Prevention of Money Laundering Act, 2002 – ss.3 and 4 – Production of Documents in a sealed cover for custodial interrogation – Prosecution alleged irregularities in Foreign Investment Promotion Board (FIPB) clearance given to a company for receiving foreign investment to the tune of Rs.305 crores against approved inflow of Rs.4.62 crores – Appellant was the then finance minister – CBI registered FIR against the appellant and other accused persons u/s.120 IPC r/w. s.420 IPC, s.8 and s.13(2) r/w. s.13(1)(d) of the Prevention of Corruption Act, 1988 – Enforcement Directorate also registered a case u/ss.3 and 4 of PMLA against the accused persons – High Court dismissed the application for the grant of anticipatory bail filed by the appellant and held it to be a classic case of money-laundering – On appeal, before the Supreme Court, respondent sought to produce the materials so collected in a sealed cover and requested the Court to peruse the documents and materials to satisfy the conscience of the Court as to the necessity for the custodial interrogation – Respondent contended that the materials so collected cannot be shared with appellant at the initial stage when the Court was considering the matter for grant of prearrest bail – Appellant contended that respondent cannot rely upon the documents without furnishing those documents to the appellant or without questioning the appellant about the materials – Held: The Court can receive the materials/documents collected during the investigation and peruse the same to satisfy its conscience that the investigation is proceeding in the right lines and for the purpose of consideration of grant of bail/anticipatory bail etc. - In the instant case, sealed cover was received by the Court, however, the Court refrained from opening the sealed cover and perusing the documents because if Court had made observations after perusal of the materials, it might have caused prejudice to the appellant and other co-accused who were not before the Court – Suffice to note that it was the stage of considering the pre-arrest bail – In the initial stages of investigation where the Court is considering the question of grant of regular bail or pre-arrest bail, it is not for the Court to enter into the demarcated function of the investigation and collection of evidence/materials for establishing the offence and interrogation of the accused and the witnesses – Since, the respondent had collected documents/materials for custodial interrogation of the appellant, the submission of the respondent was accepted for the limited purpose of refusing pre-arrest bail to the appellant – Penal Code, 1860 – s.120B r/w. s.13(1)(d).
Prevention of Money Laundering Act, 2002 – ss.3 and 4 – Prevention of Corruption Act, 1988 – s.8 and 13(2) – r/w. s.13(1)(d) – Interrogation of the accused – Interferences of Judiciary in – Held: Interrogation of the accused and the answers elicited from the accused and the opinion whether the answers given by the accused are ‘satisfactory’ or ‘evasive’, is purely within the domain of the investigating agency and the Court cannot substitute its views by conducting mini trial at various stages of investigation.
Prevention of Money Laundering Act, 2002 – ss.3 and 4 – Code of Criminal Procedure, 1973 – s.438 – Grant of anticipatory bail – Prosecution alleged irregularities in Foreign Investment Promotion Board (FIPB) clearance given to a company for receiving foreign investment to the tune of Rs.305 crores against approved inflow of Rs.4.62 crores – Appellant was the then finance minister – FIR was registered – Enforcement Directorate also registered a case u/ss. 3 and 4 of PMLA against the accused persons – High Court dismissed the application for grant of anticipatory bail filed by the appellant – On appeal, held: Power u/s.438 Cr.P.C. is an extraordinary power and the same has to be exercised sparingly more so, in cases of economic offences – Economic offences stand as a different class as they effect the economic fabric of the society – Grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the accused and in collecting the useful information and also the materials which might have been concealed – Success is such interrogation would elude if the accused knows that he is protected by the order of the Court – In the instant case, having regard to the materials collected by the respondent- Enforcement Directorate and considering the stage of investigation, it was not a fit case to grant anticipatory bail. Code of Criminal Procedure, 1973 – s.438 – Constitution of India – Art. 21 – Right of anticipatory bail, a part of Art.21 of the Constitution of India or not – Held: The legislative intent behind the introduction of s.438 Cr.P.C. is to safeguard the individual’s personal liberty and to protect him from the possibility of being humiliated and from being subjected to unnecessary police custody. However, the court must also keep in view that a criminal offence is not just an offence against an individual, rather the larger societal interest is at stake – Therefore, a delicate balance is required to be established between the two rights-safeguarding the personal liberty of an individual and the societal interest – It cannot be said that refusal to grant anticipatory bail would amount to denial of the rights conferred upon the appellant u/Art. 21 of the Constitution of India.
Words and Phrases – ‘reason to believe’ – Held: As per definition in s.26 IPC, a person is said to be have ‘reason to believe’ a thing, if he has sufficient cause to believe that thing but not otherwise – The specified officer must have ‘reason to believe’ on the basis of material in his possession that the property sought to be attached is likely to be concealed, transferred on dealt with in a manner which may result in frustrating any proceedings for confiscation of their property under the Prevention of Money Laundering Act, 2002. Words and Phrases – Economic offence – discussed. Dismissing the appeal, the Court
HELD: Whether Court can look into the documents/materials collected during investigation.
1. It is well-settled that the court can peruse the case diary/materials collected during investigation by the prosecution even before the commencement of the trial inter-alia in circumstances like:- (i) to satisfy its conscience as to whether the investigation is proceeding in the right direction; (ii) to satisfy itself that the investigation has been conducted in the right lines and that there is no misuse or abuse of process in the investigation; (iii) whether regular or anticipatory bail is to be granted to the accused or not;
(iv) whether any further custody of the accused is required for the prosecution; (v) to satisfy itself as to the correctness of the decision of the High Court/trial court which is under challenge. The above instances are only illustrative and not exhaustive. Where the interest of justice requires, the court has the powers, to receive the case diary/materials collected during the investigation. As held in Mukund Lal v. Union of India and Another, ultimately there can be no better custodian or guardian of the interest of justice than the court trying the case. Needless to point out that when the Court has received and perused the documents/materials, it is only for the purpose of satisfaction of court’s conscience. In the initial stages of investigation, the Court may not extract or verbatim refer to the materials which the Court has perused (as has been done in this case by the Single Judge) and make observations which might cause serious prejudice to the accused in trial and other proceedings resulting in miscarriage of justice. [Para 53][206-D-G]
Naresh Kumar Yadav v. Ravindra Kumar and others (2008) 1 SCC 632 : [2007] 11 SCR 615; Malkiat Singh and others v. State of Punjab (1991) 4 SCC 341 : [1991]
2 SCR 256; R.K. Krishna Kumar v. State of Assam and others (1998) 1 SCC 474 : [1997] 6 Suppl. SCR 153; Mukund Lal v. Union of India and another 1989 Supp.
(1) SCC 622 : [1988] 3 Suppl. SCR 524; Sidharth and others v. State of Bihar (2005) 12 SCC 545 : [2005] 3 Suppl. SCR 800 – relied on.
Romila Thapar and Others v. Union of India and Others (2018) 10 SCC 753 : [2018] 11 SCR 951; Directorate of Enforcement and Another v. P.V. Prabhakar Rao (1997) 6 SCC 647 : [1997] 3 Suppl. SCR 247; Balakram v. State of Uttarakhand and others (2017) 7 SCC 668 : [2017] 5 SCR 367– referred to.
2. The Enforcement Directorate has produced the sealed cover before this Court containing the materials collected during investigation and the same was received. Vide order dated 29.08.2019, this Court has stated that the receipt of the sealed cover would be subject to our finding whether the court can peruse the materials or not. As discussed earlier, this Court has held that the court can receive the materials/documents collected during the investigation and peruse the same to satisfy its conscience that the investigation is proceeding in the right lines and for the purpose of consideration of grant of bail/anticipatory bail etc. In the present case, though sealed cover was received, this Court has consciously refrained from opening the sealed cover and perusing the documents. Lest, if this Court peruses the materials collected by the respondent and make some observations thereon, it might cause prejudice to the appellant and the other co-accused who are not before this court when they are to pursue the appropriate relief before various forum. Suffice to note that at present, this Court is only at the stage of considering the pre-arrest bail. Since according to the respondent, they have collected documents/materials for which custodial interrogation of the appellant is necessary, which this Court deem appropriate to accept the submission of the respondent for the limited purpose of refusing pre-arrest bail to the appellant. [Para 54][206-H; 207-A-D]
3. As rightly submitted by Solicitor General that if the accused are to be confronted with the materials which were collected by the prosecution/Enforcement Directorate with huge efforts, it would lead to devastating consequences and would defeat the very purpose of the investigation into crimes, in particular, white collar offences. If the contention of the appellant is to be accepted, the investigating agency will have to question each and every accused such materials collected during investigation and in this process, the investigating agency would be exposing the evidence collected by them with huge efforts using their men and resources and this would give a chance to the accused to tamper with the evidence and to destroy the money trail apart from paving the way for the accused to influence the witnesses. If the contention of the appellant is to be accepted that the accused will have to be questioned with the materials and the investigating agency has to satisfy the court that the accused was “evasive” during interrogation, the court will have to undertake a “mini trial” of scrutinizing the matter at intermediary stages of investigation like interrogation of the accused and the answers elicited from the accused and to find out whether the answers given by the accused are ‘evasive’ or whether they are ‘satisfactory’ or not. This could have never been the intention of the legislature either under PMLA or any other statute. [Para 58][208-D-G]
4. Interrogation of the accused and the answers elicited from the accused and the opinion whether the answers given by the accused are “satisfactory” or “evasive”, is purely within the domain of the investigating agency and the court cannot substitute its views by conducting mini trial at various stages of the investigation. [Para 59][209-G-H]
5. The investigation of a cognizable offence and the various stages thereon including the interrogation of the accused is exclusively reserved for the investigating agency whose powers are unfettered so long as the investigating officer exercises his investigating powers well within the provisions of the law and the legal bounds. In exercise of its inherent power under Section
482 Cr.P.C., the court can interfere and issue appropriate direction only when the court is convinced that the power of the investigating officer is exercised mala fide or where there is abuse of power and non-compliance of the provisions of Code of Criminal Procedure. However, this power of invoking inherent jurisdiction to issue direction and interfering with the investigation is exercised only in rare cases where there is abuse of process or non-compliance of the provisions of Criminal Procedure Code. [Para 60][209-A-C]
King-Emperor v. Khwaja Nazir Ahmad AIR 1945 PC
18 : [1944] SCC Online PC 29; Abhinandan Jha and others v. Dinesh Mishra AIR 1968 SC 117 : [1967] SCR 668; State of Bihar and another v. J.A.C. Saldanha and others (1980) 1 SCC 554 : [1980] 2 SCR 16 – relied on.
Dukhishyam Benupani, Asstt. Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria (1998) 1 SCC 52 : [1997] 5 Suppl. SCR 566; M.C. Abraham and Another v. State of Maharashtra and Others (2003)
2 SCC 649 : [2002] 5 Suppl. SCR 677; Subramanian Swamy v. Director, Central Bureau of Investigation and another (2014) 8 SCC 682 : [2014] 6 SCR 873; Divine Retreat Centre v. State of Kerala and Others (2008) 3 SCC 542 : [2008] 4 SCR 701; State of Bihar and another v. P.P. Sharma, IAS and another 1992 Supp.
(1) 222 : [1991] 2 SCR 1 – referred to.
6. As held by the Supreme Court in a catena of judgments that there is a well-defined and demarcated function in the field of investigation and its subsequent adjudication. It is not the function of the court to monitor the investigation process so long as the investigation does not violate any provision of law. It must be left to the discretion of the investigating agency to decide the course of investigation. If the court is to interfere in each and every stage of the investigation and the interrogation of the accused, it would affect the normal course of investigation. It must be left to the investigating agency to proceed in its own manner in interrogation of the accused, nature of questions put to him and the manner of interrogation of the accused. [Para 64][211-C-E]
7. It is one thing to say that if the power of investigation has been exercised by an investigating officer mala fide or noncompliance of the provisions of the Criminal Procedure Code in the conduct of the investigation, it is open to the court to quash the proceedings where there is a clear case of abuse of power. It is a different matter that the High Court in exercise of its inherent power under Section 482 Cr.P.C., the court can always issue appropriate direction at the instance of an aggrieved person if the High Court is convinced that the power of investigation has been exercised by the investigating officer mala fide and not in accordance with the provisions of the Criminal Procedure Code. However, as pointed out earlier that power is to be exercised in rare cases where there is a clear abuse of power and non-compliance of the provisions falling under Chapter-XII of the Code of Criminal Procedure requiring the interference of the High Court. In the initial stages of investigation where the court is considering the question of grant of regular bail or pre-arrest bail, it is not for the court to enter into the demarcated function of the investigation and collection of evidence/materials for establishing the offence and interrogation of the accused and the witnesses. [Para 65][211-E-H; 212-A]
Whether direction to produce the transcripts could be issued:7A. Since the interrogation of the accused and the questions put to the accused and the answers given by the accused are part of the investigation which is purely within the domain of the investigation officer, unless satisfied that the police officer has improperly and illegally exercised his investigating powers in breach of any statutory provision, the court cannot interfere. In the present case, no direction could be issued to the respondent to produce the transcripts of the questions put to the appellant and answers given by the appellant. [Para 66][212-C-D]
Grant of Anticipatory bail in exceptional cases:8. Ordinarily, arrest is a part of procedure of the investigation to secure not only the presence of the accused but several other purposes. Power under Section 438 Cr.P.C. is an extraordinary power and the same has to be exercised sparingly. The privilege of the pre-arrest bail should be granted only in exceptional cases. The judicial discretion conferred upon the court has to be properly exercised after application of mind as to the nature and gravity of the accusation; possibility of applicant fleeing justice and other factors to decide whether it is a fit case for grant of anticipatory bail. Grant of anticipatory bail to some extent interferes in the sphere of investigation of an offence and hence, the court must be circumspect while exercising such power for grant of anticipatory bail. Anticipatory bail is not to be granted as a matter of rule and it has to be granted only when the court is convinced that exceptional circumstances exist to resort to that extraordinary remedy. [Para 67][212-E-G]
State of M.P. and another v. Ram Kishna Balothia and another (1995) 3 SCC 221 : [1995] 1 SCR 897; State Rep. By The CBI v. Anil Sharma (1997) 7 SCC 187 : [1997] 3 Suppl. SCR 737 ; Sudhir v. State of
Maharashtra and Another (2016) 1 SCC 146 : [2015]
12 SCR 387; Assistant Director, Directorate of Enforcement v. Hassan Ali Khan (2011) 12 SCC 684; Adri Dharan Das v. State of W.B. (2005) 4 SCC 303 : [2005] 2 SCR 188; Siddharam Satlingappa Mhetre v. State of Maharashtra and Others (2011) 1 SCC 694 : [2010] 15 SCR 201; Jai Prakash Singh v. State of Bihar and another (2012) 4 SCC 379 : [2012] 5 SCR 1 75 – relied on.
9. Ordinarily, arrest is a part of the process of the investigation intended to secure several purposes. There may be circumstances in which the accused may provide information leading to discovery of material facts and relevant information. Grant of anticipatory bail may hamper the investigation. Pre-arrest bail is to strike a balance between the individual’s right to personal freedom and the right of the investigating agency to interrogate the accused as to the material so far collected and to collect more information which may lead to recovery of relevant information. [Para 72][214-E-F]
Directorate of Enforcement v. Ashok Kumar Jain (1998)
2 SCC 105 : [1998] 1 SCR 57 ; State of Gujarat v. Mohanlal Jitamalji Porwal and others (1987) 2 SCC
364 : [1987] (2) SCR 677 ; Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 439 : [2013] SCR 547 – relied on. Enforcement Officer, Ted, Bombay v. Bher Chand Tikaji Bora and others (1999) 5 SCC 720 – referred to.
10. Power under Section 438 Cr.P.C. being an extraordinary remedy, has to be exercised sparingly; more so, in cases of economic offences. Economic offences stand as a different class as they affect the economic fabric of the society. In Directorate of Enforcement v. Ashok Kumar Jain, it was held that in economic offences, the accused is not entitled to anticipatory bail. The Solicitor General submitted that the “Scheduled offence” and “offence of money laundering” are independent of each other and PMLA being a special enactment applicable to the offence of money laundering is not a fit case for grant of anticipatory bail. The Solicitor General submitted that money laundering being an economic offence committed with much planning and deliberate design poses a serious threat to the nation’s economy and financial integrity and in order to unearth the laundering and trail of money, custodial interrogation of the appellant is necessary. Grant of anticipatory bail at the stage of investigation may frustrate the investigating agency in interrogating the accused and in collecting the useful information and also the materials which might have been concealed. Success in such interrogation would elude if the accused knows that he is protected by the order of the court. Grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation. Having regard to the materials said to have been collected by the respondent-Enforcement Directorate and considering the stage of the investigation, this Court is of the view that it is not a fit case to grant anticipatory bail. [Paras 76, 77 and 81][216-E-G; 218-B-C]
Shri Gurbaksh Singh Sibbia and others v. State of Punjab (1980) 2 SCC 565 : [1980] 3 SCR 383;
Additional District Magistrate, Jabalpur v. Shivakant Shukla (1976) 2 SCC 521 : [1976] Suppl. SCR 172 ; Rao Shiv Bahadur Singh and another v. State of Vindhya Pradesh AIR 1953 SC 394 : [1953] SCR 1188; Santosh s/o Dwarkadas Fafat v. State of Maharashtra (2017) 9 SCC 714 : [2017] 10 SCR 129; Jai Prakash Singh v. State of Bihar and Another (2012) 4 SCC 379 : [2012]
5 SCR 1; Nikesh Tarachand Shah v. Union of India and another (2018) 11 SCC 1 : [2017] 12 SCR 358 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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