High Court Round UpLegal RoundUp

110 Reports from 20 High Courts


Allahabad High Court


  • Money Laundering

For money launderers “jail is the rule and bail is an exception”

While addressing a matter with regard to anticipatory bail, Krishan Pahal, J., observed that, Money Laundering being an offence is economic threat to national interest and is committed by the white-collar offenders who are deeply rooted in society and cannot be traced out easily.

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  • Right to Approach the Court

Person whose case is based on falsehood has no right to approach the Court

Expressing that Courts of law are meant for imparting justice, Sanjay Kumar Singh, J., observed that more often the process of Court is being abused by unscrupulous litigants to achieve their nefarious design.

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  • Bail

Cogent and clinching evidence found regarding conversion of deaf and dumb students to Islam; Bail denied

The Division Bench of Brij Raj Singh and Ramesh Sinha, JJ. dismissed a criminal appeal which was filed under Section 21 (4) of the National Investigation Agency Act, 2008 of refusal of bail to the appellant.

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Unity of India is not made of bamboo reeds which will bend to the passing winds of empty slogans; foundations of our nation are more enduring: All HC while granting bail to Kashmiri Students

Expressing that Students travelling freely to different parts of the country in the quest for knowledge is the true celebration of India diversity and a vivid manifestation of India’s unity, Ajay Bhanot, J., stated that it is the duty of the people of the hosting State to create enabling conditions for visiting scholars to learn and to live the constitutional values of our nation.

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Andhra Pradesh High Court


  • Arms Act

Will carrying of toy gun in public attract S. 25 of Arms Act? Bail granted to a man giving stills as a hero with an air gun in a cinema theatre

“…the offences punishable under Sections 290, 506(2) IPC are bailable in nature. As regards the offence punishable under Section 25 of the Arms Act, 1959, is concerned, the pistol which was seized from the possession of A-1 is an air gun. It is a toy gun.”

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  • Wilful Negligence

No offence made out under POA Act against bank officials who misplaced the house documents and title deeds of a claimant as FIR does not show wilful Negligence by a public servant

The Court after perusing Section 3(1) (v) and 3(2) (vii) and Section 4 of POA, Act, which deals with punishment for neglect of duties it is clear that these cannot be made applicable to the facts in issue. Section 3(2)(vii) postulates a situation where a person being a public servant commits any offence under this section i.e., Section 3(2) shall be punishable with imprisonment for a term which shall be less than one year but which may extend to the punishment provided for that offence. 

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  • Vakalat and Written

Signatures on the Vakalat and the Written Statement cannot be considered as signatures of comparable and assured standard for want of expert opinion under S. 45 Evidence Act

Ninala Surya, J., decided to not interfere with the impugned order and dismissed the civil writ petition.

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Bombay High Court


  • Child Marriages

Child marriages will have to be stopped and no person can be allowed to take advantage of any such situation

Vibha Kankanwadi, J., expressed that Child marriages are hazardous to the social fabric of this Country.

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  • Decorum of Court

Advocate to maintain dignity & decorum of Court, no room for arrogance and no license to intimidate Court

Anuja Prabhudessai, J., expressed that an advocate as an Officer of the Court is under an obligation to maintain the dignity and decorum of the Court. There is no room for arrogance and there is no license to intimidate the Court, make reckless accusations and allegations against a Judge and pollute the very fountain of justice.

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  • Compassionate Appointment

Can legal heir of deceased employee be granted compassionate appointment, who took voluntary retirement due to being medically unfit?

Ravindra V. Ghuge, J., decides a matter as to whether the benefit of compassionate appointment can be granted to the legal heir of the employee, who took voluntary retirement and was never certified as being medically unfit to perform any work, though the reason for opting for retirement was a serious medical condition.

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  • Religious Verses

Declaration of reciting religious verses at someone’s residence: Act of breaching personal liberty of another person?

Stating that, “Great power comes with greater responsibility”, the Division Bench of Prasanna B. Varale and S.M. Modak, JJ., expressed that, the expectation of responsible behaviour or responsible conduct from those persons who are active in public life cannot be an extra expectation but would be a basic expectation.

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  • Eviction

Son not expected to brand his aged father a ‘swindler’ or allege that aged parents have lost mental balance

In a matter wherein, the parents sought eviction of their sonRohit B. Deo, J., expressed that,

“In the conservative Indian society, a son is not expected to brand his aged father a ‘swindler’ or then allege that the aged parents have lost mental balance.”

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  • Arbitration and Conciliation Act

Can mere filing of proceedings under S. 7 IBC be treated as an embargo on Court exercising jurisdiction under S. 11 of Arbitration & Conciliation Act?

A very interesting question was considered by G.S. Kulkarni, J., the question being, whether mere filing of a proceeding under Section 7 of the Insolvency and Bankruptcy Code, 2016 would amount to an embargo on the Court considering an application under Section 11 of the Arbitration and Conciliation Act, 1996, to appoint an arbitral tribunal?

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  • Land Acquisition

For determining land acquisition compensation, market value, if any, specified in Stamp Act for registration of Sale Deed and/or Agreement of Sale has to be considered

The Division Bench of S.V. Gangapurwala and Vinay Joshi, JJ., expressed that only because 83% of the property for the project is acquired, it would be egregious not to apply the provision of the statute for determination of compensation.

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  • Pension

If service of an employee at his superannuation is less than ten years, then previous temporary or officiating service needed to be counted for qualifying service for pension

The Division Bench of R.D. Dhanuka and S.G. Mehare, JJ., expressed that, for condoning the interruption in service, the total service pensionary benefit in respect of which will lost should not be less than five years duration, excluding one or two interruptions.

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  • Partition

In a suit for partition, the heads of all the branches are necessary parties

Mangesh S. Patil, J., decided on the following questions for consideration:

  • Whether in a suit for partition and possession of the field all the sharers and co-partners are necessary parties?
  • Whether suit for partition and possession is bad for non-joinder of necessary parties and therefore ought to have been dismissed?
  • Whether in the circumstances of the case, the observation regarding non-joinder of necessary parties, made by the appellate court, are proper?

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  • Maintenance

Can filing of a maintenance proceeding, a criminal case for harassment be said to be sufficient to jump to a conclusion that wife intended to harass husband and his relations?

In a matter of matrimonial discord, Mangesh S. Patil, J., expressed that, when admittedly, for whatever reason, there was a marital discord and the wife had started residing with the infant child at her parental house barely within three years of her marriage, it cannot be expected of her not to prosecute whatever rights and remedies she has under the law.

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  • “No Confidence”

If directly elected Sarpanch acts in a manner rendering functioning of Panchayat at a standstill, would member of panchayat get right to move motion of ‘no confidence’?

Stating that in the democratic setup, the will of the majority is the rule, the Division Bench of S.V. Gangapurwala and Shrikant D. Kulkarni, JJ., held that if the directly elected Sarpanch fails to call the meetings of the Panchayat or acts in a manner rendering the functioning of the Panchayat at a standstill, the member of the Panchayat would certainly get a right to move a motion of no confidence.

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  • Motor Accident Case

Determination of a just compensation cannot be equated to be a bonanza

Addressing a dispute with regard to the percentage of permanent disability and determination of compensation, Shrikant D. Kulkarni, J., remarked that determination of a just compensation cannot be equated to be a bonanza.

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  • Society

Can minority members of a Society act against will of majority members and foist delay in commencement of redevelopment work of Society?

Observing that, a developer who has been appointed by the Society and who is eager to proceed with the redevelopment, was in some manner left baffled and dragged into litigationG.S. Kulkarni, J., held that, non-cooperating members cannot foist a delay on the builder and the society in the commencement of the redevelopment work resulting in the project costs being increased every passing day.

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  • Abortion

Past pregnancy can be determined on account of permanent changes in the body of a woman

While addressing a matter, wherein the accused who was a doctor charged for raping a minor stated that there was not any proof that the girl ever conceived or had undergone any abortion, M.G. Sewlikar, J., expressed that, Medical science is so advanced that now a days past pregnancy also can be determined on the basis of changes in the body of a woman on account of pregnancy.

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  • Custody of Child

Non-custodial parent cannot be deprived of his right to spend quality time and enjoy company of children

Anuja Prabhudessai, J., expressed that the children also have the right to love and affection from both parents as well as grandparents as it is essential for the personal development and overall well-being of the children.

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  • Partnership Act

Every partner is liable, jointly with all other partners and also severally for all acts of firm done while he is a partner: Is it true?

Expressing that, a firm is not a legal entity, N.J. Jamadar, J., held that a partnership firm is only a collective or compendious name for all the partners.

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  • Constitutional Validity of S. 29A of Consumer Protection Act

Whether absence of President of State Commission or District Forum for reasons beyond control is sufficient for striking down S. 29A as unconstitutional?

Stating that, the Courts cannot examine the constitutional validity if a situation created by impugned legislation is irremediable, the Division Bench of V.M. Deshpande and Amit B. Borkar, JJ., addressed a matter wherein the constitutional validity of Section 29A of the Consumer Protection Act, 1986 has been challenged.

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  • Lawyer-Client Relationship

Lawyer-client relationship is a fiduciary one; any act which is detrimental to legal rights of clients’ needs to be punished

Stating that it is the duty of every Advocate to uphold professional integrity so that citizens can legally secure justicethe Division Bench of V.M. Deshpande and Amit B. Borkar, JJ., expressed that, professional misconduct refers to its disgraceful conduct not befitting the profession concerning the legal profession, which is not a business or trade and therefore, it must remain decontaminated.

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  • Sale Deed

Whether a natural guardian having executed sale-deed of property of a minor in favour of a third party and thereafter repurchased part of it, can be prosecuted for offences under Ss. 420, 467, 468, 471 of IPC that too, after more than 35 years from date of attaining majority by minor?

The Division Bench of V.M. Deshpande and Amit Borkar, JJ., expressed that a transaction by a natural guardian of a minor with respect to his immovable properties is valid till a Court strikes it down.

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  • Muslim Personal Law

Under Muslim Personal law, can Family Court dissolve the marriage of a couple?

The Division Bench of V.K. Jadhav and Sandipkumar C. More, JJ., addressed whether Family Court under Muslim Personal Law (Shariat) Application Act, 1937 read with Section 7(1)(b) Explanation (b) of the Family Courts Act, 1984 declare the matrimonial status of a wife and husband.

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  • Competition Commission of India

Competition Commission of India not to take any coercive actions against Asianet, Disney and Star India until 8th June

The Division Bench of G.S. Patel and Madhav J. Jamdar, JJ., directed the Competition Commission of India not to take any coercive actions against Asianet Star Communications Private Limited, Disney Broadcasting and Star India.

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  • Alimony

Whether the husband is entitled to claim alimony under Section 25 of the Hindu Marriage Act, 1955?

Bharati Dangre, J., held that provision of maintenance/permanent alimony being a beneficial provision for the indigent spouse, Section 25 can be invoked by either of the spouse, where a decree of any kind governed by Sections 9 to 13 has been passed and marriage tie is broken, disrupted or adversely affected by such decree of the court.

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  • Properties

Daughters and widow of a deceased would inherit properties of deceased as tenants in common or joint tenants?

Mangesh S. Patil, J., expressed that, by virtue of Section 19 of the Hindu Succession Act, it has been explicitly made clear that if two and more heirs succeed together to the property and in the estate, they take the property as tenants in common and not as joint tenants.

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Calcutta High Court


  • Departmental Proceedings

DGP directed to initiate departmental proceedings against Police Officers; CID to take over investigation

Rajasekhar Mantha, J. while adjudicating a case involving serious offences under Section 365, 354B and other provisions of IPC directed the Director General of Police, West Bengal to initiate appropriate departmental proceeding against the ASI, Arnab Chakraborty and any other person that he may feel was responsible for misleading the Court further handing over the investigation to CID, West Bengal.

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  • Policy Decisions

Policy decisions of State not to be disturbed unless found to be grossly arbitrary or irrational; prayer for extension of lease rejected

Shampa Sarkar, J. decided on a petition which was filed for a direction upon the respondents 7 and 8 to cancel and/or quash the notice dated April 6, 2022, with regard to handing over the possession of the ferry ghat to the Pradhan of the Mahanandatola Gram Panchayat, upon expiry of the lease of the petitioner.

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  • Currency Notes

There are many known heroes and unsung heroes, if everybody starts making such a claim there will not be an end; Petition for printing Netaji’s picture on currency notes dismissed

The Division Bench of Prakash Shrivastava, CJ. and Rajarshi Bharadwaj, J. dismissed a petition which was filed by the petitioner with the plea that having regard to the contribution of Netaji Subhas Chandra Bose in the freedom struggle, his picture should be printed on the Indian currency.

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  • Arbitration and Conciliation Act

Scope of S. 9 of A&C Act cannot be extended to enforcement of award or granting fruits of award to award holder as an interim measure; application dismissed

Ravi Krishan Kapur, J. dismissed an application which was filed under Section 9 of the Arbitration and Conciliation Act, 1996 (‘the Act’) wherein liberty to withdraw a sum of Rs 4,11,89,759/- deposited by the award debtor, State of West Bengal, with the Registrar, Original Side of this Court upon furnishing of appropriate security was sought.

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  • Rape

Lady IPS Officer directed to investigate in the recent matter of 4 rape cases in the villages

The Division Bench of Prakash Shrivastava, CJ. and Rajarshi Bharadwaj, J. took up a petition and directed Damayanti Sen, IPS presently working as Special Commissioner of Police to Kolkata Police to investigate in the matter of rape cases at village Nehalpur, Nandipara, incident on Dol Purnima and English Bazar.

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  • Indian Forest Act

Court orders release of vehicles confiscated under the Indian Forest Act with unprecedented observations

Rabindranath Samanta, J. allowed a criminal revision petition which was filed aggrieved by the order of Magistrate wherein he had rejected the prayers made by the petitioners for return of two vehicles which were seized by the Deputy Ranger (Beat Officer), Bamonpokhari Range Office of the Forest Range, Kurseong Forest Range, Darjeeling

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  • GST Act

The interest of revenue has been safeguarded; Order of detention against the State upheld in matter of GST Act

The Division Bench of T. S. Sivagnanam and Hiranmay Bhattacharyya, JJ., dismissed an appeal and connected application which was filed by the State against  the order of detention passed by the authority detaining two trucks containing consignment of steel and other products in WPA 17611 of 2021 dated: 07-12-2021 wherein petitioner was the wife of late Mohit Madhogoria, who was a registered dealer under the provisions of the W.B.V.A.T. Act presently under the GST Act.

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Chhattisgarh High Court


  • Legislation

Whenever substantive obligation/rights/ interests are impaired/adversely affected through any piece of subordinate legislation, then its source must be traced within express provisions in four corners of parent enactment

“…the very object and reason behind framing of the Pharmacy Act, 1948 was to ensure that only persons with a minimum standard of professional education should be permitted to practice the profession of pharmacy.”

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  • Unlawful Detention

Writ of habeas corpus is a writ of right, it is not a writ of course; a prima facie case of unlawful detention must be made

The writ of habeas corpus is an effective means of immediate release from the unlawful detention, whether in prison or in private custody. Physical confinement is not necessary to constitute detention. Control and custody are sufficient. For issuance of a writ of habeas corpus, the applicant must show a prima facie case of unlawful detention of the subject.

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  • Section 304 B of Penal Code, 1860

An order of acquittal is not to be set aside lightly; Chh HC observes in a case where daughter in law committed suicide in unnatural circumstances

The Court after perusing evidence and facts observed that the finding of the Trial Court that the prosecution has failed to prove that soon before the death of the deceased she was subjected to cruelty on account of demand of dowry is totally based on the evidence available on record.

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  • Will

Daughters also entitled for getting equal share in the property inherited by their parents; Court reiterates and allows appeal deciding validity of will

Narendra Kumar Vyas, J. allowed an appeal filed by the defendants setting aside the judgment and decree by the Trial Court whereby trial Court had decreed the suit filed by plaintiff/respondent 1, dismissed the counter claim filed by appellants/defendants 1 to 3.

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  • Criminal Trial

Criminal trial and confiscation proceedings may run simultaneously; Once the information of confiscation proceeding under S. 52 (e) Indian Forest Act is given to DM, Trial Magistrate has no power over it

“…a bare reading of Section 52, Indian Forest Act, 1927 makes it clear that Forest Officer has power to confiscate the vehicle and the Competent Authority after giving show cause notice to the petitioner.”

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  • Abduction

If a girl runs away voluntarily without any persuasion, can boy with whom she eloped be held responsible for abducting the girl?

Deepak Kumar Tiwari, J., held that, when the accused has not played any active role or persuaded the victim and the victim voluntarily left the protection of her parents and having capacity to know her action, no offence of abduction is made out.

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Delhi High Court


  • Maintenance

Husband with sufficient means, is obligated to maintain wife and children?

In a maintenance matter, Subramonium Prasad, J., expressed that, if a husband has sufficient means, he is obligated to maintain his wife and children and not shirk away from his moral and familial responsibilities

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  • Rule of Law

Whether absence of rule of law or utter disregard for the same propels a country towards inevitable ruin?

Expressing that, attempts to circumvent or undermine judicial decisions need to be viewed seriously in order to ensure that the functioning of our country is unhindered, especially during turbulent times, Subramonium Prasad, J., held that,

“It is only the rule of law which not only cements the civilised functioning of a country, but also drives a country towards progress and development.”

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  • Framing of Charge

Does framing of charge means that accused is guilty or does it imply that accused may be guilty?

“The beauty of procedural law lies in the stages and remedies available during the course of a criminal proceeding.”

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  • Levy of Liquidated Damages

 If a contract comprises, several components awarded to different contractors, would it be inapposite to blame contractor that was last in completing work for loss suffered on account of delay in completing Project?

While reiterating the law on award of liquidated damages, Vibhu Bakhru, J., expressed that, where a contract comprises, several components awarded to different contractors, it is inapposite to blame the contractor that is last in completing the work for loss suffered on account of delay in completing the Project.

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  • Arbitration Agreement

Rule of priority in favour of arbitrators is counterbalanced by Courts’ power to review existence and validity of arbitration agreement

“Once a valid arbitration agreement exists between the parties, the issue whether the petitioner is entitled to any relief in the absence of a third party to the agreement or that third party is required to be impleaded in the proceedings, is covered by the Doctrine of Competence-Competence and it will be for the Arbitrator to decide the said issue.”

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  • PC & PNDT Act

Can Court take cognizance of complaint filed by single-member Appropriate Authority for offences under PC&PNDT Act, 1994?

Mukta Gupta, J., held that, the Metropolitan Magistrate/ Judicial Magistrate of the first class is competent to take cognizance and try the offence punishable under the PC&PNDT Act on the complaint of an Appropriate Authority or any officer authorised on this behalf by the Central Government or the State Government or the Appropriate Authority under sub-Section (1) of Section 28 of the Pre-Conception and Pre Natal-Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994.

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  • Jurisdiction

Can power under S. 482 CrPC be exercised where allegations are required to be proved in Court of law?

Rajnish Bhatnagar, J., expressed that the Court in the exercise of its jurisdiction under Section 482 CrPC cannot go into the truth or otherwise of the allegations made in the complaint or delve into the disputed question of facts.

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  • Recusal of Judge

When a Judge recuses without reasons, can a litigant or third party intervene, comment or enquire?

Asha Menon, J., held that, when a Judge recuses, no litigant or third party has any right to intervene, comment or enquire. The recusal has to be respected, whether a reason has been spelt out in detail or not.

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  • Adultery

Only continuous and repeated acts of adultery and/or cohabitation in adultery would attract rigours of provision under S. 125(4) CrPC

While addressing a matter with regard to a wife’s right to maintenance Chandra Dhari Singh, J., expressed that, only continuous and repeated acts of adultery and/or cohabitation in adultery would attract the rigours of the provision under Section 125(4) CrPC.

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  • Civil Contempt

Disobedience of an order of Court, if permitted, will result in striking at root of rule of law

Whether the third party can be absolved from contempt if they are informed that their conduct would violate the Court order, Subramonium Prasad, J., reiterated the well-settled position that though broadly a person who is not a party to the proceedings cannot be proceeded against for violation of the order, but a third party cannot seek to absolve themselves if they are informed about the fact that their conduct amounts to a violation of the Court and that despite the information, they choose to willfully flout the mandate of the Court.

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  • Denial of Sex

Whether denial of sex can qualify as “exceptional depravity” under S. 14 of the Hindu Marriage Act and allow waiver of one-year mandatory period?

Noting that, Section 14 of the Hindu Marriage Act intends to discourage the couples from breaking the sacred bond of marriage in haste, the Division Bench of Vipin Sanghi, ACJ and Jasmeet Singh, J., held that, a mandatory one year period granted under Section 14 of the Act, encourages couples to cool down, and give a rethink to preserve their marriage.

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  • Bail

Person accused of defrauding Government: Will Del HC grant bail to the accused?

Prateek Jalan, J., grants bail to a person who was alleged to cause fraudulent transactions and loss to the government.

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Cocoon of protection, afforded by a bail order insulates suspect and he could thwart interrogation reducing it to futile rituals

Asha Menon, J., expressed that, personal liberty is a very precious fundamental right and it should be curtailed only when it becomes imperative according to the peculiar facts and circumstances of the case.

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  • Arbitration and Conciliation Act

Scope of examination under S. 11 of A&C Act is confined to existence of arbitration agreement or does it extend to adjudicating nature of contract as well?

Vibhu Bakhru, J., held that whether claims are barred by limitation is a mixed question of fact and law and is required to be examined by the Arbitral Tribunal.

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Whether an award passed under S. 34(4) of the A&C Act is a fresh award for the purpose of S. 34 of the Act?

Vibhu Bakhru, J., allowed an amendment application seeking amendment of a petition filed under Section 34 of the Arbitration and Conciliation Act.

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  • Infringement

Red Bull v. Sting | Injunction application against Pepsico’s tagline “STIMULATES MIND ENERGIZES BODY”: Whether Pepsi has committed infringement?

Amit Bansal, J., observed that the taglines of ‘Red Bull’ and ‘Sting’ are descriptive and laudatory in nature.

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  • Scholarship Advertisement

If an advertisement regarding scholarship was published in Urdu language, can it be presumed that it was targeted at students belonging to a particular community only?

The Division Bench of Manmohan and Dinesh Kumar Sharma, JJ., expressed that just because the scholarship advertisement was published in the Urdu language, does not mean that it was targeted at students belonging to a particular community only.

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  • COVID-19

Can Delhi High Court direct State for payment of ex gratia compensation of Rs 1 Crore to families whose members died due to COVID-19?

The Division Bench of Vipin Sanghi, ACJ and Navin Chawla, J., held that this Court cannot direct payment of ex gratia compensation of Rs 1 Crore to families whose members died due to COVID-19.

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  • Physical relations on Promise to Marry

 Long term relationship with intent of marriage ended on hostile terms, would it be covered under S. 376(2)(n) IPC?

Noting that the Trial Court failed to perform its duty and rendered a mechanical order, Subramonium Prasad, J., set aside the trial Court’s order in a matter wherein, a woman had alleged that she was subjected to physical relationship with a boy on a false promise of marriage.

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  • Political Clearance

Judges required to seek political clearance qua private visits abroad: Did Del HC strike down Ministry of External Affairs’ Office Memorandum requiring the same?

The Division Bench of Rajiv Shakdher and Jasmeet Singh, JJ., strikes down the OM dated 13-7-2021, to the extent it requires Judges of the Supreme Court and the High Court to seek political clearance qua private visits abroad.

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  • Natural Justice

Refusal of a trade mark without even affording a hearing would be contrary to fundamental tenets of natural justice

Prathiba M. Singh, J., expressed that, refusing trade mark without even affording a hearing would be contrary to the fundamental tenets of natural justice.

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  • LOC issued against Rana Ayyub

Infringement of Human Rights and restraint of her freedom of speech and expression?

While expressing that a LOC is a coercive measure to make a person surrenderChandra Dhari Singh, J., noting that the petitioner had appeared on each and every date before the Investigating Agency when summoned, quashed the LOC issued against Rana Ayyub.

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  • Arbitration and Conciliation Act

Vibhu Bakhru, J., forms an arbitration tribunal to adjudicate the matter with regard to use the brand name/trademark “Hero”.

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  • Custodial Interrogation

Father of deceased accuses brother-in-law for her suicide: If chargesheet has already been filed, is there any need of custodial interrogation?

Chandra Dhari Singh, J., decides a bail matter wherein a woman was alleged to have committed suicide due to harassment and dowry demands by in-laws.

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Gujarat High Court


  • Reinstatement of Employee

Court directs reinstatement of employee alleged of corruption charges; termination order quashed

Biren Vaishnav, J. allowed a petition which was filed challenging the order of termination passed by the respondent – authority, by which, the services as Assistant Motor Vehicle Inspector, Class-III of the petitioner has been terminated on the ground of lodging of an FIR under Sections 7, 8, 12, 13(1)(D) and 13(2) of the Prevention of Corruption Act.

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  • Bail

First step of turning him into a hardcore criminal will be sending him behind bars; Court allows bail

A.S. Supehia, J. allowed a bail application in connection with FIR filed for the offences under Sections 363, 366, 376(2)(n), 376(3) of the Penal Code, 1860 as well as Sections 4, 6, and 12 of the Protection of Children from Sexual Offences Act, 2012 (POCSO Act).

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  • Custody of Children

Mother alleged to have extra-marital affair, will father be granted custody of children?

Ashok Kumar C. Joshi, J., denied granting child custody to father, wherein the mother was alleged to have extra-marital affairs.

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Himachal Pradesh High Court


  • COVID-19

PIL filed by an advocate for grant of stipend to her as well other Advocates, who have not completed 3 years of practice on account of Covid-19; HP HC directs to approach State Bar

A Division Bench of Mohammad Rafiq CJ. and Jyotsna Rewal Dua JJ. disposed of the petition and directed to approach State Bar Council.

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Jharkhand High Court


  • Natural Justice

Principles of natural justice required to be followed and cannot be waived out depending upon quantum of punishment; Reiterated mandate of natural justice in blacklisting cases

The Court remarked that the cardinal principle of natural justice is mandatory to be followed in a case where any adverse decision/action is being taken against one or the other. The issuance of notice means that the person against whom any adverse action proposed to be taken, is required to be provided with the opportunity of hearing.

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Jammu and Kashmir and Ladakh High Court


Advocates are officers of Court and deserve same respect and dignity as is being given to Judicial and Presiding Officers of Courts

Sanjay Dhar, J., expressed that, there may be stray incidents where the advocates have resorted to levelling allegations against the Judicial Officers in order to seek transfer of their cases from one Court to another to suit their convenience, but then this cannot be generalized.

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  • Maintenance

Minor seeks maintenance but issue of her paternity is in question: Will J&K and Ladakh HC grant maintenance amidst the dispute?

“…grant of maintenance to a minor child should be the paramount consideration for a Magistrate dealing with a petition under Section 125 CrPC, but when the paternity of a child is seriously disputed and there is no prima facie material to suggest that the respondent happens to be the father of the child, it would not be prudent for a Magistrate to fasten the respondent with the liability of maintaining the child.”

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Kerala High Court


  • Sexual Assault

In the guise of applying makeup, a bridal make up artist alleged sexually assaulted several women: Can he be granted anticipatory bail?

Gopinath P., J., granted bail to the bridal make up artist who was alleged to have sexually assaulted several women in the guise of applying make up.

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  • Media Trial

Can media be given right to speculate on outcome of one going investigations or Court proceedings or criminal trials?

While addressing the matter with regard to the media trial, Mohammed Nias C.P., J., expressed that, half-truths and misinformation cannot be the basis of publications or telecast.

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  • Alimony

Can children claim any amount under the head of permanent alimony under S. 25 of the Hindu Marriage Act?

Observing that trauma in a marital discord is common to both parties, the Division Bench of A. Muhamed Mustaque and Sophy Thomas, JJ., expressed that as per Section 25 of the Hindu Marriage Act, while awarding permanent alimony and maintenance, the husband’s income and other property, if any, and the income and property of the wife, conduct of the parties and other circumstances are to be taken into account.

Read full report here…

  • Consensual Sex

Can promise to marry a married woman be legally enforceable wherein she voluntarily formed sexual relations with a man?

Dr Kauser Edappagath, J., addressed a matter wherein a married woman voluntarily had sex with her former lover.

Read full report here…

  • Maintenance Tribunal

Whether power of Maintenance Tribunal under Senior Citizen Act is circumscribed to ordering of monthly allowance?

In a matter, wherein a senior citizen has approached the Court with her grievance with respect to her son, Murali Purushothaman, J., expressed that,

“When the Senior Citizen or parent who has earnings makes an application to the Maintenance Tribunal contending that her right to earning is obstructed by the son who has statutory obligation to maintain the parent, the Maintenance Tribunal has to ensure that the Senior Citizen or parent is able to maintain herself from her earnings.”

“To care for those who once cared for us is one of the biggest honours.”

Read full report here…

  • Family Court

Do Family Courts have to remain as a neutral umpire of the real dispute between the parties?

Expressing that, Family Court has been functioning in like manner of an ordinary Civil Court, the Division Bench of A. Muhamed Mustaque and Sophy Thomas, JJ., remarked that, family courts have to be impartial or neutral.

Dissatisfaction with the administration of justice in the Family Courts is writ large on the face of many orders challenged before this Court.

Read full report here…


Karnataka High Court


Mere suspicion is not enough to prosecute the petitioner for offence punishable under S. 370 of the IPC for human trafficking; Kar HC observes in a case where AIO caught 3 Indian nationals on suspicion

The Court after perusing complaint, charge sheet and Section 370 of the IPC observed that the petitioner had indulged himself in human trafficking and thus the soul of the provision is exploitation.

Read full report here…

  • Election

Kar HC quotes “The Vajpayee led NDA–Government was toppled for want of one vote” and Benjamin Franklin while deciding a case of a returning candidate whose election was set aside

“…A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to dispute an election.”

Read full report here…

  • Solid Waste Management

PIL filed seeking to shift the location identified for setting up solid waste management; directions issued

A Division Bench of Ritu Raj Awasthi CJ. and S. R Krishna Kumar JJ. issued directions regarding setting up of solid waste management units after expert opinion from concerned authorities.

Read full report here…

  • A&C Act

Kar HC deals whether an international commercial arbitral award rendered outside India between the parties who have no connection to India can be enforced in India

“…a foreign award under a New York Convention has been given a special status. India being a signatory to the said New York Convention it is required that all countries which are signatories to the New York Convention enable execution of a foreign arbitral award rendered in a reciprocating country in the event of a property against which the arbitral award is sought to be enforced is situated within the jurisdiction of that particular country.”

Read full report here…

  • Dishonour of Cheque

Kar HC decides contours of law in a classic case where cash of Rs 2 crore was borrowed as hand loan and a cheque obtained for the repayment of the same got dishonoured

The Court observed that the Act was amended by the Amendment Act of 2018 and Section 143A came to be inserted. The purport of the amendment is that the Court may in certain circumstances award interim compensation which shall not exceed 20% of the amount of the cheque and such interim compensation can be permitted to be withdrawn in terms of the said amendment.

Read full report here…


Madras High Court


  • Tax Liability

If an assessee under stress of investigation, signs a statement admitting tax liability and makes a few payments, can it lead to self-ascertainment?

Merely because an assessee has, under stress of investigation, signed a statement admitting tax liability and has also made a few payments as per the statement, cannot lead to self-assessment or self-ascertainment.

Read full report here…

  • Two-Finger Test

Ban the practice of two-finger test on victims of sexual offences by medical professionals

Stating that two-finger test cannot be permitted to be continued, the Division Bench of R. Subramanian and N. Sathish Kumar, JJ., directed the State Government to ban the practice of two-finger test on victims of sexual offences by the medical professionals.

Read full report here…

  • Co-parcenary Right

Are Coparcenary rights taken away by Hindu Succession Act?

Anand Venkatesh, J., addressed a matter with regard to coparcenary rights of sons and daughters

Read full report here…

  • Legal Profession

Law Officers perform their duties without profit motive and with a service mentality for a nominal fee as compared to their lucrative private practice

Expressing that, Legal profession is a noble profession, and it is the lawyer, who plays a predominant role in securing every citizen life and personal liberty fundamental and statutory rights ensured by the ConstitutionM. Govindaraj, J., observed that, Law Officers perform their duties without profit motive and with a service mentality for a nominal fee as compared to their lucrative private practice.

Read full report here…

  • Law of Limitation

Exercise of power of discretion if made excessively, it would defeat the purpose and object of law of limitation; Courts not to travel beyond permissible extent

Expressing that, Power of discretion is to be exercised to mitigate the injustice if any occurred to the litigantsS.M. Subramaniam, J., remarked that,

“Litigations/appeals are expected to be filed within the period of limitation as contemplated under the Statutes. Rule is to follow limitation. Condonation of delay is an exception. Exceptions are to be exercised discreetly, if the reasons furnished are genuine and acceptable.”

Read full report here…


Madhya Pradesh High Court


  • Live-in Relationships

Live-in relationships are engulfing ethos of Indian society, and promoting promiscuity and lascivious behavior, giving further rise to sexual offences

Subodh Abhyankar, J., expressed that, the bane of live-in-relationship is a by-product of the Constitutional guarantee as provided under Article 21 of the Constitution of India.

Read full report here…

  • Divorce

Woman is considered half of her husband and thus completes him. While a man is also considered incomplete without a woman; Appeal for divorce dismissed

“Based on Hindu law, marriage is a sacred tie and the last of ten sacraments that can never be broken. Also, it is a relationship that is established by birth to birth. Also, it is not only considered as sacred but it is also a holy union. The main objective of marriage is to enable a woman and a man to perform their religious duties. Along with this, they also have to beget progeny. Based on ancient writings, a woman is considered half of her husband and thus completes him. While a man is also considered incomplete without a woman.”

Read full report here…

  • Criminal Proceeding

Criminal proceeding maliciously instituted with an ulterior motive for wrecking vengeance deserves to be quashed; Court allows petition by husband

Rajeev Kumar Shrivastava, J. allowed a petition which was filed to quash FIR for offence under Sections 498-A, 506, 34 of IPC and other subsequent proceedings initiated therefrom.

Read full report here…

  • Bail

Warning issued to Additional Session Judge for granting bail on caste and bias

Vivek Agarwal, J. allowed a bail application issuing a warning to First Additional Session Judge, Maihar, District Satna to be more cautious and judicious in his approach in future so that image of the judiciary can be saved and allegations of casteism and bias are not allowed to be levied so to tarnish collective image of judiciary.

Read full report here…

  • Mental Cruelty

Mental cruelty inflicted by the wife over her husband through her conduct a valid ground for divorce; Court allows appeal

The Division Bench of Sheel Nagu and Anand Pathak, JJ., allowed an appeal which was preferred under Section 19 of the Family Court Act, 1984 against the judgment and decree dated 27-03- 2019 passed by the Link Family Court whereby the application preferred by the appellant/applicant/husband under Section 13(1)(iA) of Hindu Marriage Act, 1955 had been rejected.

Read full report here…

  • Dishonour of Cheque

Whether dishonour of cheques could have only given a cause of action to register an FIR for an offence under S. 420 IPC?

The Court stated it is a well-settled principle of law that the general law will not prevail over the Special Law as enshrined in the maxim generalia specialibus non derogant.

Read full report here…


Orissa High Court


  • Dishonour of Cheque

Ori HC considers whether any difference exists between a case where default is committed and prosecution immediately launched and where prosecution is deferred till cheque presented again gets dishonored for second or successive time?

R K Pattnaik, J. dismissed the petition and held that the ground on which the petition is raised is misconceived and therefore, cannot be sustained.

Read full report here…


Rajasthan High Court


  • Sexual Assault

Ex–fiancée levelled charges of sexual assault to harass and destroy present married life of the boy; Raj HC issues notice and directs police to neither harass nor arrest him

Dinesh Mehta, J., issues notice and directs police to neither harass nor arrest the petitioner boy.

Read full report here…

  • Bail

Raj HC granted temporary bail for a period of 15 days to enable the appellant to perform Kanyadaan on daughter’s marriage

A Division bench of Manindra Mohan Srivastava, CJ. and Madan Gopal Vyas J. allowed the application and granted bail for a period of 15 days.

Read full report here…

  • Mining Operations

PIL filed seeking permit for gypsum mining in the districts Shriganganagar and Haumangarh; Raj HC observes citizen does not have any vested right to carry on mining operations, absolute right lies with State

A Division Bench of Farjand Ali J and Sandeep Mehta JJ.  directed that as and when the gypsum mining operations are opened in Sriganganagar and Hanumangarh districts, the petitioners shall not be entitled to apply for mining licenses for this purpose in either of these two districts.

Read full report here…

  • Maintenance of Senior Citizens

Ill-treatment meted out to respondent-mother, expelled from her own house, allegations of mental, physical and social abuse; Raj HC directs petitioner-son to vacate the house with his family

The Court observed that Maintenance and Welfare of Parents and Senior Citizens Act, 2007 was enacted by the Legislature in the background that the traditional norms and values of the Indian Society are lost due to withering of the joint family system as a large number of elderly are not being looked after by their family, particularly the widowed women, who are forced to spend their twilight years all alone and are exposed to emotional neglect, lack of financial support and are rather treated as a waste.

Read full report here…

  • Right to Procreation

Raj HC reiterated “Right to Procreation survives during incarceration” and “is traceable and squarely falls within the ambit of Article 21 of our Constitution; Parole granted

The Division Bench of Farjand Ali and Sandeep Mehta, JJ. allowed the petition and granted parole after considering the religious philosophies, cultural, sociological and humanitarian aspects, coupled with the fundamental right guaranteed by the Constitution of India.

Read full report here…


Punjab and Haryana High Court


  • Duration of Marriage

Short duration of marriage cannot be the only ground to disallow organ transplant by spouse; writ petition allowed

 Raj Mohan Singh, J., contemplated the present petition and ruled that a short duration of marriage is absolutely no ground to deny an organ transplant.

Read full report here…

  • Mental Cruelty

Unworkable Marriage | Wife makes unfounded, indecent and defamatory allegations against husband to his senior officers, destroying his career & reputation: Mental Cruelty or not?

Expressing that, Matrimonial cases are matters of delicate human and emotional relationshipthe Division Bench of Ritu Bhari and Ashok Kumar Verma, JJ., expressed that, the Court no doubt should seriously make an endeavour to reconcile the parties, yet, if it is found that the breakdown is irreparable, then divorce should not be withheld.

Read full report here…

  • Voice Sample

S. 65-B (4) of the Evidence Act does not mention the stage of furnishing the certificate for admissibility; Court directs to give voice sample

Avneesh Jhingan, J., entertained a petition under Section 482 CrPC where the petitioner was aggrieved by the directions of the Chief Judicial Magistrate for giving voice samples.

Read full report here…


Telangana High Court


  • Employees State Insurance Act

Exhausting the remedy available for appeal is the rule and entertaining a writ petition is an exception

G Radha Rani, J., disposed of the petition and directed the petitioner to approach the EI Court under Section 75 of the ESI Act by filing an appropriate application.

Read full report here…


Tripura High Court


  • POCSO

Offence under S. 8 of the POCSO Act not been established beyond reasonable doubt; Court acquits man of POCSO charges

Arindam Lodh, J. partly allowed an appeal which was filed against the judgment and order of conviction whereby and whereunder the appellant has been found guilty for committing an offence punishable under Section 8 of the POCSO Act and sentenced him to suffer Rigorous Imprisonment for 3 years for the said offence and also found guilty under Section 448 of IPC and sentenced to suffer Rigorous Imprisonment for 1 year for the said offence.

Read full report here…

Statement of the victim show exaggerations and improved versions; Court reduces sentence in POCSO matter

Arindam Lodh, J. partly allowed an appeal which was filed challenging the judgment of conviction and order of sentence passed by Special POCSO judge wherein the appellant had been convicted under Section 10 of the POCSO Act, 2012 and sentenced to suffer rigorous imprisonment for 5 years and to pay a fine of Rs 20,000/- with default stipulation and further convicted under Section 451 IPC and sentenced him to suffer simple imprisonment for 6 months and to pay fine of Rs. 5000 with default stipulation.

Read full report here…


Sikkim High Court

State directed to ensure immediate escalation of progress of work of repairing of NH-10; meeting called to chalk out the immediate course of action before monsoon arrival

The Division Bench of Biswanath Somadder and Meenakshi Madan Rai, JJ. took up the PIL in order the peruse the status report concerned with the damaged roads and highways in the State.

Read full report here…

  • Missing Children

Directions issued for tracing out the missing children in the State; CCTV’s installed in police stations

The Division Bench of Biswanath Somadder, CJ. and Meenakshi Madan Rai, J. issued certain directions in the matter of a PIL concerning missing children in the State.

Read full report here…

Case BriefsHigh Courts

Allahabad High Court: While addressing a matter with regard to anticipatory bail, Krishan Pahal, J., observed that, Money Laundering being an offence is economic threat to national interest and is committed by the white-collar offenders who are deeply rooted in society and cannot be traced out easily.

An anticipatory bail application had been filed on behalf of the applicant under Section 3/4 of the Prevention of Money Laundering Act, 2002 to enlarge him on bail.

Analysis, Law and Decision


High Court stated that Section 45 of the PMLA Act provides two conditions that are mandatory in nature and must be complied with before granting bail to the accused of an offence.

The above was reiterated in the case of Gautam Kundu v. Directorate of Enforcement, (2015) 16 SCC 1.

Further, in the case of Union of India v. Varinder Singh, 2017 SCC OnLine SC 1314, Supreme Court observed that Section 45 of the PMLA Act imposes conditions for the grant of bail. Bail cannot be granted without complying with the requirements of Section 45 of PMLA Act.

The Bench expressed that the PMLA Act, 2002 deals with the offence of money laundering and Parliament enacted this law to deal and curb the activities of money laundering.

The provisions of Code of Criminal Procedure will not be applicable until there is no specific provision given in PML Act, 2002.

Elaborating further, Court stated that offences like money laundering are committed with proper conspiracy, deliberate design with the motive of personal gain regardless of the consequences to the society and economy of the Country.

Hence, for money launderers “jail is the rule and bail is an exception”.

Concluding the matter, Court held that on prima facie reading of material on record and considering parameters of Section 45(1) PMLA as well as the gravity of the alleged offences, the applicant was not guilty of the alleged offences or that he was not likely to commit such offence while on bail. [Anirudh Kamal Shukla v. Union of India, 2022 SCC OnLine All 176, decided on 21-3-2022]


Advocates before the Court:

Counsel for Applicant :- Purnendu Chakravarty, Anuuj Taandon

Counsel for Opposite Party :- A.S.G.I., Shiv P. Shukla

Case BriefsHigh Courts

Delhi High Court: While addressing a matter wherein bail of Gautam Thapar accused in Yes Bank Loan Fraud case, was sought, Manoj Kumar Ohri, J., expressed that it is well settled that, economic offences constitute a class apart and need to be visited with a different approach, given their severity and magnitude. Albeit these offences are likely to adversely impact the economic fabric of the country, bail shall not be denied to a person accused of an economic offence in a routine manner.

The present application had been filed under Section 439 of the Criminal Procedure Code seeking regular bail filed under Sections 45/44 of the Prevention of Money Laundering Act, 2002 (PMLA) and arising out of ECIR registered under Sections 3 /4 PMLA by the respondent/ED.

Factual Background

After the removal of Rana Kapoor, the then MD and CEO of Yes Bank Ltd., certain complaint came to be filed assailing his role in the grant of various credit facilities to borrowers, in violation of banking norms and against receipt of illegal gratification, which resulted in huge loss to the Bank

One of the above-stated complaints was in relation to Oyster Buildwell Pvt. Ltd. (OBPL) a real estate company, which was extended credit facilities to the tune of Rs 514.27 crores resulting in loss of Rs 466.51 crores to the Bank.

Hence, an FIR was registered under Sections 120B/406/420/468/471 by the CBI against OBPL, the applicant and other including unknown public servants and private persons for having committed criminal breach of trust, cheating, criminal conspiracy and forgery for diversion/misappropriation of the public money during the period from 2017 to 2019.

The investigation in the case is still pending.

Analysis and Discussion

As per Article 21 of the Constitution of India, it guarantees a right to personal liberty to every person, and thus, there is no gainsaying that bail is the rule and jail an exception.

In matters of regular bail under Section 439 CrPC, a Court must consider aspects, including but not limited to the larger interest of the State of public, whether the accused is a flight risk, whether there is a likelihood of this tampering with evidence, whether there is the likelihood of influencing witnesses, etc.

Another factor relevant to the question of bail would be the gravity of the alleged offence and/or nature of the allegations levelled, which may serve as an additional test and can be applied while keeping in view the severity of the punishment that the offence entails.

The embargo imposed by Section 45(1) PMLA on grant of bail took form of twin conditions:

(i) that the Public Prosecutor shall be given an opportunity to oppose the application for release, and (ii) where the Public Prosecutor opposes such application, the Court should be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence and that he is not likely to commit any offence while on bail.

In 2017, the constitutional validity of Section 45 PMLA was challenged before the Supreme Court in Nikesh Tarachand Shah v. Union of India,    (2018) 11 SCC 1, whereby a decision rendered in 2018, explicating the defects inherent in the provision and the challenges posed thereby, the Supreme Court held that the twin conditions imposed by Section 45(1) PMLA were manifestly arbitrary, discriminator and violative of Articles 14 ad 21 of the Constitution of India.

Post the above-said decision, an amendment was made to Section 45 PMLA vide the Finance Act, 2018. The new Section 45(1) PMLA reads as follows:

“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—]

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and 

(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 :

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.”

This Court concurred with the decision of the Special Judge that the apprehensions of the applicant tampering with evidence and influencing witnesses were unfounded.

With regard to the apprehension of the applicant being a flight risk was concerned, it was noted that the respondent had already issued LOCs against the applicant, who was willing to surrender his passport.

In view of the above, High Court opined that the applicant’s presence during the trial can be secured by taking adequate measures, including surrender of his passport, and imposing necessary conditions in terms of P. Chidambaram v. Central Bureau of Investigation, (2020) 13 SCC 337.

Further, the Bench added that, at this stage, it would be deemed apposite to refer to the observations made in Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46 where while relying on its earlier decisions in Ranjitsing Brahmajeetsing Sharma v. State of Maharashtra,(2005) 5 SCC 294 and State of Maharashtra v. Vishwanath Maranna Shetty, (2012) 10 SCC 561, the Supreme Court outlined the parameters for adjudication of bail application in terms of Section 45(1)(ii) PMLA.

The applicant was the ultimate beneficiary, being the Founder and Chairman of the Avantha Group and in total, an amount of Rs 500.11 crores was stated to be the ‘proceeds of crime’ in the case.

It was noted that as per the prosecution complaint, certain Bank Officials colluded with the applicant for the grant of Term Loan, which was ostensibly obtained by OBPL to furnish security deposit in favor of JPIL, however, in reality the same was sought with malafide intentions to be siphoned off and diverted towards repayment of facilities availed by Avantha Group companies and for meeting other expenses.        

Adding to the above, Court found that the bank was fully aware of the real purpose for which the loan was obtained.

Public money under the garb of Term loan was siphoned off in this way, resulting in generation of ‘proceeds of crime’ as well as its layering and ultimate projection as untainted money.

In view of the above-discussed position, High Court held that it cannot be stated that the applicant was not guilty of the alleged offences or that he was not likely to commit any such offence while on bail.

Therefore, bail was declined. [Gautam Thapar v. Directorate of Enforcement, 2022 SCC OnLine Del 642, decided on 2-3-2022]


Advocates before the Court:

For the Petitioner:

Mr Mukul Rohatgi, Sr. Advocate with Mr Sandeep Kapur, Mr Virinder Pal Singh Sandhu, Mr Vivek Suri, Ms Niharika Karanjawala, Mr Abhimanshu Dhyani, Mr Sahil Modi and Ms Kajal, Advocates

For the Respondent:

Mr Amit Mahajan, CGSC with Mr Kritagya Kumar Kait, Advocate

High Court Round UpLegal RoundUp

82 reports on High Court Judgments to read from February 2022.


Allahabad High Court


 Bail

 22-year-old woman, burnt and buried due to demand of dowry: All HC denies bail to accused husband

Noting the brutality with wife a 22-year-old lady and mother of a one year’s infant child in causing her death, beating her cruelly by “her husband” Vikas Kunvar Srivastav, J. held that the said act was not only grave in nature but heinous also.

Read report, here…

Law on S. 311 CrPC

Power to the Court to summon a material witness or to examine a person present in Court or to recall a witness already examined: All HC discusses

Sanjay Kumar Pachori, J., while addressing a matter with regard to recalling of the witnesses expressed that, Section 311 of the Code confers a wide discretion on the Court to act as the exigencies of justice require.

Read report, here…

Law on Recovery of Maintenance

Limitation of 1 year for recovery of maintenance under S. 125(3) of CrPC and the law on enforcement to claim order of maintenance under S. 128 CrPC: All HC explains

Dr Yogendra Kumar Srivastava, J., while addressing a matter regarding recovery of maintenance amount, expressed that,

“Sentencing to jail can only be seen as a means of recovering the amount of arrears and not a mode of discharging liability.”

Read report, here…


Andhra Pradesh High Court


If the de facto complainant feels insulted as he was beaten in front of public and if he takes a hasty decision to commit suicide; will the accused be held responsible in the eyes of law?

Cheekati Manavendranath Roy J. partly allowed the petition by quashing FIR for the offence punishable under Sections 306 r/w 116 IPC.

Read report, here…

Bail

AP HC considered alleged attempt to threatening witness as a vague allegation; Cancellation of bail sought was rejected

“…nothing was brought to the notice of the police or the investigating agency stating that the accused are interfering with course of investigation by way of threatening the witnesses through their men.”

Read report, here…


Bombay High Court


 Law on Voluntarily Causing Grievous Hurt

In a land dispute, a person subjected to grievous injury with the use of ‘Khurpi’: Will he be punished under S. 326 or 325 Penal Code, 1860? Bom HC explains

The Division Bench of S.S. Shinde and N.R. Borkar, JJ., upheld the decision of the Trial Court in a case of causing grievous injury voluntarily.

Read report, here…

Bail

Constant quarrels between husband and wife: Bom HC observes while granting bail to husband accused of dowry and cruelty

Sarang V. Kotwal, J., on noting that the husband and wife cannot live together and there were constant quarrels between them, granted bail to the husband who was accused under the provisions of Dowry Prohibition Act and Penal Code, 1860. 

Read report, here…

Provocation by Wife

Wife subjected husband to humiliation by publicly calling him impotent and abusing him resulting in assault by husband: Husband will be convicted for murder or culpable homicide? Bom HC analyses

The Division Bench of Sadhana S. Jadhav and Prithviraj K. Chavan, JJ., modified the conviction of a husband who in provocation by wife on being subjected to abuses assaulted wife.

Read report, here…

Abetment to Suicide

Employer setting big targets, not granting leave and not accepting resignation would be acts in normal course of business: Bom HC grants anticipatory bail to employer accused of abetting suicide committed by employee

 Sarang V. Kotwal, J., addressed a matter wherein an employer was accused of abetting the suicide of an employee.

Read report, here…

Law on Custody

9-year-old child prefers to stay with mother’s father and his family members and shows animosity towards father: Whether father will get custody of child or not? Bom HC decides 

Addressing a matter wherein a child’s mother was diagnosed with cancer due to which she started living at her parental home with the child, and after the passing of the mother, a custody battle arose between the father of the child and the father and brother of wifeDivision Bench of S.S. Shinde and N.J. Jamdar, JJ., noted animosity of the child towards his father, to which the Court expressed that, the same must have occurred due to ‘parental alienation syndrome’.

Read more, here…

Appeal

Appellate court can reverse the finding and sentence of the trial court ordering re-trial

The Division Bench of S.S. Shinde and Milind N. Jadhav, JJ. allowed an appeal against conviction of the Appellant by the Trial Court. The appellant was convicted of the offence punishable under Section 302 of the Penal Code, 1860, (“IPC”) read with Section 34 IPC. He was sentenced to suffer life imprisonment and to pay a fine of Rs. 15,000.

Read report, here… 

Transparency in Functioning

Disqualification of Sarpanch in suspicion of benefitting her close relations by allotting work under Panchayat’s order, without establishment of direct or indirect involvement as per S. 14(1)(g) of Maharashtra Village Panchayats Act: Is it correct? Bom HC analyses

Quoting a phrase from a story of a Roman Ruler Julius Caesar that, “Caesar’s wife should be above suspicion”, Bharati H. Dangre, J., remarked that,

“…those who are vested with the powers are to be made more accountable and transparent in their functioning and subjected to social audit with a view to minimize their discretionary decisions.”

Read report, here…

COVID-19 

Cinema Halls, Theaters, Malls, Restaurants, etc. permitted to carry on business with 50% capacity but banquet halls/Mangal Karyalaya & lawns not permitted with same capacity: Bom HC issues notice

The Division Bench of Sunil B. Shukre and Anil L. Pansare, JJ., addressed a petition wherein a grievance was filed stating that an unreasonable classification resulting in impermissible discrimination had been made by the respondents as Cinema Halls, Theaters, Malls, Restaurants and also other establishments have been permitted to carry on their business or operations with 50% capacity of the customers or attendees, provided customers or attendees are armed with two doses of vaccination, and whereas, Mangal Karyalaya/ Banquet Halls and Lawns where marriage functions are held and solemnised are not being permitted to carry on their business and operations with the same capacity of persons who have taken both the doses of vaccination. 

Read report, here… 

Consumer Protection

Consumer Protection Act requires State Government to constitute a State Consumer Disputes Redressal Commission and create circumstances to its effective functioning: Bom HC at Goa directs State of Goa to ensure filling up of vacant positions expeditiously

Stating that the State Administration comprises several IAS Officers, the least expected out of them is to find the solution to problems, so that State Consumer Disputes Redressal Commission functions effectively, The Division Bench of M.S. Sonak and R.N. Laddha, JJ., directed the State of Goa to ensure that the post of President and 3 other members of the Commission which are vacant be filled expeditiously.

Read report, here…

Dead Person

Notice to a dead person under S. 148 of Income Tax Act cannot be issued: Bom HC

The Division Bench of K.R. Shriram and N.J. Jamdar, JJ., reiterated that notice under Section 148 of the Income Tax Act, 1961 to a dead person cannot be issued.

Read report, here…

Legal Profession

“Notaries operating from public taxis around vicinity of Court”: Dignity of the profession needs to be maintained and the legal profession cannot be allowed to function from the streets | Bom HC

The Division Bench of S.J. Kathawalla and Milind N. Jadhav, JJ., requested the Department of Legal Affairs to give due consideration to this Court’s Order and the Report dated 9-12-2021 submitted by Nausher Kohli, Advocate whilst enacting the Draft Bill.

Read report, here…

Murder or Culpable Homicide?

Husband killed wife brutally in a heat of passion leaving husband with a wounded pride: Bom HC decides whether the said offence will come under “Murder” or “Culpable Homicide not amounting to Murder

Stating that, in the moment of anger spouses almost forgot about the two children who were hardly three years old at the time of incident, the Division Bench of Sadhana S. Jadhav and Prithiviraj K. Chavan, JJ., found that the case of a husband killing wife with a knife was a case of culpable homicide not amounting to murder.

Read report, here…

Arbitration

Bombay HC rejects argument that a dispute cannot be referred for arbitration on account of fraud: Read why

B.P. Colabawalla, J., addressed an arbitration application filed under Section 11 of the Arbitration and Conciliation Act, 1996

Read report, here…

Gangubai Kathiawadi

Can after certification granted by Board, public exhibition of a film be prohibited? Bom HC answers 

In respect to petitions with regard to the release of movie Gangubai Kathiawadi, Division Bench of Dipankar Datta, CJ and M.S Karnik, J., while expressing that “Once the film is granted a certificate by the competent statutory authority, i.e. the Board, the producer or distributor of the film has every right to exhibit the film in a hall unless, of course, the said certificate is modified/nullified by a superior authority/Court”, held that, there cannot be any kind of obstruction for the exhibition of a film, which is certified, unless the said certificate is challenged and Court stays its operation.

Read report, here…

Divorce 

If husband and wife get their marriage registered under Special Marriage Act & under Parsi Marriage and Divorce Act, 1936 as well, would this require them to get nullity of marriage under both Acts or one? Court decides

G.S. Kulkarni, J., expressed that, there is no provision under legislations, that if a marriage between the same couple is annulled under a competent law as enacted by the Parliament, it can as well be of a legal effect in the corresponding enactment.

Read report, here…


Calcutta High Court


Bail

S. 37 of the NDPS Act mandates a more stricter approach than an application for bail sans the NDPS Act: Cal HC

The Division Bench of Bibhas Ranjan De and Debangsu Basak, JJ., while addressing a bail application in a case under NDPS Act, remarked that,

Section 37 of the NDPS Act mandates a more stricter approach than an application for bail sans the NDPS Act.

Read report, here…

Sexual Assault

14-yr old girl subjected to penetrative sexual assault by man who called her grand daughter: Is girl’s complaint vital to form basis of conviction? Cal HC explains

The Division Bench of Joymalya Bagchi and Bivas Pattanayak, JJ., in a penetrative sexual assault case of a 14-year-old girl, expressed that,

“Crime against woman is increasing as a whole. Such type of crime is a direct insult to the human dignity of the society and therefore imposition of any inadequate sentence not only results in injustice to the victim and the society in general but also stimulates criminal activities.”

Read report, here…

Trademark

Disparagement or mere puffery? Court decides in matter of offending/misleading advertisements [Dabur India v. Baidyanath Ayurved]

Saraf, J. decided on a petition which was filed seeking remedy against impugned advertisements disparaging the goodwill and reputation of the petitioner and its product.

Read report, here…


Chhattisgarh High Court


 Jurisdiction

 Limited jurisdiction has been given to the High Court confined to the substantial question of law only

Anoop Kumar Dhand J. dismissed the appeal as it does not fulfill the requirement mandated under Section 30 of Workmen’s Compensation Act, 1923.

Read report, here…

If the party is able to make out an exceptional case and the court finds irretrievable injustice would occur if writ jurisdiction is not invoked, High Courts do have the power to entertain the writ petition

Sam Koshy J. partly allowed the petition and partly disposed of the petition expressing no opinion on the termination notice issued against the petitioner.

Read report, here…

Child Custody

Due to father’s field job, mother granted custody of child: Did Chh HC also grant contact and visitation right to father? Read

In a child custody battle, the Division Bench of Goutam Bhaduri and Rajani Dubey, JJ., reiterated the position of law in the Supreme Court’s decision of Yashita Sahu v. State of Rajasthan(2020) 3 SCC 67, wherein it was held that the court cannot provide one happy home with two parents to the child then let the child have the benefit of two happy homes with one parent each, further this Court granted visitation and contact right to the father.

Read report, here…

Desertion 

If husband brings home concubine due to which wife leaves house, would that lead to desertion by wife? Chh HC explains

The Division Bench of Goutam Bhaduri and Rajani Dubey, JJ., expressed that,

“If the husband keeps another lady; gives shelter to her; and proceeds to have child with the said lady and for that reason if the first wife has to leave the matrimonial home because of physical and mental torture meted out to her it cannot be presumed as a desertion on the part of wife.”

Read report, here…


Delhi High Court


Trademark Dispute

Baazi v. WinZo | Trademark is used by a manufacturer or service provider to distinguish products from those of competitors: Here’s how Winzo appeared dishonest and unfair in adopting Baazi

“When people are satisfied with the products supplied by a manufacturer or service provider, they buy them on the basis of the trade mark and over time it becomes popular and well known. Thus, the use of a similar or identical trademark by a competitor in the same product would lead unwary customers to believe that it originates from the same source.”

Read report, here…

Deadly Weapons

Whether a ‘blade’ would be covered under S. 397 IPC as a deadly weapon? Del HC explains in view of settled position of law

Mukta Gupta, J., explained under what circumstances would Section 397 of penal Code, 1860 would be attracted.

Read report, here…

Law on Bail

Investigation complete, charge sheet filed, accused in jail since 6 months: Read whether Del HC grants bail

Dhari Singh, J., granted bail while referring to a catena of Supreme Court decisions with regard to the law on bail.

Read report, here…

4 years as undertrial, 2 witnesses examined out of 14, no probability of trial to be concluded in near future: Whether Del HC will grant bail to accused under S. 37(b)(ii) of NDPS Act? Read

Chandra Dhari Singh, J., granted bail to an accused on being satisfied with “reasonable grounds” as per Section 37 (b)(ii) of the NDPS Act, 1985.

Read report, here…

Judicial Separation 

Can judicial separation be granted instead of divorce for which party has approached the Court? Read what Del HC says

Expressing that the Family Court’s decision was based on optimism and hope rather than the actual factual matrix of the case, the Division Bench of Vipin Sanghi and Jasmeet Singh, JJ., while addressing a matter wherein matrimonial dispute occurred between the parties, observed that,

“..a decree of judicial separation can be rescinded by the same court; but a decree of divorce can be reversed only by a judicial order: either in review or in appeal. If it is passed ex parte, it may be recalled on an application being made for that purpose.” 

Read report, here…

Money Laundering

Money laundering offence under PMLA is, layered and multi-fold and includes stages preceding and succeeding offence of laundering money: Del HC

While expressing the object of PMLA Act Chandra Dhari Singh, J., expressed that, offence of money laundering is threefold including the stages of placement, whereby the criminals place the proceeds of crime to the general and genuine financial system, layering, whereby such proceeds of crime are spread into various transactions within the financial system and finally, integration, where the criminals avail the benefits of crime as untainted money.

Read report, here…

Uphaar Case

Manner in which judicial records tampered revealed well-planned & methodical attempt to subvert justice system: Suspending sentence of Ansal brothers would amount eroding faith of public? Read Del HC’s decision

Stating that the manner in which Court records tampered was insidious and revealed a well-planned and methodical attempt to subvert the justice system in order to escape conviction in the Main Uphaar CaseSubramonium Prasad, J., held that since the matter relates to tampering of judicial record, the same has to be decided expeditiously in order to ensure faith of the public in the judicial system.

Read report, here…

Law on Review

Can review be sought wherein Court has to delve into materials, apply its mind afresh after re-evaluating materials? Del HC throws light

Expressing that, Minor mistakes of inconsequential importance are insufficient to seek a review, Asha Menon, J., elaborated that, while seeking review of orders passed in a Civil Suit, the grounds mentioned in Order XLVII Rule 1 of the CPC have to be satisfied, which would not equate the hearing with the original hearing of the case or a hearing in an appeal 

Read report, here… 

Eviction

Group of leading artistes asked to vacate Government allotted premises under Discretionary Quota: Right to continue in public premises infinitely? Detailed report

Expressing that a state of indecision could not have given rise to a legitimate expectation, Yashwant Varma, J., held that, while the petitioners undisputedly were illustrious and pre-eminent exponents in their respective fields of the classical arts, the Court was not shown any material which may justify the continued retention of public premises in Delhi or that they would be unable to propagate the classical arts in any other State or city of the nation.

Read report, here… 

Shared Household

Where the residence is a shared household, would it create any embargo upon owner to claim eviction against his daughter-in-law? Read what Del HC says

Yogesh Khanna, J., held that right of residence under Section 19 of the Domestic Violence Act is not an indefeasible right of residence in a shared household, especially when the daughter-in-law is pitted against aged father-in-law and mother-in-law.

Read report, here…

Section 138 NI Act

Vicarious Liability of Directors of Company for offences committed under S. 138 NI Act: Person claiming to not being able to manage business due to his age, could this be accepted as defence? Del HC answers

Subramonium Prasad, J., addressed a matter pertaining to vicarious liability of directors of the company alleged for offences under Section 138 NI Act.

Read report, here…

Passport

Adoptive Father of a minor girl seeks issuance of her passport with details of adoptive parents so that she could write her TOEFL examination: Here’s what Del HC directed

Kameswar Rao, J., addressed a matter wherein a minor child was not able to apply for a passport either in the name of her biological parents or in the name of her adoptive parents, was unable to pursue her academics in the USA.

Read report, here…

Other

Power under Article 227 of Constitution of India cannot be exercised to upset conclusions, howsoever erroneous they may be, unless there was something grossly wrong or unjust: Del HC

Asha Menon, J., while expressing the scope of power under Article 227 of the Constitution of India dismissed the present petition. 

Read report, here…


Gujarat High Court


Will

Opportunity of being heard needs to be granted; Court decided in matter of the Will of Guru Ranchhoddas

A.P. Thaker, J. decided over a petition wherein the case of the petitioner was that the properties in question were originaly private properties of Guru Keshavdas, and after the death of Guru Keshavdas, Guru Karsandas became the Mahant and succeeded the properties under his Will. On the death of Guru Karsandas his chela Guru Atmaram became Mahant and succeeded to the properties of Guru Karsandas under his Will dated 08.12.1941. Thereafter, Guru Atmaram died leaving his Will dated 06-05-1947, appointing Guru Ranchhodas as Chela.

Read report, here…


Himachal Pradesh High Court


Couples have to make their choice at the threshold between career prospects and family life; HP HC observes in a case where a mother seeks job transfer to be with her daughter

“…mandamus is a public remedy and this remedy lies, when a public authority fails to perform the duty entrusted to it by law.”

Read report, here…


Jammu and Kashmir and Ladakh High Court


Inherent Power

Instead of filing an appeal before the Sessions Court petitioner rushed to this Court invoking its inherent power. Can High Court exercise its inherent power? Read J&K and Ladakh HC’s decision

Mohd. Akram Chowdhury, J., reiterated the settled position of law that if an alternate efficacious remedy is available under the statute, the inherent power of this Court cannot be invoked.

Read report, here…


Jharkhand High Court


Lokayukta 

Does Lokayukta have power to pass directions upon disciplinary authority to take action against erring officials? Jharkhand HC elaborates in light of Jharkhand Lokayukta Act, 2001

Sujit Narayan Prasad, J., addresses a very pertinent question of whether the Jharkhand Lokayukta Act, 2001 provides power for issuance of direction upon the disciplinary authority to take action against erring officials or can it’s order be limited to a recommendation.

Read report, here…


Kerala High Court


Cruelty

Is not taking treatment for mental illness to bring out a peaceful family atmosphere a form of cruelty and thus, a ground for divorce? HC answers

In an interesting case the Division Bench of A.Muhamed Mustaque and C.R. Sophy Thomas, JJ., held that not taking treatment for mental illness in order to bring out a peaceful and harmonious family atmosphere can also be counted as cruelty to the persons at the receiving end.

Read report, here…

If Court finds that marriage failed due to incompatibility, but one of the parties withholds consent for mutual separation, would that be ‘Cruelty’? Kerala HC elaborates

Expressing that, “If the conduct and character of one party causes misery and agony to the other spouse, the element of cruelty to the spouse would surface, justifying grant of divorce”, the Division bench of A. Muhamed Mustaque and Sophy Thomas, JJ., held that, Court cannot leave the life of a spouse to the mercy of the opposite spouse.

Read report, here…

Constitutional & Statutory Obligation

Whether State empowered to reject medical reimbursement for treatment being from unrecognized department of recognized hospital? HC decides

Murali Purushothaman, J., held that there is a Constitutional as well a statutory obligation on the part of the State to bear the expenses for treatment of the government servant and his family.

Read report, here…

Reservation

“Marrying a Christian man would not wipe off the benefit of reservation granted to a scheduled caste persons”, HC reiterates caste of a person is to be decided on the basis of birth

Raja Vijayaraghavan V, J., held that marrying a Christian man would not wipe off the benefit of a reservation granted to scheduled caste persons.

Read report, here…

Corporal Punishment

Teacher administering moderate and reasonable force to enforce discipline in classroom, can be exposed to criminal prosecution? Kerala HC answers 

While explaining that inflicting corporal punishment on a Child by a parent or teacher is forbidden, Dr Kauser Edappagath, J., observed that,

“Hurt of a less serious crime is not forbidden when inflicted in the reasonable chastisement of a child by a parent or by a school teacher.”

Read report, here…

Registration of Marriage

If a foreign embassy doesn’t issue ‘Single Status Certificate’ or NOC of an OCI card holder, can Declarations and Certificates be accepted for registration of marriage in India? Ker HC answers

While addressing a matter wherein an Indian Citizen intended to soleminse and register his marriage with a British Citizen, an OCI card holder, N. Nagaresh, J., held that f a foreign Embassy does not issue a Single Status Certificate or NOC due to the law, rules and regulations prevailing in that country, Declarations or Certificates evidencing the same should be accepted in India for registration of marriage.

Read report, here…

Tobacco at residence

If a person keeps tobacco at residence, would that amount to being an offence? Ker HC answers

While addressing a matter for an offence alleged under Cigarettes and Other Tobacco Products Act, Juvenile Justice Act and Kerala Police Act, Dr Kauser Edappagath, J., expressed that mere keeping tobacco at residence would not amount to being an offence.

Read report, here…

Admin of WhatsApp Group

Can an Admin of a messaging service group be held criminally liable for the offensive content posted by member of a group? Kerala HC addresses

While addressing the question of whether the creator or administrator of a WhatsApp group is criminally liable for offensive content posted by a group member, Dr Kauser Edappagath, J., held that a person can be criminally liable for the acts of another if they are party to the offence.

Read report, here…


Karnataka High Court


 Hijab Case

When Karnataka High Court temporarily restrained students from wearing hijab, religious flags, saffron shawls, etc.: Read Court’s interim order

While expressing that, “Endless agitations and closure of educational institutions indefinitely are not happy things to happen”, the Bench of Ritu Raj Awasthi, CJ and Krishna S Dixit and JM Khazi, JJ., restrained all the students regardless of their religion or faith from wearing saffron shawls (Bhagwa), scarfs, hijab, religious flags or the like within the classroom, until further orders.

Read report, here…

Sentence

Conviction sentence not to affect career and not be treated as a remark for employment; Kar HC confined the sentence to fine only in accordance with Ss. 279 and 337 IPC

Sreenivas Harish Kumar, J., disposed of the petition and modified the judgment of the appellate court.

Read report, here…

GST Exemption 

Whether GST exemption can be claimed for leasing out residential premises as hostel to students and working professionals? Kar HC answers 

The Division Bench of Alok Aradhe and M.I. Arun, JJ., addressed whether GST exemption can be claimed for leasing of residential premises as a hostel to students and working professionals.

Read report, here…


Madras High Court


Negotiable Instruments Act

Whether proceedings under Ss. 138 and 141 of NI Act can be initiated against corporate debtor during moratorium period? Madras HC answers

Sathish Kumar, J., while addressing a matter with regard to the dishonour of cheques under Section 138 of Negotiable Instruments Act, 1881, held that the moratorium provision contained in Section 14 of the Insolvency and Bankruptcy Code, would apply only to corporate debtor, but the natural persons mentioned in Section 141 of Negotiable Instruments Act continue to be statutorily liable under Chapter XVII of the Negotiable Instrument Act.

Read report, here…

Religious Practice

“One of the basic tenets to be followed by every Hindu is tolerance. Tolerance must be his own community or religion and in particular, to also to every other religious practice”: Madras HC

“Fundamental Rights and Duties are sacrosanct and binding on the Courts which adjudicate issues relating to the religion.”

Read report, here…


Madhya Pradesh High Court


 MBBS Seat

CBI’s self-contained note cannot form basis for rejecting application for increase of MBBS Seat; HC directs NMC to consider the application afresh 

The Division Bench of Sujoy Paul and Arun Kumar Sharma, JJ., quashed the National Medical Commission’s decision rejecting L.N. Medical College & Research Centre’s application for increase of MBBS seats.

Read report, here…

Writ of Mandamus

Provision for redressal of grievance in matter of radiation by mobile tower exists; Permission for installation can’t be revoked

Nandita Dubey, J. heard a petition which was filed seeking issuance of the writ of mandamus to the respondents to take appropriate effective steps against the Reliance Telecom Services not to permit them for installation of the mobile tower in the premises of Jai Hind School, V.V. Giri Ward, Pipariya.

Read report, here…

Departmental Inquiry

Desirable to stay the departmental proceedings till conclusion of the criminal case; Court prohibits Department to continue inquiry

Atul Sreedharan, J. decided on a petition which was filed by the petitioner who was aggrieved by the departmental proceedings against him on the identical charges by the CBI in the criminal case. 

Read report, here…

Land Acquisition

What would be an appropriate factor by which market value of land was to be multiplied to assess the compensation in the case where the land was situated in the rural area? [NH- 148N land acquisition] 

The Division Bench of Vivek Rusia and Rajendra Kumar Verma, JJ. took up a bunch of petitions which had similar facts that the petitioners were owners of agricultural land that came under the acquisition for construction of 12 lanes Delhi-Mumbai Expressway i.e. NH-148N under the provisions of the National Highways Act, 1956 (‘the NH Act of 1956’). 

Read report, here…

Acquittal

Unless the acquittal in criminal trial is honourable/clean, the employer has enough discretion to find a candidate to be unfit for employment

The Division Bench of Sheel Nagu and Sunita Yadav, JJ. while hearing a petition under Article 227 against order the Central Administrative Tribunal, Jabalpur Bench., dismissed the petition.

Read report, here…


Meghalaya High Court


Meghalaya Civil Service and the Meghalaya Police Service

There is no question of apples and orange being put in the same basket: Court calls State’s action foolish and justification of such act real tragedy

Sanjib Banerjee, CJ. while deciding in the matter between groups of persons in the Meghalaya Civil Service and the Meghalaya Police Service, pertaining to seniority between or among them, disposed the writ petition in favour of petitioners.

Read report, here…

Rape Case | Confession

Unequivocal confession leads to dismissal of appeal in a Rape case with minor

The Division bench of Sanjib Banerjee, CJ. and W. Diengdoh, J. dismissed the appeal which was filed on behalf of the convict with counsel engaged by the Legal Services Authority.

Read report, here…

Police Service 

“It is elementary that when the law requires a certain thing to be done in a particular manner, it has to be done in such manner or not at all”; Court upholds the dismissal of police official for passing information to outlaws 

“….the appellant had links with the banned outfit and had passed on information about police movements and operations to the outlawed organisation” 

Read report, here…


Orissa High Court


Ever-growing stock of seized vehicles

PIL filed about the ever-growing stock of seized vehicles and other properties in the various police stations in the State of Odisha; Directions issued

Muralidhar, CJ. issued directions regarding the ever-growing stock of seized vehicles and other properties in the various police stations in the State of Odisha

Read report, here…


Punjab and Haryana High Court


 Drug Menace

“Drug menace has become deep rooted and is taking its toll like a slow poison for the young generation”; HC expresses anguish over callously casual approach of officers

In a case exposing callous attitude of authorities while dealing with drug menace in the State of Punjab, Meenakshi I. Mehta, J., observed that in some paras of the Statu sreports/Reply, the police officers concerned had mentioned the tablets, allegedly recovered as ‘CLAVIDOL-100 SR’ whereas in certain other paras the same had been described as ‘CLOVIDOL-100 SR’. Criticizing the lackadaisical attitude of officers, the Bench remarked…

Read report, here…

State of Punjab which was known as one of the prosperous States is now at the brink of drug-trafficking

Expressing that, State of Punjab which was known as one of the prosperous States is now at the brink of drug-trafficking, Harnaresh Singh Gill, J., held that in order to curb the menace of drug trafficking the accused person are to be dealt with stringently even at the stage of granting her/him bail in NDPS Act cases involving commercial quantity.

Read report, here…


Patna High Court


Mental Health 

Mental health of a person and/or treatment of those who are in need, more so during the time of Covid-19, is the least priority of the State Government

The Division Bench of Sanjay Karol, CJ and S. Kumar, J., directed the Chief Secretary, Government of Bihar to take all steps ensuring the establishment of State Mental Health Authority as per Section 45 of the Mental Health Care Act, 2017.

Read report, here…


Rajasthan High Court


 Compensation | Motor Vehicle

Money cannot substitute a life lost but an effort has to be made for grant of just compensation having uniformity in approach; Court observes in a MV accident case demanding higher compensation 

Birendra Kumar J. allowed the appeal and enhanced the award considering the settled guidelines in the subsequent judgments to reach at “just compensation”.

Read report, here…

Customs Act 

DRI officer is not Competent Authority to issue show cause notice and adjudicate the same as “proper officer”; Show cause notice set aside 

A Division Bench of Akil Kumar, CJ and Sameer Kureshi, J. allowed the writ petition and set aside the proceedings issued by show cause notice and subsequent demands confirmed by OIO. 

Read report, here…

Rajasthan Public Service Commission

It would be open for RPSC to conduct written main examination on the rescheduled date, Single Judge bench order stayed

A Division Bench of Akil Kureshi CJ and Sudesh Bansal J. stayed the impugned judgment and left it open for RPSC to conduct a written main examination on the rescheduled date.

Read report, here…

Compassionate Appointment

“…on the ground of delay itself, the heir of the deceased employee shall not be entitled to appointment on compassionate ground.”; Raj HC observes in a case where delay is of almost 13 years 

A Division Bench of Manindra Mohan Srivastava and Anoop Kumar Dhand, JJ. dismissed the petition on the ground that the writ petition filed by the petitioners is without any substance. 

Read report, here…

Transfer

Accepting requests for inter-district transfer can lead to chain reaction and at times considerable administrative difficulties; Raj HC observes while dealing a case related to inter-district transfer

A Division bench of Akil Kureshi CJ and Madan Gopal Vyas J. dismissed the petition stating that nothing would come in the way of the petitioner in seeking inter-district transfer if the Government rules and regulations recognize any such policy.

Read report, here…


 Tripura High Court


 Qualifying Examination

No grievance for non-selection; Court finds criteria fixed by ONGC clear and categorical

Indrajit Mahanty, CJ. dismissed a petition which was filed by the petitioner who was appointed as Junior Security Supervisor at (A-1 Level) in the category of Scheduled Tribe and had appeared for the computer-based test and physical standard test conducted by the ONGC. It was alleged that in the selection process the petitioner was awarded 72 marks but was not selected whereas the candidate (respondent 3) who got only 66.10 marks was wrongly and illegally selected by the respondent 2.

Read report, here…

Conjugal Rights

Whether maintenance granted to the wife under S. 125 CrPC can be cancelled in view of husband’s obtaining a decree for restitution of conjugal rights and wife’s refusal for the same?

S.G. Chattopadhyay, J., decided on a petition which was filed by the petitioner challenging order passed by the Additional Judge, Family Court which stated that the petitioner was not entitled to any maintenance allowance under section 125 Cr.P.C from her husband in view of her refusal to restore conjugal relationship with her husband pursuant to the judgment and decree passed by the District Judge for restitution of conjugal rights.

Read report, here…

Bail

Tests provided under S.37(1)(ii) of the NDPS Act should qualify in order to seek bail; Court rejects application 

S.G. Chattopadhyay, J., rejected a bail application which was filed for releasing the accused on bail who had been undergoing imprisonment since 16-09-2021 under NDPS Act, 1985. Successive applications of the accused for pre-arrest bail were rejected.

Read report, here…

Die-in-Harness Scheme

Exclusion of married daughters from the die-in-harness scheme of the State Government discriminatory? Court discusses

The Division Bench of Indrajit Mahanty, CJ. and S.G. Chattopadhyay, J. decided over a bunch of petitions which had a similar question pertaining to exclusion of married daughters from the die-in-harness scheme of the State Government. 

Read report, here…

Migratory Birds

More than 1000 ‘Rare’ Birds dead, no carcasses found; Court directs committee inspection 

The Division Bench of S.G. Chattopadhyay and Indrajit Mahanty, JJ., took up a PIL which was filed on the basis of press reports that in the Sukhsagar water body of Udaipur, Khilpara, large number of migratory birds of more than 1000 in numbers were found dead. Notices were issued and following the directions of this Court a report had come to be filed by the State wherein the State had taken note of the fact that many migratory birds come and find sanctuary in water bodies in the State of Tripura and they come all the way from Spain, Portugal, South East France, Italy and North Western Africa and have all been listed as “Rare” birds by the European Union, but it seems that the same has been detailed as localized by the State.

Read report, here…


Uttaranchal High Court


Right to Information

Husband seeking personal information such as salary of wife under Right to Information Act, 2005; Whether acceptable or not?

“….The only exception as to the information given under the Act under Section 8 of the RTI Act, is an exemption from disclosure of information.”

Read report, here…

Termination of Pregnancy

Compelling to continue pregnancy, infringement under Art. 21; Rape victim allowed to terminate Intrauterine Fetus of 28 weeks 5 days

Alok Kumar Verma, J., decided on a petition which was filed by the father of the minor petitioner to issue a writ in the nature of mandamus commanding and directing the respondent to ensure immediate medical termination of petitioner’s pregnancy after taking all precautions as required to be taken medically and legally.

Read report, here… 

Bail

Denial of bail on sole ground of apprehension that he may commit crime again, overturned by the Court

R.C. Khulbe, J. granted bail in a criminal revision petition moved against the order of Juvenile Justice Board (JJB), Dehradun as well as a judgment by Addl. Sessions Judge (POCSO)/FTC, Dehradun against the petitioner.

Read report, here…



8 Legal Stories of the Week: From High Courts to District Courts

7 Legal Stories of the Week: From High Courts to District Courts

11 Legal Stories of the Week: From Hijab ban to a Sexual Harassment complaint from an employee in ScoopWhoop & more

8 Legal Stories of the Week: From the release of movie Gangubai Kathiawadi to WhatsApp Admin’s liability if a member of group shares objectionable content on group and many more such stories

Case BriefsHigh Courts

Delhi High Court: While expressing the object of PMLA Act Chandra Dhari Singh, J., expressed that, offence of money laundering is threefold including the stages of placement, whereby the criminals place the proceeds of crime to the general and genuine financial system, layering, whereby such proceeds of crime are spread into various transactions within the financial system and finally, integration, where the criminals avail the benefits of crime as untainted money.

A criminal revision petition was filed by the petitioner under Section 397 of the Penal Code, 1860 read with Section 401 of the Code of Criminal Procedure, 1973 and Section 47 of the Prevention of Money Laundering Act, 2002 (PMLA) seeking setting aside of the order passed by the Special Judge, Patiala House Courts whereby all the accused persons were discharged on the ground that no prima facie case was made out against them.

Background

In the present matter, criminal proceedings under PMLA were initiated against the respondents by the petitioner on the basis of independent intelligence gathered regarding money laundering activities. Therefore, an FIR under Sections 21,25,29 and 61 of the Narcotics Drugs and Psychotropic Substance Act, 1985 and Sections 420, 468, 471, 120B of the Penal Code, 1860 were registered.

Petitioner’s case was that the respondents were found to be involved in an international syndicate of laundering the money generated out of the drug trafficking in Australia and other countries.

While the private Respondents 1 to 3 are based in India, their counterparts, namely, Gulshan Kumar, Mandeep Singh, Sanjeev Kumar Saini and Ravinder Pal Singh were based in Australia and together they had been carrying out cross border criminal activities and their counterparts in Australia had already been apprehended.

Analysis, Law and Decision

High Court firstly stated that the offence of money laundering under the PMLA is layered and multi-fold and includes the stages preceding and succeeding the offence of laundering money as well.

Further, the Bench stated that the offence of money laundering, is not to be appreciated in isolation but is to be read with complementary provisions.

“…the essential ingredients for the offence of Section 3 of the PMLA become, first, the proceeds of crime, second, proceeds of crime arising out of the offences specified in the Schedule of the Act and third, the factum of knowledge while commission of the offence of money laundering.”

High Court expressed that, since no scheduled offence was made out against the respondents, this Court found that an investigation and proceedings into the PMLA could not have been established against the respondents at the first instance.

Section 397 CrPC unequivocally states that the High Court or Sessions Courts which is exercising its revisional jurisdiction shall apprise itself solely of the question of correctness, legality and propriety of the order of the Subordinate Court.

“…the provision of the Cr.P.C. suggests that the Court shall limit itself to the findings, sentence or order passed by the subordinate Court, against which the Revisionist is seeking relief before the Courts concerned and shall not go beyond the analysis and observations made by the subordinate court.”

Additional Sessions Judge is under the challenge before this Court in its revisional jurisdiction.

This Court stated that in its revisional jurisdiction it would not proceed into the enquiry of the records, documents and other evidence in consideration before the Trial Court, but shall constrain itself to the findings of the lower Court in the impugned order and to the question whether there is any patent illegality, error apparent on record or incorrectness.

Bench remarked that the extent of exercise of discretion by the Court was limited to the prima facie satisfaction of the Court and if the Court does not find reasonable grounds of suspicion against the accused, it may discharge him of the offence alleged against him.

Additional Sessions Judge did not find any evidence brought on record to show that the accused persons were involved in the commission of the offences alleged against them.

This Court found force in the submission that since no offences were made out against the respondents. Petitioner could not establish the allegations against the respondents and as such the material produced was not sufficient to find the guilt against them.

High Court found no illegality or impropriety in the lower court’s decision, hence the petition was dismissed. [Directorate of Enforcement v. Gagandeep Singh, 2022 SCC OnLine Del 514, decided on 17-2-2022]


Advocates before the Court:

For the Petitioner:

Anurag Ahluwalia, CGSC with Danish Faraz Khan, Advocates

For the Respondents:

Vikram Chaudhari, Senior Advocate with Rishi Sehgal and Ria Khanna, Advocates

Op EdsOP. ED.

I. Introduction

The coronavirus crisis encouraged traditional and even first time investors to look for alternative investment opportunities, and cryptocurrencies have been an unconventional and increasingly popular alternative ever since.[1] Cryptocurrencies are a form of digital currency based on blockchain technology, widely considered secure, decentralised and providing anonymity to its users, while using cryptography[2] to secure the transaction records. Due to the highly secure nature of transactions, purchases cannot be traced, and individuals can use it to purchase even illegal merchandise, including drugs or firearms.[3] Although cryptocurrency is “secure” two elements make cryptocurrencies riskier than bank accounts: market volatility and the lack of federal insurance and regulation.[4]

The cryptocurrency market crossed $1 trillion value earlier this year,[5] while unofficial industry estimates suggest that Indian owned investments in cryptocurrencies to be approximately US $1.4 billion.[6] Further, the PwC 2020 Time for Trust Report[7] found that blockchain technology would add $1.76 trillion (~1.4%) to the global Gross Domestic Product (GDP) by the year 2030. A global poll revealed that 73% of millionaires would invest in cryptocurrencies, such as Bitcoin and Ethereum, before the end of 2022.[8]

In 2018,  Reserve Bank of India (RBI) promulgated a circular[9] which prohibited banks from extending financial services that involved cryptocurrency, though  RBI had raised concerns about the potential financial, legal and security risks associated with it since 2013.[10] The Ministry of Finance constituted an Inter-Ministerial Committee which published the report of the Committee to propose specific actions to be taken in relation to Virtual Currencies, 2019[11] raising several pertinent concerns including the need to secure consumers from fraud and risks, the protection of the financial system, and the need to prevent criminal activities. Thus, the Committee submitted the Draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019[12], which suggested a blanket ban on cryptocurrencies. Interestingly, the Draft Bill provided under Section 8(1) that whoever directly or indirectly mines, generates, holds, sells, deals in, transfers, disposes of or issues cryptocurrency, shall be punished with up to 10 years of imprisonment. The severity of the proposed imprisonment is in line with Para 2 of  Part A of the Schedule under the PMLA, giving us a clear indication as to how seriously the Government views these transactions.

However, a Supreme Court Bench comprising of  R.F. Nariman, Aniruddha Bose and V. Ramasubramanian, JJ. quashed  RBI circular in Internet and Mobile Assn. of India v. RBI,[13] (hereinafter “IMAI”), on the ground of proportionality, and upheld the contention that the denial of access to cryptocurrency users would be tantamount to a denial of the right to carry on any trade or profession guaranteed under Article 19(1)(g)[14] of the Constitution of India (hereinafter “the Constitution”). Thereafter, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was set to be introduced in the Lok Sabha, to prohibit all private cryptocurrencies operational in India.[15] There is a strong likelihood that this step is being undertaken, because  RBI is instructed to launch its own digital currency.[16] Yet, as on date, there is no definitive regulation governing cryptocurrencies, adding to the uncertainty and confusion about its legality in India.

The Government of India initially wanted to encourage blockchain technology whilst opposing the legitimisation of cryptocurrency because once the unit of transaction changes from rupees to any kind of cryptocurrencies, tax recovery or general regulatory control would become extremely difficult and may reach beyond the regulatory capacity of the Government.[17] Thus, the Government has attempted to welcome blockchain technology,[18] but has vehemently opposed the use of private cryptocurrencies.[19] Recently, it was reported that the Government plans to consult experts and seek “legal opinion at the highest level” before it comes to a final decision on whether to allow the trading and holding of cryptocurrencies within the domestic market.[20]

Therefore, it is warranted to declutter the aspect of cryptocurrencies regarding the foregoing anticipation of money laundering attached to it, as to whether it can or rather should, be regulated through the PMLA, in view of its decentralised and peer-to-peer (P2P) network mechanism apropos its tenuous legality.

II. Legality of Cryptocurrency

The key issue surrounding cryptocurrency is the inability to define its legal status. In light of cryptocurrencies being prone to anti-money laundering/counter terrorist financing (AML/CTF), the “silk road,”[21] or sophisticated cyber hackings,[22] almost no country has recognised cryptocurrency as a valid legal tender.[23] Though recently, El Salvador became the first country to adopt Bitcoin as a parallel legal currency,[24] while the move was anticipated to be allied with legal and economic issues by the International Monetary Fund (IMF).[25]

The Supreme Court in IMAI[26] judgment recognised that  RBI could notify cryptocurrencies to fall under the definition of “currency” under the Foreign Exchange Management Act, 1999[27] (hereinafter “FEMA”). Therefore, cryptocurrency users would be deemed to carry on an activity that falls within the control of  RBI. The Court further held that cryptocurrency does not hold any inherent monetary value and it cannot be classified as a prepaid instrument under the Payment and Settlement Systems Act, 2007[28] (PSSA). However, the Court recognised the ability of  RBI to regulate cryptocurrencies under the PSSA. Notwithstanding the IMAI[29] judgment,  RBI has “major concerns” on the impact of cryptocurrency trade on the country’s financial stability.[30]

On 24-3-2021, the Ministry of Corporate Affairs made it mandatory for companies dealing with cryptocurrencies to disclose profit or loss incurred on transactions, the amount of cryptocurrency they hold and deposits or advances from any person.[31] Further, multiple banks have warned their customers of restrictions if they deal in cryptocurrencies, further adding uncertainty on the tenuous legality of cryptocurrencies.[32] The Court in IMAI[33] judgment opined that,

  1. It is as much true that VCs (virtual currencies) are not recognised as legal tender, as it is true that they are capable of performing some or most of the functions of real currency.

Certain cryptocurrencies known as “stablecoins” are today’s economic equivalent of money market funds, which could create significant damage in the broader crypto market.[34] One of the serious criticisms of cryptocurrencies is that it has no inherent worth, and it only has the worth that the world gives it.[35] Moreover, owing to the decentralised structure, a random “broken heart” emoji tweeted by Elon Musk drastically fluctuated the market valuation of Bitcoin.[36] A monetary system that fluctuates on individual opinions, might be regarded as inherently flawed. Further, cybercriminals are going after cryptocurrency, with an increase in the number of new modifications of miners, according to a report by the cybersecurity firm Kaspersky.[37]

Thus, how can there be a currency that is not backed up by a sovereign State? The IMAI[38] judgment noted that, “George Friedman, the founder and Chairman of Geopolitical Futures LLC, an online publication, aptly summarised this dilemma as follows:

  1. 104. Bitcoin is neither fish nor fowl … But both pricing it as a commodity when no commodity exists and trying to make it behave as a currency, seem problematic. The problem is not that it is not issued by the Government nor that it is unregulated. The problem is that it is hard to see what it is.

III. Cryptocurrency and money laundering

Some cryptocurrencies such as Monero, Zcash, DASH, Verge and Horizen provide their users with maximum privacy, making it almost impossible to trace the parties involved in the transactions.[39] In other words, most cryptocurrencies allow criminals to hide the source of their wealth. Though Bitcoin records all transactions which are contained in a freely distributed database,[40] criminals reportedly[41] laundered US $2.8 billion through Bitcoin exchanges in 2019, up from US $1 billion in 2018, making it even more appealing to criminals.[42] Thus, there is minimal or no law enforcement oversight protection, since there is no authority for regulating cryptocurrency, as opposed to the active role of the Government in the distribution of fiat currencies.

Cryptocurrencies being primarily based on P2P mechanism attract launderers for having the total cost of cash out strategy at less than 15% of the proceeds of crime, compared to other money laundering methods costing up to 50%.[43] It is because the information relating to the transaction, or the source of funds mostly are anonymous, making it next to impossible to bring it within the ambit of the PMLA, besides the fact that not recording every transaction detail violates Section 12[44] of the PMLA, which imposes an obligation on banking companies, financial institutions, and intermediaries to maintain and upkeep records. This anonymity and accessibility arguably make cryptocurrencies the preferred safe haven for criminal activities including money laundering.[45]

Therefore, unless anonymity is omitted from all transactions relevant to cryptocurrency, tracing or freezing the digital wallet suspected to be containing “proceeds of crime,” would practically become impossible for an agency like the Directorate of Enforcement (hereinafter “ED”). The Draft Bill which sought to ban all cryptocurrencies, attempted to address the problem of anonymity by bringing the act of mining, generating, issuing, holding, using, selling, transfer and/or disposal of cryptocurrency within the meaning of a “scheduled offence,” under the PMLA. Further, it has been reported that India’s leading cryptocurrency exchanges, including WazirX, CoinDCX and CoinSwitch Kuber, have partnered with Internet and Mobile Association of India to set up an advisory board to implement a code of conduct for the crypto industry in India.[46] Recently, the ED reportedly issued a notice to WazirX for allegedly violating the FEMA for transactions worth ₹2,790.74 crore.[47] Even though India has not yet passed a law on cryptocurrency, certain types of transaction have a higher risk of attracting penalties.[48]

The Supreme Court in  IMAI[49] judgment observed that virtual currencies are not widely accepted modes of exchange and thus they could also not be regarded as a final discharge of debt. The Government once aimed to block cryptocurrencies and welcome blockchain technology in the same breath, however, the Government may be required to recognise cryptocurrency if it intends to generate revenue through it and prevent its misuse as an avenue of money laundering. Moreover, the Indian income tax law is unclear regarding the tax impact on the gains earned from cryptocurrencies.[50]

 IV.  Where the world stands on cryptocurrency

According to the United Nations, the estimated amount of money laundered globally in a year is 2% to 5% (or $800 billion to $2 trillion) of the global GDP.[51] While the world leans towards the sustainable development goals to counter climate change, a debate looms around the energy consumption in cryptocurrency mining. As per an analysis of the Cambridge Centre for Alternate Finance, Bitcoin consumes approximately 110 Terawatt hours per year – 0.55% of the global electricity production, or roughly equivalent to annual energy draw of Malaysia or Sweden.[52] Is the cryptocurrency energy consumption appropriate use of non-renewable resources or the world needs to reject this model of monetary system?

In Canada, digital currencies are not legal tender,[53] but are bound by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2000, which include processes such as record keeping, verification, suspicious transaction reporting, and registration. In Singapore, primarily the Payment Services Act, 2019, mandate that cryptocurrency businesses should obtain a licence complying with AML/CTF regulations. In the United Kingdom, those engaged in crypto related business have to register with the Financial Conduct Authority, and they have to comply with AML/CTF measures provided under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations, 2017. Recently, it was reported that up to 50 companies dealing in cryptocurrencies such as Bitcoin may be forced to close after failing to meet the UK’s AML rules.[54]

On the other hand, in the United States,[55] though there is no federal regulation governing cryptocurrencies, the Financial Crimes Enforcement Network (FinCEN) regulates money services businesses (MSBs) under the Bank Secrecy Act of 1970. Thus, while MSBs are required to conduct a comprehensive risk assessment of exposure to money laundering, FinCEN regulates MSBs to develop, implement, and maintain a compliance program for AML/CTF. Recently, the owner of a Bitcoin exchange was convicted by a federal jury for his role in a transnational and multimillion-dollar scheme to defraud Americans and received a 121-month prison sentence.[56] Another man was sentenced to 121 months in federal prison for conspiring to distribute and possess methamphetamine, a dangerous drug, the payment of which was done through cryptocurrency.[57] These are just a few illustrations that point to the dangers of an unregulated anonymous currency.

 V. The way forward

 Cryptocurrency needs to be regulated, undoubtedly. However, the PMLA as it currently exists is wholly insufficient to deal with money laundering via cryptocurrency and there can be two procedures to tackle this insufficiency. Firstly, it may be regulated by amending Section 2(s)(sa)[58] of the PMLA to include cryptocurrency business persons within the meaning of “person carrying on designated business or profession,” bringing the exchange service provider within the meaning of “reporting entity” under Section 2(w)(wa) and imposing “client due diligence/KYC” requirements on cryptocurrency businesses under Rule 9 of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. Secondly, an effective legislation can be enacted with an autonomous body as thewatchdog, to affect safe utilisation of the currency. India should reasonably anticipate that decentralised and unregulated cryptocurrencies, while undermining the control of e RBI, can destabilise the economy; alongside being misused for circumventing capital controls, money laundering or illegal purchases. The verdict of the Supreme Court in IMAI[59] shall necessarily be complied with, which makes a ban on cryptocurrencies to be violative of the fundamental right to trade guaranteed under the Constitution. However, it is more likely that this position will have to be revised and a legislative ban be imposed as the dangers of cryptocurrency become clearer.


Criminal Lawyer based out of New Delhi.

†† Intern, Law Chambers of Jai Anant Dehadrai [3rd Year, BA LLB (Hons), Jamia Millia Islamia, Delhi].

1 Hadar Y. Jabotinsky and Roee Sarel, “How the Covid-19 Pandemic Affected the Cryptocurrency Market” (CLS Bluesky Blog, 26-3-2021) <https://clsbluesky.law.columbia.edu/2021/03/26/how-the-covid-19-pandemic-affected-the-cryptocurrency-market/>.

[2] Kathleen Richards, “What is Cryptography” (TechTarget, April 2020) <https://searchsecurity.techtarget.com/definition/cryptography>.

[3] Dawn Allcot, “How Does Cryptocurrency Work – and is it Safe?” (Yahoo Finance, 2-5-2021) <https://finance.yahoo.com/news/does-cryptocurrency-safe-150059419.html>.

[4] Ibid.

[5] Samanth Subramanian, “Crypto is Now the World’s Fifth-Most Circulated Currency by Value” (Quartz, 12-1-2021) <https://qz.com/1954555/all-the-worlds-crypto-is-now-worth-more-than-1-trillion/>.

[6] James Mathew, “Crypto Investors Get a Shock as India Drafts Bill to Ban Digital Currency” (Arabian Business, 20 April 2021) <https://www.arabianbusiness.com/alternative-assets/462324-crypto-investors-get-shock-as-india-circulates-draft-bill-to-ban-the-digital-currency>.

[7] PwC, “Time for Trust: The Trillion-Dollar Reasons to Rethink Blockchain” (PwC, October 2020) <https://image.uk.info.pwc.com/lib/fe31117075640475701c74/m/2/434c46d2-a889-4fed-a030-c52964c71a64.pdf>.

[8] Kevin Helms, “Millionaires FOMO: 73% Will Own Bitcoin by 2022, Survey” (Bitcoin News, 19-11-2020) <https://news.bitcoin.com/millionaires-fomo-73-own-bitcoin/>.

[9] Reserve Bank of India, “Prohibition on dealing in Virtual Currencies” (RBI/2017-18/154, 6-4-2018) <https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NOTI15465B741A10B0E45E896C62A9C83AB938F.PDF>.

[10] Vinod Joseph et al., “India: Cryptocurrencies In India – Past, Present & Future” (Mondaq, 13-5-2020) <https://www.mondaq.com/india/fin-tech/944312/cryptocurrencies-in-india–past-present-future>.

[11]Ministry of Finance, Report of the Committee to Propose Specific Actions to be Taken in Relation to Virtual Currencies, (Department of Economic Affairs, 28-2-2019) <https://dea.gov.in/sites/default/files/Approved%20and%20Signed%20Report%20and%20Bill%20of%20IMC%20on%20VCs%2028%20Feb%202019.pdf>.

[12] Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019 <https://prsindia.org/files/bills_acts/bills_parliament/Draft%20Banning%20of%20Cryptocurrency%20&%20Regulation%20of%20Official%20Digital%20Currency%20Bill,%202019.pdf>.

[13] (2020) 10 SCC 274.

[14] Article 19(1)(g), Constitution.

[15] BQ Desk, “India’s Cryptocurrency Ban: Top 5 Things to Know” (BloomberQuint, 18-2-2021) <https://www.bloombergquint.com/business/indias-cryptocurrencies-ban-top-5-things-to-know>.

[16] Manoj Sharma, “RBI Working on Digital Currency, Wants to Tap on Blockchain Technology: Das” (Business Today, 25-2-2021) <https://www.businesstoday.in/current/economy-politics/breaking-rbi-reservations-regarding-cryptocurrencies-shaktikanta-das/story/432317.html>.

[17] Subhajit Sengupta, “A Vehement ‘No’ to Cryptocurrencies but Blockchain is ‘Welcome’, Arun Jaitley Says” (News18, 1-2-2018) <https://www.news18.com/news/business/a-vehement-no-to-cryptocurrencies-but-blockchain-is-welcome-arun-jaitley-says-1648003.html>.

[18] NITI Aayog, “Blockchain: The India Strategy” (Draft Discussion Paper, January 2020) <https://niti.gov.in/sites/default/files/2020-01/Blockchain_The_India_Strategy_Part_I.pdf>.

[19] FE Bureau, “Cryptocurrency ban to be made explicit; Govt to introduce Bill soon” (The Financial Express, 4-3-2021) <https://www.financialexpress.com/money/cryptocurrency-ban-to-be-made-explicit-govt-to-introduce-bill-soon/2205896/>.

[20] Aashish Aryan, “More Liberal Debate Likely: Govt Wants Legal Opinion on Cryptos” (The Indian Express, 21-5-2021) <https://indianexpress.com/article/business/banking-and-finance/more-liberal-debate-likely-govt-wants-legal-opinion-on-cryptos-7323780/>.

[21] David Adler, “Silk Road: The Dark Side of Cryptocurrency” (FJCFL Blog, 21-2-2018) <https://news.law.fordham.edu/jcfl/2018/02/21/silk-road-the-dark-side-of-cryptocurrency/>.

[22] Robert McMillan, “The Inside Story of Mt. Gox, Bitcoin’s $460 Million Disaster” (Wired, 3-3-2014) <https://www.wired.com/2014/03/bitcoin-exchange/>.

[23] The Law Library of Congress, Regulation of Cryptocurrency Around the World (Global Legal Research Center, June 2018) <https://www.loc.gov/law/help/cryptocurrency/cryptocurrency-world-survey.pdf>.

[24] Sandeep Soni, “El Salvador Creates History: Becomes World’s First Country to Adopt Bitcoin as Legal Currency,” (The Financial Express, 9-6-2021) <https://www.financialexpress.com/economy/el-salvador-creates-history-becomes-worlds-first-country-to-adopt-bitcoin-as-legal-currency/2268056/>.

[25] Reuters, “IMF Sees Legal, Economic Issues with El Salvador Bitcoin Move” (The Economic Times, 10-6-2021) <https://economictimes.indiatimes.com/markets/cryptocurrency/imf-sees-legal-economic-issues-with-el-salvador-bitcoin-move/articleshow/83404747.cms>.

[26] (2020) 10 SCC 274.

[27] Foreign Exchange Management Act, 1999.

[28] Payment and Settlement Systems Act, 2007.

[29] (2020) 10 SCC 274.

[30] ET Bureau, “RBI’s Stance on Cryptocurrency Unchanged, Governor Das Says” (The Economic Times, 4-6-2021) <https://economictimes.indiatimes.com/tech/technology/rbis-concerns-on-cryptocurrency-remain-unchanged-governor-shaktikanta-das-says/articleshow/83230813.cms>.

[31] Amendments in Schedule III to the Companies Act, 2013, (Ministry of Corporate Affairs, 24-3-2021) <https://mca.gov.in/Ministry/pdf/ScheduleIIIAmendmentNotification_24032021.pdf>.

[32] Ridhima Saxena, “HDFC Bank, SBI Card Warn Customers of Restrictions if They Deal in Cryptocurrencies” (BloombergQuint, 29-5-2021) <https://www.bloombergquint.com/crypto/hdfc-bank-sbi-card-warn-customers-of-restrictions-if-they-deal-in-cryptocurrencies>.

[33] (2020) 10 SCC 274.

[34] Bloomberg, “Can a Cryptocurrency Break the Buck?” (Mint, 1-6-2021) <https://www.livemint.com/opinion/online-views/can-a-cryptocurrency-break-the-buck-11622504970042.html>.

[35] Priya Dialani, “Future of Cryptocurrency? Will it Grow or Stoop Low?” (Analytics Insight, 4-6-2021) <https://www.analyticsinsight.net/future-of-cryptocurrency-will-it-grow-or-stoop-low/>.

[36] Eric Lam, “Bitcoin Slips After Musk Tweets Broken-Heart Emoji for Token” (BloombergQuint, 4-6-2021) <https://www.bloombergquint.com/technology/bitcoin-drops-after-musk-tweets-broken-heart-emoji-for-token>.

[37] Bureau, “Cybercriminals go After Cryptocurrency: Report” (The Hindu Business Line, 5-6-2021) <https://www.thehindubusinessline.com/economy/cybercriminals-go-after-cryptocurrency-report/article34736492.ece>.

[38] (2020) 10 SCC 274.

[39] Shobhit Seth, “The 6 Most Private Cryptocurrencies” (Investopedia, 5-1-2021) <https://www.investopedia.com/tech/five-most-private-cryptocurrencies/>.

[40] Gaspare Jucan Sicignano, “Money Laundering Using Cryptocurrency:

The Case of Bitcoin!” Athens Journal of Law 2021 7(2) 253 <https://www.athensjournals.gr/law/2021-7-2-7-Sicignano.pdf>.

[41] Mike Orcutt, “Criminals Laundered $2.8 Billion in 2019 Using Crypto Exchanges, Finds a New Analysis” (MIT Technology Review, 16-1-2020) <http://technologyreview.com/2020/01/16/130843/cryptocurrency-money-laundering-exchanges/>.

[42] Nyman Gibson, “What is Bitcoin Laundering?” (NGM) <https://ngm.com.au/bitcoin-laundering/>.

[43] Sergi Delgadi-Segura et al., “Cryptocurrency Networks: A New P2P Paradigm”, Mobile Information Systems (Hindawi, 2018) <https://www.hindawi.com/journals/misy/2018/2159082/>.

[44] Section 12, PMLA.

[45] Matthew Leising, “Booming Decentralized Finance a Potential Haven for Money Laundering” (Bloomberg, 1-10-2020) <https://www.bloomberg.com/news/articles/2020-10-01/booming-crypto-market-a-potential-haven-for-money-laundering>.

[46] Ashwin Manikandan and Apoorva Mittal, “India’s Cryptocurrency Industry Draws Up ‘Legitimacy Plan’ ” (The Economic Times, 3-6-2021).

<https://economictimes.indiatimes.com/tech/technology/indias-cryptocurrency-industry-draws-up-legitimacy-plan/articleshow/83188685.cms>.

[47] Neil Borate, “What ED’s Notice to WazirX Means for Indian Crypto Traders?” (Mint, 15-6-2021) <https://www.livemint.com/market/cryptocurrency/what-ed-s-notice-to-wazirx-means-for-cryptotraders-11623689353255.html>.

[48] Ibid.

[49] (2020) 10 SCC 274.

[50] Harsh Bhuta, “Hold Crypto Assets? Here’s How you are Going to Pay Income-Tax on it” (The Economic Times, 6-6-2021) <https://economictimes.indiatimes.com/markets/cryptocurrency/hold-crypto-assets-heres-how-you-are-going-to-pay-income-tax-on-it/articleshow/83277122.cms>.

[51] United Nations Office on Drugs and Crimes, “Money Laundering” <https://www.unodc.org/unodc/en/money-laundering/overview.html>.

[52] Nic Carter, “How Much Energy Does Bitcoin Actually Consume?” (Harvard Business Review, 5-5-2021) <https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume>.

[53] Government of Canada, Digital Currency <https://www.canada.ca/en/financial-consumer-agency/services/payment/digital-currency.html>.

[54] Kalyeena Makortoff, “Cryptocurrency Dealers Face Closure for Failing UK Money Laundering Test” (The Guardian, 3-6-2021) <https://www.theguardian.com/technology/2021/jun/03/cryptocurrency-dealers-face-closure-for-failing-uk-money-laundering-test>.

[55] Tookitaki, Cryptocurrency Regulations in the United States <https://www.tookitaki.ai/compliance_hub/cryptocurrency-regulations-in-the-united-states/>.

[56] Press Release, “Owner of Bitcoin Exchange Sentenced to Prison for Money Laundering” (Department of Justice, 12-1-2021) <https://www.justice.gov/opa/pr/owner-bitcoin-exchange-sentenced-prison-money-laundering>.

[57] Press Release, “California Man Sentenced to 121 Months for Methamphetamine Trafficking” (Department of Justice, 29-4-2021) <https://www.justice.gov/usao-nh/pr/california-man-sentenced-121-months-methamphetamine-trafficking>.

[58] Section 2(s)(sa) of PMLA.

[59] (2020) 10 SCC 274.

Op EdsOP. ED.

Introduction

 William Pitt said in the British Parliament in 1763 that, “The poorest man may in his cottage bid defiance to all the forces of the Crown. It may be frail; its roof may shake; the wind may blow through it; the storm may enter; the rain may enter; but the King of England cannot enter — all his force dares not cross the threshold of the ruined tenement!”[1] 

For any democracy to thrive there must be proper checks and balances in the exercise of the powers of its law enforcement agencies. In the Indian context, the Directorate of Enforcement (ED) has massive discretionary powers vested in it, and its prosecutorial record suggests that it has been less than scrupulous about exercising those vast powers. There have been multiple instances, where the agency has been found wanting in its adherence to the procedures established under the law of its creation, the Prevention of Money-Laundering Act, 2002[2] (PMLA), especially in matters of seizure and the attachment of properties.

The fear of arbitrary action by the ED is palpable, not least because liberty and personal property are at stake. It is also because the PMLA envisages a sui generis adjudication procedure[3], under Section 8 of the Act, with its own internal checks and balances – which again, are not scrupulously followed[4].  In fact, there have even been instances[5] where ED has switched gears mid-prosecution and have even attempted to justify property attachments under two laws – the PMLA or the Criminal Procedure Code, 1973 (CrPC), using a “whatever sticks” approach. Hence a criminal statute that offers neither predictability nor clarity in its application would raise serious doubts about the integrity of the underlying prosecution in the minds of Judges.

The Supreme Court in Tofan Singh v. State of T.N.,[6] held that the “investigating officers” under the special statutes such as the Narcotics Drugs and Psychotropic Substances Act, 1985[7] shall be deemed to be “police officers,” within the meaning of Section 25 of the Evidence Act, 1872[8] (no confession made to a police officer, shall be proved as against a person accused of any offence). However, under Section 50(4) of the PMLA, all proceedings under Sections 50(2) and (3) are deemed to be a “judicial proceeding”. As ED proceedings are “judicial proceedings,” statements made before ED are admissible as evidence, negating the Tofan Singh judgment[9], and subsequently the said Section 25. While many claim[10] Section 50 of the PMLA to be violative of Article 20(3) of the Constitution of India[11] (the Constitution), the Courts have more often than not held it not to be.[12] Though, if the statement is recorded after the arrest, it does violate Article 20(3).[13] Moreover, one is not entitled to invoke Section 160 CrPC since the PMLA specifically and comprehensively deals with the “power, authority and procedure for issuance of summons” under Section 50 of PMLA.[14]

Apart from criticism about its lukewarm adherence to procedural safeguards under the Act, the ED’s enthusiasm to raid and charge individuals does not seem to lead to successful prosecutions. Naturally, this has led to strong criticism about the agency’s integrity and vulnerability to political pressure. The statistics paint a grim picture in this regard. The ED conducted over 1700 raids between March 2011 and January 2020 in connection with 1569 specific investigations; however, it managed to secure convictions in only nine.[15]

Moreover, there have been reported instances where the ED has taken recourse to wrong provisions of law, while attempting to seize the assets of an individual.[16] So, the question must arise, is there any mechanism to maintain checks and balances over ED, otherwise loaded with vast and unfettered powers?

This article focuses on the fundamental concept of seizure, and whether it can be or is being done arbitrarily and/or is there any due process to be followed while exercising this power, which often results in allegations against the ED of harassing individuals by restricting their right to private property and personal liberty.

Seizure of assets

 The ED is empowered to conduct “search and seizure” against any person, on the basis of information in possession of the officer concerned and by specifying in writing precise “reasons to believe” that the act of money-laundering has been committed or a person is in possession of any proceeds of crime involved in money-laundering.

Section 17(1-A) of PMLA gives further power to seize the record and a copy of the said order is to be served on the person concerned. The seizure memo is required to be signed by two independent witnesses. Section 17(4) of PMLA provides that on the freezing of the record of property within a period of 30 days from such seizure or freezing, an application has to be filed in writing of such record of a continuation of order of freezing before the adjudicating authority. The said reasons thereafter have to be forwarded to the adjudicating authority under sub-clause (2) and the person arrested is to be taken to the Judicial Magistrate within 24 hours or a Metropolitan Magistrate having the jurisdiction.

However, vide the Finance Act, 2019 the proviso to Sections 17(1) and 18(1) were deleted, while empowering ED to enter any property for conducting search and seizure even without reporting of a scheduled offence to a Magistrate or any other competent authority, with respect to Section 157 CrPC. This amendment massively broadened the existing powers of ED by bringing Sections 17 and 18 at par with Section 19, where there is no precondition to forward a report under Section 157 CrPC to a Magistrate – thus eliminating judicial oversight at this stage entirely.

Notably, the property seized under Section 17 or Section 18 of the PMLA can be retained by an authorised officer, if she/he has reason to believe that such property is required to be retained for adjudication under Section 8 of the PMLA.[17] The property can be retained for a period of 180 days from the day on which it was seized or frozen.[18] Details of property seized or frozen have to be informed to the adjudicating authority in a prescribed manner.[19] The seized property is required to be returned to the person from whom it was seized after 180 days, unless the adjudicating authority permits retention of property beyond this period.[20] These are some of the many procedural safeguards embedded in the statute, essentially to maintain checks and balances over powers of ED.

The Prevention of Money-Laundering (Receipt and Management of Confiscated Properties) Rules, 2005[21] makes provision for receipt and management of confiscated properties. The Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013[22] provide for specific procedures relating to taking possession of attached or frozen properties confirmed by the adjudicating authority. However, discarding the principle of natural justice, the rules make no provision as to how the administrator will dispose of the property. Though, Rule 3 of the Prevention of Money-laundering (Restoration of Confiscated Property) Rules, 2016[23], lays down a procedure by carving out power in favour of the Special Court.

Section 24 of the PMLA provides that, in any proceedings related to proceeds of crime, if a person is charged with Section 3 of the PMLA, the authority or court shall presume that such proceeds of crime are involved in money-laundering; and that in the case of any other person the authority or court, may presume that such proceeds of crime are involved in money-laundering. However, such burden only shifts onto the person, where there is a trigger of a foundational fact, based on the “reason to believe” i.e. there is reason to believe that the person is involved in the offence.[24]

Section 65 of the PMLA being one of the means of action gives the ED wide discretion by  providing that provisions of CrPC shall apply to PMLA insofar as they are not inconsistent the provisions of PMLA. Section 102(2) CrPC obligates the investigating officer to report the seizure of property to the officer in charge of the police station if the investigating officer is subordinate to the officer-in-charge. The term “any offence” and “any property” opens the floodgates for the police officer to seize any property under the suspicious circumstances under any statute. Such confusion bestows unfettered power on the ED to investigate, arrest and harass anyone under the garb of “reasonable suspicion”, as the Finance Act of 2019 clarified that the offences under the Act have always been cognizable and non-bailable.[25] Therefore, Section 102(3) balances the power of police authorities to seize any property irrespective of the nature of the offence i.e. cognizable or non-cognizable because the investigating officer is obligated to report to the Magistrate about the seizure of the property and if the property cannot be furnished to the court then the police authorities shall give that property to any person who promises to execute a bond for providing the property before the court as and when the Magistrate directs.

Requisites for an order of search and seizure

Section 17 of the PMLA provides for search and seizure, and it lays down the procedure, sub-clause (1) of which is explained here for clarity: The order of authorising any subordinate officer for search and seizure is to be passed either by Director or any officer not below the rank of Deputy Director authorised by the Director. The order for search and seizure is to be passed based on information in possession of the Director or officer not below the rank of Deputy Director authorised by him. On the basis of information received, the Director or other authorised officer not below the rank of Deputy Director must have “reason to believe” by recording these reasons of his belief that any person:

(i) has committed any act which constitutes money-laundering; or

(ii) is in possession of any proceeds of crime involved in money laundering; or

(iii) is in possession of any records related to money laundering; or

(iv) is in possession of any property related to crime.

On fulfilment of these requirements, the Director or any officer equivalent above the rank of Deputy Director authorised by the Director may direct any subordinate officer to conduct search and seize property or documents pertaining to money-laundering. The officer conducting the search has to do it in the following manner, as stipulated in Section 17(1)(iv) of the PMLA:

  1. enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept;
  2. break open the lock of any door, box, locker, safe, almirah, or another receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available;
  3. seize any record or property found as a result of such search;
  4. place marks of identification on such record or property, if required or make or cause to be made extracts or copies therefrom;
  5. make a note or an inventory of such record or property; and
  6. examine on oath any person who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under PMLA.

However, the said action of seizure is sustainable, subject to conditions stipulated in the proviso to Section 17(1) of the PMLA, which says that the search and seizure shall not be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 157 CrPC, or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the Government of India or equivalent being head of the office or Ministry or department or unit, as the case may be, or any other officer who may be authorised by the Central Government, by notification, for this purpose.

Judicial interpretation of the power to seize assets

The Delhi High Court in Mahanivesh Oils & Foods (P) Ltd v. Directorate of Enforcement,[26] said that, “[a]ny provisional attachment under Section 5(1); seizure under Section 17 or Section 18 of the Act (PMLA); or the order of attachment by the adjudicating authority under Section 8(2) is founded on the fundamental premise that the properties attached/seized ‘are involved in money-laundering’.

Moreover, the Delhi High Court observed in Abdullah Ali Balsharaf v. Directorate of Enforcement[27] that:

  1. … Powers of seizure of properties is a draconian power. Grant of such authoritarian and drastic powers, without commensurate checks and balances, would militate against the principle of rule of law engrafted in the Constitution of India. A police officer does not possess unfettered rights to freeze any asset without the same being reported immediately to a Magistrate. The party aggrieved, thus, has immediate recourse in respect of the said action of freezing the property…. The PMLA has separate checks and balances to ensure that such powers are exercised in aid of the object of confiscating or vesting such proceeds of crime with the Government. The power to provisionally attach or seize or freeze a property can be exercised only (a) if the specified officer has material in his possession, which provides him reason to believe that the property sought to be attached or seized is proceeds of crime or related to a crime; and (b) after recording the reasons in writing.

The Delhi High Court in Directorate of Enforcement v. Axis Bank[28] noted that:

  1.  As in the case of power of survey, search and seizure, search of persons, retention of property and power to arrest, for enforcing “provisional attachment”, it is sine qua non for the empowered officer, acting under Section 5(1), to record in writing his “reason to believe” that grounds are made out to direct such provisional attachment.

The view of the Gujarat High Court in Paresha G. Shah v. State of Gujarat[29] that, “an order or instructions of attachment/freezing of bank account passed or issued by the authority under the PMLA in exercise of his powers under Section 102 of the Code read with Section 65 of the PMLA should not continue or remain in operation for an indefinite period of time” was noted by the PMLA Appellate Tribunal in Jagdishbhai Ishwarbhai Patel v. Directorate of Enforcement.[30]

For seizure under CrPC, the mandatory conditions of Section 102 were discussed by the Supreme Court in State of Maharashtra v. Tapas D. Neogy,[31] wherein it was observed that the conditions as:

(a) there must be a “property”; and

(b) in respect of that “specific property” there must be a suspicion of commission of any offence.

In M.T. Enrica Lexie v. Doramma,[32] the Supreme Court interpreted the following conditions to be construed as a property i.e. (a) property which is stolen or suspected to be stolen; and (b) the property directly linked to crime.

In Nevada Properties (P) Ltd.  v. State of Maharashtra,[33] the Supreme Court ruled that the power of a police officer to seize any property, which may be found under circumstances that create suspicion of the commission of any offence, would not include the power to attach, seize and seal an immovable property. Moreover, the Kerala High Court in Mohd. Enamul Haque v. CBI,[34] was of the view that:

  1. … No agency can arbitrarily freeze bank accounts under Section 102 CrPC, or keep the accounts frozen indefinitely, because it will have the ultimate effect of denying the constitutional or legal rights of the account-holder. Such a step can be resorted to by the investigating agencies only if it is found absolutely necessary.

In Guruprasath v. State[35] the Madras High Court reiterated that “bank accounts cannot be freezed indefinitely”. Further, the Gujarat High Court in Bhanuben v. State of Gujarat,[36] held that:

“… [t]he order of attachment of the bank accounts in exercise of powers under Section 102 CrPC  read with Section 65 of the PMLA should not continue for an indefinite period of time.”

Conclusion

The ED for achieving purposes other than the ones sought to be achieved, seizes a property at first, and decides later whether to invoke provisions of PMLA, or Section 102 CrPC as was done in Opto Circuit[37]. Such a position of law places an undue burden on individuals, as their right to private property is compromised through statutory discretion in favour of ED. Therefore, a balance must be struck between the right to property of an individual and the measures which may be required to be taken by an investigating agency for effective enforcement of the proceedings under PMLA.[38] The 44th Amendment to the Constitution deleted both Article 19(1)(f) and Article 31 from the Constitution, however, Article 300-A states that “no person shall be deprived of his property, save by the authority of the law”. Therefore, though right to property is not a fundamental right, it still is a constitutional right. And, as the Supreme Court noted, However, laudable be the purpose, the executive cannot deprive a person of his (their) property without specific legal authority, which can be established in a court of law.”[39]


* Criminal lawyer, New Delhi.

** Intern, Law Chambers of Jai Anant Dehadrai, 3rd year student, BA LLB (Hons.), Jamia Millia Islamia, Delhi.

[1] William Miller v. United States of America, 1958 SCC OnLine US SC 131 : 2 L Ed 2d 1332 : 357 US 301, 307 (1958)  (quoting the 1763 speech of William Pitt, Earl of Chatham, in the House of Commons).

[2] Prevention of Money-Laundering Act, 2002.

[3] See, Section 8 of the PMLA [Section 8(1) of PMLA provides that on receipt of specific complaints, if the adjudicating authority has reason to believe that any person has committed a defined offence, it may serve a notice of not less than thirty days on such person to justify the acquisition of such property/asset.]

[4]The adjudicating authority routinely fails to conclude proceedings under Section 5 within 180 days – thus unjustly elongating attachment of properties. See, Vikas WSP Ltd. v. Directorate Enforcement, 2020 SCC OnLine Del 1732.

(It was held that the limit of 180 days being the prescribed period, the adjudicating authority becomes functus officio after the expiry of the said limit. There is no power conferred by the PMLA upon the authority to extend the validity of the provisional attachment order.)

[5] In Opto Circuit India Ltd. v. Axis Bank, 2021 SCC OnLine SC 55 the Court rejected the ED’s argument that the “stop operation” was requested to prevent the layering/diversion of and to safeguard the proceeds of crime. The Court further rejected the ED’s contention that the power of seizure is available under Section 102 CrPC which has been exercised and as such the freezing of the account would remain valid. The Court noted that the power is to be exercised in the specified manner alone, failing which it would fall foul of the requirement of complying due process under law.

[6] 2020 SCC OnLine SC 882 .

[7] Narcotics Drugs and Psychotropic Substances Act, 1985.

[8] Evidence Act, 1872.

[9] Supra Note 6.

[10] Among several challenges include Mehbooba Mufti’s recent claim to declare Section 50 as void, inoperative, and violative of Article 20(3) of the Constitution. See, PTI, Mehbooba Mufti moves Delhi HC challenging ED summons in money laundering case (The Print, 9-3-2021) <https://theprint.in/judiciary/mehbooba-mufti-moves-delhi-hc-challenging-ed-summons-in-money-laundering-case/618674/> last accessed 25-5-2021.

[11] Constitution of India.

[12] P. Chidambaram v. Directorate of Enforcement, 2019 SCC OnLine Del 11129 ; Virbhadra Singh v. Enforcement Directorate, 2017 SCC Online Del 8930 ; Vakamulla Chandrashekhar v. Enforcement Directorate, 2017 SCC OnLine Del 12810 .

[13] Gaurav Gupta v. Director of Enforcement, 2015 SCC OnLine Del 9929.

[14] Nalini Chidambaram v. Directorate of Enforcement, 2018 SCC OnLine Mad 5924.

[15] Kaushik Deka, Who is an Enemy of the State? (India Today, 27-2-2021) <https://www.indiatoday.in/magazine/cover-story/story/20210308-who-is-an-enemy-of-the-state-1773222-2021-02-27> last accessed 22-3-2021.

[16] For instance, the ED wrongfully obtained an order of seizure (LR) of bank account located in a foreign jurisdiction under Section 57 of the PMLA, instead of satisfying and complying with the underlying preconditions stipulated under Section 60 of the PMLA. See, Directorate of Enforcement v. Gautam Khaitan, CNR No: DLCT11-000927-2019, CC No: 01/2015, order dated 26.04.2021.

[17] Section 20(1), PMLA.

[18] Ibid.

[19] Section 20(2), PMLA.

[20] Section 20(3), PMLA.

[21] Prevention of Money-Laundering (Receipt and Management of Confiscated Properties) Rules, 2005.

[22] Prevention of Money-Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013.

[23] Prevention of Money-laundering (Restoration of Confiscated Property) Rules, 2016.

[24] Naresh Jain v.  Deputy Director, Directorate of Enforcement, FPA-PMLA-1332/DLI/2016, order dated 12-9-2019 [Appellate Tribunal, Prevention of Money Laundering Act]. See also, Hanif Khan v. Central Bureau of Narcotics, (2020) 16 SCC 709

[25] Section 200, Finance (No. 2) Act, 2019.

[26] 2016 SCC Online Del 475.

[27] 2019 SCC OnLine Del 6428.

[28] 2019 SCC OnLine Del 7854.

[29] 2015 SCC OnLine Guj 6582

[30] 2017 SCC OnLine ATPMLA 40.

[31] (1999) 7 SCC 685.

[32] (2012) 6 SCC 760

[33] (2019) 20 SCC 119.

[34] 2018 SCC OnLine Ker 22772.

[35] 2017 SCC OnLine Mad 34779.

[36] 2017 SCC OnLine Guj 2517.

[37] Supra Note 5.

[38] Rose Valley Real Estate and Constructions Ltd. v. Union of India, 2015 SCC OnLine Cal 539.

[39] Hari Krishna Mandir Trust v. State of Maharashtra, (2020) 9 SCC 356.

Experts CornerKapil Madan

Introduction

The provision of bail goes back to the medieval times of Magna Carta which was drafted 800 years back and described as the keystone of individual liberty and has been consistently followed in India. Clause 39 of the Royal Charter of the Magna Carta provided that “no free man shall be seized or imprisoned or stripped of his rights or possessions, or outlawed or exiled or deprived if his standing in any other way, nor will he be proceeded against with force, except by the lawful judgment of his equals or by the law of the land”.

 

The presumption of innocence is the cardinal rule of our criminal justice system and also finds its roots under Article 21 of the Constitution of India. The  Supreme Court in several judgments have reiterated that “bail is the rule and jail is the exception”. Since presumption of innocence is attached to all the accused persons and as such they may be given the opportunity to look after and defend their own case. The Supreme Court in Sanjay Chandra v. CBI[1] has also echoed that the accused has a better chance to prepare and present his case while he is out on bail in the following words:

 

  1. It makes sense to assume that a man on bail has a better chance to prepare or present his case than one remanded in custody. And if public justice is to be promoted, mechanical detention should be demoted.

 

Furthermore, the Supreme Court in Sanjay Chandra case[2] and State of U.P. v. Amarmani Tripathi[3], has observed that the following factors among others may be considered while deciding the bail application:

 

  1. 11. … (a) The nature of accusation and the severity of punishment in case of conviction and the nature of supporting evidence.

(b) Reasonable apprehension of tampering with the witness or apprehension of threat to the complainant.

(c) Prima facie satisfaction of the court in support of the charge.

 

Most recently the Supreme Court in P. Chidambaram v. Directorate of Enforcement[4] has reiterated the “triple test” that may be satisfied for grant of bail and the same is as under:

  1. That the accused is not at “flight risk.”
  2. That there are no chances of tampering with evidences.
  3. That there is no likelihood that the accused shall influence the witnesses.

 

Offence of Money Laundering and Bail

Short History of PMLA

The Prevention of Money Laundering Act, 2002 (PMLA) was passed by Parliament in the year 2002 and it was notified on 1-7-2005. The primary object of the Act is to make money laundering an offence, and to attach the property involved in the money laundering.

 

Money laundering is a process where proceeds of crime generated out of scheduled offence is introduced as untainted money into the stream of legitimate commerce and finance. Section 2(1)(u)[5] defines proceeds of crime as under:

“proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property.

 

Section 45 (Pre-Amendment)

By virtue of Section 45, PMLA departs from the rule of presumption of innocence in as much as it introduces two further pre-conditions that may be satisfied before an accused can be enlarged on bail. Section 45 is reproduced hereinbelow for ease of reference:

 

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 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—

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

(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.

 

History of  Section 45

It is submitted that Section 45[6] originally applied to Part A appended of the Schedule appended to the Act that contained only two offences i.e. Sections 121 and 121-A of the Penal Code, 1860 (IPC) that dealt with waging or attempting to wage war or abetting waging of war against the Government of India, and conspiracy to commit such offences. Part B of the Schedule, as originally enacted, referred to certain offences of a heinous nature under the IPC and even the most heinous offences under the IPC were contained only in Part B, so that if bail were asked for such offences, the twin conditions imposed by Section 45(1) would not apply.

 

It is worthwhile to observe that an interesting amendment was made in 2012 by virtue of Act 2 of 2013 whereby the entire Part B of the Schedule was transposed into Part A of the Schedule meaning thereby that the rigours of Section 45 will now apply to all the erstwhile offences that were earlier contained in Part B of the Schedule.

 

Constitutional Validity of the Rigours of Section 45

The Supreme Court had an occasion to consider the constitutional validity of the twin conditions as imposed under Section 45 in Nikesh Tarachand Shah v. Union of India[7] where the Supreme Court was pleased to struck down the said two conditions by declaring the same being violative of Articles 14 and 21 of the Constitution of India. The Supreme Court gave the following reasons while striking down the said provision:

 

  1. A person may be enlarged on bail for the scheduled offence however while considering the bail in the PMLA proceedings, the same accused has to satisfy the test as laid down in Section 45 qua the same schedule offence for which he is already on bail. Even if the accused is acquitted in the schedule offence, even then he has to satisfy the rigours of Section 45 qua the same offence for which is already acquitted.
  1. Section 45(1) leads to a problematic situation as the impugned twin conditions has no nexus to the offences under the PMLA. The Court while granting or rejecting the bail does not apply its mind to whether the person is guilty of the offence of money laundering, but instead applies its mind to whether such person is guilty of the scheduled or predicate offence. This again leads to a manifestly arbitrary, discriminatory and unjust result which would invalidate the section.
  1. There is no provision under PMLA which excludes the grant of pre-arrest bail. This again leads to an extremely anomalous situation as a person may be granted anticipatory bail without satisfying the twin conditions for an offence under money laundering together with an offence under Part A of the Schedule, however if such person happens to be arrested for the same offences, in order to get regular bail, he has to first satisfy the twin conditions under Section 45.
  1. Section 45 is a drastic provision which turns the presumption of innocence on its head, which is fundamentally detrimental to a person accused of any offence. Before application of a section which infringes the personal liberty guaranteed by Article 21 of the Constitution of India, the Court must be doubly sure of the fact that such a provision furthers a compelling State interest for tackling serious crime. In the absence of any such compelling State interest, the indiscriminate application of the impugned conditions of Section 45 will certainly violate Article 21 of the Constitution.

 

In view of the above the Supreme Court declared Section 45(1) of the PMLA, insofar as it imposes twin conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India.

 

Position Subsequent to the Amendment under Section 45, PMLA ACT

Pursuant to the Nikesh Tarachand[8] case, Section 45 was amended w.e.f. 19-4-2018 vide Finance Act, 2018 (No. 13 of 2018) wherein for the words “punishable for a term of imprisonment of more than three years under Part A of the Schedule”, the words “under this Act” were substituted in Section 45(1) of the PMLA.

 

Section 45- Pre-Amendment

Section 45- Post-Amendment

(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:

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

(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….

 

 

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:

 

(i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and

 

(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….

 

 

Aftermath of the Amendment under Section 45, PMLA

The aforesaid Amendment in Section 45 has again sparked a debate where it is usually argued on behalf of the prosecution that the defects as pointed out in Nikesh Tarachand has been remedied. It is worthwhile to mention that the above argument does not hold any water in view of the following:

  1. Revival or resurrection of the impugned twin conditions by way of an amendment would again result in negating the presumption of innocence which is attached to any person being prosecuted of an offence and would certainly create drastic inroads into the fundamental rights of personal liberty guaranteed by Article 21 of the Constitution of India. The amendment in no manner can be said to remedy the defect qua the violation of Article 21 of the Constitution of India.
  1. The Supreme Court had an occasion to deal with the amended Section 45 in Chidambaram v. Directorate of Enforcement[9] where the Supreme Court took cognizance of amendment ensued to Section 45 and yet the bail was decided without satisfying the rigours of amended Section 45.
  1. It is submitted that the Bombay High Court in Deepak Virendra Kochhar Directorate of Enforcement[10] while dealing with the new amended Section 45 has held as under:

“… In view of clear language used in para 46 of the Supreme Court decision in Nikesh Tarachand Shah[11], Court has no hesitation in reaching a definite conclusion that amendment in sub-section (1) of Section 45 of PMLA introduced after the Supreme Court decision in Nikesh Tarachand Shah[12] does not have effect of reviving twin conditions for grant of bail, which have been declared ultra vires Articles 14 and 21 of Constitution of India….”

  1. Further, a similar view was taken by the Delhi High Court in Sai Chandrasekhar Directorate of Enforcement[13], Patna High Court in Ahilya Devi v. State of Bihar[14], Manipur High Court in Okram Ibobi Singh v. Directorate of Enforcement[15], Madhya Pradesh High Court in Vinod Bhandari v. Director[16] wherein the courts reiterated the observations laid down in Nikesh Tarachand case[17] and held that the Amendment in Section 45 no manner revives or resurrects the twin conditions that were struck down by the Supreme Court in Nikesh Tarachand[18] case.

 

Conclusion

Therefore in view of the above, it can safely be concluded that the twin conditions as imposed by the Section 45 of PMLA cannot be looked into while deciding the bail application as the same are violative of Articles 14 and 21 of the Constitution of India.

EXPERT OPINION

1. In absence of compelling state interest (offences under TADA, NDPS), the laws impinging the presumption of innocence will be in teeth with Article 21 of the Constitution of India.

2. The restrictions imposed by the special statutes on the power of the Court to grant bail must not be pushed too far that it deprives the accused of his Fundamental Rights or else the presumption of innocence secured only after centuries of struggle would lose its meaning.


† Partner, KMA Attorneys.The author can be contacted at kmadan@kmalawoffice.com or +91-9971305252.

††  Associate, KMA Attorneys.

[1] (2012) 1 SCC 40.

[2] (2012) 1 SCC 40.

[3]  (2005) 8 SCC 21.

[4] (2020) 13 SCC 791.

[5] PMLA Act, 2002

[6] PMLA Act, 2002

[7] (2018) 11 SCC 1.

[8] (2018) 11 SCC 1.

[9] (2019) 9 SCC 24.

[10] Crl. Bail Application No. 1322 of 2020, order dated 25-3-2021 (Bom).

[11] (2018) 11 SCC 1.

[12] (2018) 11 SCC 1.

[13] 2021 SCC OnLine Del 1081.

[14] Crl. Misc. No. 41413 of 2019, decided on 28-5-2020 (Pat).

[15] 2020 SCC OnLine Mani 365.

[16] 2018 SCC OnLine MP 1559.

[17] (2018) 11 SCC 1.

[18] (2018) 11 SCC 1.

Case BriefsForeign Courts

Westminster Magistrates’ Court: Marking a significant development in the Punjab National Bank fraud case, District Judge Sam Goozée while deliberating upon request submitted by the Government of India for the extradition of Nirav Modi held that, Modi’s extradition to India is compatible with his ECHR Convention rights within the meaning of Human Rights Act, 1998, therefore for further processes as per Section 87(3) of Extradition Act, 2003, the case shall be sent to the Secretary of State for a decision as to whether Nirav Modi is to be extradited. The Court also notified Mr Modi that he has the right to appeal to the High Court (on a point of law or fact or both) against the Judge’s decision to send the matter to the Secretary of State. However, it was clarified that in case Mr Modi chooses to exercise his right to appeal, the appeal will not be heard until the Secretary of State has reached a decision on the matter.

Background

CBI and Enforcement Directorate Cases: In January 2018, CBI received a complaint by the Deputy General Manager of the Punjab National Bank alleging large-scale fraud perpetrated by Nirav Modi. It was alleged that a number of Modi’s firms had fraudulently used the credit facility offered by PNB known as ‘Letters of Undertaking’ [a form of bank guarantee to facilitate foreign transactions]. Post investigating the matter, CBI charged Mr Modi with offences under Section 120B (IPC) (Criminal Conspiracy) read with Section 420 of the IPC (Cheating and Dishonestly Inducing Delivery of Property), Section 409 of IPC (criminal breach of trust by a public servant or by banker, merchant or agent) and Section 13 of the Prevention of Corruption Act 1988 (Criminal Misconduct by a Public Servant).

As a result of the CBI investigation, the Enforcement Directorate (ED) launched a parallel investigation into offences of suspected money laundering of the proceeds of the fraud reported by PNB. As a consequence, as a result, Nirav Modi was charged with an offence contrary to Section 3 of the Prevention of Money Laundering Act 2002.

Evidence Tampering: It was also alleged that, Modi conspired to remove the original documents relating to the LOU applications from PNB bank premises to the offices of a law firm. The firm was misled into accepting the documents as they were informed that the documents they were receiving were not original documents.

Subsequent disappearance and Extradition attempts by India: Owing to the uproar following the revelation of the bank fraud, Nirav Modi absconded. He was later reported to be sighted in the United Kingdom. Once his presence in the UK was confirmed, the Government of India put forth the extraction request in July 2018, to seek Modi’s return for the purposes prosecution. Post-certification of the requests by the Home Office in February 2019, the Secretary of State issued a  certificate in accordance with s.70(1) of the  Extradition Act, 2003, certifying the requests were valid and had been made in the approved way. Nirav Modi was arrested on 19th March 2019 and has remained in custody throughout the extradition proceedings.

Issues

The primary issue that concerned the Court was that Section 78(4)(b) of Extradition Act, 2003 required the Judge to decide whether the offences specified in the request are extradition offences or not.

Contentions  

Nirav Modi, via his counsels Clare Montgomery and Ben Watson challenged the extradition requests on the following grounds-

  • Whether the offences stated in the requests are extradition offences as per S. 137 of Extradition Act, 2003. Whether there is a prima facie case and evidence which would be sufficient to make a case requiring an answer by Nirav Modi if the proceedings were the summary trial of information against him.
  • Whether extradition is compatible with Modi’s ECHR Convention rights,  especially Articles 3 and 6 (as per the requirement in S. 87 of Extradition Act)
  • It was further contended that granting the extradition request will be oppressive to Mr. Modi’s mental health (S. 91 of Extradition Act).

Court’s Observations

Perusing the facts, the contentions of the case, evidences produced and issues of human rights, the Court deemed it fit to categorize its discussion and observations under the following heads-

Prima facie case (CBI, ED): After perusing “16 volumes of evidence and information from the GOI and 16 bundles of expert reports and defence evidence and a total of 32 lever arch folders of documents”, the Court concluded that, “On one possible view of the evidence, I am satisfied that there is evidence upon which NDM could be convicted in relation the conspiracy to defraud the PNB. A prima face case is established”. Similarly, the Court observed that there is a prima facie case of money laundering as well. The conclusions were based on a detailed scrutiny of the facts and evidences adduced, based on which the Court was satisfied that the LOUs issued to Modi’s firms without appropriate cash margins and without being recorded on the bank’s systems. The concerned LOUs were also issued in direct contravention to the Circular issued by the Bank. The Court was also satisfied that the evidences had clearly established the links between Nirav Modi and the co- conspirators. The CBI investigation also demonstrated that Nirav Modi had retained control of the Nirav Modi Firms but had sought to disguise the control of the firms through the use of dummy partners recruited at his behest in order to sustain the LOU scheme.

Extradition Offences:  The Court observed that offences specified in the request are extradition offences as defined by Section 137(3) of Extradition Act. Nirav Modi is accused in a Category 2 territory of the commissions of offences constituted by the conduct set out in the request. The Court noted that the burden rests on the Requesting State (in this case India) to prove to the criminal standard pursuant to Section 206 Extradition Act that the offences within the request are extradition offences. “The approach is to look at the essentials of the conduct relied on and consider whether if it had occurred in England, at the time it was alleged to have occurred, it would have constituted an English offence” that is to say that the words “constitute an offence” in Section 137(2)(b) does not mean the Requesting State has to prove guilt of Nirav Modi in English law, it simply means that, if proved, it would constitute a comparable English offence. Examining the concerned provisions of the 2003 Act, the Court stated that, “A request need not identify the relevant mens rea of the equivalent English offence for the purposes of satisfying dual criminality. Instead it suffices that the necessary mental element can be inferred by the court from the conduct identified in the request documents or that the conduct alleged includes matters capable of sustaining the mental element necessary under English law”.

Analyzing the submissions of the Indian Government, the Court was satisfied that they had proved that ‘conduct’ in the requests is capable of satisfying the requirements of the notional English offences, thereby meeting the requirements of Section 137 of Extradition Act.

Human Rights (Articles 3 and 6 of ECHR and S. 91 of Extradition Act): The Court took note of the doubts raised by Nirav Modi’s counsels that he will not be tried fairly in India, citing evidences regarding the fragility of the independence of the judiciary. The District Judge observed that, Modi’s case has garnered huge media attention due to the allegations of defrauding a State-owned bank of significant sums of money, therefore it comes of no surprise that the case has garnered political interest and some commentary. “Sensationalist media reporting in high profile criminal cases is not unique to India and is not unknown in this jurisdiction. Courts are used to dealing with high profile cases which are subjected to ill-advised political commentary”. The Court concluded that irrespective of the media and political attention, there is no evidence which raises a doubt on the independence of judiciary and suggests that upon extradition, Nirav Modi will not be tried fairly.

Regarding the concerns directed towards deterioration of Nirav Modi’s mental health, the Court noted the Indian Government’s details about Barrack No 12, Arthur Road Jail, where Nirav Modi will be lodged upon his extradition; and also the comprehensive assurances vis-à-vis Modi’s physical and mental well-being during his time in prison. The Court also perused Nirav Modi’s psychiatric report, which states that Modi requires regular psychiatric support to review and adjust his medication as required. Based on the expert opinions and information furnished on the issue, Sam Goozée, J., concluded that “I have no doubt that Courts would ensure these assurances are upheld. There is no reliable evidence of the GOI breaching their solemn diplomatic assurance… the Indian authorities have capacity to cope properly with NDM’s mental health and suicidal risk, bolstered by NDM being able to access private treatments from clinicians. I also weigh up the strong public interest in giving effect to extradition treaty obligations”.

Other Remarks: Apart from the aforementioned observations, the Court also pointed gave a sharp critique on certain aspects that emerged during the course of the proceedings-   

  • In course of examining the numerous evidences adduced, the Judge noted that, “Unlike the evidence from the Defence, the evidence produced by the GOI in the case, through no fault of Counsel, was poorly presented and very difficult to navigate”.
  • The Judge also made some scathing remarks on the “ill-advised political commentary” and sensationalist approach of the media around the case.
  • The Judge particularly took note of the comments expressed by former Supreme Court Judge Shri Markandey Katju (expert opinion), stating that, “Despite having been a former Supreme Court judge in India until his retirement in 2011 his evidence was in my assessment less than objective and reliable. His evidence in Court appeared tinged with resentment towards former senior judicial colleagues. It had hallmarks of an outspoken critic with his own personal agenda. I found his evidence and behaviour in engaging the media the day before giving evidence to be questionable for someone who served the Indian Judiciary at such a high level appointed to guard and protect the rule of law”.

[Government of India v. Nirav Deepak Modi, decided on 25-02-2021]


Sucheta Sarkar, Editorial Assistant has put this story together.

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of SA Bobde, CJ and AS Bopanna* and V. Ramasubramanian, JJ has held that  under the Prevention of Money ­Laundering Act, 2002, though the Directorate of Enforcement is vested with sufficient power to freeze the accounts; such power is circumscribed by a procedure laid down under the statute.

“It certainly is not the requirement that the communication addressed to the Bank itself should contain all the details. But what is necessary is an order in the file recording the belief as provided under Section 17(1) of PMLA before the communication is issued and thereafter the requirement of Section 17(2) of PMLA after the freezing is made is complied.”

Background

Enforcement Directorate in order to track the money trail relating to the predicate offence by the appellant company and prevent layering of the same had initiated the proceedings under the Prevention of Money ­Laundering Act, 2002 (PMLA). This led to the freezing of the accounts maintained by the appellant company.

It was Appellant Company’s case that the freezing of the accounts has prejudiced the appellant, inasmuch as, the amount in the account which belongs to the appellant is made unavailable to them due to which statutory payments to be made to the Competent Authorities under various enactments is withheld and the payment of salary which is due to the employees is also prevented. The limited issue before the Supreme Court, hence, is that of defreezing the bank account so as to enable the appellant to make the statutory payments.

Analysis

Scheme of PMLA

While PMLA seeks to achieve the object of preventing money laundering and bring to book the offenders, it also safeguards the rights of the persons who would be proceeded against under the Act by ensuring fairness in procedure. Hence a procedure, including timeline is provided so as to ensure that power is exercised for the purpose to which the officer is vested with such power and the Adjudicating Authority is also kept in the loop.

Section 17 of PMLA

The pre-requisite of Section 17 of PMLA is that the Director or such other Authorised Officer in order to exercise the power under the section, should on the basis of information in his possession, have reason to believe that such person has committed acts relating to money laundering and there is need to seize any record or property found in the search.  Such belief of the officer should be recorded in writing.

  • Sub-section (1A) to Section 17 of PMLA provides that the Officer Authorised under sub-section (1) may make an order to freeze such record or property where it is not practicable to seize such record or property.
  • Subsection (2) provides that after search and seizure or upon issuance of a freezing order the Authorised Officer shall forward a copy of the reasons recorded along with material in his possession to the Adjudicating Authority in a sealed envelope.
  • Sub-section (4) provides that the Authority seizing or freezing any record or property under sub-section (1) or (1A) shall within a period of thirty days from such seizure or freezing, as the case may be, file an application before the Adjudicating Authority requesting for retention of such record or properties seized.

The Court. Further, emphasised that the freezing of the account will also require the same procedure since a bank account having alleged ‘proceeds of crime’ would fall both under the ambit “property” and “records”.

Discussion on facts

The Directorate of Enforcement in their counter affidavit had taken contradictory stand inasmuch as, while explaining the need to freeze the account has stated that the ‘stop operation’ was requested to stop the further layering/diversion of proceeds of crime and to safeguard the proceeds of crime, which we notice is a power available under PMLA. But in the counter affidavit it is strangely stated that the same has not been done under Section 17(1) of the PMLA. However, in contrast it has been further averred with regard to the power available under PMLA and that PMLA being a stand-alone enactment and independent process whereunder Section 71 of PMLA has an overriding affect over other laws. Irrespective of the stand taken, the power exercised by the Competent Authority should be shown to be in the manner as has been provided in law, in this case under PMLA.

In the instant case, the procedure contemplated under Section 17 of PMLA to which reference is made above has not been followed by the Officer Authorised.

“Except issuing the impugned communication dated 15.05.2020 to AML Officer to seek freezing, no other procedure contemplated in law is followed. In fact, the impugned communication does not even refer to the belief of the Authorised Officer even if the same was recorded separately. It only states that the Officer is investigating the case and seeks for relevant documents, but in the tabular column abruptly states that the accounts have to be ‘debit freezed/stop operations’.”

Hence, the freezing or the continuation thereof is without due compliance of the legal requirement and, therefore, not sustainable.

Power of seizure under Section 102 CrPC – Applicability

The Court rejected Additional Solicitor General S.V. Raju’s contention that the power of seizure is available under Section 102 of the Code of Criminal Procedure, which has been exercised and as such the freezing of the account would remain valid, on the following grounds:

  1. Directorate of Enforcement has contended that PMLA is a standalone enactment. If that be so and when such enactment contains a provision for seizure which includes freezing, the power available therein is to be exercised and the procedure contemplated therein is to be complied.
  2. When the power is available under the special enactment, the question of resorting to the power under the general law does not arise.
  3. The power under Section 102 CrPC is to the Police Officer during the course of investigation and the scheme of the provision is different from the scheme under PMLA. Further, even sub¬section (3) to Section 102 CrPC requires that the Police Officer shall forthwith report the seizure to the Magistrate having jurisdiction, the compliance of which is also not shown if the said provision was in fact invoked. The impugned communication dated 15.05.2020 does not refer to the power being exercised under the Code of Criminal Procedure.

The Court, hence, said that,

“The action sought to be sustained should be with reference to the contents of the impugned order/communication and the same cannot be justified by improving the same through the contention raised in the objection statement or affidavit filed before the Court.”

Conclusion

The Court noticed that in the instant case, though the Authorised Officer is vested with sufficient power; such power is circumscribed by a procedure laid down under the statute. As such the power is to be exercised in that manner alone, failing which it would fall foul of the requirement of complying due process under law.

Finding fault with the Authorised Officer and declaring the action bad only in so far as not following the legal requirement before and after freezing the account, the Court directed the banks to defreeze the respective accounts and clear the cheques issued by the appellant, drawn in favour of the Competent Authority towards the ITDS, PF, ESI, Professional Tax, Gratuity and LIC employees’ deductions, subject to availability of the funds in the account concerned.

It further directed that if any further amount is available in the account after payment of the statutory dues and with regard to the same any action is to be taken by the Directorate of Enforcement within a reasonable time, it would open to them to do so subject to compliance of the required procedure afresh, as contemplated in law.

[OPTO Circuit India Ltd. v. Axis Bank, 2021 SCC OnLine SC 55, decided on 03.02.2021]


*Justice AS Bopanna has penned this judgment

Appearances before the Court

For the appellant company: Senior Advocate Mukul Rohatgi,

For Directorate of Enforcement: Additional Solicitor General S.V. Raju

Op EdsOP. ED.

Introduction

The Prevention of Money-Laundering Act, 2002[1] (PMLA) is a pro-active legislation keen on curbing money-laundering and bringing violators to justice. Such a legislation is definitely the need of the hour considering the number of scams this country has seen in its past and a strong law securing the 4 walls of justice for offenders is welcomed by the people at large. However, off-late, criminal law practitioners (defense lawyers) have found it challenging to deal with PMLA for the fact that the 4 ends securing the 4 walls of ‘presumed’ justice is far too airtight even for genuine non-offenders to escape its clutches, if caught by sheer happenstance. This article deals with one such scenario.

PMLA punishes an individual for the offence of money-laundering under Sections 3 and 4 which read as follows:

3. Offence of money-laundering.— Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. 

[Explanation. – For the removal of doubts, it is hereby clarified that,

(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely,

(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e) projecting as untainted property; or

(f) claiming as untainted property, in any manner whatsoever;

 (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever].

  1. Punishment for money-laundering.— Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine:

Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words which may extend to seven years, the words which may extend to ten years had been substituted.

On a bare reading of these two provisions, any money that is construed to be ‘proceeds of crime’ is liable to be punished under PMLA. ‘Proceeds of crime’ is defined under Section 2(1)(u) as any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence[2]. It is my contention that an offence under the PMLA cannot be a stand-alone offence, as an offence is required to be committed (under the Schedule) for the monies/properties to be deemed ‘proceeds of crime’. Without commission of a crime, there exists no proceeds from crime.

The Karnataka High Court in K. Sowbaghya v. Union of India[3] has observed that:

having regard to the meaning attributed to ‘proceeds of crime’ under PMLA, whereby crime contemplated is the alleged scheduled offence, the ‘proceeds of crime’ contemplated under Sections 3 and 4 are clearly and inextricably linked to the scheduled offence and it is not possible to envision an offence under PMLA as a stand-alone offence without the guilt of the offender in the scheduled offence being established.

Therefore, on a logical reasoning of the said proposition, only if an offence under the Schedule to PMLA is committed, then the question of proceeds of crime arises.

Coming to the thesis or central question for discussion in this article, there are various offences under various statutes that have been adduced as scheduled offences under the PMLA, and for the major part of the Schedule, I have no quarrel with the intention of the legislature. For example, an offence under Section 25 of the Arms Act (which is a scheduled offence under the PMLA) punishes the individual who possesses or sells unlicensed arms and ammunition. The PMLA, rightly so, punishes the individual for the proceeds he/she has made or property acquired through such possession or sale. Taking another example, certain offences under the Penal Code, 1860 such as Sections 364-A (kidnapping for ransom), 384 to 389 (extortion), 392 to 402 (robbery and dacoity) etc are also scheduled offences under the PMLA. Similar to the previous example, IPC punishes the accused for the offences of kidnapping, extortion or robbery/dacoity whereas the PMLA punishes the accused for the money made or property acquired from the commission of such crimes.

The problem arises when considering offences under the Prevention of Corruption Act, 1988[4] (the PC Act), particularly Section 13. Offences under Section 13 (criminal misconduct by a public servant), also a scheduled offence under PMLA, punishes a public servant for receiving illegal gratification by using his/her public office, misappropriating property or owning/possessing property worth beyond known sources of income or illicit enrichment of wealth (general overview). Contrary to the argument that the PC Act only punishes a person for being corrupt or misusing his public office and PMLA punishes the monies made or properties acquired from such misconduct, I argue that the PC Act collectively performs the functions of the PMLA as well.

The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from money-laundering. Therefore, the function of PMLA is to seize/confiscate the properties so enjoyed by individuals who have acquired such property by commission of one or more offences which can be acted upon under the Act, apart from punishment for holding such property. The PC Act on the other hand, not only punishes an individual for being corrupt and holding tainted property, it also takes away any property/money derived from such abuse of power/criminal misconduct for the same reason that such property was acquired through illegal means.

The Supreme Court while dealing with a case under the PC Act in Yogendra Kumar Jaiswal v. State of Bihar[5] held that:

If a person acquires property by means which are not legally approved, the State would be perfectly justified to deprive such person of the enjoyment of such ill-gotten wealth. There is a public interest in ensuring that persons who cannot establish that they have legitimate sources to acquire the assets held by them, do not enjoy such wealth.  Such a deprivation would certainly be consistent with the requirement of Articles 300-A and 14 of the Constitution which prevent the State from arbitrarily depriving a person of his property.

When the PC Act inclusively curbs and confiscates “proceeds of crime”, would prosecution for the same under PMLA not amount to double jeopardy?

Provisions of the PC Act examined

An analysis of Section 13 of the PC Act will shed further light on this theory. Section 13 reads as follows:

13. Criminal Misconduct by a Public Servant. [(1) A public servant is said to commit the offence of criminal misconduct,

(a) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or any property under his control as a public servant or allows any other person so to do; or

(b) if he intentionally enriches himself illicitly during the period of his office.

Explanation 1.- A person shall be presumed to have intentionally enriched himself illicitly if he or any person on his behalf, is in possession of or has, at any time during the period of his office, been in possession of pecuniary resources or property disproportionate to his known sources of income which the public servant cannot satisfactorily account for.

Explanation 2.- The expression known sources of income means income received from any lawful sources.]

(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than [four years] but which may extend to [ten years] and shall also be liable to fine.[6]

Most cases pending or newly charged are predominantly under the provisions prior to the 2018 amendment due to the check period and hence, emphasis will also be placed on Sections 13(1)(a) to (e), as they were, prior to the amendment. However, the following explanation would be squarely applicable to Section 13 as it is subsequent to the amendment also.

Provision

(Before Amendment)

Key Word/Phrase
13(1)(a) Gratification other than legal remuneration
13(1)(b) Valuable thing
13(1)(c) Misappropriates property entrusted to him or under his control
13(1)(d) Valuable thing or pecuniary advantage
13(1)(e) Pecuniary resources or property disproportionate to known sources of income
(After amendment) Key Word/Phrase
13(1)(a) Misappropriates property entrusted to him or under his control
13(1)(b) Intentionally enriches himself illicitly

All these provisions have a key word or a phrase within which the alleged actions have to fit into for them to be charged with one of the above offences (all of which are scheduled offences under PMLA). At this point, it is also pertinent to examine the definition of ‘property’ as under Section 2(1)(v) of PMLA:

(v) “property” means any property or asset of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;

Explanation.– For the removal of doubts, it is hereby clarified that the term “property” includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences;”

A bare reading of this definition would show that all keywords/phrases for making one liable under Section 13 of the PC Act also (on interpretation) fall under the definition of Section 2(1)(v) of PMLA. Apart from jail time, the objective of Sections 3 and 4 of PMLA are to confiscate any property that is construed to be from proceeds of crime as the person holding the said property has not obtained and enjoyed them through legal means. This, in its very essence is what Section 13 is also trying to accomplish. The Oxford English Dictionary defines the word “pecuniary” as “of or in money”, thereby making construction of the term ‘pecuniary advantage’ to also fall under the definition of property under Section 2(1)(v) of PMLA. This comparison is only to show that cumulatively, Section 13 of the PC Act and Sections 3 and 4 of PMLA are trying to achieve the same goal and have the same objectives. Therefore, initiating action against an individual under both the provisions of law for the same offence or transaction, would amount to double jeopardy.

It is agreed as stated by the Andhra Pradesh High Court in B. Rama Raju v. Union of India[7] that punishment under Sections 3 and 4 of PMLA are distinct proceedings from Section 5 which is attachment of property and subsequent confiscation. However, in a PC Act case, the trial court (CBI Court in most jurisdictions) passes an order of attachment of tainted property or property under presumption that it is through illegal gratifications during the pendency of trial. This is where Section 5 of PMLA comes in conflict with the proceedings already pending before the trial court. Once the properties are already attached and since the PMLA also permits an order of attachment under Section 5, the Enforcement Directorate making an application to transfer all properties from CBI to ED is prima facie posing a direct threat to the investigation conducted by CBI.[8] Both the agencies are looking into the same properties for offences committed and further, only if an offence is established by CBI can it be treated as ‘proceeds of crime’ by ED.

The Supreme Court in Kanhaiyalal v. D.R. Banaji[9] had held that:

 “If a court has exercised its power to appoint a receiver of a certain property, it has done so with a view to preserving the property for the benefit of the rightful owner as judicially determined. If other courts or tribunals of coordinate or exclusive jurisdiction were to permit proceedings to go independently of the court which was placed the custody of the property in the hands of the receiver, there was a likelihood of confusion in the administration of justice and possible conflict of jurisdiction.

Even though the observations made therein were in a civil case, the same principles are to be applied to criminal cases also, as attachment of property in these matters are quasi civil in nature. If the Enforcement Directorate were to interfere with pending proceedings conducted by CBI, then there would arise a conflict of jurisdiction since both are on the basis of the same offence and properties possessed therein.

The most essential ingredient for an offence under Section 3 of PMLA is the existence of property that is deemed to be a proceed of crime and Section 13 of the PC Act, quintessentially performs the twin function by making the accused public servant liable for abusing his/her office, possessing such property as well as confiscating the said property since it is a proceed of a ‘crime’ committed by the public servant. To makes things more convincing, punishment under Section 13(2) of the PC Act is much more severe than Section 4 of PMLA, thereby justifying its twin purpose.

Double Jeopardy explained

The concept of double jeopardy has been known to mankind from time immemorial. Dating back to 355 BC in Athens, Greece, the law forbids the same man to be tried twice on the same issue. Double jeopardy or non bis in idem is a procedural defense that prevents a person from being tried again on the same or similar charges following a valid conviction or acquittal. The principle of double jeopardy in India existed prior to the drafting and enforcement of the Constitution. It was first enacted in Section 403(1) of the Criminal Procedure Code, 1898 which is now Section 300 of the amended Criminal Procedure Code, 1973. A partial protection against double jeopardy is a Fundamental Right guaranteed under Article 20 (2) of the Constitution of India, which states “No person shall be prosecuted and punished for the same offence more than once”.

In Thomas Dana v. State of Punjab[10], a Constitutional Bench of 5 Judges laid down 3 requirements for double jeopardy i.e. prosecution, punishment and same offence. If these 3 are complied with, then the protection under Article 20(2) is guaranteed.

Section 300 of the Code of Criminal Procedure also protects a person from being tried again where he/she has already been tried and acquitted/convicted for the same offence. Section 26 of the General Clauses Act states that:

 “Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offence.

This is further enumerated by the Supreme Court in Manipur Administration v. Thokchom Bira Singh[11], that for Article 20(2) and Section 26 of the General Clauses Act to act as a bar for second prosecution and its consequential punishment thereunder, it must be for the same offence that is, an offence whose ingredients are the same. Applying the principles of Section 26 of the General Clauses Act, Article 20(2) and the above decision of the  Supreme Court to the present question at hand, it can be stated that since the offence for which PMLA is invoked is essentially the same offence as under the PC Act, the above provisions will get attracted. Therefore, ingredients, occurrences and circumstances are the same for an offence under Section 13 of the PC Act and Sections 3 and 4 of PMLA (including evidence, both oral and documentary) i.e. money/properties acquired through commission of an offence, it is to be concluded that prosecution under PMLA is a second trial for the same offence when the PC Act proceedings are pending or have attained finality.

Conclusions

I have, in this article, tried to give an outline that prima facie, Section 13 of the PC Act and Sections 3 and 4 of PMLA do not harmoniously gel with each other. On the one hand, only if the primary or scheduled crime is made out can a prosecution under PMLA be maintainable (there are certain lines of thought which state, offence under PMLA is stand-alone and is not dependent on any other offence being proved/committed) and on the other hand, even on the existence of an offence under Section 13 of PC Act, the PC Act is a self-sufficient Act which punishes the accused for both abusing the position of being a public servant, as well as having acquired or being in possession of illegal gratification or property that is either misappropriated or disproportionate to known sources of income. Hence, a subsequent action under  PMLA is nothing but a violation of the constitutionally protected fundamental right against double jeopardy. In concluding remarks, it would be pertinent to note that the Schedule to PMLA is to be revisited and pros and cons are to be considered by the Courts having jurisdiction as to whether the provisions of the PC Act (not restricted to Section 13) are to be considered scheduled offences under PMLA.


*Advocate, Madras High Court

[1] Prevention of Money Laundering Act, 2002

[2]Indian Bank v. Government of India, 2012 SCC Online Mad 2526  

[3] 2016 SCC Online Kar 282

[4] Prevention of Corruption Act, 1988

[5](2016) 3 SCC 183

[6]Prior to the 2018 amendment, Section 13(1) reads as follows;

  1. Criminal misconduct by a public servant.—(1) A public servant is said to commit the offence of criminal misconduct,—

(a) if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person any gratification other than legal remuneration as a motive or reward such as is mentioned in section 7; or

(b) if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or for a consideration which he knows to be inadequate from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned; or

(c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do; or

(d) if he,—

(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing

or pecuniary advantage; or

(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or

(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or

(e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income.

Explanation.—For the purposes of this section, “known sources of income” means income received from any lawful source and such receipt has been intimated in accordance with the provisions of any law, rules or orders for the time being applicable to a public servant.

[7] 2011 SCC OnLine AP 152

[8] I take this stand being fully aware of the fact that Section 18-A of the PC Act, pursuant to the 2018 amendment, has paved way and given priority to provisions of PMLA (with respect to attachment) over the Criminal Law (Amendment) Ordinance, 1944 under provisions of which attachment and confiscation are usually made under the PC Act. This bereft of the fact that if attachment in PMLA takes precedence over the PC Act, then the whole idea of establishing proceeds of crime would become null as the procedure for trial are different under both Acts and trial under PMLA is much more accelerated due to its narrow scope for the offence of proceeds of crime.

[9] 1959 SCR 333

[10] 1959 Supp (1) SCR 274

[11] (1964) 7 SCR 123 

Hot Off The PressNews

IT Department conducts serach on Chinese Entities premises

Based on the credible information that few Chinese individuals and their Indian associates were involved in money laundering and hawala transactions through series of shell entities, a search action was mounted at various premises of these Chinese entities, their close confederates and couple of bank employees.

Search action revealed that at the behest of Chinese individuals, more than 40 bank accounts were created in various dummy entities, entering into credits of more than Rs 1,000 Crore over the period.

A subsidiary of Chinese company and its related concerns have taken over Rs 100 Crore bogus advances from shell entities for opening businesses of retail showrooms in India. Further, incriminating documents in respect of hawala transactions and laundering of money with the active involvement of bank employees and Chartered accountants has been found as a result of search action. Evidences of foreign hawala transactions involving Hongkong and US dollars have also been unearthed. Further investigations are under progress.


Ministry of Finance

[Press Release dt. 11-08-2020]

[Source: PIB]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): A Bench comprising of Justice S.J. Mukhopadhaya (Chairperson) and Justice B.L. Bhat (Judicial member) rejected an appeal challenging an NCLT judgement where it allowed a liquidator to sell the assets of a company which had been attached by the Directorate of Enforcement (ED) during the period of ‘Moratorium’.

The Resolution Professional had filed an application before the NCLT for releasing the attachment of certain assets of Varrsana Ispat Limited (Corporate Debtor) by the ED. The NCLT held that ordering the release of the attached assets would not be maintainable since the attachment order was issued before the order of declaration of ‘Moratorium’ in the present case. The aforesaid NCLT order had been challenged in this appeal.

The Tribunal rejected the appellant’s contentions that Section 14 of the Insolvency and Bankruptcy Code, 2016 would have an overriding effect over the Prevention of Money Laundering Act, 2002 and that creditors and investigative agencies could not disrupt the ‘Corporate Insolvency Resolution Process’ during the period of ‘Moratorium’. The bench observed that since the provisions of the Prevention of Money Laundering Act, 2002 pertained to ‘proceeds of crime,’ Section 14 of the I&B Code would not be applicable to such a proceeding.

The Order stated that the offence of money-laundering has nothing to do with the ‘Corporate Debtor’ but will be applicable to individuals such as ex-Directors and shareholders of the ‘Corporate Debtor,’ who cannot be given protection from the Prevention of Money Laundering Act, 2002 by taking advantage of Section 14 of the I&B Code. Rather, it held that both the Acts would be invoked simultaneously. Since the attachments were made by the ED long before the initiation of the Corporate Insolvency Resolution Process, this would disallow the ‘Resolution Professional’ from taking advantage of Section 14 of the I&B Code. [Varrsana Ispat Limited v. Deputy Director, Directorate of Enforcement, Company Appeal (AT) (Insolvency) No. 493 of 2018, decided on 27-07-2020]

Case BriefsHigh Courts

Delhi High Court: Anup Jairam Bhambhani J., granted bail to an accused in a money-laundering case involving a sum of more than INR 2000 crores. Upholding the legal principle of the presumption of innocence of an accused until proven guilty, the Court found that in the absence of compelling grounds and reasons, the under-trial accused could not be detained in judicial custody.

The applicant sought regular bail after being arrested in the complaint case arising from an Enforcement Case Information Report (ECIR). According to the Enforcement Directorate’s (ED) allegations, the applicant owns 50% shares in a company which in turn owns 50% of an RBI recognized non-banking financial company Religare Enterprises Ltd. (REL). It is alleged that the applicant misappropriated money, amounting to over INR 2036 crores, lent by REL to entities controlled or owned by the applicant.

The Court opined that the applicant was not in a position to tamper with evidence, since the allegedly offending transactions cannot be altered by virtue of their being reflected in several records, including those of regulatory bodies such as the RBI, SEBI, etc. and also because all records of such transactions had already been seized by the ED. Since the ED had confirmed that it would not interrogate the applicant while he was in judicial custody, it found the applicant’s detention unreasonable, especially as there was no foreseeable timeline within which the ED was to complete its investigations.

Bench held that the applicant had deep roots in society and was not a flight-risk, so “no purpose would be served by keeping him in judicial custody.” The nature of an offence should have a limited role in determining the merits of a bail application, and even though the applicant is accused of committing an offence whose financial implications are large in quantum, such losses cannot be compensated for by keeping the under-trial applicant in prolonged custody. It emphasized on the importance of time-bound investigations, stating that “criminal investigation is not a metaphorical fishing-rod handed to an investigating agency, to indulge its penchant for ‘fishing around’ for evidence.”

Highlighting the dire situation of undertrials in prisons, it reiterated Sanjay Chandra v. CBI’s (2012) 1 SCC 40 ruling that every man is innocent until duly tried and found guilty, and that it would be inappropriate to refuse bail to an undertrial simply to give him “a taste of imprisonment as a lesson.” It approved the bail application and directed the applicant to be released, subject to certain conditions laid down in the order. [Shivinder Mohan Singh v. Directorate of Enforcement, 2020 SCC OnLine Del 766 , decided on 23-07-2020]

Op EdsOP. ED.

The scourge of money laundering is an issue that has plagued society for ages now, carrying with it the potential to not only destabilise the international financial system, but has also having been instrumental in funding for terrorism, illicit drugs and trafficking among a few major issues which erode modern day society. The efforts of the international community as a whole to tackle this menace though, have been relatively recent. The formation of the Financial Action Task Force (FATF), as an international organisation to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, in the year 1989 was a major step forward in the battle against money laundering. From time to time the FATF has passed stringent recommendations to curb laundering of money. Though India joined the FATF comparatively late, in 2010, its efforts to tackle money laundering as a standalone issue had already commenced with the introduction of the Prevention of Money Laundering Bill, 1998 in the Lok Sabha on 4th August 1998 by the Government of the day, which was subsequently referred to the Standing Committee on Finance and subsequently upon receipt of its recommendations was passed by both Houses of Parliament and received the assent of the President on 17th January 2003, giving birth to the Prevention of Money Laundering Act, 2002 (PMLA)[1]. The PMLA contains stringent provisions to tackle money laundering, including but not limited to a broad definition of “proceeds of crime” [Section 2(1)(u)], which is the very basis for prosecution under the Act, attachment of property prior to conviction for money laundering (Section 5), freezing of bank accounts (Section 17) arrest of a person (Section 19) on the subjective satisfaction of the Enforcement Directorate (the agency tasked with the implementation of the Act) reverse burden of proof as to the legitimacy of the “proceeds of crime” (Section 24) and making admissible statements made before specified officials of the Enforcement Directorate (Section 50).

One of the most controversial provisions of the PMLA, the constitutionality of which has already been challenged before the different High Courts of the country[2], is Section 24, which places the burden upon the accused to dispel the presumption that the property in possession of an accused is not “proceeds of crime” and is untainted. The original provision at the time of passing of the enactment read as follows: 

24. Burden of Proof: When a person is accused of having committed the offence under Section 3, the burden of proving that proceeds of crime are untainted property shall be on the accused.”

The same was subsequently amended. The present article is not seeking to comment on the constitutional validity of Section 24 PMLA but to understand upon whom does Section 24 PMLA thrust the responsibility to prove a fact i.e. the prosecution or the accused and at what stage can it be invoked by the prosecution.

Section 24 PMLA, is a shift from the traditional responsibility/duty/obligation cast upon the prosecution to prove its case against an  accused  beyond reasonable doubt. The duty of the prosecution to prove its case beyond reasonable doubt is an integral part of the Fundamental Right of a person accused of having committed an offence to be presumed innocent until proven guilty.

The parliamentary debates at the time of introduction of the same show that the same was indeed a controversial provision, with jurists of the stature of no less than Mr. Fali S. Nariman (Senior Advocate & Ex-Member of Parliament) and Late Mr. Ram Jethmalani (Senior Advocate & Ex-Member of Parliament) having voiced reservations about incorporation of such a provision.

Mr. Fali S. Nariman stated[3] “...But what worries me is the burden of proof, that is, Section 24….”. The Late Mr. Ram Jethmalani in fact argued[4] that “When a person is accused of having committed an offence under Clause 3, the burden of proving that the proceeds of crime are untainted property shall be on the accused. The presumption is not arising from, at least, some fact having been proved. Merely because you accuse somebody, he has to prove it. Therefore, please understand that this presumption is totally unreasonable, irrational, and will create a lot of problems. It will not stand the test of constitutional validity at all.”

It is noteworthy that though the Courts have upheld the validity of provisions similar to Section 24 PMLA, however, they have at the same time held that in such statutes providing for such a reverse burden, it is incumbent for the prosecution to first prove the foundational facts beyond any reasonable doubt, which would in itself be subjected to greater scrutiny, before the presumption can be raised against an  accused[5] . The Courts have further gone onto hold that even in such situations it is incumbent upon the prosecution to prove the guilt of the  accused  and it cannot be absolved of this responsibility[6]. Specifically in the context of Section 24 PMLA, various High Courts have held that the presumption contained therein is not to be interpreted that the property concerned is “proceeds of crime”, it can only be held so once it is proven by the prosecution, and it is only upon such proof can the same be taken to be involved in money laundering[7]. It has been further held that Section 24 PMLA does not contain a presumption as to the knowledge of the  accused  of the “proceeds of crime”, which still has to be demonstrated by the  prosecution. In fact, the High Court of Kerala has gone a step further and held in  Kavitha G. Pillai v. The Joint Director[8] (supra) that the presumption contained is only that the same are “proceeds of crime” and the question of whether the same are actually ill-gotten can only be determined upon the proof of the scheduled offence.

Considering the fact that Section 24 PMLA is nonetheless a very drastic provision, and prone to misuse and abuse by over-zealous and/or corrupt officials, Courts have to tread cautiously while proceeding with cases of money laundering. In the words of William Blackstone, in his commentaries on the Laws of England “It is better that ten guilty persons escape than that one innocent suffer”.The same would hold true even with respect to Section 24 PMLA, which is not a presumption as to guilt but a rebuttable presumption of a fact. Therefore, the question as to what stage the presumption kicks in, becomes pertinent. Does it apply at all stages even during a bail application? Does it apply during the stage of summoning an accused or framing charges? Or does it apply only at the final stages of the trial?

Owing to the fact that the unamended Section 24 PMLA as originally enacted was prone to abuse, arising out of the wide gamut of meanings which could be assigned to the word “ accused ” prevalent therein, Parliament deemed it fit to amend it vide the PMLA (Amendment) Act, 2012 and amended it as follows:

“24. Burden of proof—In any proceeding relating to proceeds of crime under this Act,—

(a) in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and

(b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering.”

    (emphasis supplied)

A comparison of the unamended and amended Section 24 PMLA would show that the word “ accused ” has been replaced with the phrase “Charged with the offence of money laundering”. It would thus be necessary to interpret the latter phrase to arrive at a conclusion as to when the said presumption would operate against an  accused .

Historically, the Courts had been hesitant to rely upon the Parliamentary Debates in aid of interpretation of a provision, as can be seen from decisions of the  Supreme Court in State of Travancorev. Bombay Co. Ltd.[9] , State of West Bengal v. Union of India[10]. Subsequently, the Courts commenced placing reliance upon the Parliamentary Debates to decipher the intention of an ambiguous word/phrase appearing in a provision, as discernible from the debates surrounding the said provision. As recently as 2017, a 7-Judge Bench of the  Supreme Court, in of Abhiram Singhv. C.D. Commachen[11]  placed reliance upon Parliamentary Debates to understand the connotation of the word “his” appearing in Section 123(3) of the Representation of People Act, 1951. Thus, the Parliamentary Debates while amending Section 24 PMLA would be relevant to ascertain the meaning of the word “charged” appearing therein.

During the course of the Debates leading to the passing of the PMLA (Amendment) Act, 2012, Mr. P. Chidambaram, the then Finance Minister, indicated that “If you look at the original section in the parent Act, Section 24, when a person is accused of having committed the offence, the burden of proving that the proceeds of crime are untainted property shall be on the accused. This was a drastic provision. Simply by an accusation that he had committed an offence of money-laundering, the burden of proof was shifted to the accused. He may not even be charged at that time. This was what we found to be an onerous provision and an unfair provision……then, the question was asked that by using the word ‘charged’, whether we are shifting the burden of proof even at the stage of the report under 173(8). The answer is: obviously, no. Under 173(8), what is filed is a report after investigation. The word ‘charge’ occurs for the first time in the Criminal Procedure Code under Section 211, ‘Every charge under this Code shall state the offence with which the accused is charged.’ So, we borrow the language of 211 and say, replace the word ‘accused’ and say ‘when a person is charged with an offence, that is when the court frames a charge against him under Section 211’. Only at that stage, the burden shifts to him.”  The same is a clear indication of the legislative intent that the presumption against a person is not to apply even at the stage of summoning a person or at the stage of deciding a bail application, but only to apply at the stage when charges are framed against the person.

Here it would be interesting to note that despite the legislative intent being to shield those people who are simply “ accused ” and have not yet been “charged” for the offence of Money Laundering, Courts no less than the   Supreme Court have held Section 24 PMLA to be applicable even at the stage of bail. The  Supreme Court in Gautam Kunduv. Directorate of Enforcement[12], Rohit Tandon v. Directorate of Enforcement[13], the  Gujarat High Court in Pradeep Nirankarnath Sharmav. Directorate of Enforcement[14], Rakesh Manekchand Kothariv. Union of India[15], Jignesh Kishorebhaiv. State of Gujarat[16], the  High Court of Bombay in Chhagan Chandrakant Bhujbalv. Union of India[17], the  High Court of Madras in Farouk Irani v. The Deputy Director, Directorate of Enforcement[18]  have all implicitly held Section 24 to be applicable at the stage of Bail. However, two facts become important to note here, first in none of the cases cited above did the Courts delve into the meaning of the phrase “Charged with the offence of money laundering” and second, most of the aforesaid decisions came at a time when Section 45 PMLA provided two conditions to be complied with before an  accused  person could be released on bail, one of them being the requirement of the  accused  to demonstrate that he is not guilty of the scheduled offence relating to the proceeds of crime. The twin conditions were subsequently held to be unconstitutional by the  Supreme Court in Nikesh Tarachand Shah v. Union of India[19] being violative of Articles 14 and 21 of the Constitution of India. It is possible that the views of the Supreme Court and of the  High Courts in the aforementioned decisions on Section 24 PMLA being applicable at the stage of bail were in light of the existence of the twin conditions against release on bail in Section 45 PMLA, requiring an  accused  to demonstrate his innocence, which is in essence a supplementary provision to Section 24 PMLA.

At the same time, it would be noteworthy there are also judgments which have held that Section 24 PMLA is inapplicable at the stage of bail, such as the decision of the  Bombay High Court in Chhagan Chandrakant Bhujbalv. Assistant Director, Directorate of Enforcement[20] and the decision of the  Gujarat High Court in Jignesh Kishorebhai Bhajiawala v. State of Gujarat[21] and the decision of the  High Court of Delhi in Upendra Raiv.Directorate of Enforcement[22] , wherein the said Courts have implied that Section 24 PMLA would not apply at the stage of bail. It would be relevant to note that the said judgments were passed after the judgment passed by the Supreme Court in Nikesh Tarachand Shah (supra) and the said Courts took the same into consideration, which makes it safe to infer that the earlier decisions applying Section 24 PMLA even at the stage of bail could have been in view of the existence of the twin conditions against release of a person on bail as contained in Section 45 PMLA. Now with the twin conditions having been held unconstitutional and further in view of the clear intent of the legislators while amending Section 24 PMLA it can be said that Section 24 cannot be invoked at the stage of bail or till after the framing of charges by a competent court and hence the earlier judgments mentioned above, can no longer be considered as binding precedent on the aspect of applicability of Section 24 PMLA at the stage of bail.

The above legal question about burden of proof can be tackled in another manner. To rebut the presumption raised against him, an  accused  person would have to demonstrate that the property in question is not “proceeds of crime”. In order to do that he would, as has been correctly held by the  High Court of Andhra Pradesh in  B. Rama Raju  v. Union of India (supra), the  accused  would have to show his income, earnings, assets to show how he has acquired the property in question. In  Abdul Rashid Ibrahim Mansuriv. State of Gujarat[23], the Supreme Court while dealing with a case pertaining to NDPS Act held that the burden of proof cast on the  accused  under Section 35[24] of the said Act can be discharged through different modes. Firstly, the accused  can rely on the materials available in the prosecution evidence. Secondly, he can elicit answers from prosecution witnesses through cross-examination to dispel any such doubt. Thirdly, he may also adduce other evidence when he is called upon to enter on his defence. At the first opportunity, “the accused  can rely on the materials available in the prosecution evidence” is fraught with its own difficulties i.e. how do ensure the prosecution relies upon material which will favor the accused. It must also be kept in mind that it is not something alien to investigating agencies to place reliance upon only those materials which favor the prosecution and to either ignore or to keep from the Court the material favoring the accused. This has prompted the Courts to hold that in the interests of a fair trial, complete disclosure of materials in the possession of the investigating agencies has to be made to the accused so that he is in a position to effectively defend himself/ herself[25]. But here also there are limitations in terms of whether the un-relied upon documents are documents which were seized by the Investigating Officer under a seizure memo or the same are simply in his custody or it is a situation where the accused  claims that he handed the said documents over to the Investigating Officer during the course of investigation, but the same have been neither seized by him nor are the same in his custody. In such situations whether the said documents can be summoned by a Court before framing of charges is debatable and therefore would it be fair to place a reverse burden of proving that the “proceeds of crime” are untainted upon an accused? The answer has to be a loud and resounding NO. To apply the reverse burden on an accused person in such situations would be violative of the right to fair trial as prescribed under the Constitution of India.

In fact, the Supreme Court has recently, in Mohan Lal v. State of Punjab[26], while dealing with a case involving the NDPS Act, 1985, held that in statutes providing a reverse burden, “…the onus will lie on the prosecution to demonstrate on the face of it that the investigation was fair, judicious with no circumstances that may raise doubts about its veracity. The obligation of proof beyond reasonable doubt will take within its ambit a fair investigation, in the absence of which there can be no fair trial. If the investigation itself is unfair, to require the accused to demonstrate prejudice will be fraught with danger vesting arbitrary powers in the police which may well lead to false implication also. Investigation in such a case would then become an empty formality and a farce…”

Likewise, in a  prosecution for the offences punishable under Section 3 PMLA it is incumbent upon the  prosecution to demonstrate its fairness otherwise the Court ought to be loathe to convict an  accused  based on an unfair  prosecution.

Therefore, this presumption under Section 24 PMLA can be effectively discharged by an accused  only during the course of Trial and not at the pre-charge stages, as normally the Courts do not permit reliance upon defence material before charges are framed. Therefore to invoke the presumption under Section 24 PMLA at a stage prior to framing of charges would be unfair, illegal and contrary to the legislative intent as discussed above.


*Advocates, practicing in Delhi on the criminal side for the last 16 and 4 years respectively. Authors specialise in white collar crimes. Regularly appearing before trial courts, appellate courts and Adjudicating Authorities in matters relating to Prevention of Corruption Act, Prevention of Money Laundering Act and other economic/white collar crimes.

[1] Prevention of Money Laundering Act, 2002

[2] B. Rama Raju v. Union of India, 2011 SCC OnLine AP 152 The said judgment is presently under challenge before Supreme Court as Special Leave to Appeal (C) No. 28394/2011 titled as B. Rama Raju v. Union of India and is pending for arguments along with a batch of other petitions and; Usha Agarwal v. Union of India, 2017 SCC OnLine Sikk 146  ; K. Sowbhagya v. Union of India, 2016 SCC OnLine Kar 282 . All the said judgments have upheld the constitutional validity of Section 24 PMLA.

[3] Rajya Sabha Debate dated 25.07.2002

[4] Rajya Sabha Debate dated 25.07.2002

[5] Hanif Khan v. Central Bureau of Narcotics, judgment dated 21.08.2019 passed by Supreme Court in Criminal Appeal No. 1206 of 2013; Babu v. State of Kerala, (2010) 9 SCC 189; Naresh Jain  v. The Deputy Director, Directorate of Enforcement, judgment dated 12.09.2019 passed by Appellate Tribunal for Money Laundering in FPA-PMLA-1332/DLI/2016, FPA-PMLA-1333/DLI/2016, FPA-PMLA-1929/DLI/2017, MP-PMLA-3813/DLI/2017, FPA-PMLA-1930/DLI/2017, MP-PMLA-3816/DLI/2017, FPA-PMLA-1931/DLI/2017, MP-PMLA-3837/DLI/2017, FPA-PMLA-1952/DLI/

[6] State of Maharashtra v. Wasudeo Ramchandra Kaidalwar, (1981) 3 SCC 199

[7] Jafar Mohammed Hasanfatta v. Deputy Director, 2017 SCC OnLine Guj 2476; Kavitha G. Pillai v. The Joint Director, 2017 SCC OnLine Ker 10118; Tech Mahindra Limited v. Joint Director, Directorate of Enforcement, Hyderabad, judgment dated 22.12.2014 passed by Andhra Pradesh High Court in WP No. 17525/2014

[8] 2017 SCC OnLine Ker 10118

[9] 1952 SCR 1112

[10] (1964) 1 SCR 371

[11] (2017) 2 SCC 629

[12] (2015) 16 SCC 1

[13] (2018) 11 SCC 46

[14] 2017 SCC OnLine Guj 1372

[15] 2015 SCCOnLine Guj 3507

[16] 2017 SCC OnLine Guj 1371

[17] 2016 SCC OnLine Bom 9938

[18] Judgment dated 05.05.2017 passed by  Madras High Court in Criminal Original Petitions Nos. 20423, 20454 and 20581 of 2016

[19] (2018) 11 SCC 1

[20] 2016 SCC OnLine Bom 9938

[21] 2017 SCC OnLine Guj 1371

[22] 2019 SCC OnLine Del 9086

[23] (2000) 2 SCC 513

[24] Section 35 NDPS states as follows-

35. Presumption of culpable mental state.–?(1) In any prosecution for an offence under this Act which requires a culpable mental state of the accused, the Court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Explanation.?In this section culpable mental state? includes intention, motive knowledge of a fact and belief in, or reason to believe, a fact.

(2) For the purpose of this section, a fact is said to be proved only when the court believes it to exist beyond a reasonable doubt and not merely when its existence is established by a preponderance of probability.”

[25] P. Gopalkrishnan v. State of Kerala,  2019 SCC Online SC 1532; V.K. Sasikala v. State, (2012) 9 SCC 771; Shashi Bala v. State, Govt. NCT of Delhi, 2016 SCC OnLine Del 3791; Ashutosh Verma v. CBI, 2014 SCC OnLine Del 6931

[26] (2018) 17 SCC 627

Hot Off The PressNews

Supreme Court: The Bench comprising of  R Banumathi, A S Bopanna and Hrishikesh Roy, JJ., granted bail to P. Chidambaram in INX money Laundering Case registered by the Enforcement directorate.

Pointers to be noted:

  • P Chidambaram will not leave the country without prior permission of the court
  • He has been released on a personal bond of Rs 2 lakh with two surety of like amount
  • Delhi High Court’s November 15 verdict dismissing bail plea of P Chidambaram has been set aside.
  • Court has also restrained Chidambaram from giving any press interviews or making statements in the media

Background:

Chidambaram sought bail in a case pertaining to the Foreign Investment Promotion Board (FIPB) clearance given to INX Media to the tune of Rs 305 crore in 2007 by Chidambaram when he was the Finance Minister. He was arrested by the ED on October 16 and is currently in judicial custody. Denying bail to Chidambaram in the case, the High Court had stated that prima facie allegations against him are “serious in nature” and he played an “active and key role” in the offence.

Senior advocates Kapil Sibal and Abhishek Manu Singhvi, appearing on behalf of Chidambaram today, submitted before the top court that their client has been in jail for over 90 days and has cleared the triple test criterion to avail the bail. Chidambaram had sought bail on the health grounds. The Congress leader also asserted that no part of the triple test, which includes flight risk, influencing witnesses and tampering with evidence, has been made out against him. He stated that there was no allegation that he was a flight risk following the issuance of a Look out Circular (LOC).

On October 22, 2019, the bench had granted bail to former Finance Minister and senior Congress leader P Chidambaram in connection with the INX Media case registered by the Central Bureau of Investigation (CBI).

The Court noticed that Chidambaram was neither a “flight risk” nor there was possibility of his abscondence and said that Chidambaram

“being the Member of Parliament and a Senior Member of the Bar has strong roots in society and his passport having been surrendered and “look out notice” issued against him, there is no likelihood of his fleeing away from the country or his abscondence from the trial.”

[Detailed Judgment to be Updated] Stay tuned in!

Hot Off The PressNews

The Financial Action Task Force (FATF) has called on its members and other jurisdictions to apply counter-measures to protect the international financial system from the ongoing and substantial money laundering and terrorist financing (ML/FT) risks emanating from the jurisdiction of Democratic People’s Republic of Korea (DPRK).

Jurisdiction of Iran is subject to a FATF call on its members and other jurisdictions to apply in line with Recommendation 19:

1. Increased supervisory examination for branches and subsidiaries of financial institutions based in Iran;
2. Enhanced relevant reporting mechanisms or systematic reporting of financial transactions; and
3. Increased external audit requirements for financial groups with respect to any of their branches and subsidiaries located in Iran.

Specific attention is brought to extract from Public Statement on Iran as follows:

“The FATF decided in June 2019 to call upon its members and urge all jurisdictions to require an increased supervisory examination for branches and subsidiaries of financial institutions based in Iran. In line with the June 2019 Public Statement, the FATF decided this week to call upon its members and urge all jurisdictions to introduce enhanced relevant reporting mechanisms or systematic reporting of financial transactions; and require increased external audit requirements for financial groups with respect to any of their branches and subsidiaries located in Iran.

If before February 2020, Iran does not enact the Palermo and Terrorist Financing Conventions in line with the FATF Standards, then the FATF will fully lift the suspension of counter-measures and call on its members and urge all jurisdictions to apply effective counter-measures, in line with recommendation 19.

The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence with respect to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19, including: (1) obtaining information on the reasons for intended transactions; and (2) conducting enhanced monitoring of business relationships, by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.”

Similarly, on DPRK, the FATF Public Statement states that:

” FATF has serious concerns with the threat posed by the DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing.

The FATF reaffirms its 25 February 2011 call on its members and urges all jurisdictions to advise their financial institutions to give special attention to business relationships and transactions with the DPRK, including DPRK companies, financial institutions, and those acting on their behalf. In addition to enhanced scrutiny, the FATF further calls on its members and urges all jurisdictions to apply effective counter-measures, and targeted financial sanctions in accordance with applicable United Nations Security Council Resolutions, to protect their financial sectors from money laundering, financing of terrorism and WMD proliferation financing (ML/FT/PF) risks emanating from the DPRK. Jurisdictions should take necessary measures to close existing branches, subsidiaries and representative offices of DPRK banks within their territories and terminate correspondent relationships with DPRK banks, where required by relevant UNSC resolutions.”

Further, FATF has identified the following jurisdictions as having strategic deficiencies which have developed an action plan with the FATF to deal with them. These jurisdictions are: The Bahamas, Botswana, Cambodia, Ghana, Iceland, Mongolia, Pakistan, Panama, Syria, Trinidad and Tobago, Yemen and Zimbabwe. FATF has also identified Ethiopia, Sri Lanka and Tunisia as jurisdictions which are no longer subject to monitoring.

About FATF

The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF monitors the progress of its members in implementing necessary measures, reviews money laundering and terrorist financing techniques and counter-measures, and promotes the adoption and implementation of appropriate measures globally. The FATF’s decision-making body, the FATF Plenary, meets three times a year and updates these statements, which may be noted. India became Observer at FATF in the year 2006 and became 34th member country of FATF on 25th June 2010.


Securities Exchange Board of India

[Press Release dt. 21-11-2019]

Hot Off The PressNews

Supreme Court: The bench of R Banumathi, A S Bopanna and Hrishikesh Roy, JJ has  sought a response from the Enforcement Directorate (ED) on an appeal filed by former union finance minister P Chidambaram challenging the Delhi High Court ‘s order dismissing his bail petition in the INX Media money laundering case. The Court issued a notice to the probe agency and posted the matter for hearing to November 26.

Chidambaram sought bail in a case pertaining to the Foreign Investment Promotion Board (FIPB) clearance given to INX Media to the tune of Rs 305 crore in 2007 by Chidambaram when he was the Finance Minister. He was arrested by the ED on October 16 and is currently in judicial custody. Denying bail  to Chidambaram in the case, the High Court had stated that prima facie allegations against him are “serious in nature” and he played an “active and key role” in the offence.

Senior advocates Kapil Sibal and Abhishek Manu Singhvi, appearing on behalf of Chidambaram today, submitted before the top court that their client has been in jail for over 90 days and has cleared the triple test criterion to avail the bail. Chidambaram had sought bail on the health grounds. The Congress leader also asserted that no part of the triple test, which includes flight risk, influencing witnesses and tampering with evidence, has been made out against him. He stated that there was no allegation that he was a flight risk following the issuance of a Look out Circular (LOC).

On October 22, 2019, the bench had granted bail to former Finance Minister and senior Congress leader P Chidambaram in connection with the INX Media case registered by the Central Bureau of Investigation (CBI).

The Court noticed that Chidambaram was neither a “flight risk” nor there was possibility of his abscondence and said that Chidambaram

“being the Member of Parliament and a Senior Member of the Bar has strong roots in society and his passport having been surrendered and “look out notice” issued against him, there is no likelihood of his fleeing away from the country or his abscondence from the trial.”

(Source: ANI)

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of R Banumathi, AS Bopanna and Hrishikesh Roy, JJ has granted bail to former Finance Minister and senior Congress leader P Chidambaram in connection with the INX Media case registered by the Central Bureau of Investigation (CBI).

Chidambaram is currently in the custody of Enforcement Directorate (ED) till October 24 in the INX Media money laundering case. Chidambaram, who is currently in judicial custody in Tihar jail, had filed a Special Leave Petition (SLP) in the apex court days after the High Court dismissed his bail plea contending that he might influence the witnesses in the case.

When the Solicitor General  Tushar Mehta submitted before the Court that “flight risk” of economic offenders should be looked at as a national phenomenon and be dealt with in that manner merely because certain other offenders have flown out of the country, the Court said that the same cannot, be put in a straight-jacket formula so as to deny bail to the one who is before the Court, due to the conduct of other offenders, if the person under consideration is otherwise entitled to bail on the merits of his own case. Hence, such consideration including as to “flight risk” is to be made on individual basis being uninfluenced by the unconnected cases, more so, when the personal liberty is involved.

The Court noticed that Chidambaram was neither a “flight risk” nor there was possibility of his abscondence and said that Chidambaram

“being the Member of Parliament and a Senior Member of the Bar has strong roots in society and his passport having been surrendered and “look out notice” issued against him, there is no likelihood of his fleeing away from the country or his abscondence from the trial.”

On the allegation of possibility of influencing the witnesses, the Court noticed,

“Till the date, there has been no allegation regarding influencing of any witness by the appellant or his men directly or indirectly. In the number of remand applications, there was no whisper that any material witness has been approached not to disclose information about the appellant and his son. It appears that only at the time of opposing the bail and in the counter affidavit filed by the CBI before the High Court, the averments were made.”

The Court observed that CBI has no direct evidence against Chidambaram regarding the allegation of appellant directly or indirectly influencing the witnesses. It further noticed that the conclusion of the learned Single Judge of Delhi High Court “…that it cannot be ruled out that the petitioner will not influence the witnesses directly or indirectly……” is not substantiated by any materials and is only a generalised apprehension and appears to be speculative. It, hence, held,

“Mere averments that the appellant approached the witnesses and the assertion that the appellant would further pressurize the witnesses, without any material basis cannot be the reason to deny regular bail to the appellant; more so, when the appellant has been in custody for nearly two months, co-operated with the investigating agency and the charge sheet is also filed.”

Setting aside the Delhi High Court judgment, the Court, hence, directed that Chidambaram be released on bail if not required in another case subject to the condition of his executing bail bonds for a sum of Rs.1,00,000/- with two sureties of like sum to the satisfaction of the Special CBI Judge. The Court further directed,

“The passport if already not deposited, shall be deposited with the Special Court and Chidambaram shall not leave the country without leave of the Special Court and subject to the order that may be passed by the Special Judge from time to time. He shall make himself available for interrogation as and when required.”

[P. Chidambaram v. Central Bureau of Investigation, 2019 SCC OnLine SC 1380, decided on 22.10.2019\

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Supreme Court: Senior Congress leader P Chidambaram on Thursday moved the Supreme Court against the order of the Delhi High Court that dismissed his bail plea in the INX Media case. Chidambaram, who is currently in judicial custody in Tihar jail, filed a Special Leave Petition (SLP) before the Supreme Court earlier today, days after the High Court dismissed his bail plea contending that he might influence the witnesses in the case.

Refuting the contentions put forth by the high court, Chidambaram asserted that he has not influenced any witness or accused in the case.

“A mere apprehension without there being substantial evidence and particulars of an accused approaching any witness is not enough to deny bail to an accused,”

Alluding to certain inputs submitted by the Central Bureau of Investigation (CBI) to the court in a sealed cover, the petition stated,

“The liberty has thus been denied on the basis of the baseless, anonymous and unverified allegation made behind the petitioner’s back.”

Chidambaram said that the submissions made by the agency in the sealed cover were “highly objectionable and against all canons of fair play and justice”. The petition also stated that the FIR registered in 2015, did not name Chidambaram. The plea asserted that there was no reference or allegation against him in the FIR.

Chidambaram is facing probe for alleged irregularities in the Foreign Investment Promotion Board (FIPB) clearance given to INX Media to the tune of Rs 305 crore in 2007 when he was the Union finance minister. While the CBI is probing the corruption allegations, the Enforcement Directorate (ED) is looking into money laundering allegations against him in the case. The CBI had arrested Chidambaram on August 21 following which he was sent to judicial custody, which is slated to end today.

(Source: ANI)