Supreme Court unlocks the right to access documents under PMLA

Introduction

The Supreme Court of India, in its common judgment in two appeals viz. “Sarla Gupta v. Enforcement Directorate¹” and “QVC Realty Co. Ltd. v. Enforcement Directorate²” has answered the following questions:

(1) Whether a person from whom or from whose premises documents have been seized by the Enforcement Directorate (ED) under Sections 17³ and 18⁴ of the Prevention of Money-Laundering Act, 2002 (PMLA) has the right to get copies of documents seized?

(2) Whether an accused has the right to get copies of documents relied upon in a complaint under Section 44(1)(b)⁵ of the PMLA and the documents produced therewith?

(3) Whether an accused has the right to seek production of documents not relied upon by the prosecution? If yes, then whether:

(a) at the stage of framing of charge; or

(b) at the stage of entering upon defence; or

(c) for purposes of bail applications governed by Section 45(1)(ii)⁶ of the PMLA?

Factual background

In Sarla Gupta case⁷, the appellants had filed an application under Section 207⁸ of the Criminal Procedure Code, 1973 (CrPC) inter alia seeking copies of documents which were not relied upon by the prosecution. The trial court and the Delhi High Court had rejected the appellants’ application inter alia on the ground that at the stage of framing of charges, the prosecution is under an obligation to supply only those documents which were referred to and relied upon in the prosecution complaint.

In QVC Realty case⁹, Appellant 2 had filed an application before the trial court seeking supply of all of the documents that were seized by the ED during raids conducted by it. The said application was dismissed by the trial court. Appellant 2 then approached the Punjab & Haryana High Court. The High Court dismissed the petition on the ground that at the stage of framing of charge, Appellant 2 had a limited right to seek only a list of documents which were not relied upon by the prosecution and not actual copies thereof.

Right to get copies of documents seized by the ED under Sections 17 and 18 of the PMLA

Section 17 of the PMLA provides that the ED has the power to search a building, place, vessel, vehicle, etc. and to seize any record or property found during the search. Whereas, Section 18 provides that the ED has the power to search persons and seize any records or property from them or from any premises which are under the control, ownership or possession of such persons.

The Court then took note of Sections 20¹⁰ and 21¹¹ of the PMLA. Section 20 deals with retention of property seized under Section 17 or Section 18 or frozen under Section 17(1-A) of the PMLA. The Court also observed that retention of property under Section 20 does not amount to forfeiture of the property. The seized property does not vest in the ED. It was further observed that there is no prohibition in providing copies of the deeds or instruments evidencing title to the person from whom or from whose premises the documents are seized. It was therefore held that if Section 20 is interpreted to mean that the person from whom such documents are seized is not entitled to receive even copies of the same, the provision will be rendered arbitrary and violative of Article 14 of the Constitution.

Section 21 deals with retention of records. It was observed that Section 21(2) provides that the person from whom or from whose premises records are seized or frozen, shall be entitled to obtain copies of such records, as a matter of right.

In light of the aforementioned circumstances, the Court held that the person from whom or whose premises documents and records have been seized is entitled to get the true copies thereof. As far as other property seized is concerned, the person from whom the property seized is entitled to get a copy of the seizure memo along with the list of seized properties.

Right to get copies of relied upon documents in a complaint filed under Section 44(1)(b) of the PMLA and documents produced therewith

Under Section 44(1)(b), the Court can take cognizance of the offence of money laundering based on a complaint filed by the ED. The Court took note of Section 44(1)(d) of the PMLA. It was observed that the court while trying the offence of money laundering shall proceed with the trial in accordance with Chapter XVIII CrPC (Procedure before Court of Session). Therefore, Section 228¹² CrPC shall apply, and the court shall be required to frame a charge based on the complaint filed by ED.

The Court then took note of its judgment in Yash Tuteja v. Union of India¹³ where it was held that once a complaint is filed before the Special Court under the PMLA, the provisions of Sections 200 to 204 CrPC¹⁴ will apply to a complaint under the PMLA for the reason that there is no provision in the PMLA which overrides the said provisions of CrPC. It was therefore held that once cognizance is taken by the Special Court, copies of the documents annexed to the complaint have to be furnished to the accused. The said documents cannot be separated from the complaint because they form the basis of the cognizance taken by the Special Court.

The Court then took note of Sections 207, 208¹⁵ and 209¹⁶ CrPC. Section 207 entitles the accused to receive copies of the first information report (FIR) confessions and all statements recorded under Sections 161¹⁷ and 164¹⁸ CrPC of persons whom the prosecution intends to examine as witnesses. Section 208 mandates that, in cases instituted by way of a complaint, the Magistrate, while issuing process under Section 204, must provide the accused with copies of statements recorded under Sections 200 and 202, statements and confessions under Sections 161 and 164, and any documents which the prosecution intends to rely on. Section 209 makes compliance with Section 207 or Section 208 as the case may be, mandatory before committing a case to the Sessions Court.

The Court held that while the provisions of Sections 207 and 208 CrPC do not prima facie apply to complaints under Section 44(1)(b), there is no reason as to why the principles laid down thereunder should not be applied as the provisions are consistent with the principles of free and fair trial.

Therefore, the Court held that once cognizance is taken based on a complaint under Section 44(1)(b) of the PMLA, the trial court must direct that along with the process, a copy of the complaint and the following documents have to be provided to the accused:

(i) statement of the complainant and witnesses (if any) recorded by the trial court before taking cognizance;

(ii) documents including the copies of statements under Section 50¹⁹ of the PMLA produced before the trial court along with the prosecution complaint and the documents produced subsequently by the ED till the date of taking cognizance; and

(iii) copies of supplementary complaint and the documents, if any, produced along with it.

Right to seek production of documents not relied upon by prosecution

The Court took note of its decision in To Issue Certain Guidelines Regarding Inadequacies and Deficiencies in Criminal Trials, In re²⁰ wherein the Court had directed that while furnishing the list of statements, documents under Section 207 or Section 208, the Magistrate should also ensure that a list of documents which are not relied upon is also furnished. The Court also referred to Rule 4(i) of the Draft Criminal Rules of Practice, 2021 which provides that every accused shall be provided with a copy of all the statements of witnesses and a list of all the documents that were seized during investigation and copies of documents relied upon by the investigating officer. The explanation to the said rule provides that the list of documents furnished to the accused shall specify the documents which are not relied upon.

Therefore, it was held that copy of the list of all the documents that are not relied upon by the ED must also be furnished to the accused. The Court opined that the object was to ensure that the accused has knowledge of the documents in the custody of the investigating officer which are not relied upon so that the accused can, at an appropriate stage, make an application under Section 91²¹ CrPC for providing copies of the same. Therefore, it was held that an accused does have the right to seek copies of documents which are not relied upon by the prosecution.

Thereafter, the Court delved into the issue of the stage at which an accused may be supplied with such documents:

(a) At the stage of framing of charges

The Court referred to the judgment in State of Orissa v. Debendra Nath Padhi²². The Court therein had observed that entitlement of an accused to seek copies of documents that are not relied upon under Section 91 CrPC, would not arise at the stage of framing of charge, this is because at the stage of framing of charge, what is necessary and relevant to be seen is only the “record of the case” produced along with the charge-sheet. The Court then took note of the decision in Om Parkash Sharma v. CBI²³ where it was held that at the stage of framing of charge, the Court is confined to finding out a prima facie case and decide whether it is necessary to frame charges and make the accused stand trial.

Thereafter, the Court took note of the decision in Nitya Dharmananda v. Gopal Sheelum Reddy²⁴ where it was held that at the stage of framing of charge, power under Section 91 CrPC cannot be invoked by the accused unless the court is satisfied that there is material of sterling quality which has been withheld by the prosecution.

Thus, the Court concluded that in case of a complaint under the PMLA; while framing charge, the Court can look into only the complaint and the documents produced along with it. Therefore, it was held that the accused is not entitled to seek copies of documents which are not relied upon at the stage of framing charges. However, the accused would be entitled to a copy of the list of documents which are not relied upon.

(b) At the stage of entering upon defence

The Court took note of Section 233²⁵ CrPC. It was observed that under Section 233(3), at the stage of entering upon defence, an accused may request the production of documents not relied upon by the prosecution. The trial court may reject such an application only on the grounds specified therein, viz. that the application is vexatious or intended to cause delay. Therefore, it was observed that at the stage of entering upon defence, an accused is entitled to apply for documents which are not relied upon as it is a part of his right to defend.

The Court then took note of Sections 65²⁶ of the PMLA. Section 65 makes the provisions of CrPC applicable to all proceedings under the PMLA provided they are not inconsistent with the provisions of the PMLA. It was observed that Section 44(1)(d) of the PMLA provides that the procedure applicable to a trial under the PMLA would be the same that is applicable to a trial before a Court of Session. Therefore, Section 233 CrPC would apply to trial under the PMLA. It was further held that Section 233 is not inconsistent with any provisions of the PMLA. Therefore, the Court held that an accused under the PMLA would have a right to apply for copies of documents which are not relied upon by the prosecution.

The Court then took note of Section 24²⁷ of the PMLA and observed that it imposes a significant burden on the accused. Under this provision, the Court shall presume, unless contrary is proved, that the alleged proceeds of crime are involved in money laundering. The constitutional validity of this provision has been upheld by the Supreme Court in Vijay Madanlal Choudhary v. Union of India²⁸ on the ground that the accused would have full opportunity to rebut the presumption. Therefore, the Court held that it is necessary to construe Section 233(3) in favour of the accused so as to enable them to discharge the burden imposed by Section 24 of the PMLA appropriately.

(c) In proceedings for grant of bail under Section 45 of the PMLA

Section 45 of the PMLA also imposes a negative burden on the accused. The accused has to satisfy the trial court that there are reasonable grounds for believing that he may be innocent. Therefore, the Court held that if a narrow view is taken, an accused would not be in a position to discharge the said burden and therefore it would affect his right to liberty under Article 21.

Therefore, it was held that while seeking under Section 45 of the PMLA, the accused is entitled to make an application under Section 91 CrPC seeking production of documents which are not relied upon by the prosecution. However, if further investigation is pending, the ED is entitled to raise an objection on the ground that disclosure of such documents may prejudice the investigation, however, the ED would have to show those documents to the Court and if the Court, after perusing the documents, is satisfied that the disclosure would prejudice the investigation, then the prayer of the accused can be rejected.

Conclusion

The Court finally allowed both appeals and held as follows:

(1) A person from whom or from whose premises documents have been seized by ED under Sections 17 and 18 of the PMLA has the right to obtain copies of all such documents in light of Section 21(2) of the PMLA.

(2) Once cognizance is taken, the trial court shall provide copies of all the documents and statements produced along with the complaint or recorded by the Court and the documents till the date of taking cognizance and copies of supplementary complaints and documents produced therewith.

(3) A copy of the list of documents which are not relied upon by the prosecution, has to be provided to the accused so that the accused can file an application for production thereof at an appropriate stage.

(4) At the stage of framing of charge, an accused would not be entitled to seek copies of those documents which are not relied upon by the ED.

(5) At the stage of entering upon defence, the accused would be entitled to seek copies of documents which are not relied upon so as to enable him to discharge the negative burden imposed on him by Section 24 of the PMLA.

(6) In bail proceedings under Section 45 of the PMLA, the accused is entitled to seek copies of documents which are not relied upon. However, if further investigation is pending, then the accused may be so entitled only if the court is satisfied that production of such documents would not prejudice the investigation.

This judgment enables an accused under the PMLA to seek copies of relevant documents which are not relied upon at an appropriate stage of proceedings especially while seeking bail under Section 45 of the PMLA.

The Court has balanced the rights of an accused with the negative burden imposed by the PMLA, ensuring that the right to free and fair trial guaranteed under Article 21 is not hampered.