TMI Blog2019 (4) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... en. In our view this principle must a fortiori apply to a special statute such as PMLA. No infirmity in the impugned judgment on the issue. We hold that ingredients of section 17 of PMLA must be scrupulously complied with and it is impermissible for seizure to be made by relying instead upon the provisions of section 102 of the CrPC. Wherever there is/are any provision/s covering any aspect of proceedings under PMLA, such provisions would prevail and must be adhered to regardless of any cognate provision contained in the CrPC. Provisions of the CrPC may however be relied upon as residuary provisions for proceedings under PMLA on aspects and matters for which no specific provision is contained in PMLA. In case of any conflict or contradiction as between provisions of PMLA and CrPC, those contained in PMLA would prevail and those of the CrPC must yield. Insofar as the question of whether assets acquired prior to enactment of PMLA come within the definition of ‘proceeds of crime’, the view taken by the single Judge, namely that it is irrational to hold that such assets could never fall within the definition contained in section 2(1)(u) of the PMLA, has not been challenged or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustaWestland, U.K. DoE also issued another communication dated 22.03.2018 ordering a freeze on the transfer of shares held by the private parties in the Demat accounts maintained with SMC. 5. The relevant portion of letter dated 13.02.2018 is extracted below: Thus, the operation of the transaction pertaining to the transfer of shares of M/s. KRBL Ltd owned by M/s Abdullah Ali Obeid Balsharaf M/s Omar Ali Obeid Balsharaf ought to be restrained/stopped under the provisions of Sec. 102 Cr. P.C. r/w sec. 65 r/w Sec 2(na) of The Prevention of Money Laundering Act 2002 during the pendency of investigation. The same may not be transferred without permission of this Directorate or competent authority. 6. While the transactions between the concerned parties involved several intricacies, it is not necessary to take note of such details for purposes of deciding the present appeal. Suffice it to say that by way of communications dated 13.02.2018 and 22.03.2018 (the impugned communications ) DoE interdicted, and in effect annulled, the transaction of sale of shares conducted between the concerned parties. In compliance of the impugned communications the BSE withheld 64,94,891 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion that arises for our consideration is the following: In the light of section 65 of the PMLA, which makes the provisions of Cr.P.C. applicable inter alia to seizure and attachment of property under the PMLA, can DoE proceed in exercise of powers under the general provisions of section 102 CrPC instead of acting under the stricter provisions of section 17 of the PMLA ? 12. It would be beneficial at this point to set-out the provisions referred to above in-extenso : Section 65 of Prevention of Money Laundering Act: 65. Code of Criminal Procedure, 1973 to apply The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall 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. (Emphasis Supplied) Section 17 of Prevention of Money Laundering Act: 17. Search and seizure.-( 1) Where the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, on the basis of information in his possession, has reason to believe (the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned: Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60, it becomes practical to seize a frozen property, the officer authorised under subsection (1) may seize such property. (2) The authority, who has been authorised under subsection (1) shall, immediately after search and seizure, or upon issuance of a freezing order forward a copy of the reasons so recorded along with 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 reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsofar as they are not inconsistent with the provisions of the PMLA; secondly, the power conferred on an officer under section 17 of the PMLA inter alia for seizure of property must be exercised on the basis of information in the possession of the officer, if founded on such information the officer has reason to believe that a person has committed any of the acts specified in the provision; with the reason for such belief to be recorded in writing. Section 17 also mandates that upon seizure or upon issuance of a freeze order, a copy of the reasons recorded by the officer alongwith material in his possession is required to be forwarded to the Adjudicating Authority in a sealed envelope. 14. On the other hand, section 102 CrPC empowers a police officer to seize any property which may (merely) be alleged or suspected to have been stolen; or which may be found in circumstances which create suspicion of commission of any offence. Section 102 also provided that a seizure so made is required to be reported to the officer-in-charge of a police station; and in certain cases to the concerned Magistrate or, in certain circumstances, be handed to any person on executing a bond of undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs under any special or local law or any special jurisdiction or form of procedure prescribed by any other law, in this case the Army Act. 19. Though CrPC is the general procedural law applicable to all criminal matters, the legislature has provided that nothing in the CrPC is to affect any special law or special jurisdiction or special power or special form of procedure prescribed by any other law that may be in force. In our view, section 5 CrPC squarely applies in the context of PMLA, which is a special law, carving-out a special jurisdiction, providing special power and a special form of procedure for offences relating to money laundering and saves those provisions. 20. On a combined reading of section 5 of CrPC and section 71 of PMLA, it is clear that any special procedure or power conferred by PMLA would prevail over any general procedure or power conferred by CrPC Section 65 of PMLA must therefore be read as providing a residuary procedural blueprint inasmuch as for matters relating to arrest, search, attachment, confiscation, investigation, prosecution and all other proceedings under the PMLA, the relevant provisions contained in the CrPC are to apply but only so long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flict. XXXXX 30. The conditions specified under Section 45 of PMLA are mandatory and need to be complied with, which is further strengthened by the provisions of Section 65 and also Section 71 of PMLA. Section 65 requires that the provisions of CrPC shall apply insofar as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of PMLA shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. PMLA has an overriding effect and the provisions of CrPC would apply only if they are not inconsistent with the provisions of this Act. Therefore, the conditions enumerated in Section 45 of PMLA will have to be complied with even in respect of an application for bail made under Section 439 CrPC. That coupled with the provisions of Section 24 provides that unless the contrary is proved, the authority or the Court shall presume that proceeds of crime are involved in money-laundering and the burden to prove that the proceeds of crime are not involved, lies on the appellant. (Emphasis Supplied) For completeness, it may be mentioned that the conditions referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person (Emphasis Supplied) 25. We must add that in fact the phrase reason to believe is defined in section 26 of the Indian Penal Code, 1860 (IPC) in the following words: 26. Reason to believe - A person is said to have reason to believe a thing, if he has sufficient cause to believe that thing but not otherwise. The phrase reason to believe as appearing in section 26 of IPC has been interpreted by the Supreme Court in the case titled Joti Parshad vs. State of Haryana reported as 1993 Supp (2) SCC 497 in the following way: 5. Under the Indian Penal law, guilt in respect of almost all the offences is fastened either on the ground of intention or knowledge or reason to believe . We are now concerned with the expressions knowledge and reason to believe . Knowledge is an awareness on the part of the person concerned indicating his state of mind. Reason to believe is another facet of the state of mind. Reason to believe is not the same thing as suspicion or doubt and mere seeing also cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The procedures laid down under the Act being stringent in nature, however, must be strictly complied with. It is therefore clear that where there is a requirement that an action may be taken by an officer only when there is reason to believe, especially in the context of a statute where stringent procedures are laid down, the requirement of having reason to believe must be strictly complied with. PMLA is exactly such a statute where stringent procedures have been laid down. 28. We see no reason why the essence of the definition contained in section 26 of the IPC should not inform the interpretation of the same phrase in section 17 of the PMLA. It is noteworthy that the phrase reason to believe has a specific connotation in criminal jurisprudence and is not merely an ordinary and colloquial phrase. 29. Besides, we must never forget the venerated principle of law laid down by the Privy Council in the case of Nazir Ahmad vs. Emperor reported as AIR 1936 PC 253, that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all; and other methods of performance are necessarily forbidden. In our view this principle must a f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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