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2016 (5) TMI 1544 - HC - Indian LawsMoney Laundering - proceeds of crime - Gambling with the aid of mobile phone - cricket betting - Jurisdiction - power of police officers as well as the officers of the Enforcement Directorate to assist the authorities defined under section 48 and appointed under section 49(1) of the PMLA - HELD THAT - Money laundering has been defined under Section 2(p) and 2(u) and Section 3. The proceeds of crime as per Section 2(u) pertain to any property derived, obtained directly or indirectly, as a result of criminal activity by any person relating to a scheduled offence or the value of such property. The scheduled offences have been defined under Section 2(y) and admittedly, Sections 419, 420, 467, 471 are part of the scheduled offences as described under part A of the schedule. Under the existing provisions in Section 45 of the Act, every offence is cognizable. If an offence is cognizable, then any police officer in India can arrest an offender without warrant. At the same time, under Section 19 of the Act, only a Director or a Deputy Director or an Assistant Director or any other officer authorised, may arrest an offender. Clearly, there was a conflict between these two provisions. Under Section 45(1)(b) of the Act, 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 authorised by the Central Government. So, what would happen to an arrest made by any police officer in the case of a cognizable offence? Which is the court that will try the offence? Clearly, there were inconsistencies in these provisions. We have now enabled only the Director or an officer authorised by him to investigate offences. Of course, we would, by rule, set up a threshold; and, below that threshold, we would allow State police officers also to take action - The second anomaly that we found was that the expression investigation officer and the word investigation occur in a number of sections but they were not defined in the Act. Consequently, one has to go to the definition in the Criminal Procedure Code and that Code provides only investigation by a police officer or by an officer authorised by a Magistrate . So, clearly, there was a lacuna in not enabling the Director or the Assistant Director under this Act to investigate offences. That has been cured now. Whether the offence under the PMLA is cognizable and non-bailable? - HELD THAT - By Prevention of Money Laundering (Amendment) Act, 2005 (20 of 2005) subclause (a) of the Money Laundering Act, 2002 (15 of 2003) stands deleted. The said sub-clause (a) provided that every offence punishable under this Act shall be cognizable. Sub-section (1A) introduced by the Prevention of Money Laundering (Amendment) Act of 2005 provides that notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) 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 - There are no words in the body of the section to declare the offences under the Act to be non-bailable. Since the Act has created new offences, it was necessary that there ought to have been a specific provision in that respect. However, the marginal note to the section reads as offences to be cognizable and non-bailable . It is true that at one time the judicial view was that the marginal notes are not part of statute for they are not inserted by the Parliament, nor under the authority of the Parliament. But this view no longer holds good in India. 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. Subsection (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 general or special order The provisions of the Act has been given overriding effect upon any other law and further categorically mentioned that any provision of Code of Criminal Procedure which are inconsistent with the provision of 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 - the word 'investigation' as defined in Section 2(na) has been inserted by virtue of Amendment Act, 20 of 2005. According to the definition 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. It is concluded that none of the fundamental rights, or any legal rights of any of the applicants could be said to have been infringed in any manner. So far as the issue as regards the admissibility and evidentiary value of the statement recorded under section 50 of the PMLA is concerned, the same would be looked into by the Trial Court. I have reached to the conclusion that the procedure which has been adopted for the purpose of proceeding against the applicants under the PMLA has not deprived any of the applicants of their personal liberty as embodied under Article 21 of the Constitution of India. Petition dismissed.
Issues Involved:
1. Whether the investigation under the Prevention of Money Laundering Act, 2002 (PMLA) adhered to the procedural safeguards of the Code of Criminal Procedure (Cr.P.C.). 2. Whether the offences under the PMLA are cognizable and non-bailable. 3. The admissibility and evidentiary value of statements recorded under Section 50 of the PMLA. 4. The impact of procedural lapses on the rights of the accused under Articles 14 and 21 of the Constitution of India. Detailed Analysis: 1. Procedural Safeguards under Cr.P.C.: The petitioners argued that the investigation under PMLA was conducted without following the mandatory procedural safeguards prescribed under the Cr.P.C., such as recording information of the offence, informing the Magistrate, maintaining a case diary, etc. They contended that the officers of the Enforcement Directorate failed to adhere to these safeguards on the erroneous claim that they are not "police officers" and the PMLA, being a Special Act, overrides the Cr.P.C. The court referred to Section 65 of the PMLA, which mandates the application of the Cr.P.C. provisions insofar as they are not inconsistent with the PMLA. The court emphasized that the procedural safeguards under the Cr.P.C. are necessary to ensure the jurisdictional Magistrate is kept informed and to protect the rights of the accused. 2. Cognizable and Non-Bailable Nature of PMLA Offences: The petitioners argued that the offences under the PMLA are non-cognizable and bailable, citing the deletion of sub-clause (a) of Section 45(1) of the PMLA by the 2005 amendment, which initially made every offence under the Act cognizable. The court held that the offences under the PMLA are cognizable and non-bailable. It referred to the marginal note of Section 45, which reads "offences to be cognizable and non-bailable," and emphasized that the marginal note is part of the legislation. The court also noted that the punishment for money laundering under Section 4 of the PMLA is rigorous imprisonment for a term not less than three years, which may extend to seven years, making it a cognizable offence as per the classification in the Cr.P.C. 3. Admissibility and Evidentiary Value of Statements under Section 50: The petitioners challenged the admissibility and evidentiary value of statements recorded under Section 50 of the PMLA, arguing that these statements were retracted and thus should not be considered. The court deferred this issue to the trial court, stating that the admissibility and evidentiary value of the statements recorded under Section 50 would be examined during the trial. 4. Impact of Procedural Lapses on Fundamental Rights: The petitioners contended that the procedural lapses in the investigation violated their fundamental rights under Articles 14 and 21 of the Constitution of India, leading to arbitrary actions and deprivation of personal liberty. The court concluded that none of the fundamental or legal rights of the petitioners were infringed. It emphasized that the procedure adopted under the PMLA did not deprive the petitioners of their personal liberty as guaranteed under Article 21. The court also noted that there were serious allegations against each petitioner, and the procedural lapses did not warrant quashing the proceedings. Conclusion: The court rejected all the petitions, stating that the investigation under the PMLA adhered to the necessary procedural safeguards and that the offences under the PMLA are cognizable and non-bailable. The trial court was directed to proceed with the trial in accordance with the law.
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