PMLA and NDPS 2025: 4 Supreme Court judgments Balancing State Power and Civil Liberties

 

Introduction: The Tightrope Walk Between Security and Liberty

The state's need to combat complex crimes like money laundering and narcotics trafficking often leads to the creation of powerful and stringent laws, such as the Prevention of Money Laundering Act (PMLA) and the Narcotic Drugs and Psychotropic Substances (NDPS) Act. These laws grant investigative agencies extensive powers, creating an inherent tension with a citizen's fundamental constitutional right to liberty. In 2025, the Supreme Court of India delivered several landmark rulings that recalibrated this delicate balance. This article explores the four most impactful and counter-intuitive takeaways from these judicial pronouncements.

1. The Bail Paradox: When a "Double Lock" Meets Indefinite Delay

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Jurisdictional Thresholds in Money Laundering Prosecutions: The Requirement of a Prior FIR

 I. Introduction

The Prevention of Money Laundering Act, 2002 (PMLA) serves as a specialized legislation aimed at combating the laundering of proceeds derived from criminal activity. A foundational principle of the PMLA is that the offence of money laundering (Section 3) is derivative—it relies on the existence of a "scheduled offence" (or predicate offence).

A critical legal question often arises in cases where the scheduled offence is not recorded via a First Information Report (FIR) by the police but is instead pursued through a private complaint filed by an individual before a Magistrate. This analysis examines whether the Directorate of Enforcement (ED) has the jurisdiction to register an Enforcement Case Information Report (ECIR) and file a prosecution complaint under the PMLA based solely on a private complaint regarding a scheduled offence, absent any police FIR or complaint by an authorized investigating agency.

Read full judgment here: Click here.

II. The Legal Issue

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BNSS Provision Capping Maximum Undertrial Term Applies To PMLA : Supreme Court Grants Bail

It has been observed that in the case of Vijay Madanlal

Chaudhary vs. Union of India, (2022) SCC Online SC 926 that

the beneficial provision of Section 436A of the Code of

Criminal Procedure, 1973, (for short, ‘the Cr.P.C.’)may apply

to prosecution under the Prevention of Money-Laundering Act,

2002 (for short, ‘the PMLA’) as Section 436A has come on

statute book subsequent to enactment of the PMLA. Therefore,

a corresponding provision of Section 479(1) of Bharatiya

Nagarik Suraksha Sanhita, 2023 (for short, ‘the BNSS’) will

apply to prosecution under the PMLA. {Para 2}

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION}

CRIMINAL APPEAL NO.________/2024

(Arising Out of Special Leave Petition (Criminal) No.10846/2024)

BADSHAH MAJID MALIK  Vs  DIRECTORATE OF ENFORCEMENT & ORS. 

Dated: October 18, 2024.

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Supreme Court: PMLA Accused Entitled To Hearing Before Cognizance Is Taken Of ED Complaint Filed After BNSS Came Into Effect

This Court has taken a consistent view that a complaint filed by the Enforcement Directorate under Section 44 (1)(b) of the PMLA will be governed by Sections 200 to 204 of the CrPC. This view has been taken by this Court in the cases of Yash Tuteja v. Union of India1 and Tarsem Lal v. Enforcement Directorate2. Therefore, the provisions of Chapter XVI, containing Sections 223 to 226, will also apply to a complaint under Section 44 of the PMLA. As the complaint has been filed after 1st July, 2024, Section 223 of the BNSS will apply to the present complaint. {Para 5}

6. The proviso to sub-section (1) of Section 223 puts an embargo on the power of the Court to take cognizance by providing that no cognizance of an offence shall be taken by the Magistrate without giving the accused an opportunity of being heard.

7. In this case, admittedly, an opportunity of being heard was not given by the learned Special Judge to the appellant before taking cognizance of the offence on the complaint. Only on that ground, the impugned order dated 20th April, 2024, will have to be set aside.

 In the Supreme Court of India

(Before Abhay S. Oka and Ujjal Bhuyan, JJ.)

Kushal Kumar Agarwal  Vs Directorate of Enforcement 

Criminal Appeal No. 2749 of 2025 

Decided on May 9, 2025

Citation: 2025 INSC 760,2025 SCC OnLine SC 1221

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Supreme Court: What is Importance of the foundational facts-Under Section 24 PMLA?

 In Vijay Madanlal Choudhary (supra) dealing with Section 24 of the PMLA, the three-Judge Bench held as under:

97. Be that as it may, we may now proceed to decipher the purport of Section 24 of the 2002 Act. In the first place, it must be noticed that the legal presumption in either case is about the involvement of proceeds of crime in money-laundering. This fact becomes relevant, only if, the prosecution or the authorities have succeeded in establishing at least three basic or foundational facts. First, that the criminal activity relating to a scheduled offence has been committed. Second, that the property in question has been derived or obtained, directly or indirectly, by any person as a result of that criminal activity. Third, the person concerned is, directly or indirectly, involved in any process or activity connected with the said property being proceeds of crime. On establishing the fact that there existed proceeds of crime and the person concerned was involved in any process or activity connected therewith, itself, constitutes offence of money- laundering. The nature of process or activity has now been elaborated in the form of Explanation inserted vide Finance (No. 2) Act, 2019. On establishing these foundational facts in terms of Section 24 of the 2002 Act, a legal presumption would arise that such proceeds of crime are involved in money-laundering. The fact that the person concerned had no causal connection with such proceeds of crime and he is able to disprove the fact about his involvement in any process or activity connected therewith, by producing evidence in that regard, the legal presumption would stand rebutted.

99. Be it noted that the legal presumption Under Section 24(a) of the 2002 Act, would apply when the person is charged with the offence of money-laundering and his direct or indirect involvement in any process or activity connected with the proceeds of crime, is established. The existence of proceeds of crime is, therefore, a foundational fact, to be established by the prosecution, including the involvement of the person in any process or activity connected therewith. Once these foundational facts are established by the prosecution, the onus must then shift on the person facing charge of offence of money-laundering-to rebut the legal presumption that the proceeds of crime are not involved in money-laundering, by producing evidence which is within his personal knowledge. In other words, the expression "presume" is not conclusive. It also does not follow that the legal presumption that the proceeds of crime are involved in money-laundering is to be invoked by the Authority or the court, without providing an opportunity to the person to rebut the same by leading evidence within his personal knowledge.

100. Such onus also flows from the purport of Section 106 of the Evidence Act. Whereby, he must rebut the legal presumption in the manner he chooses to do and as is permissible in law, including by replying Under Section 313 of the 1973 Code or even by cross- examining prosecution witnesses. The person would get enough opportunity in the proceeding before the Authority or the court, as the case may be. He may be able to discharge his burden by showing that he is not involved in any process or activity connected with the proceeds of crime. In any case, in terms of Section 114 of the Evidence Act, it is open to the court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct, and public and private business, in their relation to the facts of the particular case. Considering the above, the provision under consideration [Section 24(a)] by no standards can be said to be unreasonable much less manifestly arbitrary and unconstitutional. {Para 14}

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 3572 of 2024.

Decided On: 28.08.2024

Prem Prakash Vs. Union of India (UOI) through the Directorate of Enforcement

Hon'ble Judges/Coram:

B.R. Gavai and K.V. Viswanathan, JJ.

Author: K.V. Viswanathan, J.

Citation: 2024 INSC 637, MANU/SC/0943/2024.

Read full Judgment here: Click here.

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Supreme Court: Statement To ED By Accused Under PMLA Custody Incriminating Oneself In Another PMLA Case Inadmissible

 The question that arises is when a person is in judicial custody/custody in another case investigated by the same Investigating Agency, whether the statements recorded (in this case the statements dated 03.08.2023, 04.08.2023, 11.08.2023) for a new case in which his arrest is not yet shown, and which are claimed to contain incriminating material against the maker, would be admissible Under Section 50? {Para 22}

23. In Vijay Madanlal Choudhary (supra), addressing the scope of Section 50, following has been held:

159....However, if his/her statement is recorded after a formal arrest by the ED official, the consequences of Article 20(3) or Section 25 of the Evidence Act may come into play to urge that the same being in the nature of confession, shall not be proved against him.

The three-judge Bench in Vijay Madanlal Choudhary (supra) has apart from Article 20(3) also adverted to Section 25 of the Evidence Act. Section 25 of the Evidence Act reads as under:

25. Confession to police officer not to be proved.- No confession made to a police officer shall be proved as against a person Accused of any offence.

24. Vijay Madanlal Choudhary (supra) though held that the authorities under the PMLA are not police officers, did anticipate a scenario where in a given case, the protection of Section 25 of the Evidence Act may have to be made available to the Accused. The Court observed that such situations will have to be examined on a case-to-case basis. We deem it appropriate to extract Para 172 of Vijay Madanlal Choudhary (supra).

172. In other words, there is stark distinction between the scheme of the NDPS Act dealt with by this Court in Tofan Singh (supra) and that in the provisions of the 2002 Act under consideration. Thus, it must follow that the authorities under the 2002 Act are not police officers. Ex-consequenti, the statements recorded by the authorities under the 2002 Act, of persons involved in the commission of the offence of money-laundering or the witnesses for the purposes of inquiry/investigation, cannot be hit by the vice of Article 20(3) of the Constitution or for that matter, Article 21 being procedure established by law. In a given case, whether the protection given to the Accused who is being prosecuted for the offence of money-laundering, of Section 25 of the Evidence Act is available or not, may have to be considered on case-to-case basis being Rule of evidence.

25. This Court in Vijay Madanlal Choudhary (supra) anticipated the myriad situations that may arise in the recording of the Section 50 statement and discussed the parameters for dealing with them. In Rajaram Jaiswal v. State of Bihar   MANU/SC/0065/1963 : 1963:INSC:84 : AIR 1964 SC 828, a judgment quoted in extenso in Vijay Madanlal Choudhary (supra), this Court observed that the expression "police officer " in Section 25 of the Evidence Act is not confined to persons who are members of the regularly constituted police force. Further, setting out the test for determining whether an officer is a "police officer " for the purpose of Section 25 of the Evidence Act, this Court in Rajaram Jaiswal (supra) held (quoted from para 165 of Vijay Madanlal Choudhary (supra)

165(ii) It may well be that a statute confers powers and imposes duties on a public servant, some of which are analogous to those of a police officer. But by reason of the nature of other duties which he is required to perform he may be exercising various other powers also. It is argued on behalf of the State that where such is the case the mere conferral of some only of the powers of a police officer on such a person would not make him a police officer and, therefore, what must be borne in mind is the sum total of the powers which he enjoys by virtue of his office as also the dominant purpose for which he is appointed. The contention thus is that when an officer has to perform a wide range of duties and exercise correspondingly a wide range of powers, the mere fact that some of the powers which the statute confers upon him are analogous to or even identical with those of a police officer would not make him a police officer and, therefore, if such an officer records a confession it would not be hit by Section 25 of the Evidence Act. In our judgment what is pertinent to bear in mind for the purpose of determining as to who can be regarded a 'police officer' for the purpose of this provision is not the totality of the powers which an officer enjoys but the kind of powers which the law enables him to exercise. The test for determining whether such a person is a "police officer" for the purpose of Section 25 of the Evidence Act would, in our judgment, be whether the powers of a police officer which are conferred on him or which are exercisable by him because he is deemed to be an officer in charge of police station establish a direct or substantial relationship with the prohibition enacted by Section 25, that is, the recording of a confession. In other words, the test would be whether the powers are such as would tend to facilitate the obtaining by him of a confession from a suspect or delinquent. If they do, then it is unnecessary to consider the dominant purpose for which he is appointed or the question as to what other powers he enjoys. These questions may perhaps be relevant for consideration where the powers of the police officer conferred upon him are of a very limited character and are not by themselves sufficient to facilitate the obtaining by him of a confession.

26. Four decades ago, V.R. Krishna Iyer, J. in his inimitable style, speaking for this Court in Nandini Satpathy v. P.L. Dani and Anr.,   MANU/SC/0139/1978 : 1978:INSC:80 : (1978) 2 SCC 424 observed as under:

50. We, however, underscore the importance of the specific setting of a given case for judging the tendency towards guilt. Equally emphatically, we stress the need for regard to the impact of the plurality of other investigations in the offing or prosecutions pending on the amplitude of the immunity. "To be witness against oneself" is not confined to particular offence regarding which the questioning is made but extends to other offences about which the Accused has reasonable apprehension of implication from his answer. This conclusion also flows from "tendency to be exposed to a criminal charge". "A criminal charge" covers any criminal charge then under investigation or trial or which imminently threatens the Accused.

57. We hold that Section 161 enables the police to examine the Accused during investigation. The prohibitive sweep of Article 20(3) goes back to the stage of police interrogation- not, as contended, commencing in court only. In our judgment, the provisions of Article 20(3) and Section 161(1) substantially cover the same area, so far as police investigations are concerned. The ban on self-accusation and the right to silence, while one investigation or trial is under way, goes beyond that case and protects the Accused in regard to other offences pending or imminent, which may deter him from voluntary disclosure of criminatory matter. We are disposed to read 'compelled testimony' as evidence procured not merely by physical threats or violence but by psychic torture, atmospheric pressure, environmental coercion tiring interrogative prolixity, overbearing and intimidatory methods and the like - not legal penalty for violation. So, the legal perils following upon refusal to answer, or answer truthfully, cannot be regarded as compulsion within the meaning of Article 20(3). The prospect of prosecution may lead to legal tension in the exercise of a constitutional right, but then, a stance of silence is running a calculated risk. On the other hand, if there is any mode of pressure, subtle or crude, mental or physical, direct or indirect, but sufficiently substantial, applied by the policeman for obtaining information from an Accused strongly suggestive of guilt, it becomes 'compelled testimony', violative of Article 20(3).

27. In the facts of the present case, we hold that the statement of the Appellant if to be considered as incriminating against the maker, will be hit by Section 25 of the Evidence Act since he has given the statement whilst in judicial custody, pursuant to another proceeding instituted by the same Investigating Agency. Taken as he was from the judicial custody to record the statement, it will be a travesty of justice to render the statement admissible against the Appellant.

29. A complete reading of Vijay Madanlal Chaudhary (supra), particularly, paragraphs 159, 165 and 172 mandate us to ask ourselves the query: Is a reasonable inference legitimately possible that, due to the vulnerable position in which the Appellant was placed and the dominating position in which the Investigating Agency was situated, in view of the arrest in the other proceeding that, there obtained a conducive atmosphere to obtain a confession? We certainly think so. The question is not whether it actually happened. The question is could it have been possible.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 3572 of 2024.

Decided On: 28.08.2024

Prem Prakash Vs. Union of India (UOI) through the Directorate of Enforcement

Hon'ble Judges/Coram:

B.R. Gavai and K.V. Viswanathan, JJ.

Author: K.V. Viswanathan, J.

Citation: 2024 INSC 637, MANU/SC/0943/2024.

Read full Judgment here: Click here.

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Supreme Court: Prosecution can not start with statement of co-accused to establish their case against accused under PML Act

Being a co-Accused with the Appellant, his statement against the Appellant assuming there is anything incriminating against the present Appellant will not have the character of substantive evidence. The prosecution cannot start with such a statement to establish its case. We hold that, in such a situation, the law laid down Under Section 30 of the Evidence Act by this Court while dealing with the confession of the co-Accused will continue to apply. In Kashmira Singh v. State of Madhya Pradesh,   MANU/SC/0031/1952 : 1952:INSC:12 : [1952] SCR 526, this Court neatly summarized the principle as under:

.... The proper way to approach a case of this kind is, first, to marshal the evidence against the Accused excluding the confession altogether from consideration and see whether, if it is believed, a conviction could safely be based on it. If it is capable of belief independently of the confession, then of course it is not necessary to call the confession in aid. But cases may arise where the judge is not prepared to act on the other evidence as it stands even though, if believed, it would be sufficient to sustain a conviction. In such an event the judge may call in aid the confession and use it to lend assurance to the other evidence and thus fortify himself in believing what without the aid of the confession he would not be prepared to accept.

Hence, insofar as Afshar Ali's statement is concerned, the Investigating Agency will have to first marshal the other evidence and can at best look at the statement for lending assurance. {Para 37}

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 3572 of 2024.

Decided On: 28.08.2024

Prem Prakash Vs. Union of India (UOI) through the Directorate of Enforcement

Hon'ble Judges/Coram:

B.R. Gavai and K.V. Viswanathan, JJ.

Author: K.V. Viswanathan, J.

Citation: 2024 INSC 637, MANU/SC/0943/2024.

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Supreme Court: Distinction between S 50 of PML Act and Section 160/161 of Code of Criminal Procedure

 Apart from the fact that Section 50 is a gender neutral, as it does not make any distinction between a man and a woman, there are glaring inconsistencies between the provisions contained in Section 50 of PMLA and Section 160/161 of Code of Criminal Procedure. The Chapter XII of Code of Criminal Procedure pertains to the "Information to the Police and their Powers to Investigate". Section 160 which falls under Chapter XII empowers the Police Officer making an investigation under the said Chapter to require any person to attend within the limits of his own or adjoining station who, from the information given or otherwise appears to be acquainted with the facts and circumstances of the case, whereas, the process envisaged by Section 50 of the PMLA is in the nature of an inquiry against the proceeds of crime and is not "Investigation" in strict sense of the term for initiating prosecution; and the Authorities referred to in Section 48 of PMLA are not the Police Officers as held in Vijay Madanlal. It has been specifically laid down in the said decision that the statements recorded by the Authorities Under Section 50 of PMLA are not hit by Article 20(3) or Article 21 of the Constitution, rather such statements recorded by the authority in the course of inquiry are deemed to be the Judicial proceedings in terms of Section 50(4), and are admissible in evidence, whereas the statements made by any person to a Police Officer in the course of an investigation under Chapter XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code. In view of such glaring inconsistencies between Section 50 PMLA and Section 160/161 Code of Criminal Procedure, the provisions of Section 50 PMLA would prevail in terms of Section 71 read with Section 65 thereof. {Para 16}

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 2221-2222 of 2023

Decided On: 09.09.2024

Abhishek Banerjee and Ors. Vs. Directorate of Enforcement

Hon'ble Judges/Coram:

Bela M. Trivedi and S.C. Sharma, JJ.

Author: Bela M. Trivedi, J.

Citation:  MANU/SC/0991/2024,2024 INSC 668.

Read full Judgment here: Click here.

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Supreme Court: Section 50 of PML Act is not violative of Article 20(3) or Article 21 of the Constitution.

 The above ratio laid down in Vijay Madanlal clinches the contentions raised by the learned Counsels for the Appellants with regard to the provisions of Section 50 being violative of Article 20(3) or Article 21 of the Constitution, and we need not further elaborate the same, nor do we need to deal with the decisions of this Court on the said issue which have already been dealt with in Vijay Madanlal. Suffice it to say that Section 50 enables the authorized Authority to issue summon to any person whose attendance he considers necessary for giving evidence or to produce any records during the course of the proceedings under the Act, and that the persons so summoned is bound to attend in person or through authorized agent, and to state truth upon the subject concerning which he is being examined or is expected to make statement and produce documents as may be required by virtue of Sub-section (3) of Section 50. At the stage of issue of summons, the person cannot claim protection Under Article 20(3) of the Constitution, the same being not "testimonial compulsion". At the stage of recording of statement of a person for the purpose of inquiring into the relevant facts in connection with the property being proceeds of crime, is not an investigation for prosecution as such. The summons can be issued even to witnesses in the inquiry so conducted by the authorized officers. The consequences of Article 20(3) of the Constitution or Section 25 of the Evidence Act may come into play only if the involvement of such person (noticee) is revealed and his or her statements is recorded after a formal arrest by the ED official. In our opinion, the learned Counsels for the Appellants have sought to reagitate the issues which have already been settled in Vijay Madanlal.

{Para 19}

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 2221-2222 of 2023

Decided On: 09.09.2024

Abhishek Banerjee and Ors. Vs. Directorate of Enforcement

Hon'ble Judges/Coram:

Bela M. Trivedi and S.C. Sharma, JJ.

Author: Bela M. Trivedi, J.

Citation:  MANU/SC/0991/2024,2024 INSC 668.

Read full Judgment here: Click here.

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Supreme Court: PMLA Prevails Over CrPC Regarding Procedure For Summoning Persons

 Apart from the fact that Section 50 is a gender neutral, as it does not make any distinction between a man and a woman, there are glaring inconsistencies between the provisions contained in Section 50 of PMLA and Section 160/161 of Code of Criminal Procedure. The Chapter XII of Code of Criminal Procedure pertains to the "Information to the Police and their Powers to Investigate". Section 160 which falls under Chapter XII empowers the Police Officer making an investigation under the said Chapter to require any person to attend within the limits of his own or adjoining station who, from the information given or otherwise appears to be acquainted with the facts and circumstances of the case, whereas, the process envisaged by Section 50 of the PMLA is in the nature of an inquiry against the proceeds of crime and is not "Investigation" in strict sense of the term for initiating prosecution; and the Authorities referred to in Section 48 of PMLA are not the Police Officers as held in Vijay Madanlal. It has been specifically laid down in the said decision that the statements recorded by the Authorities Under Section 50 of PMLA are not hit by Article 20(3) or Article 21 of the Constitution, rather such statements recorded by the authority in the course of inquiry are deemed to be the Judicial proceedings in terms of Section 50(4), and are admissible in evidence, whereas the statements made by any person to a Police Officer in the course of an investigation under Chapter XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code. In view of such glaring inconsistencies between Section 50 PMLA and Section 160/161 Code of Criminal Procedure, the provisions of Section 50 PMLA would prevail in terms of Section 71 read with Section 65 thereof. {Para 16}

17. So far as the procedure to be followed by the Summoning Officer while exercising the powers Under Sub-section (2) and (3) of Section 50 of the PMLA is concerned, it is pertinent to note that Rule 11 of the said Rules 2005, requires the Summoning Officer to follow the procedure as prescribed therein, i.e., to issue Summons in Form V appended to the said Rules. The said prescribed Form V requires Summoning Officer to mention not only the Name, Designation and Address of the Summoning Officer but also the details of the persons summoned as also the documents sought therein. The foot note of Form V also mentions that the proceedings shall be deemed to be judicial proceedings within the meaning of Section 193 and Section 228 of the Indian Penal Code, and if the person summoned fails to give evidence as mentioned in the Schedule, he would be liable to penal proceedings under the Act. Thus, there being specific procedure prescribed under the Statutory Rules of 2005 for summoning the person Under Sub-sections (2) and (3) of Section 50 of the Act, the same would prevail over any other procedure prescribed under the Code, particularly the procedure contemplated in Section 160/161, as also the procedure for production of documents contemplated in Section 91 of the Code, in view of the overriding effect given to the PMLA over the other Acts including the Code of Criminal Procedure Under Section 71 r/w Section 65 of the PMLA.

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 2221-2222 of 2023

Decided On: 09.09.2024

Abhishek Banerjee and Ors. Vs. Directorate of Enforcement

Hon'ble Judges/Coram:

Bela M. Trivedi and S.C. Sharma, JJ.

Author: Bela M. Trivedi, J.

Citation:  MANU/SC/0991/2024,2024 INSC 668.

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Short Notes of Judgments under Prevention of money laundering Act(PMLA)

 

1) Supreme Court: PMLA Accused Need Not Fulfill S.45 Conditions When Furnishing Bond After Appearing Before Trial Court As Per Summons

In a notable judgment, the Supreme Court held that when an accused in a case under the Prevention of Money Laundering Act, 2002 (PMLA), who appears before the Special Court pursuant to a summons issued to him, it cannot be considered that he is in custody. Therefore, such an accused is not required to apply for bail under Section 45 of the PMLA.

The Special Court can however ask such an accused to furnish bonds to secure presence in terms of Section 88 of the Code of Criminal Procedure. To accept such a bond, it is not necessary that the stringent twin conditions for bail under Section 45 of the PMLA must be satisfied, clarified the Supreme Court.

Tarsem Lal v. Directorate of Enforcement Jalandhar Zonal Office, Special Leave to Appeal (Crl.) No(s). 121/2024 (and connected matters)

Decided on: 1 March, 2024

2) Supreme court: ED Cannot Arrest Accused After Special Court Has Taken Cognizance Of PMLA Complaint

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Important Supreme Court Judgments on bail(Part 3)

 

1) Supreme Court: Participation in protest and expression of strong views is not violation of bail conditions-bail is not liable to be cancelled on that ground

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.1994 OF 2024

A.DURAIMURUGAN PANDIYAN SATTAI @ DURAIMURUGAN  VS. STATE REP. BY THE INSPECTOR OF POLICE & ANR.

Dated: April 08, 2024.

https://www.lawweb.in/2024/06/supreme-court-participation-in-protest.html

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Important provisions of Prevention of Money-Laundering Act, 2002

An Act to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto.

2. Definitions.—(1) In this Act, unless the context otherwise requires,—

(s) “person” includes—

(i) an individual,

(ii) a Hindu undivided family,

(iii) a company,

(iv) a firm,

(v) an association of persons or a body of individuals, whether incorporated or not,

(vi) an every artificial judicial person not falling within any of the preceding sub-clauses, and

(vii) an any agency, office or branch owned or controlled by any of the above persons mentioned in the preceding sub-clauses;

(u) “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 19[or where such property is taken or held outside the country, then the property equivalent in value held within the country] 20[or abroad];

21[Explanation.—For the removal of doubts, it is hereby clarified that “proceeds of crime” include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence;]

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Supreme Court: PMLA Accused Who Has Spent Half Of Maximum Sentence As Undertial Can Be Given Bail Under S.436A CrPC

In the facts of this case, the appellant will

complete 3½ years of incarceration on 26th May, 2024.

Thus, he will complete half of the prescribed sentence.

In this case, obviously the trial has not started, as the

charge has not been framed. This Court has held that

Section 436A of the Code of Criminal Procedure, 1973 (for

short "CRPC") will apply even to a case under the PMLA.

But the Court can still deny the relief owing to the

ground such as where the trial was delayed at the

instance of the accused. As stated earlier, here there is

no occasion for the appellant to cause the delay in

trial, as even charge has not been framed. Moreover,

there is no other circumstance brought on record which

will compel us to deny the benefit of Section 436A of the

CRPC to the appellant. {Para 3}

4. The learned Additional Solicitor General submitted

that the power under Section 436A of the CRPC has to be

exercised by the Court of first instance.

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS.2601-2602 OF 2024

AJAY AJIT PETER KERKAR  VS. DIRECTORATE OF ENFORCEMENT & ANR.

Dated: May 16, 2024.

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Important provisions of Criminal minor Acts(Part 1)

 

1) Important provisions of NDPS Act 1985.

https://www.lawweb.in/2019/09/important-provision-of-ndps-act-1985.html

2) Important provisions of Protection of Children from Sexual Offences Act, 2012.

https://www.lawweb.in/2020/04/important-provisions-of-protection-of.html

3) Important provisions of National Investigation Agency Act 2008 as amended in the year 2019.

https://www.lawweb.in/2020/07/short-notes-on-important-provisions-of.html

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Whether money seized from bribe giver can be treated as tainted money for the purpose of Prevention of money laundering Act?

 It is true that so long as the amount is in the hands of a bribe giver, and till it does not get impressed with the requisite intent and is actually handed over as a bribe, it would definitely be untainted money. If the money is handed over without such intent, it would be a mere entrustment. If it is thereafter appropriated by the public servant, the offence would be of misappropriation or species thereof but certainly not of bribe. The crucial part therefore is the requisite intent to hand over the amount as bribe and normally such intent must necessarily be antecedent or prior to the moment the amount is handed over. Thus, the requisite intent would always be at the core before the amount is handed over. Such intent having been entertained well before the amount is actually handed over, the person concerned would certainly be involved in the process or activity connected with "proceeds of crime" including inter alia, the aspects of possession or acquisition thereof. By handing over money with the intent of giving bribe, such person will be assisting or will knowingly be a party to an activity connected with the proceeds of crime. Without such active participation on part of the person concerned, the money would not assume the character of being proceeds of crime. The relevant expressions from Section 3 of the PML Act are thus wide enough to cover the role played by such person. {Part 16}

17. On a bare perusal of the complaint made by the Enforcement Directorate, it is quite clear that the Respondent was prima facie involved in the activity connected with the proceeds of crime.

18. The view taken by the High Court that the Respondent cannot be held liable for the offence under the PML Act is thus completely incorrect.

19. The observations made by us regarding involvement of the Respondent are prima facie in nature and for considering whether the allegations made by the prosecution if accepted to be true at this stage, would make out an offence or not. Needless to say that, on facts, the matter shall be considered purely on merits at the appropriate stage(s).

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 1864 of 2022 (Arising out of SLP (Crl.) No. 2668 of 2022)

Decided On: 31.10.2022

Directorate of Enforcement Vs. Padmanabhan Kishore

Hon'ble Judges/Coram:

U.U. Lalit, C.J.I. and Bela M. Trivedi, J.

Author: U.U. Lalit, C.J.I.

Citation:  2022/INSC/1143,MANU/SC/1412/2022.

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Whether S 45 of The Prevention of Money Laundering Act is applicable to Anticipatory bail application?

We have heard learned Counsel appearing on behalf of the respective parties at length. At the outset, it is required to be noted that Respondent No. 1 is apprehending his arrest in connection with the complaint/case by the ED for the offence of money laundering Under Section 3 of the Prevention of Money Laundering Act, 2002 and punishable Under Section 4 of the said Act. An enquiry/investigation is going on against Respondent No. 1 for the scheduled offence in connection with FIR No. 12/2019. Once the enquiry/investigation against Respondent No. 1 is going on for the offence under the Act, 2002, the rigour of Section 45 of the Act, 2002 would be attracted. Section 45 of the Act, 2002 reads as under:

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:

(2) The limitation on granting of bail specified in [* * *] Sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail. {Para 5 }

5.1. By the impugned judgment and order, while granting anticipatory bail the High Court has observed that the provisions of Section 45 of the Act, 2002 shall not be applicable with respect to the anticipatory bail applications/proceedings Under Section 438 Code of Criminal Procedure. For which the High Court has relied upon the decision of this Court in the case of Nikesh Tarachand Shah (supra). In the case of Dr. V.C. Mohan (supra), this Court has specifically observed and held that it is the wrong understanding that in the case of Nikesh Tarachand Shah (supra) this Court has held that the rigour of Section 45 of the Act, 2002 shall not be applicable to the application Under Section 438 Code of Criminal Procedure. In the case of Dr. V.C. Mohan (supra) in which the decision of this Court in the case of Nikesh Tarachand Shah (supra) was pressed into service, it is specifically observed by this Court that it is one thing to say that Section 45 of the Act, 2002 to offences under the ordinary law would not get attracted but once the prayer for anticipatory bail is made in connection with offence under the Act, 2002, the underlying principles and rigours of Section 45 of the Act, must get triggered-although the application is Under Section 438 Code of Criminal Procedure. Therefore, the observations made by the High Court that the provisions of Section 45 of the Act, 2002 shall not be applicable in connection with an application Under Section 438 Code of Criminal Procedure is just contrary to the decision in the case of Dr. V.C. Mohan (supra) and the same is on misunderstanding of the observations made in the case of Nikesh Tarachand Shah (supra). Once the rigour Under Section 45 of the Act, 2002 shall be applicable the impugned judgment and order passed by the High Court granting anticipatory bail to Respondent No. 1 is unsustainable.

 IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 534 of 2023 

Decided On: 24.02.2023

The Directorate of Enforcement  Vs. M. Gopal Reddy and Ors.

Hon'ble Judges/Coram:

M.R. Shah and C.T. Ravikumar, JJ.

Author: M.R. Shah, J.

Citation: MANU/SC/0166/2023.

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Whether the trial of the offence of money-laundering should follow the trial of the scheduled/predicate offence or vice versa?

 Section 43(1) of the Act provides for the constitution of Special Courts, by the Central Government, in consultation with the Chief Justice of the High Court. Sub-section (2) of Section 43 empowers a Special Court constituted Under Section 43(1), also to try an offence other than the offence punishable Under Section 4 of the PMLA, with which the Accused may be charged at the same trial under the Code of Criminal Procedure. In other words, a Special Court is constituted Under Section 43(1) primarily for the purpose of trying an offence punishable Under Section 4. But Sub-section (2) of Section 43 confers an additional jurisdiction upon such a Special Court to try any other offence with which the Accused may be charged at the same trial. Section 43 reads as follows:

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

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

(2) While trying an offence under this Act, a Special Court shall also try an offence, other than an offence referred to in Sub-section (1), with which the Accused may, under the Code of Criminal Procedure, 1973 (2 of 1974), be charged at the same trial. {Para 21}

22. Section 44 deals with the question of territorial jurisdiction of the Special Court, constituted Under Section 43(1). At the outset, Section 44(1) takes note of two different contingencies, namely, (i) cases where the scheduled offence as well as the offence of money-laundering are committed within the territorial jurisdiction of the same Special Court constituted Under Section 43(1); and (ii) cases where the Court which has taken cognizance of the scheduled offence, is other than the Special Court which has taken cognizance of the complaint of the offence of money-laundering. Section 44(1) reads as follows:

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

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

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

(b) a Special Court may, upon a complaint made by an authority authorised in this behalf under this Act take cognizance of offence Under Section 3, without the Accused being committed to it for trial;

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

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

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

Explanation.--For the removal of doubts, it is clarified that,--

(i) the jurisdiction of the Special Court while dealing with the offence under this Act, during investigation, enquiry or trial under this Act, shall not be dependent upon any orders passed in respect of the scheduled offence, and the trial of both sets of offences by the same court shall not be construed as joint trial;

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

23. What is dealt with by Section 44(1)(a) is a situation where there is no complication. Section 44(1)(a) lays down the most fundamental Rule relating to territorial jurisdiction, by providing that an offence punishable Under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence has been committed. It is relevant to note that Section 44(1)(a) uses the expression "offence" in three places in contradistinction to the expression "scheduled offence" used only once. This usage is not without significance. In all three places where the word "offence" alone is used, it connotes the offence of money-laundering. The place where the expression "scheduled offence" is used, it connotes the predicate offence. By prescribing that an offence punishable Under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which "the offence" has been committed, Section 44(1)(a) makes it crystal clear that it is the Special Court constituted Under Section 43(1), which will be empowered to try even the scheduled offence connected to the same.

24. After mapping out/laying down such a general but fundamental rule, the Act then proceeds to deal with a more complicated situation in Section 44(1)(c). The question as to what happens if the Court which has taken cognizance of the scheduled offence is other than the Special Court which has taken cognizance of the offence of money-laundering, is what is sought to be answered by Clause (c) of Sub-section (1) of Section 44. If the Court which has taken cognizance of the scheduled offence is different from the Special Court which has taken cognizance of the offence of money-laundering, then the authority authorised to file a complaint under PMLA should make an application to the Court which has taken cognizance of the scheduled offence. On the application so filed, the Court which has taken cognizance of the scheduled offence, should commit the case relating to the scheduled offence to the Special Court which has taken cognizance of the complaint of money-laundering.

25. Therefore, it is clear that the trial of the scheduled offence should take place in the Special Court which has taken cognizance of the offence of money-laundering. In other words, the trial of the scheduled offence, insofar as the question of territorial jurisdiction is concerned, should follow the trial of the offence of money-laundering and not vice versa.

26. Since the Act contemplates the trial of the scheduled offence and the trial of the offence of money-laundering to take place only before the Special Court constituted Under Section 43(1), a doubt is prone to arise as to whether all the offences are to be tried together. This doubt is sought to be removed by Explanation (i) to Section 44(1). Explanation (i) clarifies that the trial of both sets of offences by the same Court shall not be construed as joint trial.

27. A careful dissection of Clauses (a) and (c) of Sub-section (1) of Section 44 shows that they confer primacy upon the Special Court constituted Under Section 43(1) of the PMLA. These two clauses contain two Rules, namely, (i) that the offence punishable under the PMLA as well as a scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence of money-laundering has been committed; and (ii) that if cognizance has been taken by one Court, in respect of the scheduled offence and cognizance has been taken in respect of the offence of money-laundering by the Special Court, the Court trying the scheduled offence shall commit it to the Special Court trying the offence of money-laundering.

 IN THE SUPREME COURT OF INDIA

Writ Petition (Criminal) No. 12 of 2023

Rana Ayyub  Vs. Directorate of Enforcement.

Hon'ble Judges/Coram:

V. Ramasubramanian and J.B. Pardiwala, JJ.

Author: V. Ramasubramanian, J.

Decided On: 07.02.2023.

Citation: MANU/SC/0096/2023.

Read full Judgment here: Click here

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HC: Magistrate can’t permit questioning of an accused being tried by Special Court ( PMLA)

  Our conclusion, therefore, is that the Special Court

established under the Act is a court of exclusive jurisdiction.

Sections 6 and 7 confer on that court wide powers. It is a

court of original criminal jurisdiction and has all the powers of

such a court under the Code including those of Sections 306 to

308.”

A Three Judge Bench of the Apex Court in the case of HARSHAD S.MEHTA followed the judgment in the case of A.R.ANTULAY (supra) to hold, if a Special Court is created under the provisions of a special enactment, the proceedings falling under that enactment shall be held only before the Special Court. For this purpose the Apex Court holds that the Special Court enjoys all the powers of the court of original jurisdiction and it holds a dual capacity and powers of both the Magistrate and the Court of Session depending upon the stage of the case.

13. In the light of the statutory frame work of the PMLA and

the application filed under Section 50 of the Act, this Court is of the considered view that the application was not maintainable before the learned Magistrate, since the Court did not have the power to direct recording of statements for it to become a record under the PMLA, the order which is passed by the Court which did not have a jurisdiction to even consider any application under the PMLA, is rendered unsustainable. There can be no qualm about the principles laid down in the judgment rendered in the case of NIRANJAN SINGH (supra) relied on by the learned counsel representing the ED to mean what is custody, but the judgment is inapplicable to the facts of the case at hand as it does not deal with issues concerning jurisdiction. Therefore, in view of the preceding analysis, the order passed on the application by the learned Magistrate requires appropriate interference and is to be consequently obliterated. {Para 62}

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

WRIT PETITION No.19042 OF 2022 (GM-RES)

HARSHA D., S/O LATE DODDANANJAIHA Vs STATE BY HIGH GROUND POLICE STATION

Coram:  MR. JUSTICE M. NAGAPRASANNA

DATED: 17TH DAY OF OCTOBER, 2022

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Whether accused prosecuted under prevention of money laundering Act can get bail as per S 167 of CRPC?

We may record that as per the provisions of Section 4(2) of the Code of Criminal Procedure, the procedure contained therein applies in respect of special statutes as well unless the applicability of the provisions is expressly barred. Moreover, Sections 44 to 46 of the PMLA Act specifically incorporate the provisions of Code of Criminal Procedure to the trials under the PMLA Act. Thus, not only that there is no provision in the PMLA Act excluding the applicability of Code of Criminal Procedure, on the contrary, provisions of Code of Criminal Procedure are incorporated by specific inclusion. Even Section 65 of the PMLA Act itself settles the controversy beyond any doubt in this behalf which reads as under:

65. Code of Criminal Procedure, 1973 to apply.-

The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, in so far as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation investigation, prosecution and all other proceedings under this Act.

5. We may also refer to judgment of this Court in 'Directorate of Enforcement v. Deepak Mahajan and Anr.' [MANU/SC/0422/1994 : 1994 (3) SCC 440] wherein it was held as under:

141. In the result, we hold that Sub-sections (1) and (2) of Section 167 are squarely applicable with regard to the production and detention of a person arrested under the provisions of Section 35 of FERA and 104 of Custom Act and that the Magistrate has jurisdiction Under Section 167(2) to authorise detention of a person arrested by any authorised officer of the Enforcement under FERA and taken to the Magistrate in compliance of Section 35(2) of FERA.

6. We, thus, do not agree with the opinion of the High Court that the provisions of Section 167(2) Code of Criminal Procedure would not be applicable to the proceedings under PMLA Act. In the present case, as no complaint was filed even after the expiry of 60 days from the date when the Appellant was taken into custody, he was entitled to statutory bail in view of the provisions contained in Section 167(2) Code of Criminal Procedure.

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 566 of 2017 

Decided On: 22.03.2017

Ashok Munilal Jain Vs.  Assistant Director, Directorate of Enforcement

Hon'ble Judges/Coram:

A.K. Sikri and Ashok Bhushan, JJ.

Citation: (2018) 16 SCC 158

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