Jignesh Kishorebhai Bhajiawala v. State of Gujarat
2017-06-12
RAJESH H.SHUKLA
body2017
DigiLaw.ai
JUDGMENT : Rajesh H. Shukla, J. 1. The present Criminal Miscellaneous Application is filed by the Applicant/Original Accused under Section 439 of the Code of Criminal Procedure, 1973 read with Section 45 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as "the PML Act") in connection with File No. ECIR/01/STSZO/2016 on the ground stated in the Application. 2. The background of the facts briefly summarized in the Application are as follows. 3. Respondent No. 2 - Directorate of Enforcement, Surat has filed a case being PMLA No. 5 of 2017 on 16.3.2017 for the offence punishable under Sections 3 and 4 of the PML Act. The Income-Tax Department, Surat has also registered a case for the offence under the Prevention of Corruption Act as well as under the Indian Penal Code and there is also a case by the Central Bureau of Investigation. Thereafter, the Applicant has been summoned by the Directorate of Enforcement, Surat, on the basis of which huge currency and other documentary evidence were seized by the Income-Tax Department, and the Directorate of Enforcement, Surat has registered a case under the PML Act as stated above. 4. Heard learned Senior Counsel Shri Vikarm Chaudhary appearing with learned Advocate Shri Chetan K. Pandya for the Applicant, learned APP Ms. Moxa Thakker for the Respondent State and learned Assistant Solicitor General Shri Devang Vyas with learned Central Government Standing Counsel Shri Kshitij M. Amin for Respondent No. 2 Directorate of Enforcement, Surat. 5. Learned Senior Counsel Shri Vikaram Chaudhary referred to the background of the facts as well as the provisions of the PML Act and submitted that the offences as contemplated under the PML Act and provided in the Schedule to the PML Act has to be prima facie established. Learned Senior Counsel Shri Chaudhary submitted that whether the provisions of the PML Act and Sections 3 and 4 of the PML Act would be attracted, would be a debatable issue. He emphasized that unaccounted money may have been seized from the Applicant which could be a case of evasion of tax, where the Income-Tax authority may take further recourse and may also take suitable steps, including penalty or the prosecution. Learned Senior Counsel Shri Chaudhary however submitted that Section 2(1)(u) of the PML Act defines "proceeds of crime".
He emphasized that unaccounted money may have been seized from the Applicant which could be a case of evasion of tax, where the Income-Tax authority may take further recourse and may also take suitable steps, including penalty or the prosecution. Learned Senior Counsel Shri Chaudhary however submitted that Section 2(1)(u) of the PML Act defines "proceeds of crime". He emphasized that before the offence of money laundering as provided under Section 3 of the PML Act could be attracted, there has to be a necessary material and evidence to establish about the guilt of the Applicant Accused. He referred to the scheme of the PML Act to support his contention and also referred to Section 19 of the PML Act, which provide for "power to arrest". Learned Senior Counsel Shri Chaudhary submitted that as provided under Section 19 of the PML Act, the procedure has to be followed and it clearly lays down that there has to be a material in the possession on the basis of which the officer can have a reason to believe. He emphasized that these reasons have to be reduced to writing in a sealed cover, and within 24 hours, he has to be produced before the Magistrate. Therefore, learned Senior Counsel Shri Chaudhary submitted that the procedure has not been followed, and therefore, the present Application may be allowed. He also referred to Chapter VII which referred to "Special Courts". Learned Senior Counsel Shri Chaudhary pointedly referred to Section 43 of the PML Act which referred to the "Special Courts" and submitted that Section 44(2) provides for exercise of powers under Section 439 of Cr.P.C. Learned Senior Counsel Shri Chaudhary submitted that the provisions of the PML Act may not be attracted. He submitted that even if it is assumed that the provisions of the PML Act are attracted, the amendment which has been made in Section 45 is required to be considered with regard to the cognizable and non-cognizable offence. For that purpose he referred to the provisions of Section 45 of the PML Act and submitted that earlier Part-B offence in the Schedule were clubbed in Part-A. He therefore submitted that the issue involved is not settled and there are divergent views, which may have to be considered and interpreted for the purpose of interpretation of the statutory provisions of the PML Act.
Learned Senior Counsel Shri Vikram Chaudhary strenuously submitted that while deciding Criminal Misc. Application (For Regular Bail) No. 3952 of 2016 with Criminal Misc. Application (For Regular Bail) No. 3991 2016 by the High Court (Coram: P.P. Bhatt, J) vide order dated 17.10.2016 has considered the provisions of Section 45 of the PML Act while deciding the bail application referring to the judgment of this High Court as well as other High Courts and also the judgment of the Hon'ble Apex Court in case of Om Prakash v. Union of India reported in (2011) 14 SCC 1 . Learned Senior Counsel Shri Chaudhary pointedly referred to the observations and the Scheme of the Act and submitted that the High Court has clearly observed: "Thus, the issue regarding compliance with the procedure is live, germane and open and the view taken by the Division Bench in its order dated 3.8.2015 passed in S.Cr.A. (Habeas Corpus) 4247 of 2015 Rakesh Manekchand Kothari (supra) prevails so far. The Hon'ble Single Judge in a batch matter has taken the view that the offences under PMLA are cognizable and no procedure under Cr.P.C. is required to be followed. This view is based primarily on the judgment passed by a Division Bench of Hon'ble Punjab and Haryana High Court in its judgment dated 22.12.2015 titled as Karam Singh Vs. Union of India CWP No. 3317 of 2015 and Vinod Kumar Garg vs. Union of India CWP No. 314 of 2015." 6. Learned Senior Counsel Shri Vikram Chaudhary submitted that there was a review application filed which led to framing of certain questions of law by the High Court differing with the view in case of Karam Singh v. Union of India CWP No. 3317 of 2015. Therefore learned Senior Counsel Shri Chaudhary submitted that the issue is not settled, and for that purpose, he has referred to the other judgment of the Delhi High Court in case of Anand Chauhan v. Directorate of Enforcement reported in 2017 Law Suit (Del) 1338 and also the judgment of the Punjab and Haryana High Court in case of Gorav Kathuria v. Union of India CRWP No. 595 of 2016. He again referred to the observations made in this judgment quoted in the order of the High Court (Coram: P.P. Bhatt, J.) in Criminal Misc. application No. 3952 of 2016 with Criminal Misc.
He again referred to the observations made in this judgment quoted in the order of the High Court (Coram: P.P. Bhatt, J.) in Criminal Misc. application No. 3952 of 2016 with Criminal Misc. Application No. 3991 of 2016 dated 17.10.2016 in paragraph 6.12 and emphasized that the Scheme of the PML Act with reference to other provisions of other special statutes have been considered. Learned Senior Counsel Shri Chaudhary submitted that by amendment in 2013, the offences which were in Part-A of the Schedule prior to amendment in 2013 and the offences under Part B of the Schedule which were clubbed with Part-A, cannot be equated. He therefore tried to submit referring to the provisions of the PML Act that the purpose of the Money Laundering (Amendment Bill) 2011 was only for the sole object of overcoming the threshold limit of Rs. 30 lacs for invocation of the PML Act in respect of laundering of proceeds of crime involved in those offences. He therefore submitted that the limitation under Section 45 of the PML Act regarding grant of bail would not be applicable qua the persons who are accused of the offences which were earlier in Part-B. Again, learned Senior Counsel Shri Chaudhary has referred to the order of the High Court (Coram: P.P. Bhatt, J.) as stated above and submitted that it has been clearly observed referring to the other views of the Division Bench as well as the judgment of the Punjab & Haryana High Court that the limitation/rigors of Section 45 of the PML Act have no application. Learned Senior Counsel Shri Chaudhary pointedly referred to the judgment of the Punjab & Haryana High Court in case of Gorav Kathuria v. Union of Inida CRWP No. 595 of 2016 and submitted that it made a detailed reference to the provisions of the PML Act which have been interpreted and considered by the High Court of Punjab & Haryana. He emphasized the observations made in paragraph 72, 73 and 80 and emphasized that it has been clearly observed in paragraph 80 that it has been noted by the Punjab & Haryana High Court that they have not come across any precedent with regard to the two issues, and therefore, the question of law were framed while issuing the certificate for the purpose of reference to the Hon'ble Apex Court.
Learned Senior Counsel Shri Vikram Chaudhary submitted that the Hon'ble Apex Court has disposed of the Appeal and clearly observed that the judgment of the High Court is correct, and therefore, it would merge with the order of the Hon'ble Apex Court. The doctrine of merger would be attracted where the order of the High Court would merge with the order of the Hon'ble Apex Court. Learned Senior Counsel Shri Chaudhary referred to the judgment of the Madras High Court in case of J. Sekar v. Assistant Director, Directorate of Enforcement & Ors. in Criminal Original Petition Nos. 7178 and 7204 of 2017 dated 12.5.2017 and emphasized the observations made therein particularly paragraph 26. He emphasized that as observed in this judgment, there has to be a material to show that the property/cash recovered from the Applicant are the "proceeds of crime" under the PML Act and only if this burden is discharged or the foundation is laid, the limitation/rigors of Section 45 of the PML Act would be attracted. He therefore submitted that the provisions of the PML Act are not attracted. Assuming that they are attracted, it has to be prima facie established qua the offence as required under the PML Act. Learned Senior Counsel Shri Chaudhary also referred to Section 24 of the PML Act which referred to "burden of proof" and submitted that the Applicant is not required to discharge the burden, and therefore, as per the Scheme of the PML Act, the provisions of the Cr.P.C. would be applicable. He pointedly referred to the PML Act and submitted that it has been expressly and specifically stated in Section 46 of the PML Act that the Code of Criminal Procedure shall be applicable, and therefore, the submission that it is a special statute and the application for bail has to be considered as per Section 45 of the PML Act are misconceived and would not be attracted in light of the amendment made, by which, the offences in Schedule B are clubbed with the offence in Schedule-A, and therefore, it has to be considered as per the provisions of Section 439 of Cr.P.C. regarding grant of bail. He therefore submitted that the present Criminal Misc. Application may be allowed particularly when the issue is very much alive and not settled, and therefore, the present Application may be allowed. 7.
He therefore submitted that the present Criminal Misc. Application may be allowed particularly when the issue is very much alive and not settled, and therefore, the present Application may be allowed. 7. Per contra, learned Assistant Solicitor General Shri Devang Vyas referred to the papers and the background of the facts as well as affidavit-in-reply. He also referred to the judgment of the Hon'ble Apex Court in case of Gautam Kundu v. Manoj Kumar, Assistant Director, Eastern Region, Directorate of Enforcement reported in AIR 2016 SC 106 and emphasized the observation made in the judgment to buttress his submission regarding the applicability of Section 45 of the PML Act for the purpose of deciding the bail application. He submitted that as the PML Act is a special statute, it will have an overriding effect i.e. money laundering specifically provides that it will have an overriding effect over the provisions of procedure of the Cr.P.C. He emphasized that it has been clearly provided by the legislature that where the provisions of Cr.P.C. are inconsistent or in conflict with the statutory provisions of the PML Act, the said statute of the PML Act will prevail. Learned Assistant Solicitor General Shri Devang Vyas pointedly referred to the observations made in the aforesaid judgment and submitted that it has been clearly observed: "(28.) Before dealing with the application for bail on merit, it is to be considered whether the provisions of Section 45 of the PMLA are binding on the High Court while considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that PMLA deals with the offence of money laundering and the Parliament has enacted this law as per commitment of the country to the United Nations General Assembly. PMLA is a special statute 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.
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 under Section 45 of the PMLA are mandatory and needs to be complied with which is further strengthened by the provisions of Section 65 and also Section 71 of the PMLA. Section 65 requires that the provisions of Cr.P.C. shall apply in so far as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of the 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 Cr.P.C. 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 of Cr.P.C. 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." 8.
Learned Assistant Solicitor General Shri Devang Vyas emphasized that the law provides for presumption as regards the "proceeds of crime" and the burden would lie on the accused to give the explanation or justification. He also referred to the order passed by a coordinate bench while deciding Criminal Misc. Application (For Regular Bail) No. 30674 of 2017 (Coram: A.J. Desai, J) dated 15.3.2017 and submitted that a similar view has been expressed relying upon the same judgment of the Hon'ble Apex Court. He pointedly referred to the observations made in this judgment referring to the scheme of the PML Act as well as the provisions of the amendment made in 2013 and he emphasized the observations of the Hon'ble Division Bench of the Punjab & Haryana High Court which has been considered in this judgment and he emphasized that the prayer regarding vires of the provisions of Section 45 of the PML Act has been rejected by the Hon'ble Division Bench. Learned Assistant Solicitor General Shri Devang Vyas pointedly referred to the observations made referring to the same judgment of the Hon'ble Punjab & Haryana High Court as well as other judgments, including the judgment/order in case of Rakesh Manekchand Kothari v. Union of India with reference to the provisions of Section 45 of the PML Act. He emphasized the observations: "By considering the judgment of the Division Bench of the Punjab and Haryana High Court read with the order passed by the Hon'ble Supreme Court in the case of Gorav Kathuria dismissing the appeal as well as considering the decision in the case of Gautam Kundu (Supra), it has been held that if an accused is facing charge for the offences punishable under Section 3 of the PML Act, the rigor of Section 45 of the PML Act would be applicable." 9. The observations made by the Hon'ble Apex Court in case of Gautam Kundun (supra) have been relied upon and quoted extensively. It is in this background, learned Assistant Solicitor General Shri Devang Vyas submitted that the submission that the provisions of the PML Act particularly Section 45 would not be attracted is misconceived. Similarly, he submitted that when the special statute itself provides that it would prevail, there is no reason to discard the legislative intention reflected in the special statute.
It is in this background, learned Assistant Solicitor General Shri Devang Vyas submitted that the submission that the provisions of the PML Act particularly Section 45 would not be attracted is misconceived. Similarly, he submitted that when the special statute itself provides that it would prevail, there is no reason to discard the legislative intention reflected in the special statute. He further submitted that as explained in detail in the affidavit in reply, there is a sufficient prima facie material, including the statement made before the authorities and the Income-Tax authorities, and therefore, it would attract the provisions of the PML Act. Learned Assistant Solicitor General Shri Devang Vyas submitted that the Applicant has to show by material that he is not involved in any offence or is not guilty. He pointedly referred to the burden of proof as well as the aspect of presumption as provided in the PML Act and submitted that the burden is cast on the Applicant who comes before the court seeking bail. He submitted that reference to the other judgments referring to the provisions of Section 167 of the Cr.P.C. has no application as the issue is totally different and it is not with regard to any default bail, and therefore, it has no relevance. Learned Assistant Solicitor General Shri Devang Vyas also pointedly referred to the aspect of precedent to support his contention that the submissions regarding the doctrine of merger are misconceived as it cannot be said to be any binding precedent. For that purpose, he again made reference to the observations which have been quoted from the judgment stated above. He therefore submitted that the binding precedent would be only an issue which has been decided. and therefore, merely because the Hon'ble Apex Court has not disturbed the order of the High Court would not be a judgment of the Hon'ble Apex Court creating any binding precedent. 10.
He therefore submitted that the binding precedent would be only an issue which has been decided. and therefore, merely because the Hon'ble Apex Court has not disturbed the order of the High Court would not be a judgment of the Hon'ble Apex Court creating any binding precedent. 10. Learned Assistant Solicitor General Shri Devang Vyas also referred to the further details with reference to the affidavit-in-reply with regard to the prima facie material and the nature of offence and submitted that considering the gravity of the offence and the economic offence in which the special statute like the PML Act has been enacted by the legislature, the application for bail has to be considered keeping in mind the rigors of Section 45 of the PML Act and the present Application for bail may not be entertained. 11. In rejoinder, learned Senior Counsel Shri Vikram Chaudhary again referred to the papers as well as the background of the facts and submitted that assuming that the provisions of Section 45 of the PML Act are applicable, it cannot be argued that no bail could be granted. He emphasized that even if Section 45 of the PML Act is attracted, it provides for the discretion to the High Court and he further submitted that in order to arrive at the conclusion, the High Court may examine the material. Learned Senior Counsel Shri Vikram Chaudhary submitted that, as submitted earlier, the issue is not finally decided with reference to cognizable and non-cognizable offence particularly with reference to the amendment made in 2013 where the offences are clubbed as offences under Category-A of the Schedule which would then take out the discretion and it would be contrary to the criteria applicable for grant of bail like the gravity of the offence or the nature of offence. Learned Senior Counsel Shri Vikram Chaudhary submitted that irrespective of the fact that whether Section 45 of the PML Act is attracted or not, the issue raised in the application with regard to grant of bail has to be considered. He submitted that the judgment of the Hon'ble Apex Court in case of Gautam Kundu (supra) is also subsequently considered, and therefore, the judgment of the Punjab & Haryana High Court has framed an issue by making a reference.
He submitted that the judgment of the Hon'ble Apex Court in case of Gautam Kundu (supra) is also subsequently considered, and therefore, the judgment of the Punjab & Haryana High Court has framed an issue by making a reference. He therefore submitted that the fact that the Hon'ble Apex Court has confirmed the judgment of the Hon'ble Punjab & Haryana High Court, would amount to a precedent on the principle of merger. He therefore submitted that the application may be considered. Learned Senior Counsel Shri Vikram Chaudhary further submitted that the aspect of burden of proof as referred to in Section 24 of the PML Act would not be attracted as the Applicant is not required to discharge the burden unless the foundation has been laid by the Respondent with regard to the offence and the guilt of the Applicant/Accused. He also referred to and relied upon the judgment of the Delhi High Court in case of Anand Chauhan v. Directorate of Enforcement (supra) and submitted that it may not have any application. Therefore learned Senior Counsel Shri Vikram Chaudhary submitted that the provisions of the PML Act may have to be interpreted as it has been considered in other special statute, but it cannot be said that the criminal procedure code will not have any application for the purpose of deciding the bail application. He therefore submitted that the present application may be granted. 12. In view of these rival submissions, it is required to be considered whether the present Application for bail deserve consideration. 13. The first aspect which deserve consideration is whether the provisions of Section 45 of the PML Act could be attracted or whether it will not have any application at all as sought to be canvassed by learned Senior Counsel Shri Vikaram Chaudhary. The Application itself is made under Section 439 of Cr.P.C. read with Section 45 of the PML Act as could be seen from the memo of the Application itself. 14. The submissions which have been made by learned Senior Counsel Shri Vikram Chaudhary referring to Section 2(1)(u) of the PML Act emphasizing on the "proceeds of crime" that unless the amount which has been recovered from the Applicant is not established to be "proceeds of crime", the offences as per the Schedule would not be attracted. 15.
14. The submissions which have been made by learned Senior Counsel Shri Vikram Chaudhary referring to Section 2(1)(u) of the PML Act emphasizing on the "proceeds of crime" that unless the amount which has been recovered from the Applicant is not established to be "proceeds of crime", the offences as per the Schedule would not be attracted. 15. The another facet of the submissions which have been made with much emphasis on Section 45 of the PML Act with reference to the amendment that the amendment 2013 was with the sole object to overcome the monetary threshold of Rs. 30 lacs for application of the PML Act to those offences which have been considered by the Punjab & Haryana High Court in case of Gorav Kathuria (supra). Learned Senior Counsel Shri Chaudhary has referred to the Amendment of 2013 with much emphasis that the offences which were earlier in Part-A of the Schedule prior to 2013 Amendment are heinous offences, and therefore, the other offences under Part-B of the Schedule cannot be equated with heinous offences for the purpose of Section 45(1) of the PML Act. The submissions have been made referring to the judgment of Gorav Kathuria (supra) and the other judgments that it has been read down, and therefore, the same may not have any application. Though the submissions have been made, a bare perusal of Section 45 of the PML Act which starts with non obstante clause, would make the position clear. The provisions of Section 45(2) of the PML Act provide: "The limitation on granting of bail specified in sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail." The provisions of Section 46 of the PML Act relied upon refers to the applicability of Code of Criminal Procedure for the purpose of deciding a case under the PML Act. However, as stated above, the provisions of Section 45(2) clearly provide that the limitation on grant of bail specified in sub-section (1) of Section 45 of PML Act is an addition to the limitation under the Code of Criminal Procedure, meaning thereby, both will have the application.
However, as stated above, the provisions of Section 45(2) clearly provide that the limitation on grant of bail specified in sub-section (1) of Section 45 of PML Act is an addition to the limitation under the Code of Criminal Procedure, meaning thereby, both will have the application. The provisions of the PML Act as a special statute will have the application over and above the provisions of Section 439 of Cr.P.C. providing for the additional limitation or the rigors for grant of bail. 16. Thus the stringent provision has been made for grant of bail in respect of the offences under the PML Act as referred to in the Schedule. It clearly provides that the limitations are over and above the limitation criteria for grant of bail. Further, the provisions of Section 45 starts with non-obstante clause and Section 45(1)(ii) provides: "(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond unless- (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: [emphasis supplied] Thus, the provision of the PML Act clearly indicate about the manner and the obligation is cast upon the court that no person shall be released on bail unless the court is satisfied that there are reasonable grounds for believing that he is not guilty. In other words, the satisfaction has to be reached by the court before the discretion could be exercised for releasing the accused on bail. This is pari materia with other statutory provisions like the NDPS Act. The amendment made in Section 45 of the principal Act referred to the offences as in Part-A with punishment for a term of imprisonment of more than three years. The submissions have been made that it is only qua heinous offences as provided like waging a war etc., rigors of Section 45 of the PML Act could be attracted and the other offences which were in Part-B, which have been clubbed in Part-A would not attract Section 45 of the PML Act, is misconceived.
The submissions have been made that it is only qua heinous offences as provided like waging a war etc., rigors of Section 45 of the PML Act could be attracted and the other offences which were in Part-B, which have been clubbed in Part-A would not attract Section 45 of the PML Act, is misconceived. It is well settled that the provisions of the Statute has to be read as it is and the court cannot in the guise of interpreting the provisions of law can add or substitute in the provision. If the submissions have to be accepted, it would amount to embarking upon the legislative function without any justification. It cannot be readily accepted that the legislature is not aware or oblivious of the circumstances so as to accept such submission that Section 45 of the PML Act has to be restricted qua its application for heinous offences in the Part-A and the same Section 45 of the PML Act would not be attracted for the purpose of other offences though now they are falling in Part-A. A close scrutiny of the statutory provision with amendment would make it clear that the legislature has clearly provided: "Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence punishable for a term of imprisonment of more than three years under Part A of the Schedule shall be released on bail or on his own bond unless." Thus, it is clearly provided by the legislature that in respect of the offences punishable for more than three years under PML Act, the rigors of Section 45 of the PML Act would apply, and when the legislature has clubbed the offences in Part-B with Part-A without any further provision or clarification, it would be suggestive of the fact that the legislature was conscious to make a specific provision with reference to the offences punishable for a term of imprisonment of three years. This itself would imply that the offences under the Act falling in Part-A of the Schedule, where the term of sentence is more than three years, the rigors of Section 45 of the PML Act would be attracted.
This itself would imply that the offences under the Act falling in Part-A of the Schedule, where the term of sentence is more than three years, the rigors of Section 45 of the PML Act would be attracted. In other words the submission that the offences which were originally in Part-B and which have been clubbed with Part-A after the amendment, would not attract rigors of Section 45 of the PML Act, is misconceived. 17. The statement of objects and reasons providing for background of the enactment suggesting the intention of the legislature would make the position clear that the PML Act has been enacted when it was realised world over that the money laundering poses a serious threat not only to the financial system of the countries but also to the integrity and sovereignty, and therefore, to curb the money laundering, which, in turn may have a bearing on drug trafficking and other offences and for which the United Nations General Assembly passed a resolution to provide for a mechanism to prevent such money laundering, the PML Act has been enacted. The Hon'ble Apex Court has also considered the very provision of Section 45 of the PML Act in a judgment in case of Gautam Kundu (supra). The Hon'ble Apex Court while recording the submission has observed: "28. Before dealing with the application for bail on merit, it is to be considered whether the provisions of Section 45 of the PMLA are binding on the High Court while considering the application for bail under Section 439 of the Code of Criminal Procedure. There is no doubt that PMLA deals with the offence of money laundering and the Parliament has enacted this law as per commitment of the country to the United Nations General Assembly. PMLA is a special statute 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 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 under Section 45 of the PMLA are mandatory and needs to be complied with which is further strengthened by the provisions of Section 65 and also Section 71 of the PMLA. Section 65 requires that the provisions of Cr.P.C. shall apply in so far as they are not inconsistent with the provisions of this Act and Section 71 provides that the provisions of the 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 Cr.P.C. would apply only if they are not inconsistent with the provisions of this Act.
PMLA has an overriding effect and the provisions of Cr.P.C. 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 of Cr.P.C. 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." Thus, while recording the submissions, the Hon'ble Apex Court has emphasized and observed as stated above that the conditions enumerated in Section 45 of the PML Act will have to be complied with even in respect of the application for bail under Section 439 of Cr.P.C. It is further observed referring to Section 24 of the PML Act that unless the contrary is proved, the authority or the court may presume about the "proceeds of crime" that such a money involved in laundering are "proceeds of crime". In other words, the burden of proof with regard to the "proceeds of crime" would lie with the Applicant and has to satisfy the authority that the amount recovered or involved is not the "proceeds of crime under the PML Act. Therefore, the submissions which have been made by learned Senior Counsel Shri Vikram Chaudhary referring to the provisions of Section 2(1)(u) - "proceeds of crime" that unless it is prima facie established that the amount recovered from the Appellant Accused is "proceeds of crime" under the PML Act, the statutory provisions of this Act are not attracted, is thoroughly misconceived in light of the aforesaid observations which have interpreted the same provision provided for the burden of proof on the Applicant Accused with further rider that presumption shall be made by the authority or the court unless it is so established by the present Applicant Accused of an offence. Thus, the submission that unless the foundation is laid for attraction of the statutory provision of the PML Act, it cannot be said to be "proceeds of crime", is thoroughly misconceived or rather contrary to the statutory provisions interpreted by the Hon'ble Apex Court in case of Gautum Kundu (supra).
Thus, the submission that unless the foundation is laid for attraction of the statutory provision of the PML Act, it cannot be said to be "proceeds of crime", is thoroughly misconceived or rather contrary to the statutory provisions interpreted by the Hon'ble Apex Court in case of Gautum Kundu (supra). The Hon'ble Apex Court has observed: "We have noted that 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. As mentioned earlier, Section 45 of the PMLA imposes two conditions for grant of bail, specified under the said Act. We have not missed the proviso to Section 45 of the said Act which indicates that the legislature has carved out an exception for grant of bail by a Special Court when any person is under the age of 16 years or is a woman or is a sick or infirm. Therefore, there is no doubt that the conditions laid down under Section 45A of the PMLA, would bind the High Court as the provisions of special law having overriding effect on the provisions of Section 439 of the Code of Criminal Procedure for grant of bail to any person accused of committing offence punishable under Section 4 of the PMLA, even when the application for bail is considered under Section 439 of the Code of Criminal Procedure." 18. Again, referring to the aspect of the burden of proof, the Hon'ble Apex Court, relying upon the earlier judgment in case of Union of India v. Hassan Ali Khan, reported in (2011) 10 SCC 235 has clearly observed: "In Union of India v. Hassan Ali Khan, (2011) 10 SCC 235 , this Court has laid down that what will be the burden of proof when attempt is made to project the proceeds of crime as untainted money. It is held in the said paragraph that allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifted on the accused persons under Section 24 of the PML Act, 2002." 19.
It is held in the said paragraph that allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifted on the accused persons under Section 24 of the PML Act, 2002." 19. Again, such stringent provisions have also to be found in other special statute like NDPS Act where there is a similar or pari materia provision casting an obligation upon the court to reach to the satisfaction about the fact that the accused is not guilty. 20. In the facts and circumstances, particularly with reference to the background of the facts referred to in the affidavit-in-reply filed by the Respondent authority, it can hardly be said that such a satisfaction could be arrived at this stage. 21. It may not be out of place to emphasize that even the investigation is not over and even if the investigation is required to be made or is made by the other authority under the other Act like Income-Tax Act, by itself would not lead to a conclusion that the investigation under the PML Act is concluded. In fact the authority like Directorate of Enforcement under the PML Act would be justified in proceeding with the investigation on the basis of the revelations and the material found in the inquiry or the investigation under the other statute like Income-Tax Act. Therefore, when the investigation by the Enforcement Authority under the PML Act has not yet been over, it may not be possible to arrive at the satisfaction as provided in Section 45(1)(ii) of the PML Act. This itself would suggest that one cannot put the cart before the horse and readily accept the submissions which have been made with reference to the observations made by the Hon'ble Punjab & Haryana High Court or the Madras High Court brushing aside the specific observations referring to the same statutory provisions of Section 45 of the PML Act by the Hon'ble Apex Court. 22. The submissions which have been made by learned Senior Counsel Shri Vikram Chaudhary that the issue is not settled and therefore when there are divergent views under consideration and where the reference is also made and it has been remanded, it is a case for grant of bail, is thoroughly misconceived.
22. The submissions which have been made by learned Senior Counsel Shri Vikram Chaudhary that the issue is not settled and therefore when there are divergent views under consideration and where the reference is also made and it has been remanded, it is a case for grant of bail, is thoroughly misconceived. The submissions which have been made with reference to the details with regard to the order of the High Court having been merged with the order of the Hon'ble Apex Court, which has been emphasized as stated herein above, also cannot be accepted. The doctrine of merger would not be attracted in the facts of the case as the order of the High Court may merge but it would not be setting any precedent. It is well accepted that what is of the essence in a decision is the ratio and not every observations. Further, it is also well accepted that what is binding under Article 141 of the Constitution is the issue decided between the parties. It is well accepted that only such an issue which has been directly discussed and decided by the Hon'ble Apex Court would be a precedent and the reference made to the doctrine of merger would not have any application as sought to be canvassed. Further, the prayer for vires of the provisions of the PML Act had been rejected by the Division Bench in case of Rakesh Kothari upholding the validity of the provisions of Section 45 of the PML Act. 23. The Hon'ble Apex Court has in a judgment in case of Government of Karnataka v. Gowramma, reported in 2007 (13) SCC 482 has observed: "9. Reliance on the decision without looking into the factual background of the case before it is clearly impermissible. A decision is a precedent on its own facts. Each case presents its own features. It is not everything said by a Judge while giving a judgment that constitutes a precedent. The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well-settled theory of precedents, every decision contains three basic postulates - (i) findings of material facts, direct and inferential.
The only thing in a Judge's decision binding a party is the principle upon which the case is decided and for this reason it is important to analyse a decision and isolate from it the ratio decidendi. According to the well-settled theory of precedents, every decision contains three basic postulates - (i) findings of material facts, direct and inferential. An inferential finding of facts is the inference which the Judge draws from the direct, or perceptible facts; (ii) statements of the principles of law applicable to the legal problems disclosed by the facts; and (iii) judgment based on the combined effect of the above. A decision is an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically flows from the various observations made in the judgment. The enunciation of the reason or principle on which a question before a Court has been decided is alone binding as a precedent. (See: State of Orissa v. Sudhansu Sekhar Misra and Ors. ( AIR 1968 SC 647 ) and Union of India and Ors. v. Dhanwanti Devi and Ors. ( 1996 (6) SCC 44 ). A case is a precedent and binding for what it explicitly decides and no more. The words used by Judges in their judgments are not to be read as if they are words in Act of Parliament. In Quinn v. Leathem (1901) AC 495 (H.L.), Earl of Halsbury LC observed that every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which are found there are not intended to be exposition of the whole law but governed and qualified by the particular facts of the case in which such expressions are found and a case is only an authority for what it actually decides. 10. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes.
Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In London Graving Dock Co. Ltd. V. Horton (1951 AC 737 at p.761), Lord Mac Dermot observed: "The matter cannot, of course, be settled merely by treating the ipsissima verba of Willes, J. as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished judge." Thus, a decision is an authority for what it actually decides. What is of essence in the decision is the ratio and not the every observations made. Further, the analysis of the submissions and the details which have been relied upon, including the judgment of the Hon'ble Division Bench of the Punjab & Haryana High Court as well as the judgment of the Hon'ble Division Bench of this High Court and also the judgment of the Punjab & Haryana High Court in case of Gorav Kathuria (supra) dismissing the Appeal, read with the judgment of the Hon'ble Apex Court in case of Gautam Kundu (supra) would not leave any doubt that if an accused is facing the charge for an offence under Sections 3 and 4 of the PML Act, the rigors of Section 45 of the PML Act would be attracted. Lord Halsbury in Quinn v. Leathem, reported in (1901) AC 495, p. 506 has observed: "Every judgment must be read as applicable to the particular facts proved or assumed to be proved, since the generality of the expressions which may be found there are not intended to be expositions of the whole law but govern and are qualified by the particular facts of the case in which such expressions are to be found." 24.
Assuming for the sake of argument, the submissions which have been made that every offence may not be heinous and may not invite and may not be treated on the same footing, even then, it is for the legislature to make suitable amendment and/or clarification. It cannot be readily assumed that the legislature is oblivious of these aspects particularly when the offences in Part-B have been clubbed with Part-A. In fact Section 45 refers to this aspect and the legislature has provided that where the offence is punishable for a term more than three years, rigors of Section 45 of the PML Act would be attracted. In other words, whether at this stage, which offence would be attracted, whether it will fall under which category or class of offence, cannot be decided or presumed when the investigation by the enforcement agency is pending. Further, the emphasis made by learned Senior Counsel Shri Vikram Chaudhary that the foundation has to be laid is also misconceived as it is only at the conclusion of the investigation, the picture may emerge with regard to the nature of offence or the class of offence as provided in the schedule. Therefore, in light of the discussion made herein above, the present Criminal Application cannot be entertained and deserve to be dismissed and accordingly stands dismissed. Rule is discharged.