2024 (5) TMI 837 - SC - Money Laundering

Money Laundering - Denial of benefit of anticipatory bail - whether power to arrest vesting in the officers of the Directorate of Enforcement (ED) under Section 19 of the PMLA cannot be exercised after the Special Court takes cognizance of the offence punishable under Section 4 of the PMLA? - order of the Court accepting bonds under Section 88 - HELD THAT - There is no provision therein which is in any manner inconsistent with Section 205 of the CrPC. Hence, it will apply to a complaint under the PMLA. A summons is issued on a complaint to ensure attendance of the accused before the Criminal Court. If an accused is in custody, no occasion arises for a Court to dispense with the personal attendance of the accused - If the accused who appears pursuant to the summons issued on a complaint were deemed to be in custody, the lawmakers would not have provided for Section 205. After examining the provisions of the PMLA, it is apparent that Section 88 is in no manner inconsistent with the provisions of the PMLA. Therefore, Section 88 will apply after filing of a complaint under Section 44(1)(b) of the PMLA. If Section 88 is to apply even before a summons is issued or served upon a complaint, there is no reason why it should not apply after the service of summons. A discretionary power has been conferred by Section 88 on the Court to call upon the accused to furnish bonds for his appearance before the Court. It does not depend on the willingness of the accused - when an accused appears before the Special Court under a summons issued on the complaint, if he offers to submit bonds in terms of Section 88, there is no reason for the Special Court to refuse or decline to accept the bonds. Executing a bond will aid the Special Court in procuring the accused's presence during the trial. If a warrant of arrest has been issued and proceedings under Section 82 and/or 83 of the CrPC have been issued against an accused, he cannot be let off by taking a bond under Section 88. Section 88 is indeed discretionary. But this proposition will not apply to a case where an accused in a case under the PMLA is not arrested by the ED till the filing of the complaint. The reason is that, in such cases, as a rule, a summons must be issued while taking cognizance of a complaint. In such a case, the Special Court may direct the accused to furnish bonds in accordance with Section 88 of the CrPC. Whether an order of the Court accepting bonds under Section 88 amounts to grant of bail? - HELD THAT - When an accused furnishes a bond in accordance with Section 88 of the CrPC for appearance before a Criminal Court, he agrees and undertakes to appear before the Criminal Court regularly and punctually and on his default, he agrees to pay the amount mentioned in the bond. Section 441 of the CrPC deals with a bond to be furnished by an accused when released on bail. Therefore, an order accepting bonds under Section 88 from the accused does not amount to a grant of bail. Contingency where after service of summons issued on a complaint under the PMLA, the accused does not appear - HELD THAT - While cancelling the warrant, the Court can always take an undertaking from the accused to appear before the Court on every date unless appearance is specifically exempted. When the ED has not taken the custody of the accused during the investigation, usually, the Special Court will exercise the power of cancellation of the warrant without insisting on taking the accused in custody provided an undertaking is furnished by the accused to appear regularly before the Court. When the Special Court deals with an application for cancellation of a warrant, the Special Court is not dealing with an application for bail. Hence, Section 45(1) will have no application to such an application. Once cognizance is taken of the offence punishable under Section 4 of the PMLA, the Special Court is seized of the matter - after cognizance of the complaint under 44(1)(b) of the PMLA is taken by the Court, the ED and other authorities named in Section 19 are powerless to arrest an accused named in the complaint. Hence, in such a case, an apprehension that the ED will arrest such an accused by exercising powers under Section 19 can never exist. The impugned orders declining to grant anticipatory bail set aside - appeal allowed.

Summary

Issues Involved:

1. Applicability of Sections 200 to 205 of the CrPC to complaints under Section 44(1)(b) of the PMLA.
2. Issuance of summons or warrants by the Special Court.
3. Whether an accused appearing pursuant to a summons is deemed to be in custody.
4. Applicability of Section 88 of the CrPC to PMLA complaints.
5. Conditions under which the ED can seek custody of the accused after cognizance is taken.
6. Practice of taking accused into custody after appearing in compliance with summons.
7. Procedure for cancellation of warrants.

Summary:

1. Applicability of Sections 200 to 205 of the CrPC to complaints under Section 44(1)(b) of the PMLA:

The Supreme Court held that once a complaint under Section 44(1)(b) of the PMLA is filed, it will be governed by Sections 200 to 205 of the CrPC as none of these provisions are inconsistent with the PMLA. The Special Court must apply its mind to whether a prima facie case of an offence under Section 3 of the PMLA is made out, and if so, can take recourse to Section 204 of the CrPC to issue process.

2. Issuance of summons or warrants by the Special Court:

The Court held that if the accused was not arrested by the ED till the filing of the complaint, the Court should issue a summons to the accused and not a warrant. Even if the accused is on bail, a summons must be issued. The Court emphasized that the issuance of summons is the rule unless the accused is charged with a heinous crime and is likely to tamper with evidence or evade the process of law.

3. Whether an accused appearing pursuant to a summons is deemed to be in custody:

The Court rejected the argument that an accused appearing pursuant to a summons is deemed to be in custody. It clarified that the object of issuing a summons is to secure the accused's presence before the Court, not to take him into custody. Therefore, it is not necessary for the accused to apply for bail upon appearing in response to a summons.

4. Applicability of Section 88 of the CrPC to PMLA complaints:

Section 88 of the CrPC, which allows the Court to take bonds for appearance, applies to complaints under the PMLA as it is not inconsistent with the PMLA. The Court held that if an accused appears pursuant to a summons and offers to submit bonds in terms of Section 88, the Special Court should accept the bonds to ensure the accused's appearance during the trial.

5. Conditions under which the ED can seek custody of the accused after cognizance is taken:

After cognizance of the complaint under Section 44(1)(b) of the PMLA is taken, the ED and other authorities named in Section 19 cannot exercise the power of arrest of the accused shown in the complaint. If the ED wants custody of the accused for further investigation, it must seek custody by applying to the Special Court, which must pass an order after hearing the accused and recording brief reasons.

6. Practice of taking accused into custody after appearing in compliance with summons:

The Court noted that some Special Courts under the PMLA follow the practice of taking the accused into custody after they appear pursuant to a summons. The Court declared this practice illegal and emphasized that such a practice may offend the right to liberty guaranteed by Article 21 of the Constitution of India.

7. Procedure for cancellation of warrants:

The Court held that if an accused does not appear after a summons is served, the Special Court can issue a warrant under Section 70 of the CrPC. The accused can apply for cancellation of the warrant by giving an undertaking to appear regularly before the Court. The Special Court can cancel the warrant without insisting on taking the accused into custody, provided an undertaking is furnished by the accused to appear regularly.

Operative Conclusions:

a) The complaint under Section 44(1)(b) of the PMLA will be governed by Sections 200 to 205 of the CrPC.
b) Summons should be issued as a normal rule if the accused was not arrested till the filing of the complaint.
c) An accused appearing pursuant to a summons is not deemed to be in custody.
d) The Special Court can grant exemption from personal appearance under Section 205 of the CrPC.
e) The Special Court can issue a warrant if the accused does not appear after a summons is served.
f) An order accepting bonds under Section 88 does not amount to a grant of bail.
g) The Special Court has the power to issue a warrant if the accused fails to appear after furnishing bonds under Section 88.
h) Section 88 is discretionary and not mandatory in every case.
i) The ED cannot arrest an accused named in the complaint after cognizance is taken.
j) The ED must seek custody of the accused by applying to the Special Court if further investigation is needed.

The appeals were allowed, and the warrants against the appellants were cancelled subject to conditions of filing undertakings and furnishing bonds within one month.