By: Ram Chander Sankhla, Advocate | Former Chief Commissioner, GST & Customs| Managing Partner, Sankhla Law associates.

Author can be reached at www.rrsla.com

——————————— CONTINUED FROM PART I ; II; III; & IV——————————

 

 

SPECIAL COURTS:

53. “Special Court” has been defined in Section 2(1)(z), which refers to Section 43. Section 43 reads thus:

“SPECIAL COURTS—(1) The Central Government, in consultation with the Chief Justice of the High Court, shall, for trial of offence punishable under section 4, by notification, designate one or more Courts of Session as Special Court or Special Courts for such area or areas or for such case or class or group of cases as may be specified in the notification.

Explanation—In this sub-section, “High Court” means the High Court of the State in which a Sessions Court designated as Special Court was functioning immediately before such designation.

(2) While trying an offence under this Act, a Special Court shall also try an offence, other than an offence referred to in sub-section (1), with which the accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial.”

54. Section 44 bestows above power in the Special Courts. The same reads thus:

“44. Offences triable by Special Courts — (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), —

[(a) an offence punishable under section 4 and any scheduled offence connected to the offence under that section shall be triable by the Special Court constituted for the area in which the offence has been committed:

Provided that the Special Court, trying a scheduled offence before the commencement of this Act, shall continue to try such scheduled offence; or]

(b) a Special Court may, [***] upon a complaint made by an authority authorised in this behalf under this Act take [cognizance of offence under section 3, without the accused being committed to it for trial].

[Provided that after conclusion of investigation, if no offence of money-laundering is made out requiring filing of such complaint, the said authority shall submit a closure report before the Special Court; or]

 

[(c) if the court which has taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the complaint of the offence of money-laundering under sub-clause (b), it shall, on an application by the authority authorised to file a complaint under this Act, commit the case relating to the scheduled offence to the Special Court and the Special Court shall, on receipt of such case proceed to deal with it from the stage at which it is committed.

(d) a Special Court while trying the scheduled offence or the offence of money-laundering shall hold trial in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) as it applies to a trial before a Court of Session.]

[Explanation.—For the removal of doubts, it is clarified that,— (i) the jurisdiction of the Special Court while dealing with the offence under this Act, during investigation, enquiry or trial under this Act, shall not be dependent upon any orders passed in respect of the scheduled offence, and the trial of both sets of offences by the same court shall not be construed as joint trial;

 (ii) the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence, for which complaint has already been filed, whether named in the original complaint or not.]

 

(2) Nothing contained in this section shall be deemed to affect the special powers of the High Court regarding bail under section 439 of the Code of Criminal Procedure, 1973 (2 of 1974) and the High Court may exercise such powers including the power under clause (b) of sub section (1) of that section as if the reference to “Magistrate” in that section includes also a reference to a “Special Court” designated under section 43.”

55. Section 44 has undergone amendment in 2005, 2013 and 2019. As per section 44, the offence of money laundering need to proceed for trial only before the Special Court designated to try money laundering offences where the offence of money laundering has been committed. This is a special enactment and would prevail over any other law for the time being in force in terms of section 71 of the PMLA.

56. proviso in clause “a” of subsection 1 of section 44 is an exception. This has to be regarded as directory in nature. Provision therefore needs to be read down to mean that as far as possible, the trial of scheduled offence before this special Court under the concerned law, if in different area that special Court may continue to try such scheduled offense.

57. The provision in clause “b” of subsection 1 of section 44 is again directory in nature. This means that if the accused was already in custody and facing trial in respect of a scheduled offence elsewhere and is not required to be produced before the special Court at the time of taking cognizance on the complaint filed by the authority authorised. It was held by the honourable court that the expression committed occurring in this clause can be also construed as produced. If so understood, it was explained that there is no violation of any constitutional rights.

58. While explaining clause “C” of subsection one, it was reconciled with clause “a” of subsection one, reasoning that it is an enabling and discretionary provision. There was a challenge by the petitioners that if held so, it would take away one right of appeal, otherwise available under the Cr P.C. However, the Court relied in case of State through CBI vs Kalyan Singh (former chief minister of Uttar Pradesh) and others-(2017) 7 SCC 444, while negating the argument of the petitioner. It said that in view of PMLA being special Act and section 65 and 71 of this Act in particular read with the judgement in Kalyan Singh case, it is legal and lawful for a court to commit itself the case relating to the scheduled offence.

59. In view of the above discussion, The Court found no merit in the challenge to Section 44 being arbitrary or unconstitutional. It was held the same to be consistent with the legislative scheme and the purposes and objects behind the enactment of the 2002 Act to ensure that the proceeds of crime involved in money-laundering are dealt with appropriately as per the special Act and all concerned involved in the process or activity connected with such proceeds of crime are prosecuted for offence of money-laundering.

BAIL:

60. The provisions regarding bail are in Sections 44(2), 45 and 46 in Chapter VII concerning the offence under this Act. The main provisions are under Section 45, which reads thus:

“45. Offences to be cognizable and non-bailable.—(1) [Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence [under this Act] shall be released on bail or on his own bond unless—]

  • the Public Prosecutor has been given an opportunity to oppose the application for such release; and
  • 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:

 

Provided that a person who is under the age of sixteen years, or is a woman or is sick or infirm,[or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees], may be released on bail, if the Special Court so directs:

 Provided further that the Special Court shall not take cognizance of any offence punishable under section 4 except upon a complaint in writing made by— (i) the Director; or (ii) any officer of the Central Government or a State Government authorised in writing in this behalf by the Central Government by a general or special order made in this behalf by that Government.

 

[(1A) 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.]

(2) 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. [Explanation.—For the removal of doubts, it is clarified that the expression “Offences to be cognizable and non-bailable” shall mean and shall be deemed to have always meant that all offences under this Act shall be cognizable offences and non-bailable offences notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1973 (2 of 1974), and accordingly the officers authorised under this Act are empowered to arrest an accused without warrant, subject to the fulfilment of conditions under section 19 and subject to the conditions enshrined under this section.]”

61. Section 45 stood amended vide Act 20 of 2005, Act 13 of 2018 and Finance (No.2) Act, 2019. The constitutional validity of Sub-section (1) of Section 45, as it stood prior to 23.11.2017 was considered in Nikesh Tarachand Shah case. The Court declared Section 45(1), as it stood then, insofar as it imposed two further conditions for release on bail, to be unconstitutional being violative of Articles 14 and 21 of the Constitution. The two conditions which have been mentioned as twin conditions were (i) that there are reasonable grounds for believing that he is not guilty of such offence; and (ii) that he is not likely to commit any offence while on bail. The Challenge by the petitioners is that, since the twin conditions have been declared void and unconstitutional, the same stood obliterated relying on the dictum in State of Manipur vs Surajkumar Okram & ors-2022 SCC ONLINE SC 130.

62. These challenges were important and were dealt in great length by the Supreme Court. The first issue it framed was: “whether the twin conditions, in law, continued to remain on the statute book post decision of this Court in Nikesh Tarachand Shah and if yes, in view of the amendment effected to Section 45(1) of the 2002 Act vide Act 13 of 2018, the declaration by this Court will be of no consequence.”

63. The first issue was answered holding that the observation in State of Manipur case, in paragraph 29 of that judgment, that owing to the declaration by a Court that the statute is unconstitutional obliterates the statute entirely as though it had never been passed, is contextual. In that case, the Court was dealing with the efficacy of the repealing Act. While doing so, the Court had adverted to the repealing Act and made the stated observation in the context of lack of legislative power. In the present case, however, there is no issue of lack of legislative power of the Parliament to enact a law on the subject of money-laundering. In such a situation, the enunciation of the Constitution Bench of Supreme Court, including seven-Judge Bench, in M.P.V. Sundararamier & Co. vs. The State of Andhra Pradesh & Anr. – (1958) SCR 1422  have direct bearing for answering the argument under consideration. It had noted the distinction between the effect of unconstitutionality of a statute arising either because the law is in respect of a matter not within the competence of the Legislature, or because the matter itself being within its competence, its provisions offend some constitutional restrictions. It went on to observe that if a law is on a field not within the domain of the Legislature, it is absolutely null and void, and a subsequent cession of that field to or by the Legislature will not have the effect of breathing life into what was a still born piece of legislation. At the same time, it noted that if the law is in respect of a matter assigned to the Legislature but its provisions disregard constitutional prohibitions, though the law would be unenforceable by reason of those prohibitions, when once they are removed, the law will become effective without re-enactment.

64. It was thus held that if the very premise on which the judgment of the Court declaring the provision to be void has been uprooted by the Parliament, thereby resulting in the change of circumstances, the judgment could not be given effect to in the altered circumstances, then the provision cannot be held to be void. In this case, the anomalies noted in Nikesh Tarachand Shah have been removed by way of Act No. 13 of 2018. Further, it has been clarified by way of Finance (No.2) Act, 2019 that amendment shall operate retrospectively. Thus, it cannot be said that twin conditions under Section 45 of the 2002 Act does not get revived.

65. The decision of the Constitution Bench of Supreme Court in Shri Prithvi Cotton Mills Ltd. & Anr. vs. Broach Borough Municipality & Ors.- (1969) 2 SCC 283  recognises this doctrine of taking away as the basis or validating Acts thereby removing the causes for ineffectiveness or invalidity of actions or proceedings which are validated by a legislative measure and, then by fiction, it becomes re-enacted law. It was further held so in case of Bhubaneshwar Singh & Anr. vs. Union of India & Ors.- (1994) 6 SCC 77 wherein paragraph 11, the Court noted as follows:

 “11. From time to time controversy has arisen as to whether the effect of judicial pronouncements of the High Court or the Supreme Court can be wiped out by amending the legislation with retrospective effect. Many such Amending Acts are called Validating Acts, validating the action taken under the particular enactments by removing the defect in the statute retrospectively because of which the statute or the part of it had been declared ultra vires. Such exercise has been held by this Court as not to amount to encroachment on the judicial power of the courts. The exercise of rendering ineffective the judgments or orders of competent courts by changing the very basis by legislation is a well-known device of validating legislation. This Court has repeatedly pointed out that such validating legislation which removes the cause of the invalidity cannot be considered to be an encroachment on judicial power. At the same time, any action in exercise of the power under any enactment which has been declared to be invalid by a court cannot be made valid by a Validating Act by merely saying so unless the defect which has been pointed out by the court is removed with retrospective effect. The validating legislation must remove the cause of invalidity. Till such defect or the lack of authority pointed out by the court under a statute is removed by the subsequent enactment with retrospective effect, the binding nature of the judgment of the court cannot be ignored.” (emphasis supplied)

66. Further, while dealing with reasonableness of the twin conditions of Bail, the decision of the Constitution Bench in Kartar Singh vs. State of Punjab-(1994) 3 SCC 569 was referred. While dealing with the challenge to Section 20(8) of TADA Act, the Court rejected the argument that such provision results in deprivation of liberty and violates Articles 14 and 21 of the Constitution. It noted that such provision imposes complete ban on release of accused on bail involved in the stated offence under the special legislation, but that ban stands diluted by virtue of twin conditions. It noted that rest of the provision, as in the case of the Section 45 of the 2002 Act, is comparable with the conditions specified in the Cr. P.C.,1973 Code for release of accused on bail concerning ordinary offence under general law. Also, The Constitution Bench held similarly in Usmanbhai Dawoodbhai Memon & Ors. vs. State of Gujarat-(1988) 2 SCC 271 and in paragraph 349 noted thus:

“349. The conditions imposed under Section 20(8)(b), as rightly pointed out by the Additional Solicitor General, are in consonance with the conditions prescribed under clauses (i) and (ii) of sub-section (1) of Section 437 and clause (b) of sub-section (3) of that section. Similar to the conditions in clause (b) of sub section (8), there are provisions in various other enactments — such as Section 35(1) of Foreign Exchange Regulation Act and Section 104(1) of the Customs Act to the effect that any authorised or empowered officer under the respective Acts, if, has got reason to believe that any person in India or within the Indian customs waters has been guilty of an offence punishable under the respective Acts, may arrest such person. Therefore, the condition that “there are grounds for believing that he is not guilty of an offence”, which condition in different form is incorporated in other Acts such as clause (i) of Section 437(1) of the Code and Section 35(1) of FERA and 104(1) of the Customs Act, cannot be said to be an unreasonable condition infringing the principle of Article 21 of the Constitution.” (emphasis supplied)

67. Sub-section (6) of Section 212 of the Companies Act imposes similar twin conditions, as envisaged under Section 45 of the 2002 Act on the grant of bail, when a person is accused of offence under Section 447 of the Companies Act which punishes fraud, with punishment of imprisonment not less than six months and extending up to 10 years, with fine not less than the amount involved in the fraud, and extending up to 3 times the fraud. The Supreme Court in Serious Fraud Investigation Office vs. Nittin Johari & Anr.- (2019) 9 SCC 165, while justifying the stringent view towards grant of bail with respect to economic offences held that-

“24. At this juncture, it must be noted that even as per Section 212(7) of the Companies Act, the limitation under Section 212(6) with respect to grant of bail is in addition to those already provided in the CrPC. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of the CrPC. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. In this regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy vs. Central Bureau of Investigation-(2013) 7 SCC 439: (SCC p.449, paras 34-35)

“34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.” (emphasis supplied)

68. Another incidental issue that had been dealt with, by the Supreme Court, is about the application of rigors of Section 45 of the 2002 Act in respect of anticipatory bail filed under Section 438 of the Cr.PC,1973 Code. On account of the non-obstante clause in Section 45(1) of the 2002 Act, it was held, that the sweep of that provision must prevail in terms of Section 71 of the 2002 Act. Further, the expression “anticipatory bail” is not used either in the 1973 Code or the 2002 Act. The relief granted in terms of Section 438 of the 1973 Code is one of directing release of the person on “bail” in case of his arrest; and such a relief has been described in judicial pronouncements as anticipatory bail.  In Sushila Aggarwal, it was held as under:

“7.1. At the outset, it is required to be noted that as such the expression “anticipatory bail” has not been defined in the Code. As observed by this Court in Balchand Jain, “anticipatory bail” means “bail in anticipation of arrest”. As held by this Court, the expression “anticipatory bail” is a misnomer inasmuch as it is not as if bail is presently granted by the court in anticipation of arrest.”

69. Thus, anticipatory bail is nothing but a bail granted in anticipation of arrest, hence, it has been held in various judgments by supreme Court that the principles governing the grant of bail in both cases are more or less on the same footing, except that in case of anticipatory bail the investigation is still underway requiring the presence of the accused before investigation authority. Thus, ordinarily, anticipatory bail is granted in exceptional cases where the accused has been falsely implicated in an offence with a view to harass and humiliate him. Therefore, it would not be logical to disregard the limitations imposed on granting bail under Section 45 of the 2002 Act, in the case of anticipatory bail as well.

EXCEPTION TO BAIL PROVISIONS UNDER SEC. 45:

70. There is, however, an exception carved out to the strict compliance of the twin conditions in the form of Section 436A of the Cr.P.C., 1973 Code, which has come into being on 23.6.2006 vide Act 25 of 2005. This, being the subsequent law enacted by the Parliament, must prevail.

“[436A.  Maximum period for which an undertrial prisoner can be detained— Where a person has, during the period of investigation, inquiry or trial under this Code of an offence under any law (not being an offence for which the punishment of death has been specified as one of the punishments under that law) undergone detention for a period extending up to one half of the maximum period of imprisonment specified for that offence under that law, he shall be released by the Court on his personal bond with or without sureties:

Provided that the Court may, after hearing the Public Prosecutor and for reasons to be recorded by it in writing, order the continued detention of such person for a period longer than one-half of the said period or release him on bail instead of the personal bond with or without sureties:

Provided further that no such person shall in any case be detained during the period of investigation, inquiry or trial for more than the maximum period of imprisonment provided for the said offence under that law.

Explanation—In computing the period of detention under this section for granting bail, the period of detention passed due to delay in proceeding caused by the accused shall be excluded.]”

71. In Hussainara Khatoon & Ors. vs. Home Secretary, State of Bihar, Patna-(1980) 1 SCC 98, The Supreme Court stated that the right to speedy trial is one of the facets of Article 21 and recognized the right to speedy trial as a fundamental right. This dictum has been consistently followed by in several cases. The Parliament in its wisdom inserted Section 436A under the 1973 Code recognizing the deteriorating state of undertrial prisoners so as to provide them with a remedy in case of unjustified detention. In Supreme Court Legal Aid Committee Representing Undertrial Prisoners vs. Union of India & Ors.- (1994) 6 SCC 731, the Court, relying on Hussainara Khatoon, directed the release of prisoners charged under the Narcotic Drugs and Psychotropic Act after completion of one-half of the maximum term prescribed under the Act.

72. Section 436A of the Cr. P.C,1973 is comparable with the statutory bail provision or, so to say, the default bail, to be granted in terms of Section 167 of the 1973 Code consequent to failure of the investigating agency to file the chargesheet within the statutory period and, in the context of the 2002 Act, complaint within the specified period after arrest of the person concerned. In the case of Section 167 of the 1973 Code, an indefeasible right is triggered in favour of the accused the moment the investigating agency commits default in filing the chargesheet/complaint within the statutory period. The provision in the form of Section 436A of the 1973 Code, as has now come into being is in recognition of the constitutional right of the accused regarding speedy trial under Article 21 of the Constitution. For, it is a sanguine hope of every accused, who is in custody in particular, that he/she should be tried expeditiously — so as to uphold the tenets of speedy justice. If the trial cannot proceed even after the accused has undergone one-half of the maximum period of imprisonment provided by law, there is no reason to deny him this lesser relief of considering his prayer for release on bail or bond, as the case may be, with appropriate conditions, including to secure his/her presence during the trial.

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———————————TO BE CONTINUED PART VI———————————