips for various matters and the manner of forwarding the same to the adjudicating authority, the manner of receiving the records auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te enacted by the Parliament for dealing with money laundering. Section 5 of the Code of Criminal Procedure, 1973 clearly lays down that the provisions of the Code of Criminal Procedure will not affect any special statute or any local law. In other words, the provisions of any special statute will prevail over the general provisions of the Code of Criminal Procedure in case of any conflict. 29. Section 45 of the PMLA starts with a non obstante clause which indicates that the provisions laid down in Section 45 of the PMLA will have overriding effect on the general provisions of the Code of Criminal Procedure in case of conflict between them. Section 45 of the PMLA imposes following two conditions for grant of bail to any person accused of an offence punishable for a term of imprisonment of more than three years under Part-A of the Schedule of the PMLA: (i) That the prosecutor must be given an opportunity to oppose the application for bail; and (ii) That the Court must be satisfied that there are reasonable grounds for believing that the accused person is not guilty of such offence and that he is not likely to commit any offence while on bail. 30. The conditions specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l law into motion and to seek any direction for investigation of offence under Section 3 r/w 4 of PMLA along with the offence under Part B of the Schedule inserted in PMLA w.e.f. 14.05.2015, either under Section 156(3) or under Section 155(2) of the Code of Criminal Procedure, as the case may be, pending grant of sanction requisite for taking 'cognizance' in said Scheduled Offence or under PMLA 18. In the instant case, admittedly, as of now for the alleged Scheduled Offence under the Customs Act, 1962 neither any case is registered under Section 154 by the Customs Authorities for investigating any cognizable offence under the said Act, nor is there any report in respect of the same forwarded under Section 157 of the Code. There is no complaint for taking cognizance filed in Court by any officer authorized to investigate any non-cognizable offence under Customs Act, 1962. Therefore, at this stage, the prayer of the petitioner so far as PMLA is concerned is premature. Unless as indicated above the alleged Scheduled Offence under Customs Act, 1962 is registered under Section 154 and a report thereof is sent under Section 157 of the Code to the Magistrate, or, a complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X
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