ENFORCEMENT DIRECTORATE CANNOT ARREST THE ACCUSED AFTER SPECIAL COURT HAS TAKEN COGNIZANCE OF ‘PMLA’ COMPLAINT

[DR.MARIAPPAN GOVINDARAJAN]

In TARSEM LAL VERSUS DIRECTORATE OF ENFORCEMENT JALANDHAR ZONAL OFFICE - 2024 (5) TMI 837 - SUPREME COURT, the appellants are the accused in complaints under Section 44 (1)(b) of the Prevention of Money Laundering Act, 2002 (‘Act’ for short).  The appellants have been denied anticipatory bail order under the impugned order.  The accused was not arrested after registration of Enforcement Case Information Report (‘ECIR’ for short) till the Special Court took cognizance of the offence under Section 4 of the Act.  The cognizance was taken on the complaints filed under Section 44(1)(b) of the Act.  The Special Court issued summons to the accused.  They never appeared before the Special Court.  Therefore, the Special Court issued warrant against the accused.  On the receipt of the warrant, the accused applied for anticipatory bail which was rejected.  Appeal was filed before High Court against the order of Special Court rejecting the anticipatory bail application.  The High Court turned down the appeal.  Therefore, present appeals were filed before the Supreme Court.  The Supreme Court passed interim orders to protect the accused.

The appellant submitted the following before the Supreme Court-

• The   power   to   arrest   vesting   in   the   officers   of   the Directorate of Enforcement (for short, ‘the ED’) under Section 19 of the Act cannot be exercised after the Special Court takes cognizance of the offence under Section 4 of the Act.
•  If an accused appears pursuant to the summons issued by the Special Court there is no reason for the issue of warrant against him or to take him into custody.
• On a conjoint readings of Sections 4 and 5 of Criminal Procedure Code (‘Cr.PC’ for short)  with Section 65 of the Act, it is apparent that all the provisions of Cr.PC would apply to the proceedings before the Special Court from the stage of filing complaint under Section 44(10(b).
• Once   cognizance   is   taken   based   on   a   complaint,  the Special Court cannot exercise the power of remand under  167(2) of Cr.PC.  After cognizance is taken the power can be taken at the highest under section 309 (2) of Cr.PC.
• When during the investigation, the prosecution does not seek the custody of the accused, after the court takes cognizance, there is no need to arrest the accused.
• If the accused is not arrested during the investigation, after he appears before the Special Court pursuant to summons, it is not necessary for him to apply for bail.
• Once cognizance is taken based on the complaint, the authorities cannot invoke section 19 of the Act and arrest an accused who has not been arrested till the date of Special Court taking cognizance.  If the Officers require the custody of the accused for further investigation to enable them to file a supplementary complaint.

The ED submitted the following before the Supreme Court-

• Once an accused appears before the Special Court he is deemed to be in its custody.  Though Section 437 of Cr. PC may not apply the accused must apply for bail under section 439 of CrPC.
• A Special Court takes cognizance of offence under Section 4 of the Act based on a complaint only if a prima facie case of commission of offence is made out.
• When the accused applied for bail under Section 439 of Cr. PC, after cognizance is taken, the conditions incorporated in Section 45(1) of the Act will apply to the bail application.
• An application made by the accused by furnishing the bonds under section 88 of the Act is an application for grant of bail; therefore Section 45(1) of the Act will even apply to such application.

•  After cognizance is taken on a complaint under Section 44(1(b), the ED has the right to make further investigation and file a supplementary complaint.
• The accused can apply for grant of anticipatory bail, such application shall also be governed by the conditions in section 45(1) of the Act.
• The offence under the Act is against the nation.  Therefore, taking into consideration the gravity and severity of the offence under the Act the mandatory required under Section 45(1) of the Act shall be complied with.
• The provisions of the Act will have an overriding effect of the provisions of Cr. PC in view of Section 65 read with section 71 of the Act.
• Since none of the provisions under section 45(1) has been complied with the accused, the appellants are not entitled to anticipatory bail.

The Supreme Court considered the submissions made by the appellants and the ED department.  First, the Supreme Court considered the applicability of Cr. PC to a complaint filed under Section 44(1)(b) of the Act.  The Supreme Court observed that section 46 of the Act provides that the provisions of Cr. PC will be applicable to the proceedings under before a Special Court which shall be deemed a Court of Sessions.  Once a complaint is filed before the Special Court, the provisions of Sections 200 to 204 of Cr. PC shall be applicable to the complaint.  There is no provision in the Act overriding the provisions of Section 200 to 204 of Cr.PC.  If the Special Court considers that there is no prima facie case of an offence under Section 3 of the Act, the Special Court shall dismiss the complaint under Section 203 of Cr.PC.  If a case is made out, then the Special Court shall proceed action under Section 204 of Cr.PC.

As the punishment under Section 4 of the Act is imprisonment for more than three years the complaint will be treated as a warrant case.  While taking cognizance the Special Court is having the discretion to treat the complaint as to summons case or a warrant case.  Initially the Court will issue summons to the accused.  If there is no appearance by the accused then the Court will issue bailable warrant.  Even if it does not bring result then the Special Court will issue non bailable warrant.   Unless an accused is charged with a heinous crime and it is feared that he will tamper or destroy the evidence or like to evade the process of law, issuance of non bailable warrant should be avoided. 

When the accused has already been granted bail, it is not necessary to apply for bail after taking cognizance of the offence by the Special Court.  If such an accused does not remain present after service of summons, without seeking exemption, the Special Court can always issue a warrant to secure his presence. 

The Supreme Court did not agreeable to the contentions of the ED that once an accused appears before the Special view in compliance with the issue of summons, he shall be deemed to be in custody of the ED.  Further the Supreme Court did not agreeable to the contentions of ED that once the accused appears before the Special Court he is to apply for bail.  The Supreme Court observed that on a plain reading of Section 437 of Cr. PC, it does not apply when the accused is brought before the High Court or Sessions Court.  The Special Court is appointed under Section 43(1) of the Act.  A Special Court is a Court of Session.  Therefore Section 437 of Cr. PC will not apply to the Special Court under the Act when the accused person appears before the Special Court on the issue of summons.

The Supreme Court analyzed the provisions of Section 65 and 71 of the Act.  The Supreme Court found that there is no provision inconsistent with Section 205 of Cr.PC.  Hence it will be applicable to the Act.   

The Supreme Court, then, analyzed the provisions of Section 88 of Cr. PC which provides power to the Court to take bonds for appearance.  Section 88 is an enabling provision that permits the Court to direct the accused to furnish the bond considering the facts of each case.  The Supreme Court observed that Section 88 is not inconsistent with the provisions of the Act.  Therefore Section 88 of Cr. PC will apply after filing a complaint under Section 44(1)(b) of the Act.  The object of Section 88 is to ensure that the accused appears regularly before the Court.  The Special Court may, at its discretion, may call upon the accused to furnish bonds for his appearance before the Court. 

Then the Supreme Court considered the issue as to whether an order of Court accepting the bonds amount to grant of bail.  If an accused appears before the Court upon the summons issued on the complaint he is not in custody.  Therefore, there is no question of granting bail to the accused. 

Once cognizance is taken of the offence punishable under section 4 of the Act, the Special Court is seized of the matter.  After the cognizance is taken the ED and other authorities named in Section 19 cannot exercise the power of arrest of the accused shown in the complaint.  The reasons is that the accused shown in the complaint are under the jurisdiction of the Special Court dealing with the complaint.  Therefore, after cognizance of the complaint under Section 44(1)(b) of the Act is taken by the Court, the ED and other authorities are powerless to arrest the accused named in the complaint.  Therefore, in such cases, apprehension of arrest under Section 19 will never exist.

Before the Supreme Court it was alleged by the Counsels of the appellants that some of the Special Courts under the Act used to take custody of the accused after issuing of summons.  Therefore, the accused is compelled to apply for bail.  The Supreme Court observed that if such procedure is followed, then it is illegal.  Such a practice may offend the right to liberty guaranteed under Article 21 of the Constitution of India.  If ED wants the custody of the accused, then it shall apply to the Court for such prayer.  The Court may permit custodial only if it is satisfied that such custody is required at that stage. 

Therefore, the Supreme Court proposed to direct that the warrants issued against the accused are cancelled subject to the condition that the appellants giving undertakings to the respective Special Courts to regularly and punctually attend the Court on all dates, unless specifically exempted under Section 205 of Cr.PC. The second condition is to furnish bonds to the Special Court under Section 88 of Cr.PC.

The Supreme Court held as below-

• Once a complaint under Section 44 (1)(b) is filed under the Act, it will be governed under Sections 200 to 205 of Cr.PC. as none of these provisions are inconsistent with the provisions of the Act.
• If the accused was not arrested till the filing of the complaint, while taking cognizance of the offence under Section 44(1)(b), as a normal rule, the Court should issue summons to the accused and not a warrant.  Even if the accused is on bail, summons should be issued to the accused.
• After a summons is issued under Section 204 of the Cr. PC on taking cognizance of the offence punishable under Section 4 of the Act on a complaint, if the accused appears before the Special Court pursuance to the summons, he shall not be treated as if he is in custody.  Therefore, it is not necessary for him to apply for bail.  However, the Special Court can direct the accused to furnish bonds under Section 88 of the Cr.PC.
• In a case where the accused appears pursuant to a summons before the Special Court, on sufficient cause being shown, the Special Court shall grant exemption from personal appearance to the accused by exercising power under section 205 of the Cr.PC.
• If the accused does not appear after the summons is issued or does not appear on a subsequent date the Special Court will issue a warrant under section 70 of the Cr.PC.  Initially the Court may issue bailable warrant.  If the accused does not appear the Special Court may issue non bailable warrant.
• A bond executed under section 88 of the Cr. PC the accused, who is not in custody, to appear before the Court on the fixed date.  Thus, an order under Section 88 of the Cr. PC accepting the bonds from the accused does not amount grant a bail to the accused. 
• If the accused does not appear before the Court after furnishing the bond the Special Court is having the powers under section 89 read with section 70 of Cr.PC to arrest the accused and produce him before the Court.  If such warrant is issued the accused is having right to apply for the cancellation of the warrant by giving an undertaking to the Special Court that he will appear before the Court in all hearing dates without fail.  When the Court considers the application for cancellation of warrant it is not dealing with the bail application.
• Even though it is not mandatory to obtain bonds from the accused the Court is having power directing to furnish bonds.  Once an arrest order is issued the accused cannot be let off by taking bonds under section 88 and he has to apply for the cancellation of warrant.
• After taking cognizance of the offence under Section 4 of the Act based on a complaint under Section 44(1)(b) of the Act, the ED and its officers are powerless arrest a person under Section 19 of the Act.
• If the ED wants the custody of the accused who appears after service of the summons for conducting further investigation in the same offence, the ED shall apply to the Court for seeking the custody of the accused.  After the hearing of the accused the Court shall pass the reasoned order.  The Court may allow the custody of the custody if it is satisfied that the custodial interrogation is required even though accused was never arrested