VIJAY MADANLAL CHOUDHARY & ORS. versus UNION OF INDIA & ORS.

63. In view of the observations made in said Report, the FATF made recommendations as follows: “2.3.3 Compliance with Recommendations 3 Rating Summary of factors relative to s.2.3 underlying overall rating R.3 PC Confiscation of property laundered is not covered in the relevant legislation and depends on a conviction for a scheduled predicate offence. The UAPA does not allow for confiscation of intended instrumentalities used in terrorist acts or funds collected to be used by terrorist individuals. The UAPA and NDPS Act do not allow for property of corresponding value to be confiscated. There are no clear provisions and procedures on how to deal with the assets in the case of criminal proceedings when the suspect died. Concerns based on the limited number of confiscations in relation to ML/FT offences.”

64. As a sequel to these recommendations of FATF and the observations in the stated Report, Section 5 came to be amended vide Act 2 of 2013. In this connection, it may be useful to refer to the Fifty VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] Sixth Report of the Standing Committee on Finance relating to the 2011 Bill, which reads thus: “5. Amendment in provisions implemented by Enforcement Directorate: (i)Attachment of property: The present Act in section 5 stipulates that the person from whom property is attached must “have been charged of having committed a scheduled offence”. It is proposed to be deleted as property may come to rest with someone, who has nothing to do with the scheduled offence or even the money-laundering offence. Procedure for attachment is at present done as provided in the Second Schedule to the Income Tax Act, 196. Now it is proposed in section 5(1) that the procedure will be prescribed separately. Time for Adjudicating Authority to confirm attachment of property by ED has been proposed to be increased from 150 days to 180 days. (ii) **** (iii) Making confiscation independent of conviction: At present attachment of property becomes final under section 8(3) “after the guilt of the person is proved in the trial court and order of such trial court becomes final”. Problems are faced in such cases where money-laundering has been done by a person who has not committed the scheduled offence or where property has come to rest with someone who has not committed any offence. Therefore, it is proposed to amend section 8(5) to provide for attachment and confiscation of the proceeds of crime, even if there is no conviction, so long as it is proved that predicate offence and money laundering offence have taken place and the property in question (i.e. the proceeds of crime) is involved in money laundering.” However, the MER 2010 highlighted certain deficiencies in the AML legislation which adversely affected the ratings on a few FATF recommendations. The areas are broadly summarized below:— a) Commodities market out of the ambit of PMLA. b) DNFBP sector not subjected to PMLA (except Casino). c) Effectiveness concerns due to absence of ML conviction. d) Identification and verification of beneficial ownership of legal persons. e) Ineffective sanctions regime for non-compliance. India has suggested an Action Plan with short, medium and long term objectives to address the specific issues raised in the MER 2010 that includes proposed amendments in the PMLA.” (emphasis supplied)

65. As aforesaid, in this backdrop the amendment Act 2 of 2013 came into being. Considering the purport of the amended provisions and the experience of implementing/enforcement agencies, further changes became necessary to strengthen the mechanism regarding prevention of money-laundering. It is not right in assuming that the attachment of property (provisional) under the second proviso, as amended, has no link with the scheduled offence. Inasmuch as Section 5(1) envisages that such an action can be initiated only on the basis of material in possession of the authorised officer indicative of any person being in possession of proceeds of crime. The precondition for being proceeds of crime is that the property has been derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. The sweep of Section 5(1) is not limited to the accused named in the criminal activity relating to a scheduled offence. It would apply to any person (not necessarily being accused in the scheduled offence), if he is involved in any process or activity connected with the proceeds of crime. Such a person besides facing the consequence of provisional attachment order, may end up in being named as accused in the complaint to be filed by the authorised officer concerning offence under Section 3 of the 2002 Act.

66. Be it noted that the attachment must be only in respect of property which appears to be proceeds of crime and not all the properties belonging to concerned person who would eventually face the action of confiscation of proceeds of crime, including prosecution for offence of money-laundering. As mentioned earlier, the relevant date for initiating action under the 2002 Act — be it of attachment and confiscation or VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] prosecution, is linked to the inclusion of the offence as scheduled offence and of carrying on the process or activity in connection with the proceeds of crime after such date. The pivot moves around the date of carrying on the process and activity connected with the proceeds of crime; and not the date on which the property has been derived or obtained by the person concerned as a result of any criminal activity relating to or relatable to the scheduled offence.

67. The argument of the petitioners that the second proviso permits emergency attachment in disregard of the safeguard provided in the first proviso regarding filing of report (chargesheet) clearly overlooks that the second proviso contains non-obstante clause and, being an exceptional situation, warrants “immediate” action so that the property is not likely to frustrate any proceeding under the 2002 Act. Concededly, there is stipulation fastened upon the authorised officer to record in writing reasons for his belief on the basis of material in his possession that such “immediate” action is indispensable. This stipulation has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act.

68. It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of “proceeds of crime” is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of “property” as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money-laundering.

69. We find force in the stand taken by the Union of India that the objectives of enacting the 2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence so as to combat the evil of money-laundering. The second proviso, therefore, addresses the broad objectives of the 2002 Act to reach the proceeds of crime in whosoever’s name they are kept or by whosoever they are held. To buttress this argument, reliance has been placed on the dictum in Attorney General for India494 and Raman Tech. & Process Engg. Co. & Anr. vs. Solanki Traders495.

70. The procedural safeguards provided in respect of provisional attachment are effective measures to protect the interest of the person concerned who is being proceeded with under the 2002 Act, in the following manner as rightly indicated by the Union of India: i. For invoking the second proviso, the Director or any officer not below the rank of Deputy Director will have to first apply his mind to the materials on record before recording in writing his reasons to believe is certainly a sufficient safeguard to the invocation of the powers under the second proviso to Section 5(1) of the 2002 Act. ii. There has to be a satisfaction that if the property involved in money-laundering or ‘proceeds of crime’ are not attached “immediately”, such non-attachment might frustrate the confiscation proceedings under the 2002 Act. iii. The order passed under Section 5(1) of the 2002 Act is only provisional in nature. The life of this provisional attachment order passed under Section 5(1) of the 2002 Act is only for 180 days, subject to confirmation by an independent Adjudicating Authority. iv. Under Section 5(2) officer passing provisional attachment order has to immediately forward a copy of this order to the Adjudicating Authority in a sealed envelope. v. Under Section 5(5) of the 2002 Act, the officer making such order must file a complaint before the Adjudicating Authority within 30 days of the order of provisional attachment being made. vi. Section 5(3) of the 2002 Act provides that the provisional attachment order shall cease to have effect on the expiry of the period specified in Section 5(1) i.e. 180 days or on the date when the Adjudicating Authority makes an order under Section 8(2), whichever is earlier. vii. Under Section 8(1), once the officer making the provisional attachment order files a complaint and if the Adjudicating Authority VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 494 Supra at Footnote No.428 (also at Footnote No.175) 495 (2008) 2 SCC 302 (also at Footnote No.430) “has a reason to believe that any person has committed an offence under Section 3 or is in possession of the proceeds of crime”, the Adjudicating Authority may serve a show cause notice of not less than 30 days on such person calling upon him to indicate the sources of his income, earning or assets or by means of which he has acquired the property attached under Section 5(1) of the 2002 Act. viii. The above SCN would require the noticee to produce evidence on which he relies and other relevant information and particulars to show cause why all or any of the property “should not be declared to be the properties involved in money-laundering and confiscated by the Central Government”. ix. Section 8(2) requires the Adjudicating Authority to consider the reply to the SCN issued under Section 8(1) of the 2002 Act. The Section further provides to hear the aggrieved person as well as the officer issuing the order of provisional attachment and also take into account “all relevant materials placed on record before the Adjudicating Authority”. After following the above procedure, the Adjudicating Authority will record its finding whether all the properties referred to in the SCN are involved in money-laundering or not. x. While passing order under Section 8(2) read with Section 8(3) there are two possibilities which might happen: a. the Adjudicating Authority may confirm the order of provisional attachment, in which case again, the confirmation will continue only up to i. the period of investigation not exceeding 365 days, or ii. till the pendency of any proceedings relating to any offence under the 2002 Act or under the corresponding law of any other country before the competent Court of criminal jurisdiction outside India. b. Adjudicating Authority may disagree and not confirm the provisional attachment, in which case attachment over the property ceases. xi. Under Section 8(4) of the 2002 Act, upon confirmation of the order of provisional attachment, the Director or other officer authorized by him shall take the possession of property attached. xii. Under Section 8(5) of the 2002 Act, on the conclusion of a trial for an offence under the 2002 Act if the Special Court finds that the offence of money-laundering has been committed it will order that the property involved in money-laundering or the property which has been involved in the commission of the offence of money-laundering shall stand confiscated to the Central Government. xiii. However, under Section 8(6) if the Special Court on the conclusion of the trial finds that no offence of money-laundering has taken place or the property is not involved in money-laundering it will release the property which has been attached to the person entitled to receive it. xiv. Under Section 8(7), if the trial before the Special Court cannot be conducted because of the death of the accused or because the accused is declared proclaimed offender, then the Special Court on an application of the Director or a person claiming to be entitled to possession of a property in respect of which an order under Section 8(3) is passed either to confiscate the property or release the property to the claimant, after considering the material before it. xv. Under Section 8(8), when a property is confiscated, Special Court may direct the central government to restore the property to a person with the legitimate interest in the property, who may have suffered a quantifiable loss as a result of money-laundering. Provided that the person must not have been involved in money- laundering and must have acted in a good faith and has suffered a considerable loss despite taking all reasonable precautions. xvi. The order passed by the Adjudicating Authority is also subject to appeal before the Appellate Tribunal which is constituted under Section 25 of the 2002 Act. Thus, the Adjudicating Authority is not the final authority under the 2002 Act as far as the attachment of proceeds of crime or property involved in money-laundering is concerned. xvii. Any person aggrieved of an order confirming the provisional attachment order can file an appeal before the Appellate Tribunal under Section 26(1) of the 2002 Act. The Appellate Tribunal on receipt of an appeal after giving the parties an opportunity of being heard will pass an order as it thinks fit either confirming or VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] modifying or setting aside the provisional attachment order appealed against. xviii. Further, the order passed by the Appellate Tribunal is further appealable before the High Court under Section 42 of the 2002 Act on any question of fact or question of law arising out of the order passed by the Appellate Tribunal. It is, thus, clear that the provision in the form of Section 5 provides for a balancing arrangement to secure the interest of the person as well as to ensure that the proceeds of crime remain available for being dealt with in the manner provided by the 2002 Act. This provision, in our opinion, has reasonable nexus with the objects sought to be achieved by the 2002 Act in preventing and regulating money-laundering effectively. The constitutional validity including interpretation of Section 5 has already been answered against the petitioners by different High Courts496. We do not wish to dilate on those decisions for the view already expressed hitherto. SECTION 8 OF THE 2002 ACT

71. This section is part of Chapter III dealing with attachment, adjudication and confiscation. It provides for the procedure and safeguards to be adhered to by the Authorities referred to in Section 48 and in particular the Adjudicating Authority appointed by the Central Government under Section 6, for dealing with the complaint filed by the authorised officer under Section 5(5) of the 2002 Act or applications made under Section 17(4) or 18(10) of the 2002 Act. This is a wholesome provision, not only protecting the interest of the person concerned, but affording him/her fair opportunity during the adjudication process. This section, as amended from time to time and as applicable to the present cases, reads thus: “8. Adjudication.—(1) On receipt of a complaint under sub- section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (10) of section 18, if the Adjudicating Authority has reason to believe that any person has 496 (1) Bombay High Court in Radha Mohan Lakhotia (supra at Footnote No.431); (2) High Court of Andhra Pradesh in B. Rama Raju (supra at Footnote No.433); (3) High Court of Gujarat in J Alive Hospitality and Food Private Limited (supra at Footnote No.434); (4) High Court of Karnataka in K. Sowbaghya (supra at Footnote No.435); (5) High Court of Sikkim at Gangtok in Usha Agarwal (supra at Footnote No.436); and Delhi High Court in J. Sekar (supra at Footnote No.437). committed an 497[offence under section 3 or is in possession of proceeds of crime], he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized 498[or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money- laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after— (a) considering the reply, if any, to the notice issued under sub- section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf; and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering. (3) Where the Adjudicating Authority decides under sub-section (2) that any property is involved in money-laundering, he shall, by VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 497 Subs. by Act 21 of 2009, sec. 5, for “offence under section 3” (w.e.f. 1-6-2009). 498 Ins. by Act 2 of 2013, sec. 6(i) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or 499[record seized or frozen under section 17 or section 18 and record a finding to that effect, whereupon such attachment or retention or freezing of the seized or frozen property] or record shall— (a) continue during 500[investigation for a period not exceeding 501[three hundred and sixty-five days] or] the pendency of the proceedings relating to any 502[offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and] 503[(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the 504[Special Court];] 505[Explanation.—For the purposes of computing the period of three hundred and sixty-five days under clause (a), the period during which the investigation is stayed by any court under any law for the time being in force shall be excluded.] (4) Where the provisional order of attachment made under sub- section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf 499 Subs. by Act 2 of 2013, sec. 6(ii)(a), for “record seized under section 17 or section 18 and record a finding to that effect, such attachment or retention of the seized property” (w.e.f. 15-2-2013), vide S.O. 343(E), dated 8-2-2013. 500 Ins. by Act 13 of 2018, sec. 208(c)(i) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19th April, 2018). 501 Subs. by Act 7 of 2019, sec. 22(i), for “ninety days” (w.e.f. 20-3-2019, vide G.S.R. 225(E), dated 19th March, 2019). 502 Subs. by Act 2 of 2013, sec. 6(ii)(b), for “Scheduled offence before a Court and” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). 503 Subs. by Act 2 of 2013, sec. 6(ii)(c), for clause (b) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). Clause (b), before substitution, stood as under: “(b) become final after the guilt of the person is proved in the trial court and order of such trial court becomes final”. 504 Subs. by the Finance Act, 2015 (20 of 2015), sec. 147(i), for “Adjudicating Authority” (w.e.f. 14-5-2015). 505 Ins. by Act 7 of 2019, sec. 22(ii) (w.e.f. 20-3-2019, vide G.S.R. 225(E), dated 19th March, 2019). shall forthwith take the 506[possession of the property attached under section 5 or frozen under sub-section (1A) of section 17, in such manner as may be prescribed: Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of section 17, the order of confiscation shall have the same effect as if the property had been taken possession of.] 507[(5) Where on conclusion of a trial of an offence under this Act, the Special Court finds that the offence of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money-laundering after having regard to the material before it.] VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 506 Subs. by Act 2 of 2013, sec. 6(iii), for “possession of the attached property” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). 507 Subs. by Act 2 of 2013, sec. 6(iv), for sub-sections (5) and (6) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). Sub-sections (5) and (6), before substitution, stood as under: “(5) Where on conclusion of a trial for any scheduled offence, the person concerned is acquitted, the attachment of the property or retention of the seized property or record under sub-section (3) and net income, if any, shall cease to have effect. (6) Where the attachment of any property or retention of the seized property or record becomes final under clause (b) of sub-section (3), the Adjudicating Authority shall, after giving an opportunity of being heard to the person concerned, make an order confiscating such property.” 508[(8) Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering: Provided that the Special Court shall not consider such claim unless it is satisfied that the claimant has acted in good faith and has suffered the loss despite having taken all reasonable precautions and is not involved in the offence of money laundering:] 509[Provided further that the Special Court may, if it thinks fit, consider the claim of the claimant for the purposes of restoration of such properties during the trial of the case in such manner as may be prescribed.]”

72. The grievance of the petitioners in respect of this provision is broadly about the period of attachment specified under Section 8(3)(a) and the modality of taking possession of the property under Section 8(4) of the 2002 Act. As a result, we will confine our discussion to the dispensation provided in the stated sub-sections. Reverting to sub-section (3), it postulates that where the Adjudicating Authority records a finding whether all or any of the properties referred to in the show cause notice issued under sub-section (1) by the Adjudicating Authority consequent to receipt of a complaint/application that the property in question is involved in money-laundering, he shall, by an order in writing confirm the attachment (provisional) of property made under Section 5(1) or retention of property or record seized or frozen under Section 17 or Section 18, and direct continuation of the attachment or retention or freezing of the concerned property for a period not exceeding three hundred and sixty-five days or the pendency of the proceedings relating to any offence under the 2002 Act before a Court or under the corresponding law of any country outside India and become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of Section 8 or Section 58B or Section 60(2A) by the Special Court. The Explanation added thereat vide Act 7 of 2019 stipulates the method 508 Ins. by the Finance Act, 2015 (20 of 2015), sec. 147(ii) (w.e.f. 14-5-2015). 509 Ins. by Act 13 of 2018, sec. 208(c)(ii) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19th April, 2018). of computing the period of three hundred and sixty-five days after reckoning the stay order of the Court, if any. The argument proceeds that the period of attachment mentioned in Section 8(3)(a) of the 2002 Act does not clearly provide for the consequence of non-filing of the complaint within three hundred and sixty-five days from the date of attachment (provisional). This argument clearly overlooks the obligation on the Director or any other officer who provisionally attaches any property under Section 5(1), to file a complaint stating the fact of such attachment before the Adjudicating Authority within thirty days in terms of Section 5(5) of the 2002 Act. Concededly, filing of complaint before the Adjudicating Authority in terms of Section 5(5) within thirty days from the provisional attachment for confirmation of such order of provisional attachment is different than the complaint to be filed before the Special Court under Section 44(1)(b) for initiating criminal action regarding offence of money-laundering punishable under Section 4 of the 2002 Act. Furthermore, the provisional attachment would operate only for a period of one hundred and eighty days from the date of order passed under Section 5(1) of the 2002 Act in terms of that provision. Whereas, Section 8(3) refers to the period of three hundred and sixty- five days from the passing of the order under sub-section (2) of Section 8 by the Adjudicating Authority and confirming the provisional attachment order and the order of confirmation of attachment operates until the confiscation order is passed or becomes final in terms of order passed under Section 8(5) or 8(7) or 58B or 60(2A) by the Special Court. The order of confirmation of attachment could also last during the pendency of the proceedings relating to the offence of money-laundering under the 2002 Act, or before the competent Court of criminal jurisdiction outside India, as the case may be. We need not elaborate on this aspect any further and leave the parties to agitate this aspect in appropriate proceedings as it is not about the constitutional validity of the provision as such.

73. The other grievance of the petitioners is in reference to the stipulation in sub-section (4) of Section 8 providing for taking possession of the property. This provision ought to be invoked only in exceptional situation keeping in mind the peculiar facts of the case. In that, merely because the provisional attachment order passed under Section 5(1) is confirmed, it does not follow that the property stands confiscated; and until an order of confiscation is formally passed, there is no reason to hasten the process of taking possession of such property. The principle VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] set out in Section 5(4) of the 2002 Act needs to be extended even after confirmation of provisional attachment order until a formal confiscation order is passed. Section 5(4) clearly states that nothing in Section 5 including the order of provisional attachment shall prevent the person interested in the enjoyment of immovable property attached under sub- section (1) from such enjoyment. The need to take possession of the attached property would arise only for giving effect to the order of confiscation. This is also because sub-section (6) of Section 8 postulates that where on conclusion of a trial under the 2002 Act which is obviously in respect of offence of money-laundering, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. Once the possession of the property is taken in terms of sub-section (4) and the finding in favour of the person is rendered by the Special Court thereafter and during the interregnum if the property changes hands and title vest in some third party, it would result in civil consequences even to third party. That is certainly avoidable unless it is absolutely necessary in the peculiar facts of a particular case so as to invoke the option available under sub-section (4) of Section 8.

74. Indisputably, statutory Rules have been framed by the Central Government in exercise of powers under Section 73 of the 2002 Act regarding the manner of taking possession of attached or frozen properties confirmed by the Adjudicating Authority in 2013, and also regarding restoration of confiscated property in 2019. Suffice it to observe that direction under Section 8(4) for taking possession of the property in question before a formal order of confiscation is passed merely on the basis of confirmation of provisional attachment order, should be an exception and not a rule. That issue will have to be considered on case- to-case basis. Upon such harmonious construction of the relevant provisions, it is not possible to countenance challenge to the validity of sub-section (4) of Section 8 of the 2002 Act.

75. The learned counsel appearing for the Union of India, had invited our attention to the recommendations made by FATF in 2003 and 2012 to justify the provision under consideration. The fact that non- conviction based confiscation model is permissible, it does not warrant an extreme and drastic action of physical dispossession of the person from the property in every case — which can be industrial/commercial/ business and also residential property, until a formal order of confiscation is passed under Section 8(5) or 8(7) of the 2002 Act. As demonstrated earlier, it is possible that the Special Court in the trial concerning money- laundering offence may eventually decide the issue in favour of the person in possession of the property as not being proceeds of crime or for any other valid ground. Before such order is passed by the Special Court, it would be a case of serious miscarriage of justice, if not abuse of process to take physical possession of the property held by such person. Further, it would serve no purpose by hastening the process of taking possession of the property and then returning the same back to the same person at a later date pursuant to the order passed by the Court of competent jurisdiction. Moreover, for the view taken by us while interpretating Section 3 of the 2002 Act regarding the offence of money-laundering, it can proceed only if it is established that the person has directly or indirectly derived or obtained proceeds of crime as a result of criminal activity relating to or relatable to a scheduled offence or was involved in any process or activity connected with proceeds of crime.

76. It is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of his acquittal or discharge in connection with the scheduled offence. Resultantly, we would sum up by observing that the provision in the form of Section 8(4) can be resorted to only by way of an exception and not as a rule. The analogy drawn by the Union of India on the basis of decisions of this Court in Divisional Forest Officer & Anr. vs. G.V. Sudhakar Rao & Ors.510, Biswanath Bhattacharya511, Yogendra Kumar Jaiswal & Ors. vs. State of Bihar & Ors.512, will be of no avail in the context of the scheme of attachment, confiscation and vesting of proceeds of crime in the Central Government provided for in the 2002 Act. SEARCHES AND SEIZURES

77. After having traversed through the provisions of Chapter I to III, we may now turn to other contentious provision in Chapter V of the 2002 Act, dealing with summons, searches and seizures, etc. Section 16 provides for power of survey bestowed upon the Authorities under the 2002 Act. They have been empowered to enter upon any place within the limits of the area assigned to them or in respect of which, has been VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 510 (1985) 4 SCC 573 (also at Footnote No.439) 511 Supra at Footnote No.438 512 (2016) 3 SCC 183 (also at Footnote No.448) specifically authorised for the purposes of Section 16 by the competent authority, for inspection of records or other matters, in the event, it has reason to believe on the basis of material in possession that an offence under Section 3 of the 2002 Act has been committed. However, when it comes to search and seizure, Section 17 of the 2002 Act permits only the Director or any other officer not below the rank of Deputy Director authorised by him to exercise that power on the basis of information in his possession and having reason to believe that any person has committed some act which constitutes money-laundering or is in possession of proceeds of crime involved in money-laundering, including the records and property relating to money-laundering. Section 17 of the 2002 Act, as amended, reads thus: “17. Search and seizure.—(1) Where 513[the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) 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 relating to money- laundering, 514[or] 515[(iv) is in possession of any property related to crime,] then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to— (a) 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; 513 Subs. by Act 21 of 2009, sec. 7(i), for “the Director” (w.e.f. 1-6-2009) 514 Ins. by Act 2 of 2013, sec. 14(i)(a) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013) 515 Ins. by Act 2 of 2013, sec. 14(i)(b) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013) (b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available; (c) seize any record or property found as a result of such search; (d) place marks of identification on such record or 516[property, if required or] make or cause to be made extracts or copies therefrom; (e) make a note or an inventory of such record or property; (f) 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 this Act: 517[***] 518[(1A) Where it is not practicable to seize such record or property, the officer authorised under sub-section (1), may make an order to freeze such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned: VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 516 Ins. by Act 2 of 2013, sec. 14(i)(c) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013) 517 Proviso omitted by the Finance (No.2) Act, 2019, sec. 197 (w.e.f. 1-8-2019). Earlier the proviso was substituted by Act 2 of 2013, sec. 14(i)(d) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013) and by Act 21 of 2009, sec. 7(ii) (w.e.f. 1-6-2009). The Proviso, before omission, stood as under: “Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974) 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” 518 Ins. by Act 2 of 2013, sec. 14(ii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013). Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60, it becomes practical to seize a frozen property, the officer authorised under sub-section (1) may seize such property.] (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure519[or upon issuance of a freezing order], forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section. 520[(4) The authority seizing any record or property under sub- section (1) or freezing any record or property under sub-section (1A) shall, within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record or property seized under sub-section (1) or for continuation of the order of freezing served under sub- section (1A), before the Adjudicating Authority.]” As noticed from the amended provision, it has been amended vide Act 21 of 2009, Act 2 of 2013 and finally by the Finance (No.2) Act, 2019. The challenge is essentially in respect of deletion of proviso vide Finance (No.2) Act, 2019 — which provides that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 157 of the 1973 Code or a 519 Ins. by Act 2 of 2013, sec. 14(iii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013). 520 Subs. by Act 2 of 2013, sec. 14(iv), for sub-section (14) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8.2.2013). Sub-section (14), before substitution, stood as under: “(4) The authority, seizing any record or property under this section shall, within a period of thirty days from such seizure, file an application, requesting for retention of such record or property, before the Adjudicating Authority.” 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. Further, the challenge is about no safeguards, as provided under the 1973 Code regarding searches and seizures, have been envisaged and that such drastic power is being exercised without a formal FIR registered or complaint filed in respect of scheduled offence. The provision is, therefore, unconstitutional.

78. These challenges have been rightly refuted by the Union of India on the argument that the 2002 Act is a self-contained Code and the dispensation envisaged thereunder, must prevail in terms of Section 71520A of the 2002 Act, which predicates that the provisions of the 2002 Act have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, which includes the provisions of the 1973 Code. Even Section 65520B of the 2002 Act predicates that the provisions of the 1973 Code shall apply, insofar as they are not inconsistent with the provisions of the 2002 Act in respect of arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under the 2002 Act. To bolster this submission, reliance is also placed on Sections 4521 and 5522 of the 1973 Code. Section VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 520A 71. Act to have overriding effect.—The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. 520B 65. Code of Criminal Procedure, 1973 to apply.—The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar 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. 521 4. Trial of offences under the Indian Penal Code and other laws.—(1) All offences under the India Penal Code (45 of 1860) shall be investigated, inquired into, tried, and otherwise dealt with according to the provisions hereinafter contained. (2) All offences under any other law shall be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. 522 5. Saving.—Nothing contained in this Code shall, in the absence of a specific provision to the contrary, affect any special or local law for the time being in force, or any special jurisdiction or power conferred, or any special from of procedure prescribed, by any other law for the time being in force. 4(2) pertains to offences under other laws (other than IPC) which are required to be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences. Similarly, Section 5 of the 1973 Code envisages that nothing in the 1973 Code shall, in the absence of a specific provision to the contrary, affect any special or local law for the time being in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed, by any other law for the time being in force.

79. Undoubtedly, the 2002 Act is a special self-contained law; and Section 17 is a provision, specifically dealing with the matters concerning searches and seizures in connection with the offence of money-laundering to be inquired into and the proceeds of crime dealt with under the 2002 Act. We have already noted in the earlier part of this judgment that before resorting to action of provisional attachment, registration of scheduled offence or complaint filed in that regard, is not a precondition. The authorised officer can still invoke power of issuing order of provisional attachment and contemporaneously send information to the jurisdictional police about the commission of scheduled offence and generation of property as a result of criminal activity relating to a scheduled offence, which is being made subject matter of provisional attachment. Even in the matter of searches and seizures under the 2002 Act, that power can be exercised only by the Director or any other officer not below the rank of Deputy Director authorised by him. They are not only high-ranking officials, but have to be fully satisfied that there is reason to believe on the basis of information in their possession about commission of offence of money-laundering or possession of proceeds of crime involved in money-laundering. Such reason(s) to believe is required to be recorded in writing and contemporaneously forwarded to the Adjudicating Authority along with the material in his possession in a sealed envelope to be preserved by the Adjudicating Authority for period as is prescribed under the Rules framed in that regard. Such are the inbuilt safeguards provided in the 2002 Act. The proviso as it existed prior to 2019 was obviously corresponding to the stipulation in the first proviso in Section 5. However, for strengthening the mechanism, including regarding prevention of money-laundering, the Parliament in its wisdom deemed it appropriate to drop the proviso in sub-section (1) of Section 17 of the 2002 Act, thereby dispensing with the condition that no search shall be conducted unless in relation to the scheduled offence a report has been forwarded to a Magistrate under Section 157 of the 1973 Code or a complaint has been filed before a Magistrate in regard to such offence. As it is indisputable that the 2002 Act is a special Act and is a self-contained Code regarding the subject of searches and seizures in connection with the offence of money- laundering under the 2002 Act, coupled with the fact that the purpose and object of the 2002 Act is prevention of money-laundering; and the offence of money-laundering being an independent offence concerning the process and activity connected with the proceeds of crime, the deletion of the first proviso has reasonable nexus with the objects sought to be achieved by the 2002 Act for strengthening the mechanism of prevention of money-laundering and to secure the proceeds of crime for being dealt with appropriately under the 2002 Act.

80. As aforementioned, Section 17 provides for inbuilt safeguards, not only mandating exercise of power by high ranking officials, of the rank of Director (not below the rank of Additional Secretary to the Government of India who is appointed by a Committee chaired by the Central Vigilance Commissioner in terms of Section 25 of the CVC Act) or Deputy Director authorised by the Director in that regard, but also to adhere to other stipulations of recording of reasons regarding the belief formed on the basis of information in his possession about commission of offence of money-laundering and possession of proceeds of crime involved in money-laundering. Further, such recorded reasons along with the materials is required to be forwarded to the three-member Adjudicating Authority (appointed under Section 6 of the 2002 Act headed by a person qualified for appointment as District Judge) in a sealed cover to be preserved for specified period, thus, guaranteeing fairness, transparency and accountability regarding the entire process of search and seizure. This is unlike the provision in the 1973 Code where any police officer including the Head Constable can proceed to search and seize records or property merely on the basis of allegation or suspicion of commission of a scheduled offence.

81. Concededly, the 2002 Act provides for an inquiry to be conducted by the Authorities and with power to collect evidence for being submitted to the Adjudicating Authority for consideration of confirmation of provisional attachment order passed by the Authorities in respect of properties being proceeds of crime involved in the offence VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] of money-laundering. In that sense, the provisions in 2002 Act are not only to investigate into the offence of money-laundering, but more importantly to prevent money-laundering and to provide for confiscation of property related to money-laundering and matters connected therewith and incidental thereto.

82. The process of searches and seizures under the 2002 Act are, therefore, not only for the purposes of inquiring into the offence of money- laundering, but also for the purposes of prevention of money-laundering. This is markedly distinct from the process of investigating into a scheduled offence.

83. It is pertinent to note that if the action taken by the Authority under the 2002 Act, including regarding searches and seizures, is eventually found to be without reasons recorded in writing, would entail punishment for vexatious search under Section 62 of the 2002 Act. Such being the stringent safeguards provided under Section 17 of the 2002 Act and Rules framed regarding the process of searches and seizures concerning the offence of money-laundering and for prevention of money-laundering including attachment of proceeds of crime, it is unfathomable as to how the challenge under consideration can be countenanced. We may usefully advert to the decision of Constitution Bench of this Court in Pooran Mal523, which had dealt with similar power entrusted to the Director of Inspection or the Commissioner under the Income-tax Act, 1961 (also see Income-Tax Officer, Special Investigation Circle-B, Meerut524). To the same end is the decision in R.S. Seth Gopikrishan Agarwal vs. R.N. Sen, Assistant Collector of Customs & Ors.525, dealing with Sections 105 and 136 of the Customs Act. In the case of Dr. Partap Singh526, this Court upheld the dispensation provided in Section 37 of the FERA by adopting purposive interpretation to give full play to the legislative intent and negating the argument regarding incorporation of the provisions of the 1973 Code by pen and ink in that section, as is the argument advanced before us.

84. As noticed earlier, in terms of Section 17(2) of the 2002 Act immediately after the search and seizure, the Authority conducting the search is obliged to forward a copy of the reasons recorded and materials 523 Supra at Footnote No.416 524 Supra at Footnote No.424 525 (1967) 2 SCR 340 (also at Footnote No.417) 526 Supra at Footnote No.425 in his possession to the Adjudicating Authority in a sealed envelope. This sealed envelope is required to be preserved for period as specified under the Rules framed in that regard so that it is not tempered with in any manner and to ensure fairness of the procedure including accountability of the Authority. Not only that, in terms of Section 17(4) of the 2002 Act the Authority seizing the record or property is obliged to submit an application before the Adjudicating Authority within a period of thirty days therefrom for the retention of the said record and Adjudicating Authority in turn gives opportunity to be heard by issuing show cause notice to the person concerned before passing order of retention of record or property, as the case may be, under the 2002 Act and the Rules framed therefor. The Authorities carrying out search and seizure is also made accountable by providing for punishment under Section 62 of the 2002 Act for vexatious search and giving false information. All these inbuilt safeguards prevent arbitrary exercise or misuse of power by the authorities appointed under the 2002 Act.

85. The emphasis placed on Section 102 of the 1973 Code regarding seizure procedure by the petitioners, is of no avail. That provision does not provide for any safeguard prior to a seizure as is provided under Section 17 of the 2002 Act and the Rules framed thereunder. As noted earlier, it can be made even by a Head Constable as the expression used is “any police officer” that too merely on the basis of an allegation or suspicion of commission of an offence. In case of search, Section 165 of the 1973 Code empowers the officer in-charge of a police station or a police officer making an investigation to take recourse to that in the event he has reasonable grounds for believing that it would be necessary to do so for investigating into any offence. This power can be exercised by any police officer (irrespective of his rank) investigating into an offence. Suffice it to observe that the power of search and seizure entrusted to the Authorities under Section 17 of the 2002 Act, is a special self-contained provision and is different from the general provisions in the 1973 Code, which, therefore, ought to prevail in terms of Section 71 of the 2002 Act. Further, in view of the inbuilt safeguards and stringent stipulations to be adhered to by the Authorities under the 2002 Act, it ought to be regarded as reasonable provision having nexus with the purposes and objects sought to be achieved by the 2002 Act. It is certainly not an arbitrary power at all. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.]

86. It was urged that the Rule 3(2) proviso in the 2005 Rules regarding forms, search and seizure or freezing and the manner of forwarding the reasons and material to the Adjudicating Authority, impounding and custody of records and the period of retention, remained unamended despite deletion of the proviso in Section 17(1) of the 2002 Act vide Finance (No.2) Act, 2019. In the first place, it is unfathomable that the effect of amending Act is being questioned on the basis of unamended Rule. It is well-settled that if the Rule is not consistent with the provisions of the Act, the amended provisions in the Act must prevail. The statute cannot be declared ultra vires on the basis of Rule framed under the statute. The precondition in the proviso in Rule 3(2) cannot be read into Section 17 of the 2002 Act, more so contrary to the legislative intent in deleting the proviso in Section 17(1) of the 2002 Act. In any case, it is open to the Central Government to take necessary corrective steps to obviate confusion caused on account of the subject proviso, if any. SEARCH OF PERSONS

87. The subject of search of persons is dealt with in Section 18 of the 2002 Act forming part of Chapter V. Even in respect of this provision, the challenge is essentially founded on the deletion of proviso in sub- section (1) of Section 18 vide Finance (No.2) Act, 2019 which was pari materia with the proviso in Section 17(1) of the 2002 Act — stipulating that no search of any person shall be made unless in relation to the scheduled offence a report has been forwarded to a Magistrate under Section 157 of the 1973 Code, etc. The Section 18, as amended reads thus: “18. Search of persons.—(1) If an authority, authorised in this behalf by the Central Government by general or special order, has reason to believe (the reason for such belief to be recorded in writing) that any person has secreted about his person or in anything under his possession, ownership or control, any record or proceeds of crime which may be useful for or relevant to any proceedings under this Act, he may search that person and seize such record or property which may be useful for or relevant to any proceedings under this Act: 527 [***] 527 Proviso omitted by the Finance (No.2) Act, 2019, sec. 198 (w.e.f. 1-8-2019). Earlier the proviso was inserted by Act 21 of 2009, sec. 8(i) (w.e.f. 1-6-2009) and (2) The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority is about to search any person, he shall, if such person so requires, take such person within twenty-four hours to the nearest gazetted officer, superior in rank to him, or a Magistrate: Provided that the period of twenty-four hours shall exclude the time necessary for the journey undertaken to take such person to the nearest gazetted officer, superior in rank to him, or Magistrate’s Court. (4) If the requisition under sub-section (3) is made, the authority shall not detain the person for more than twenty-four hours prior to taking him before the Gazetted Officer, superior in rank to him, or the Magistrate referred to in that sub-section: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of detention to the office of the Gazetted Officer, superior in rank to him, or the Magistrate’s Court. (5) The Gazetted Officer or the Magistrate before whom any such person is brought shall, if he sees no reasonable ground for VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] substituted by Act 2 of 2013, sec. 15 (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013). The proviso, before omission, stood as under: “Provided that no search of any person shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974) 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” search, forthwith discharge such person but otherwise shall direct that search be made. (6) Before making the search under sub-section (1) or sub-section (5), the authority shall call upon two or more persons to attend and witness the search, and the search shall be made in the presence of such persons. (7) The authority shall prepare a list of record or property seized in the course of the search and obtain the signatures of the witnesses on the list. (8) No female shall be searched by any one except a female. (9) The authority shall record the statement of the person searched under sub-section (1) or sub-section (5) in respect of the records or proceeds of crime found or seized in the course of the search: 528[***] (10) The authority, seizing any record or property under sub-section (1) shall, within a period of thirty days from such seizure, file an application requesting for retention of such record or property, before the Adjudicating Authority.” For the reasons noted to negate the challenge to the deletion of proviso in Section 17(1) of the 2002 Act, the same would apply with full force for rejecting the same argument in respect of deletion of proviso in Section 18(1) of the 2002 Act. Suffice it to observe that even under Section 18 of the 2002 Act, the Authority authorised to exercise power of search of person is obliged to adhere to identical inbuilt safeguards as in the case of exercise of power under Section 17 of the 2002 Act. In 528 Proviso omitted by Act 21 of 2009, sec. 8(ii) (w.e.f. 1-6-2009). Proviso, before omission, stood as under: “Provided that no search of any person shall be made unless, in relation to an offence under: (a) Paragraph 1 of Part A or Paragraph 1 or Paragraph 2 or Paragraph 3 or Paragraph 4 or Paragraph 5 of Part B of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974); or (b) Paragraph 2 of Part A of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).” addition to the similar safeguards in terms of Section 18(3) of the 2002 Act, the Authority is obliged to take the person who is about to be searched to a Gazetted Officer or a Magistrate before the search of such person is carried out. The Constitution Bench of this Court while dealing with similar provisions of NDPS Act in State of Punjab vs. Baldev Singh529 upheld the search of person procedure being a fair and reasonable procedure. In paragraph 25 of the said decision, this Court observed as follows: “25. To be searched before a gazetted officer or a Magistrate, if the suspect so requires, is an extremely valuable right which the legislature has given to the person concerned having regard to the grave consequences that may entail the possession of illicit articles under the NDPS Act. It appears to have been incorporated in the Act keeping in view the severity of the punishment. The rationale behind the provision is even otherwise manifest. The search before a gazetted officer or a Magistrate would impart much more authenticity and creditworthiness to the search and seizure proceeding. It would also verily strengthen the prosecution case. There is, thus, no justification for the empowered officer, who goes to search the person, on prior information, to effect the search, of not informing the person concerned of the existence of his right to have his search conducted before a gazetted officer or a Magistrate, so as to enable him to avail of that right. It is, however, not necessary to give the information to the person to be searched about his right in writing. It is sufficient if such information is communicated to the person concerned orally and as far as possible in the presence of some independent and respectable persons witnessing the arrest and search. The prosecution must, however, at the trial, establish that the empowered officer had conveyed the information to the person concerned of his right of being searched in the presence of a Magistrate or a gazetted officer, at the time of the intended search. Courts have to be satisfied at the trial of the case about due compliance with the requirements provided in Section 50. No presumption under Section 54 of the Act can be raised against an accused, unless the prosecution establishes it to the satisfaction of the court, that the requirements of Section 50 were duly complied with.” VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 529 (1999) 6 SCC 172 (also at Footnote No.418) Additionally, under Section 18(5) of the 2002 Act, if the person to be searched is taken to a Gazetted Officer or the Magistrate, then such Officer or Magistrate may release the person if there is no ground for search and under Section 18(6), the Authority is obliged to call at least two witnesses to attend to witness the search, in whose presence, the search is to be carried out. In terms of Section 18(7), the Authority seizing any property during the search of such a person has to prepare a list of the record or the property seized which is required to be signed by the witnesses to ensure that no tempering thereof takes place later on. In case, search of a female is to be carried out, in terms of Section 18(8), it could be done only by a female. Significantly, the Authority seizing any record or property during the search of the person, is obliged to submit an application to the Adjudicating Authority within thirty days for permitting retention of record or property. On such application, the Adjudicating Authority gives opportunity of hearing to the person concerned as to why record or property should not be retained in terms of Section 18(10). Such inbuilt safeguards are provided to secure the interest of the person being subjected to search, at the same time for strengthening the mechanism regarding prevention of money-laundering and attachment of proceeds of crime. Merely because Section 165 of the 1973 Code provides for a different mechanism regarding search by the police officer, that will be of no consequence for dealing with the inquiry/investigation and adjudication including prosecution under the 2002 Act. Suffice it to observe that the provision in the form of Section 18, as amended, is a special provision and is certainly not arbitrary much less manifestly arbitrary. Instead, we hold that the amended provision in Section 18 has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act of prevention of money-laundering and attachment and confiscation of property (proceeds of crime) involved in money-laundering, as also prosecution against the person concerned for offence of money-laundering under Section 3 of the 2002 Act. ARREST

88. Section 19 of the 2002 Act postulates the manner in which arrest of person involved in money-laundering can be effected. Sub- section (1) of Section 19 envisages that the Director, Deputy Director, Assistant Director, or any other officer authorised in this behalf by the Central Government, if has material in his possession giving rise to reason to believe that any person has been guilty of an offence punishable under the 2002 Act, he may arrest such person. Besides the power being invested in high-ranking officials, Section 19 provides for inbuilt safeguards to be adhered to by the authorised officers, such as of recording reasons for the belief regarding the involvement of person in the offence of money- laundering. That has to be recorded in writing and while effecting arrest of the person, the grounds for such arrest are informed to that person. Further, the authorised officer has to forward a copy of the order, along with the material in his possession, in a sealed cover to the Adjudicating Authority, who in turn is obliged to preserve the same for the prescribed period as per the Rules. This safeguard is to ensure fairness, objectivity and accountability of the authorised officer in forming opinion as recorded in writing regarding the necessity to arrest the person being involved in offence of money-laundering. Not only that, it is also the obligation of the authorised officer to produce the person so arrested before the Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be, within twenty-four hours. This production is also to comply with the requirement of Section 167 of the 1973 Code. There is nothing in Section 19, which is contrary to the requirement of production under Section 167 of the 1973 Code, but being an express statutory requirement under the 2002 Act in terms of Section 19(3), it has to be complied by the authorised officer. Section 19, as amended from time to time, reads thus: “19. Power to arrest.—(1) If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. (2) The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub- section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] (3) Every person arrested under sub-section (1) shall, within twenty-four hours, be taken to a 530[Special Court or] Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the 531[Special Court or] Magistrate’s Court.” In the context of this provision, the challenge is that in absence of any formal complaint being filed, arrest under Section 19 is being made by the authorised officers. Whereas, the purport of Section 167 of the 1973 Code would suggest that the person can be arrested by the jurisdictional police without warrant under Section 41 of the 1973 Code only upon registration of a complaint under Section 154 of the 1973 Code in connection with cognizable offence or pursuant to the order of the Court. Even, in case of arrest pursuant to the order of the Court, a formal complaint against such person accusing him of being involved in commission of an offence is essential. Moreover, the person produced before the Court would be at a loss to know the grounds for arrest unless a formal FIR or complaint is filed accusing him about his involvement in the commission of an offence. The provision if interpreted to permit the authorised officer to arrest someone being involved in the commission of offence of money-laundering without a formal complaint against him, would be ex facie manifestly arbitrary and unconstitutional.

89. This argument clearly overlooks the overall scheme of the 2002 Act. As noticed earlier, it is a comprehensive legislation, not limited to provide for prosecution of person involved in the offence of money- laundering, but mainly intended to prevent money-laundering activity and confiscate the proceeds of crime involved in money-laundering. It also provides for prosecuting the person involved in such activity constituting offence of money-laundering. In other words, this legislation is an amalgam of different facets including setting up of agencies and mechanisms for coordinating measures for combating money-laundering. 530 Ins. by Act 13 of 2018, sec. 208 (d)(i) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19th April, 2018). 531 Ins. by Act 13 of 2018, sec. 208 (d)(ii) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19th April, 2018). Chapter III is a provision to effectuate these purposes and objectives by attachment, adjudication and confiscation. The adjudication is done by the Adjudicating Authority to confirm the order of provisional attachment in respect of proceeds of crime involved in money-laundering. For accomplishing that objective, the authorities appointed under Chapter VIII have been authorised to make inquiry into all matters by way of survey, searches and seizures of records and property. These provisions in no way invest power in the Authorities referred to in Chapter VIII of the 2002 Act to maintain law and order or for that matter, purely investigating into a criminal offence. The inquiry preceding filing of the complaint by the authorities under the 2002 Act, may have the semblance of an investigation conducted by them. However, it is essentially an inquiry to collect evidence to facilitate the Adjudicating Authority to decide on the confirmation of provisional attachment order, including to pass order of confiscation, as a result of which, the proceeds of crime would vest in the Central Government in terms of Section 9 of the 2002 Act. In other words, the role of the Authorities appointed under Chapter VIII of the 2002 Act is such that they are tasked with dual role of conducting inquiry and collect evidence to facilitate adjudication proceedings before the Adjudicating Authority in exercise of powers conferred upon them under Chapters III and V of the 2002 Act and also to use the same materials to bolster the allegation against the person concerned by way of a formal complaint to be filed for offence of money-laundering under the 2002 Act before the Special Court, if the fact situation so warrant. It is not as if after every inquiry prosecution is launched against all persons found to be involved in the commission of offence of money-laundering. It is also not unusual to provide for arrest of a person during such inquiry before filing of a complaint for indulging in alleged criminal activity. The respondent has rightly adverted to somewhat similar provisions in other legislations, such as Section 35 of FERA and Section 102 of Customs Act including the decisions of this Court upholding such power of arrest at the inquiry stage bestowed in the Authorities in the respective legislations. In Romesh Chandra Mehta532, the Constitution Bench of this Court enunciated that Section 104 of the Customs Act confers power to arrest upon the Custom Officer if he has reason to believe that any person in India or within the Indian Customs waters has been guilty of an offence punishable under Section 135 of that Act. Again, in the case of Padam Narain Aggarwal533, while dealing with the provisions of VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 532 Supra at Footnote No.119 533 Supra at Footnote No.246 the Customs Act, it noted that the term “arrest” has neither been defined in the 1973 Code nor in the Indian Penal Code, 1860 nor in any other enactment dealing with offences. This word has been derived from the French word “arrater” meaning “to stop or stay”. It signifies a restraint of a person. It is, thus, obliging the person to be obedient to law. Further, arrest may be defined as “the execution of the command of a court of law or of a duly authorised officer”. Even, this decision recognises the power of the authorised officer to cause arrest during the inquiry to be conducted under the concerned legislations. While adverting to the safeguards provided under that legislation before effecting such arrest, the Court noted as follows: “Safeguards against abuse of power 36. From the above discussion, it is amply clear that power to arrest a person by a Customs Officer is statutory in character and cannot be interfered with. Such power of arrest can be exercised only in those cases where the Customs Officer has “reason to believe” that a person has been guilty of an offence punishable under Sections 132, 133, 135, 135- A or 136 of the Act. Thus, the power must be exercised on objective facts of commission of an offence enumerated and the Customs Officer has reason to believe that a person sought to be arrested has been guilty of commission of such offence. The power to arrest thus is circumscribed by objective considerations and cannot be exercised on whims, caprice or fancy of the officer. 37. The section534 also obliges the Customs Officer to inform the person arrested of the grounds of arrest as soon as may be. The law requires such person to be produced before a Magistrate without unnecessary delay. 38. The law thus, on the one hand, allows a Customs Officer to exercise power to arrest a person who has committed certain offences, and on the other hand, takes due care to ensure individual freedom and liberty by laying down norms and providing safeguards so that the power of arrest is not abused or misused by the authorities. ….” (emphasis supplied) 534 Ed.: Section 104 of the Customs Act, 1962. The safeguards provided in the 2002 Act and the preconditions to be fulfilled by the authorised officer before effecting arrest, as contained in Section 19 of the 2002 Act, are equally stringent and of higher standard. Those safeguards ensure that the authorised officers do not act arbitrarily, but make them accountable for their judgment about the necessity to arrest any person as being involved in the commission of offence of money-laundering even before filing of the complaint before the Special Court under Section 44(1)(b) of the 2002 Act in that regard. If the action of the authorised officer is found to be vexatious, he can be proceeded with and inflicted with punishment specified under Section 62 of the 2002 Act. The safeguards to be adhered to by the jurisdictional police officer before effecting arrest as stipulated in the 1973 Code, are certainly not comparable. Suffice it to observe that this power has been given to the high-ranking officials with further conditions to ensure that there is objectivity and their own accountability in resorting to arrest of a person even before a formal complaint is filed under Section 44(1)(b) of the 2002 Act. Investing of power in the high-ranking officials in this regard has stood the test of reasonableness in Premium Granites535, wherein the Court restated the position that requirement of giving reasons for exercise of power by itself excludes chances of arbitrariness. Further, in M/s. Sukhwinder Pal Bipan Kumar536, the Court restated the position that where the discretion to apply the provisions of a particular statute is left with the Government or one of the highest officers, it will be presumed that the discretion vested in such highest authority will not be abused. Additionally, the Central Government has framed Rules under Section 73 in 2005, regarding the forms and the manner of forwarding a copy of order of arrest of a person along with the material to the Adjudicating Authority and the period of its retention. In yet another decision in Ahmed Noormohmed Bhatti537, this Court opined that the provision cannot be held to be unreasonable or arbitrary and, therefore, unconstitutional merely because the authority vested with the power may abuse his authority. (Also see Manzoor Ali Khan538). 90. Considering the above, we have no hesitation in upholding the validity of Section 19 of the 2002 Act. We reject the grounds pressed into service to declare Section 19 of the 2002 Act as unconstitutional. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 535 Supra at Footnote No.248 536 Supra at Footnote No.249 537 Supra at Footnote No.250 538 Supra at Footnote No.251 On the other hand, we hold that such a provision has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act of prevention of money-laundering and confiscation of proceeds of crime involved in money-laundering, including to prosecute persons involved in the process or activity connected with the proceeds of crime so as to ensure that the proceeds of crime are not dealt with in any manner which may result in frustrating any proceedings relating to confiscation thereof. BURDEN OF PROOF 91. The validity of Section 24 of the 2002 Act has been assailed. This section has been amended in 2013 vide Act 2 of 2013. Before that amendment, it read thus: “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 amendment of 2013 was necessitated because of the recommendations made by FATF in 2012, wherein it was noted that the countries should adopt measures similar to those set forth in the Vienna Convention, Palermo Convention and Terrorist Financing Convention. The Objects and Reasons for effecting amendment as appended to the Amendment Bill read thus: “The Prevention of Money Laundering Act, 2002 was enacted 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. The aforesaid Act also addresses the international obligations under the Political Declaration and Global Programme of Action adopted by General Assembly of the United Nations to prevent money-laundering. The Act was amended in the year 2005 and 2009 to remove the difficulties arisen in implementation of the Act. The problem of money-laundering is no longer restricted to the geo-political boundaries of any country. It is a global menace that cannot be contained by any nation alone. In view of this, India has become a member of the Financial Action Task Force and Asia Pacific Group on money-laundering, which are committed to the effective implementation and enforcement of internationally accepted standards against money-laundering and the financing of terrorism. Consequent to the submission of an action plan to the Financial Action Task Force to bring anti money-laundering legislation of India at par with the international standards and to obviate some of the deficiencies in the Act that have been experienced by the implementing agencies, the need to amend the Prevention of Money-Laundering Act, 2002 became necessary.” The Amendment Bill had proposed substitution of Section 24 as under: “24. In any proceedings relating to proceeds of crime under this Act, unless the contrary is proved, it shall be presumed that such proceeds of crime is involved in money-laundering.” The Standing Committee of Finance then made some recommendations as follows: “The Committee recommend that the prescribed onus of proof that the property in question is not out of proceeds of money- laundering crime, being not only on the accused but also on anyone who is in possession of the proceeds of crime, should be subject to adequate safeguards to protect the innocent.” Finally, the provision came to be amended by Act 2 of 2013 which came into force with effect from 15.2.2013 and reads thus: “539[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.]” VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 539 Subs. By Act 2 of 2013, sec. 19, for section 24 (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). From the plain language of the amended provision, which is subject matter of assail in these cases being unconstitutional, clearly indicates that it concerns (all) proceeding(s) relating to proceeds of crime under the 2002 Act. The expression “proceeding” has not been defined in the 2002 Act or the 1973 Code. However, in the setting in which it has been placed in this provision, as rightly argued by the learned Additional Solicitor General for the Union of India, it must relate to the proceeding before the Adjudicating Authority or the Special Court. The proceeding before the authorities (referred to in Chapter VIII) relates to action taken regarding prevention of offence of money-laundering and ordering provisional attachment of property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence; and to inquire into all matters connected therewith and collect evidence to be presented before the Adjudicating Authority for consideration of application regarding confirmation of provisional attachment order as per Section 8 of the 2002 Act. This provision (Section 24) must, however, apply to proceeding before the Adjudicating Authority regarding confirmation of provisional attachment order and eventually for ordering confiscation of the attached property for vesting in the Central Government under Section 9 of the 2002 Act. This is reinforced from the purport of Section 23 of the 2002 Act. Further, it would also apply to proceeding before the Special Court empowered to try the offence of money-laundering under Section 3 of the 2002 Act upon presentation of a complaint by the authority authorised as per Section 44(1)(b) of the 2002 Act. 92. It is, thus, clear that this special provision regarding burden of proof in any proceeding relating to proceeds of crime under this Act would apply to stated proceeding before the Adjudicating Authority and not limited to the proceeding before the Special Court. That is evident from the plain language, indicative of applicability of the provision to “any” proceeding before the “Authority” or the “Court”. The expression “Authority” occurring in this provision must be given its proper meaning indicative of the Adjudicating Authority appointed under Section 6 of the 2002 Act to adjudicate on matters concerning confirmation of provisional attachment order and eventual confiscation and vesting of the property, if the fact situation so warrant. It is an independent body, free from the control of the Executive540. It is ordained to deal with civil aspects of the 540 See Pareena Swarup (supra at Footnote No.366) action of attachment and confiscation of the proceeds of crime and not about the criminality of the offence under Section 3 of the 2002 Act. When this provision is made applicable to the proceeding before the Authority, it would not be necessary to follow the strict principle of standard of proof beyond reasonable doubt, as applicable in criminal trials. That principle will have no bearing on the proceeding before the Authority. However, when the same evidence and provision is relied upon in the proceeding before the Special Court regarding trial of offence of money-laundering under Section 3 of the 2002 Act, it would have a different connotation in the context of a criminal trial. 93. Be that as it may, this Section 24 deals with two situations. The first part concerns the person charged with the offence of money- laundering under Section 3. The second part [Clause (b)] concerns any other person. Taking the second part first, such other person would obviously mean a person not charged with the offence of money- laundering under Section 3 of the 2002 Act. The two parts, in one sense, are mutually exclusive. If a person is charged with the offence of money- laundering under Section 3 of the 2002 Act owing to a complaint filed by the authority authorised before the Special Court, Clause (a) would trigger in. As regards the second category [Clause (b)] of person, the expression used is “may presume”. Whereas, qua the first category [covered under Clause (a)] the expression used is “shall, unless the contrary is proved, presume”. In this category, if a charge is already framed against the person for having committed offence of money-laundering, it would presuppose that the Court framing charge against him was prima facie convinced that the materials placed before it had disclosed grave suspicion against such person. In such a case, once the issue of admissibility of materials supporting the factum of grave suspicion about the involvement of the person in the commission of crime under the 2002 Act, is accepted, in law, the burden must shift on the person concerned to dispel that suspicion. It would then not be a case of reversal of burden of proof as such, but one of shifting of burden on him to show that no offence of money-laundering had been committed and, in any case, the property (proceeds of crime) was not involved in money-laundering. 94. Before we proceed to analyse the efficacy of Section 24 of the 2002 Act, it may be appropriate to visit the definition of expressions in the Evidence Act, relevant to answer the issue of standard of proof in any proceeding. In the interpretation clause, Section 3 of the Evidence Act, expression “fact” has been defined as follows: VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] “3. Interpretation clause.—In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:— “Fact”.––”Fact” means and includes–– (1) any thing, state of things, or relation of things, capable of being perceived by the senses; (2) any mental condition of which any person is conscious.” We need not dilate on the expression “relevant”, “facts in issue” and “document”. We may usefully advert to the definition of “evidence”, which reads thus: “3. Interpretation clause.—In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:— “Evidence”. ––”Evidence” means and includes–– (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry, such statements are called oral evidence; (2) 541[all documents including electronic records produced for the inspection of the Court], such documents are called documentary evidence.” The other relevant definitions are: “3. Interpretation clause.—In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context:— “Proved”.––A fact is said to be proved when, after considering the matters before it, the Court either believes it to 541 Subs. by Act 21 of 2000, sec. 92 and Sch.II-1(a), for “all documents produced for the inspection of the Court” (w.e.f. 17-10-2000) exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. “Disproved”.––A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non-existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist. “Not proved”. –– A fact is said not to be proved when it is neither proved nor disproved. 4. “May presume”.––Whenever it is provided by this Act that the Court may presume a fact, it may either regard such fact as proved, unless and until it is disproved, or may call for proof of it. “Shall presume”.––Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved. “Conclusive proof”.––When one fact is declared by this Act to be conclusive proof of another, the Court shall, on proof of the one fact, regard the other as proved, and shall not allow evidence to be given for the purpose of disproving it.” As aforementioned, standard of proof varies depending on the nature of proceedings. In civil actions, it can be preponderance of probability but in criminal actions, unless the law provides to the contrary, the onus is on the prosecution to establish the allegations and facts in issue beyond reasonable doubt. Furthermore, the burden or onus of establishing the facts in issue, keeps on shifting and is on the party who asserts a particular fact. 95. Indeed, in a criminal trial, the principle of innocence of the accused/offender is regarded as a human right — as held by this Court in Narendra Singh & Anr. vs. State of M.P.542. However, that presumption can be interdicted by a law made by the Parliament/ VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 542 (2004) 10 SCC 699 (also at Footnote No.377) Legislature. It is well-settled that statutory provisions regarding presumptions are nothing but rule of evidence. As observed by this Court in State of W.B. vs. Mir Mohammad Omar & Ors.543, the pristine rule that the burden of proof is on the prosecution to prove the guilt of the accused should not be taken as a fossilised doctrine as though it admits no process of intelligent reasoning. The Court went on to observe that the doctrine of presumption is not alien to such a rule, nor would it impair the temper of the rule. On the other hand, if the traditional Rule relating to burden of proof of the prosecution is allowed to be wrapped in pedantic coverage, the offenders in serious offences would be the major beneficiaries and the society would be the casualty. This observation has been quoted with approval in Sucha Singh544. In the latter judgment, the Court relying upon other decisions including in Shambhu Nath Mehra vs. The State of Ajmer545, noted that the provisions, such as Section 106546 of the Evidence Act, is not intended to relieve the prosecution of its burden to prove the guilt of the accused beyond reasonable doubt, but the Section would apply to cases where the prosecution has succeeded in proving facts for which a reasonable inference can be drawn regarding the existence of certain other facts, unless the accused by virtue of special knowledge regarding such facts failed to offer any explanation which might drive the Court to draw a different inference. The Court quoted with approval paragraph 33 of the decision in Shambhu Nath Mehra547, which reads thus: “33. Presumption of fact is an inference as to the existence of one fact from the existence of some other facts, unless the truth of such inference is disproved. Presumption of fact is a rule in law of evidence that a fact otherwise doubtful may be inferred from certain other proved facts. When inferring the existence of a fact from other set of proved facts, the court exercises a process of reasoning and reaches a logical conclusion as the most probable position. The above principle has gained legislative recognition in India 543 (2000) 8 SCC 382 544 Supra at Footnote No.381 545 AIR 1956 SC 404 546 106. Burden of proving fact especially within knowledge. –– When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. 547 Supra at Footnote No.545 when Section 114 is incorporated in the Evidence Act. It empowers the court to presume the existence of any fact which it thinks likely to have happened. In that process the court shall have regard to the common course of natural events, human conduct etc. in relation to the facts of the case.” (emphasis supplied) On similar lines, this Court in Hiten P. Dalal548, in paragraphs 22 and 23 observed thus: “22. Because both Sections 138 and 139 require that the court “shall presume” the liability of the drawer of the cheques for the amounts for which the cheques are drawn, as noted in State of Madras v. A. Vaidyanatha Iyer549 it is obligatory on the court to raise this presumption in every case where the factual basis for the raising of the presumption had been established. “It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused.” (Ibid. at p. 65, para 14.) Such a presumption is a presumption of law, as distinguished from a presumption of fact which describes provisions by which the court “may presume” a certain state of affairs. Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter, all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact. 23. In other words, provided the facts required to form the basis of a presumption of law exist, no discretion is left with the court but to draw the statutory conclusion, but this does not preclude the person against whom the presumption is drawn from rebutting it and proving the contrary. A fact is said to be proved when, “after considering the matters before it, the court either believes it to exist, or considers its existence so probable that a prudent VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 548 Supra at Footnote No.378 549 AIR 1958 SC 61 (also at Footnote No.392) man ought, under the circumstances of the particular case, to act upon the supposition that it exists”550. Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the court in support of the defence that the court must either believe the defence to exist or consider its existence to be reasonably probable, the standard of reasonability being that of the “prudent man”.” (emphasis supplied) The respondents have rightly invited our attention to several other statutes551 providing for shifting of the burden of proof on the accused, as in the case of Section 24 of the 2002 Act. The constitutional validity of similar provisions has been upheld by this Court from time to time. In the case of Noor Aga552, it has been observed that the Court while interpreting the provision, such as Section 24 of the 2002 Act, must keep in mind that the concerned Act has been the outcome of the mandate contained in the international convention, as is the case on hand. Further, only because the burden of proof under certain circumstances is placed on the accused, the same, by itself would not render the legal provision unconstitutional. The question whether the burden on the accused is a legal burden or an evidentiary burden, would depend on the statute and its purport and object. Indeed, it must pass the test of the doctrine of proportionality. In any case, as the burden on the accused would be only an evidentiary burden, it can be discharged by the accused by producing evidence regarding the facts within his personal knowledge. Again, in the case of Seema Silk & Sarees553, this Court restated that a legal 550 Section 3, Evidence Act 551 (i) Section 57A of the (Kerala) Abkari Act, I of 1077; (ii) Sections 105, 106, 113A and 113B of the Indian Evidence Act, 1872; (iii) Section 139 of the Negotiable Instruments Act, 1881; (iv) Section 9 of the Opium Act, 1878; (v) Section 9B of the Explosives Act 1884; (vi) Section 7 of the Prevention of Food Adulteration Act, 1954; (vii) Section 10C of the Essential Commodities Act, 1955; (viii) Section 138A of the Customs Act, 1962; (ix) Section 43E of the Unlawful Activities (Prevention) Act, 1967; (x) Section 98-B of the Gold (Control) Act, 1968; (xi) Section 57 of the Wild Life (Protection) Act, 1972; (xii) Section 18 of the Foreign Exchange Regulation Act, 1973; (xiii) Sections 35 and 54 of the Narcotic Drugs and Psychotropic Substances Act, 1985; (xiv) Sections 3C and 3D of the Epidemic Diseases Act, 1897; (xv) Section 21 of the Terrorist and Disruptive Activities (Prevention) Act, 1987; (xvi) Section 20 of the Prevention of Corruption Act, 1988; and (xvii) Sections 29 and 30 of the Protection of Children from Sexual Offences Act, 2012. 552 Supra at Footnote No.384 (also at Footnote No.55) 553 Supra at Footnote No.385 provision does not become unconstitutional only because it provides for reverse burden as it is only a rule of evidence. So long as the accused is entitled to show that he has not violated the provisions of the Act, such a legal provision cannot be regarded as unconstitutional. For, the accused is then entitled to rebut the presumption. 96. Suffice it to observe that the change effected in Section 24 of the 2002 Act is the outcome of the mandate of international Conventions and recommendations made in that regard. Further, keeping in mind the legislative scheme and the purposes and objects sought to be achieved by the 2002 Act coupled with the fact that the person charged or any other person involved in money-laundering, would get opportunity to disclose information and evidence to rebut the legal presumption in respect of facts within his personal knowledge during the proceeding before the Authority or the Special Court, by no stretch of imagination, provision in the form of Section 24 of the 2002 Act, can be regarded as unconstitutional. It has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act. In any case, it cannot be perceived as manifestly arbitrary as is sought to be urged before us. 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 VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] activity connected therewith, by producing evidence in that regard, the legal presumption would stand rebutted. 98. The person falling under the first category being person charged with the offence of money-laundering, presupposes that a formal complaint has already been filed against him by the authority authorised naming him as an accused in the commission of offence of money- laundering. As observed in P.N. Krishna Lal554, the Court cannot be oblivious about the purpose of the law. Further, the special provisions or the special enactments as in this case is required to tackle new situations created by human proclivity to amass wealth at the altar of formal financial system of the country including its sovereignty and integrity. While dealing with such provision, reading it down would also defeat the legislative intent. 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 knowledge555. 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 554 Supra at Footnote No.382 555 See Sarbananda Sonowal (supra at Footnote No.389) or activity connected with the proceeds of crime. In any case, in terms of Section 114556 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. 101. Reverting to Section 24(b) of the 2002 Act, that concerns person other than the person charged with the offence of money- laundering under Section 3 of the 2002 Act. In his case, the expression used in Clause (b) is “may presume”. This is essentially a factual presumption or discretionary presumption as expounded by this Court in A. Vaidyanatha Iyer557. In paragraph 14 of the decision, the Court noted the marked distinction between the words “shall presume” and “may presume” as follows: “(14). …… Therefore where it is proved that a gratification has been accepted, then the presumption shall at once arise under the section. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused. It may here be mentioned that the legislature has chosen to use the words ‘shall presume’ and not ‘may presume’, the former a presumption of law and latter of fact. Both these phrases have been defined in the Indian Evidence Act, no doubt for the purpose of that Act, but S. 4 of the Prevention of Corruption Act is in pari materia with the Evidence Act because it deals with a branch of law of evidence e.g., presumptions, and therefore should have the same meaning. “Shall presume” has been defined in the Evidence Act as follows: “Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved.” VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 556 114. Court may presume existence of certain facts.–– The Court may 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. 557 Supra at Footnote No.549 (also at Footnote No.392) It is a presumption of law and therefore it is obligatory on the court to raise this presumption in every case brought under S. 4 of the Prevention of Corruption Act because unlike the case of presumption of fact, presumptions of law constitute a branch of jurisprudence. ……” (emphasis supplied) Again, in the case of M. Narsinga Rao vs. State of A.P.558, the Court observed in paragraphs 13 and 17 as follows: “13. Before proceeding further, we may point out that the expressions “may presume” and “shall presume” are defined in Section 4 of the Evidence Act. The presumptions falling under the former category are compendiously known as “factual presumptions” or “discretionary presumptions” and those falling under the latter as “legal presumptions” or “compulsory presumptions”. When the expression “shall be presumed” is employed in Section 20(1) of the Act it must have the same import of compulsion. 17. Presumption is an inference of a certain fact drawn from other proved facts. While inferring the existence of a fact from another, the court is only applying a process of intelligent reasoning which the mind of a prudent man would do under similar circumstances. Presumption is not the final conclusion to be drawn from other facts. But it could as well be final if it remains undisturbed later. Presumption in law of evidence is a rule indicating the stage of shifting the burden of proof. From a certain fact or facts the court can draw an inference and that would remain until such inference is either disproved or dispelled.” (emphasis supplied) Notably, the legal presumption in the context of Section 24(b) of the 2002 Act is attracted once the foundational fact of existence of proceeds of crime and the link of such person therewith in the process or activity is established by the prosecution. The stated legal presumption 558 (2001) 1 SCC 691 (also at Footnote No.392) can be invoked in the proceeding before the Adjudicating Authority or the Court, as the case may be. The legal presumption is about the fact that the proceeds of crime are involved in money-laundering which, however, can be rebutted by the person by producing evidence within his personal knowledge. 102. Be it noted that the presumption under Section 24(b) of the 2002 Act is not a mandatory legal presumption, unlike in the case falling under the other category, namely Section 24(a). If the person has not been charged with the offence of money-laundering, the legal presumption under Section 24(b) can be invoked by the Adjudicating Authority or the Court, as the case may be. More or less, same logic as already noted while dealing with the efficacy of Section 24(a) of the 2002 Act, would apply even to the category of person covered by Section 24(b), in equal measure. 103. We, therefore, hold that the provision under consideration namely Section 24 has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act and cannot be regarded as manifestly arbitrary or unconstitutional. SPECIAL COURTS 104. The expression “Special Court” has been defined in Section 2(1)(z), which in turn refers to Section 43. Section 43 reads thus: “CHAPTER VII SPECIAL COURTS 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 VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] Criminal Procedure, 1973 (2 of 1974), be charged at the same trial.” The Special Courts established under Section 43 of the 2002 Act are empowered to try the offences under the 2002 Act. Section 44 bestows that power in the Special Courts. The same reads thus: “44. Offences triable by Special Courts.—(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),— 559[(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, 560[***] upon a complaint made by an authority authorised in this behalf under this Act take 561[cognizance of offence under section 3, without the accused being committed to it for trial]. 562[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] 559Subs. by Act 2 of 2013, sec. 21(i), for clause (a) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). Clause (a) before substitution, stood as under: “(a) the scheduled offence and offence punishable under section 4 shall be triable only 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” 560 The words “upon perusal of police report of the facts which constitute an offence under this Act or” omitted by Act 20 of 2005, sec. 6 (w.e.f. 1-7-2005). 561 Subs. by Act 2 of 2013, sec. 21(ii), for “cognizance of the offence for which the accused is committed to it for trial” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013). 562 Ins. by the Finance (No.2) Act, 2019, sec. 199(i) (w.e.f. 1-8-2019) 563[(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.] 564[Explanation.—For the removal of doubts, it is clarified that,— (i) the jurisdiction of the Special Court while dealing with the offence under this Act, during investigation, enquiry or trial under this Act, shall not be dependent upon any orders passed in respect of the scheduled offence, and the trial of both sets of offences by the same court shall not be construed as joint trial; (ii) the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence, for which complaint has already been filed, whether named in the original complaint or not.] (2) Nothing contained in this section shall be deemed to affect the special powers of the High Court regarding bail under section 439 of the Code of Criminal Procedure, 1973 (2 of 1974) and the High Court may exercise such powers including the power under clause (b) of sub-section (1) of that section as if the reference to “Magistrate” in that section includes also a reference to a “Special Court” designated under section 43.” This provision opens with a non-obstante clause making it clear that the dispensation provided therein is notwithstanding anything VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 563 Ins. by Act 2 of 2013, sec. 21(iii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013) 564 Ins. by the Finance (No.2) Act, 2019, sec. 199(ii) (w.e.f. 1-8-2019) contained in the 1973 Code regarding the matters provided therein in relation to trials concerning offence of money-laundering to be conducted by the Special Court. This provision has undergone amendment vide Act 20 of 2005, Act 2 of 2013 and Finance (No.2) Act, 2019. In the present set of matters, we are essentially concerned with the provision as obtaining after Act 2 of 2013 and the subsequent amendment vide Finance (No.2) Act, 2019. To begin with, Clause (a) in sub-section (1) of Section 44, as existed prior to amendment Act 2 of 2013, stood thus: “44. Offences triable by Special Courts.—(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),— (a) the scheduled offence and offence punishable under Section 4 shall be triable only 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.” Post amendment of 2013 and as applicable to this date, Clause (a) reads thus: “44. Offences triable by Special Courts.—(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),— 565[(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]; The amendment of 2013 in fact clarifies the dispensation to be followed in regard to trials concerning offence of money-laundering under this Act and the trial in relation to scheduled offence including before the 565 Subs. by Act 2 of 2013, sec. 21(i), for clause (a) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). Special Court trying such (scheduled) offence. By virtue of this clause, the trials regarding the offence of money-laundering need to proceed before the Special Court constituted for the area in which the offence of money-laundering has been committed. In case the scheduled offence is triable by Special Court under the special enactment elsewhere, the provision, as amended, makes it amply clear that both the trials after coming into effect of this Act need to proceed independently, but in the area where the offence of money-laundering has been committed. 105. In that, the offence of money-laundering ought to proceed for trial only before the Special Court designated to try money-laundering offences where the offence of money-laundering has been committed. This is a special enactment and being a later law, would prevail over any other law for the time being in force in terms of Section 71 of the 2002 Act. 106. The proviso in Clause (a) of sub-section (1) of Section 44, is in the nature of an exception. It predicates that before the commencement of this Act, if the Special Court elsewhere was already trying the scheduled offence, shall continue to try the same. Prima facie, it is possible to take the view that the effect of this proviso, which has come in 2013, may have retrospective effect. However, no specific case has been brought to our notice wherein the effect of such amendment is required to be examined. Accordingly, it is not necessary to dilate on this aspect any further. 107. This stipulation, however, will have to be regarded as directory provision. We say so because in a given case, the offence of money- laundering may have been committed at place x, which may be in one State, but the property which is subject matter of money-laundering may have been derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence committed at more than one place including in multiple States throughout the country. In such a case, it will not be open to the Special Court at place x to transfer all other cases in the area (even outside the State). If the provision is to be interpreted otherwise, it would have serious consequences on the trials which are pending in connection with the scheduled offences including before the Special Court elsewhere. This provision, therefore, needs to be read down to mean that as far as possible, the trial of scheduled offence before the Special Court under the concerned law, if in different area, that Special Court may continue to try such scheduled offence. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] For, the trial of the scheduled offence and the trial in connection with the money-laundering are in any way required to proceed independently. That is because, the offence of money-laundering by itself is an independent offence in respect of the process and activity connected with the proceeds of crime which may have been derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. 108. The stipulation in Clause (b) of sub-section (1) of Section 44 has been amended vide Act 20 of 2005, Act 2 of 2013 and the Finance (No.2) Act, 2019. Consequent to amendment of 2013, the Clause (b) read thus: “44. Offences triable by Special Courts.—(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),— (a)*** (b) a Special Court may, 566[***] upon a complaint made by an authority authorised in this behalf under this Act take 567[cognizance of offence under section 3, without the accused being committed to it for trial]; Later, a proviso came to be inserted vide Finance (No.2) Act, 2019, which reads thus: “44. Offences triable by Special Courts.—(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),— (a)*** (b)*** 568[Provided that after conclusion of investigation, if no offence of money-laundering is made out requiring filing of such complaint, 566 The words “upon perusal of police report of the facts which constitute an offence under this Act or” omitted by Act 20 of 2005, sec. 6 (w.e.f. 1-7-2005). 567 Subs. by Act 2 of 2013, sec. 21(ii), for “cognizance of the offence for which the accused is committed to it for trial” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013). 568 Ins. by the Finance (No.2) Act, 2019, sec. 199(i) (w.e.f. 1-8-2019). the said authority shall submit a closure report before the Special Court; or] Clause (b) of sub-section (1) of Section 44 before amendment of 2019 envisaged that the Special Court upon a complaint made by any authority authorised in this behalf under this Act, could take cognizance of offence of money-laundering under Section 3 of the 2002 Act without the accused being committed to it for trial. This would mean that if the accused was already in custody and facing trial in respect of a scheduled offence elsewhere and is not required to be produced before the Special Court (PMLA) at the time of taking cognizance on the complaint filed by the authority authorised. This provision again must be regarded as directory or a discretionary provision and the Special Court trying the offence of money-laundering need not insist for producing the accused before it at the time of taking cognizance of offence of money-laundering, provided no prejudice is caused to such accused. The expression “committed” occurring in this clause can be also construed as “produced”. If so understood, we fail to comprehend as to how this provision violates any right of the accused, much less constitutional rights. 109. Coming to the proviso inserted in this clause [Section 44(1)(b)] vide Finance (No.2) Act, 2019, is, in fact, an enabling provision. It permits the Authority authorised to file a closure report before the Special Court in case it is of the opinion that no offence of money-laundering has been made out, requiring filing of such complaint. This provision is only to dispel the doubt that in the event the person has been arrested by the officer authorised under Section 19 of this Act on the basis of material in his possession and having reason to believe and recorded in writing of being guilty of an offence punishable under this Act, but after the inquiry done by him in exercise of powers under Chapters V and VIII of the 2002 Act, he forms an opinion that no offence of money-laundering is made out, requiring filing of complaint, it is open to him to file a closure report before the Special Court disclosing that position. The proviso would, thus, come into play in such cases where the complaint is yet to be filed owing to the pendency of inquiry before the authorities, under Chapters V and VIII of the 2002 Act. In that view of the matter and more so keeping in mind the purposes and objects behind the enactment of 2002 Act, such a provision must be regarded as having reasonable nexus with the purposes and objects sought to be achieved by the 2002 VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] Act. Accordingly, for the view taken by us, we do not find any dichotomy in these provisions, much less being manifestly arbitrary or unconstitutional. 110. We now revert to Clause (c) of sub-section (1) of Section 44 of the 2002 Act. The same has undergone amendment vide Act 2 of 2013 and post that amendment, it reads thus: “44. Offences triable by Special Courts.—(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),— (a)*** (b)*** 569[(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.]” We must reconcile this provision with Clause (a) of sub-section (1) of Section 44. That provision has already been elaborated in the earlier part of this judgment and read down to mean that it is an enabling and discretionary provision. The same consideration must be kept in mind by the Special Court while considering the application filed in terms of this clause. For, this clause also recognises that the trial of scheduled offence and the trial concerning offence of money-laundering need to proceed independently, even though it may be tried by the same Special Court as both are distinct and independent offences. In that, the offence of money-laundering is and can be only in relation to the process or activity connected with proceeds of crime and has nothing to do with the criminal activity relating to a scheduled offence as such. 111. In the context of this provision, it was emphatically argued before us by the petitioners that it would take away one right of appeal, otherwise available under the 1973 Code. Resultantly, Section 44(1)(c) 569 Ins. by Act 2 of 2013, sec. 21(iii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- 2013) of the 2002 Act in particular, is unconstitutional. To buttress this submission, reliance has been placed on the dictum in A.R. Antulay570. However, this ground need not detain us in view of the just stand taken by the learned Additional Solicitor General appearing for Union of India relying on the decision of this Court in State (Through Central Bureau of Investigation) vs. Kalyan Singh (Former Chief Minister of Uttar Pradesh) & Ors.571, which has considered similar challenge. The latter decision has distinguished the exposition in A.R. Antulay572. In that, the core issue considered in A.R. Antulay573 was whether the High Court was competent to transfer the criminal trial pending before the Special Court dealing with the offence of PC Act, to itself by invoking powers under Section 407 of the 1973 Code. The Court answered the same in the negative and held that such power does not exist in the High Court and it would inevitably violate Article 21 of the Constitution. However, we are dealing with the dispensation provided by the law made by the Parliament in the form of 2002 Act. This being a special legislation and keeping in view the purport of Sections 65 and 71 of the 2002 Act, it is not possible to countenance the ground of challenge under consideration. We may usefully refer to paragraph 28 of Kalyan Singh574, which reads thus: “28. In the present case, the power of transfer is being exercised to transfer a case from one Special Judge to another Special Judge, and not to the High Court. The fact that one Special Judge happens to be a Magistrate, whereas the other Special Judge has committed the case to a Court of Session would not make any difference as, as has been stated hereinabove, even a right of appeal from a Magistrate to the Sessions Court, and from the Sessions Court to the High Court could be taken away under the procedure established by law i.e. by virtue of Sections 407(1) and (8) if the case is required to be transferred from the Magistrate at Rae Bareilly to the High Court itself. Hence, under Section 407, even if 2 tiers of appeal are done away with, there is no infraction of Article 21 as such taking away VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 570 Supra at Footnote No.134 571 (2017) 7 SCC 444 572 Supra at Footnote No.134 573 Supra at Footnote No.134 574 Supra at Footnote No.571 of the right of appeal is expressly contemplated by Section 407(1)(iv) read with Section 407(8). In the circumstances, Antulay575 judgment which dealt with the right of a substantive appeal from a Special Judge to the High Court being taken away by an order of transfer contrary to the non obstante clause in Section 7(1) of the Criminal Law Amendment Act, 1952 would not apply in the facts and circumstances before us.” (emphasis supplied) Applying the principle underlying this decision, we have no hesitation in rejecting the challenge to Section 44 as unconstitutional being violative of Articles 14, 20(3) and 21 of the Constitution. 112. Reverting to Clause (d) of sub-section (1) of Section 44, it postulates that a Special Court while trying the scheduled offence or offence of money-laundering shall hold trial in accordance with the provisions of the 1973 Code as it applies to a trial before a Court of Sessions. Going by the plain language of this provision, no fault can be found for conducting trial in the respective cases in the same manner as provided in the 1973 Code. However, the grievance is about the insertion of Explanation vide Finance (No.2) Act, 2019. As a matter of fact, this insertion is only a clarificatory provision, as is evident from the opening statement of the provision which says that “for the removal of doubts, it is clarified that”. None of the clauses inserted by this amendment travel beyond the principal provision contained in Clause (d). Clause (i) of the Explanation enunciates that the jurisdiction of the Special Court while dealing with the offence being tried 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 trials. This, in fact, is reiteration of the earlier part of the same section, which envisages that even though both the trials may proceed before the same Special Court, it must be tried separately as per the provisions of the 1973 Code. Insofar as Clause (ii) of the Explanation, at the first glance, it does give an impression that the same is unconnected with the earlier part of the section. However, on closer scrutiny of this provision, it is noted that the same is only an enabling provision permitting to take on record material regarding further investigation against any 575 Supra at Footnote No.134 accused person involved in respect of offence of money-laundering for which complaint has already been filed, whether he has been named in the complaint or not. Such a provision, in fact, is a wholesome provision to ensure that no person involved in the commission of offence of money- laundering must go unpunished. It is always open to the Authority authorised to seek permission of the Court during the trial of the complaint in respect of which cognizance has already been taken by the Court to bring on record further evidence which request can be dealt with by the Special Court in accordance with law keeping in mind the provisions of the 1973 Code as well. It is also open to the Authority authorised to file a fresh complaint against the person who has not been named as accused in the complaint already filed in respect of same offence of money- laundering, including to request the Court to proceed against such other person appearing to be guilty of offence under Section 319 of the 1973 Code, which otherwise would apply to such a trial. 113. The petitioners may be justified in making grievance that the provision though permits the Special Court to proceed with the trial in respect of scheduled offence, yet it may be oppressive as against the accused who is not charged with the offence of money-laundering but only scheduled offence. For, he may be denied of opportunity of one appeal or revision, as the case may be before the higher forum. Such a grievance can certainly be looked into by the Special Court if an application is moved by the Authority authorised. Since we have held that the provision is only to bestow enabling power in the Special Court, it must follow that the Special Court will examine the request of the Authority authorised for transfer of trial of predicate offence to itself on case-to- case basis. Similarly, request for trial of offence under another special statute, such as PC Act, NDPS Act, etc. can also be considered by the Special Court on case-to-case basis after examining all aspects of the matter. 114. In view of the above discussion, we do not find merit in the challenge to Section 44 being arbitrary or unconstitutional. We hold that the same is consistent with the legislative scheme and the purposes and objects behind the enactment of the 2002 Act to ensure that the proceeds of crime involved in money-laundering are dealt with appropriately as per the special Act and all concerned involved in the process or activity connected with such proceeds of crime are prosecuted for offence of money-laundering. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] BAIL 115. The relevant provisions regarding bail in the 2002 Act can be traced to Sections 44(2), 45 and 46 in Chapter VII concerning the offence under this Act. The principal grievance is about the twin conditions specified in Section 45 of the 2002 Act. Before we elaborate further, it would be apposite to reproduce Section 45, as amended. The same reads thus: “45. Offences to be cognizable and non-bailable.—(1) 576[Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an offence 577[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, 578[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— 576 Subs. by Act 20 of 2005, sec. 7, for “Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),— (a) every offence punishable under this Act shall be cognizable; (b) 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” (w.e.f. 1-7-2005). 577Subs. by Act 13 of 2018, sec. 208(e)(i), for “punishable for a term of imprisonment of more than three years under Part A of the Schedule” (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19th April, 2018). 578Ins. by Act 13 of 2018, s. 208(e)(ii) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19th April, 2018). (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. 579[(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), or any other provision of this Act, no police officer shall investigate into an offence under this Act unless specifically authorised, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed.] (2) The limitation on granting of bail specified in 580[***] 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. 581[Explanation.—For the removal of doubts, it is clarified that the expression “Offences to be cognizable and non-bailable” shall mean and shall be deemed to have always meant that all offences under this Act shall be cognizable offences and non-bailable offences notwithstanding anything to the contrary contained in the Code of Criminal Procedure, 1973 (2 of 1974), and accordingly the officers authorised under this Act are empowered to arrest an accused without warrant, subject to the fulfilment of conditions under section 19 and subject to the conditions enshrined under this section.]” Section 45 has been amended vide Act 20 of 2005, Act 13 of 2018 and Finance (No.2) Act, 2019. The provision as it obtained prior to 23.11.2017 read somewhat differently. The constitutional validity of Sub- section (1) of Section 45, as it stood then, was considered in Nikesh Tarachand Shah582. This Court declared Section 45(1) of the 2002 Act, as it stood then, insofar as it imposed two further conditions for release on bail, to be unconstitutional being violative of Articles 14 and 21 of the Constitution. The two conditions which have been mentioned as twin conditions are: VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 579 Ins. by Act 20 of 2005, sec. 7 (w.e.f. 1-7-2005). 580 The words “clause (b) of” omitted by Act 20 of 2005, sec. 7 (w.e.f. 1-7-2005). 581 Ins. by the Finance (No.2) Act, 2019, sec. 200 (w.e.f. 1-8-2019). 582 Supra at Footnote No.3 (i) that there are reasonable grounds for believing that he is not guilty of such offence; and (ii) that he is not likely to commit any offence while on bail. According to the petitioners, since the twin conditions have been declared to be void and unconstitutional by this Court, the same stood obliterated. To buttress this argument, reliance has been placed on the dictum in State of Manipur583. 116. The first issue to be answered by us is: whether the twin conditions, in law, continued to remain on the statute book post decision of this Court in Nikesh Tarachand Shah584 and if yes, in view of the amendment effected to Section 45(1) of the 2002 Act vide Act 13 of 2018, the declaration by this Court will be of no consequence. This argument need not detain us for long. We say so because the observation in State of Manipur585 in paragraph 29 of the judgment that owing to the declaration by a Court that the statute is unconstitutional obliterates the statute entirely as though it had never been passed, is contextual. In this case, the Court was dealing with the efficacy of the repealing Act. While doing so, the Court had adverted to the repealing Act and made the stated observation in the context of lack of legislative power. In the process of reasoning, it did advert to the exposition in Behram Khurshid Pesikaka586 and Deep Chand587 including American jurisprudence expounded in Cooley on Constitutional Limitations588 and Norton vs. Shelby County589. 117. In the present case, however, there is no issue of lack of legislative power of the Parliament to enact a law on the subject of money-laundering. In such a situation, the enunciation of the Constitution Bench of this Court, including seven-Judge Bench, may have direct bearing for answering the argument under consideration. We may usefully refer to the dictum of the Constitution Bench of five-Judges of this Court in M.P.V. Sundararamier & Co.590. It had noted the distinction between 583 Supra at Footnote No.159 584 Supra at Footnote No.3 585 Supra at Footnote No.159 586 Supra at Footnote No.310 587 Supra at Footnote No. 210 (also at Footnote No.69) 588Vol.1, page 382 589 118 US 425 (1886) 590 Supra at Footnote No.311 the effect of unconstitutionality of a statute arising either because the law is in respect of a matter not within the competence of the Legislature, or because the matter itself being within its competence, its provisions offend some constitutional restrictions. It went on to observe that if a law is on a field not within the domain of the Legislature, it is absolutely null and void, and a subsequent cession of that field to or by the Legislature will not have the effect of breathing life into what was a still born piece of legislation. At the same time, it noted that if the law is in respect of a matter assigned to the Legislature but its provisions disregard constitutional prohibitions, though the law would be unenforceable by reason of those prohibitions, when once they are removed, the law will become effective without re-enactment. After discussing the American decisions and jurisprudence, it went on to sum up as follows: “The result of the authorities may thus be summed up: Where an enactment is unconstitutional in part but valid as to the rest, assuming of course that the two portions are severable, it cannot be held to have been wiped out of the statute book as it admittedly must remain there for the purpose of enforcement of the valid portion thereof, and being on the statute book, even that portion which is unenforceable on the ground that it is unconstitutional will operate Proprio vigore when the Constitutional bar is removed, and there is no need for a fresh legislation to give effect thereto. On this view, the contention of the petitioners with reference to the Explanation in s. 22 of the Madras Act must fail. That Explanation operates, as already stated, on two classes of transactions. It renders taxation of sales in which the property in the goods passes in Madras but delivery takes place outside Madras illegal on the ground that they are outside sales falling within Art. 286(1)(a). It also authorises the imposition of tax on the sales in which the property in the goods passes outside Madras but goods are delivered for consumption within Madras. It is valid in so far as it prohibits tax on outside sales, but invalid in so far as sales in which goods are delivered inside the State are concerned, because such sales are hit by Art. 286(2). The fact that it is invalid as to a part has not the effect of obliterating it out of the statute book, because it is valid as to a part and has to remain in the statute book for being enforced as to that part. The result of the enactment of the impugned Act is to lift the ban under Article VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 286(2), and the consequence of it is that that portion of the Explanation which relates to sales in which property passes outside Madras but the goods are delivered inside Madras and which was unenforceable before, became valid and enforceable. In this view, we do not feel called upon to express any opinion as to whether it would make any difference in the result if the impugned provision was unconstitutional in its entirety.” (emphasis supplied) 118. No doubt Deep Chand591 is a subsequent judgment as has been noticed in the State of Manipur592. However, in the later judgment of the Constitution Bench of seven-Judges of this Court in Jagannath593, the legal position has been reviewed and answered. This decision has not only adverted to two earlier Constitution Bench decisions referred to and relied upon in State of Manipur594 (i.e., Behram Khurshid Pesikaka595 and Deep Chand596), including American jurisprudence and decision in Norton597, but to hosts of other decisions. The first point noted in paragraph 9 of this decision is that when this Court has declared the concerned legislation void under the provisions of Article 13 sub- clause (2) of the Constitution, should the Court proceed on the basis that the legislation was void ab initio and non est or still born and, thus, any validating measure could not instil life therein. After having analysed all the relevant decisions, the Court went on to observe in paragraphs 22 and 23, as follows: “22. In our view, although decisions of the American Supreme Court and the comments of well known commentators like Willoughby and Cooley have great persuasive force, we need not interpret our Constitution by too much reliance on them. Nor is it necessary to scrutinise too closely the decisions wherein views appear to have been expressed that a law which is void under Article 13(2) is to be treated as still-born. Equally unfruitful would it be to consider the doctrine of eclipse. 591 Supra at Footnote No. 210 (also at Footnote No.69) 592 Supra at Footnote No.159 593 Supra at Footnote No.314 594 Supra at Footnote No.159 595 Supra at Footnote No.310 596 Supra at Footnote No. 210 (also at Footnote No.69) 597 Supra at Footnote No.589 23. Apart from the question as to whether fundamental rights originally enshrined in the Constitution were subject to the amendatory process of Article 368 it must now be held that Article 31-B and the Ninth Schedule have cured the defect, if any, in the various Acts mentioned in the said Schedule as regards any unconstitutionality alleged on the ground of infringement of fundamental rights, and by the express words of Article 31-B such curing of the defect took place with retrospective operation from the dates on which the Acts were put on the statute book. These Acts even if void or inoperative at the time when they were enacted by reason of infringement of Article 13(2) of the Constitution, assumed full force and vigour from the respective dates of their enactment after their inclusion in the Ninth Schedule, read with Article 31-B of the Constitution. The States could not, at any time, cure any defect arising from the violation of the provisions of Part III of the Constitution and therefore the objection that the Madras Ceilings Act should have been re-enacted by the Madras legislature after the Seventeenth Constitutional Amendment came into force cannot be accepted.” (emphasis supplied) Thus, where the defect as pointed out by the Court has been removed by virtue of the validating Act retrospectively, then the provision can be held to be intra vires provided that it does not transgress any other constitutional limitation. It is, therefore, clear from above that if by amending the provision retrospectively, the Parliament has removed the defect or has taken away the basis on which the provision was declared void then the provision cannot be said to be in conflict with Article 13 of the Constitution. In other words, if the very premise on which the judgment of the Court declaring the provision to be void has been uprooted by the Parliament, thereby resulting in the change of circumstances, the judgment could not be given effect to in the altered circumstances, then the provision cannot be held to be void. In this case, as has been stated above, the anomalies noted in Nikesh Tarachand Shah598 have been removed by way of Act No. 13 of 2018. Further, it has been clarified by way of Finance (No.2) Act, 2019 that amendment shall operate retrospectively. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 598 Supra at Footnote No.3 Thus, it cannot be said that twin conditions under Section 45 of the 2002 Act does not get revived. 119. A priori, it is not open to argue that Section 45 of the 2002 Act post decision in Nikesh Tarachand Shah599 stood obliterated from the statute book as such. Indubitably, it is not unknown that even after declaration of unconstitutionality by the Court owing to violation of rights guaranteed under Part III of the Constitution, it is open to the Parliament/ Legislature to cure the defect reckoned by the Constitutional Court in relation to the concerned provision whilst declaring it as unconstitutional. 120. In the case of Nikesh Tarachand Shah600, as aforesaid, this Court declared the twin conditions in Section 45(1) of the 2002 Act as unconstitutional being violative of Articles 14 and 21 of the Constitution. That conclusion reached by this Court is essentially on account of two basic reasons. The first being that the provision, as it existed at the relevant time, was founded on a classification based on sentencing of the scheduled offence and it had no nexus with objectives of the 2002 Act; and secondly, because the twin conditions were restricted only to a particular class of offences within the 2002 Act, such as offences punishable for a term of imprisonment for more than three years under Part A of the Schedule, and not to all the offences under the 2002 Act. In paragraph 1 of the same decision, the Court had noted that the challenge set forth in the writ petition was limited to imposing two conditions for grant of bail wherein an offence punishable for a term of imprisonment for more than three years under Part A of the Schedule to the Act is involved. This aspect has been thoroughly analysed by the Court in the said decision. The Court also noted the legislative history for enacting such a law and other relevant material from paragraph 11 onwards upto paragraph 43. It adverted to several circumstances and illustrations to conclude that the provision, as it stood then, on the face of it, was discriminatory and manifestly arbitrary. Eventually in the operative order, being paragraph 54 of the decision, the Court declared that Section 45(1) of the 2002 Act, as it stood then, insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violated Articles 14 and 21 of the Constitution. 121. By the amendment vide Act 13 of 2018, the defects noted by this Court in the aforementioned decision have been duly cured by deleting 599 Supra at Footnote No.3 600 Supra at Footnote No.3 the words “punishable for a term of imprisonment of more than three years under Part A of the Schedule” in Section 45(1) of the 2002 Act and substituted by words “under this Act”. The question is: whether it was open to the Parliament to undo the effect of the judgment of this Court declaring the twin conditions unconstitutional? On a fair reading of the judgment, we must observe that although the Court declared the twin conditions as unconstitutional, but it was in the context of the opening part of the sub-section (1) of Section 45, as it stood then, which resulted in discrimination and arbitrariness as noticed in the judgment. But that opening part referring to class of offences, namely punishable for a term of imprisonment of more than three years under Part A of the Schedule having been deleted and, instead, the twin conditions have now been associated with all the offences under the 2002 Act, the defect pointed out in the stated decision, stands cured. To answer the question posed above, we may also usefully refer to the enunciation of the Constitution Bench of this Court, which recognises power of the Legislature to cure the defect when the law is struck down by the Constitutional Court as violative of some fundamental rights traceable to Part-III of the Constitution. It has been consistently held that such declaration does not have the effect of repealing the relevant provision as such. For, the power to repeal vests only in the Parliament and none else. Only upon such repeal by the Parliament, the provision would become non est for all purposes until re-enacted, but it is open to the Parliament to cure the defect noticed by the Constitutional Court so that the provision, as amended by removing such defect gets revived. This is so because, the declaration by the Constitutional Court and striking down of a legal provision being violative of fundamental rights traceable to Part III of the Constitution, merely results in the provision, as it existed then, becoming inoperative and unenforceable, even though it may continue to remain on the statute book. 122. The decision of the Constitution Bench of this Court in Shri Prithvi Cotton Mills Ltd.601 recognises this doctrine of taking away as the basis or validating acts thereby removing the causes for ineffectiveness or invalidity of actions or proceedings which are validated by a legislative measure and, then by fiction, it becomes re-enacted law. We may usefully refer to the decision in Bhubaneshwar Singh602, wherein in paragraph 11, the Court noted as follows: VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 601 Supra at Footnote No.300 602 Supra at Footnote No.301 “11. From time to time controversy has arisen as to whether the effect of judicial pronouncements of the High Court or the Supreme Court can be wiped out by amending the legislation with retrospective effect. Many such Amending Acts are called Validating Acts, validating the action taken under the particular enactments by removing the defect in the statute retrospectively because of which the statute or the part of it had been declared ultra vires. Such exercise has been held by this Court as not to amount to encroachment on the judicial power of the courts. The exercise of rendering ineffective the judgments or orders of competent courts by changing the very basis by legislation is a well-known device of validating legislation. This Court has repeatedly pointed out that such validating legislation which removes the cause of the invalidity cannot be considered to be an encroachment on judicial power. At the same time, any action in exercise of the power under any enactment which has been declared to be invalid by a court cannot be made valid by a Validating Act by merely saying so unless the defect which has been pointed out by the court is removed with retrospective effect. The validating legislation must remove the cause of invalidity. Till such defect or the lack of authority pointed out by the court under a statute is removed by the subsequent enactment with retrospective effect, the binding nature of the judgment of the court cannot be ignored.” (emphasis supplied) 123. Again, in the case of Comorin Match Industries (P) Ltd.603, this Court after adverting to earlier decisions, including Shri Prithvi Cotton Mills Ltd.604 observed in paragraph 24 as follows: “24. This case does not lay down that after a judgment has been pronounced on the basis of an Act, the provisions of that Act cannot be amended so as to cure the defect pointed out in the judgment retrospectively. The effect of the amending Act of 1969 is not to overrule a judgment passed by a court of law, which the legislature cannot do. What the 603 Supra at Footnote No.302 604 Supra at Footnote No.300 legislature can do is to change the law on the basis of which the judgment was pronounced retrospectively and thereby nullify the effect of the judgment. When the legislature enacts that notwithstanding any judgment or order the new law will operate retrospectively and the assessments shall be deemed to be validly made on the basis of the amended law, the legislature is not declaring the judgment to be void but rendering things or acts deemed to have been done under amended statute valid notwithstanding any judgment or order on the basis of the unamended law to the contrary. The validity to the assessment orders which had been struck down by the Court, is imparted by the amending Act by changing the law retrospectively.” (emphasis supplied) 124. The legal principles have been recapitulated by this Court once again in Indian Aluminium Co.605, in paragraph 56, it was observed as under: “56. From a resume of the above decisions the following principles would emerge: (1) The adjudication of the rights of the parties is the essential judicial function. Legislature has to lay down the norms of conduct or rules which will govern the parties and the transactions and require the court to give effect to them; (2) The Constitution delineated delicate balance in the exercise of the sovereign power by the legislature, executive and judiciary; (3) In a democracy governed by rule of law, the legislature exercises the power under Articles 245 and 246 and other companion articles read with the entries in the respective lists in the Seventh Schedule to make the law which includes power to amend the law. (4) Courts in their concern and endeavour to preserve judicial power equally must be guarded to maintain the delicate balance devised by the Constitution between the three sovereign functionaries. In order that rule of law permeates to fulfil constitutional objectives of establishing an egalitarian social order, the respective sovereign VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 605 Supra at Footnote No.303 functionaries need free play in their joints so that the march of social progress and order remains unimpeded. The smooth balance built with delicacy must always be maintained. (5) In its anxiety to safeguard judicial power, it is unnecessary to be overzealous and conjure up incursion into the judicial preserve invalidating the valid law competently made; (6) The court, therefore, needs to carefully scan the law to find out: (a) whether the vice pointed out by the court and invalidity suffered by previous law is cured complying with the legal and constitutional requirements; (b) whether the legislature has competence to validate the law; (c) whether such validation is consistent with the rights guaranteed in Part III of the Constitution. (7) The court does not have the power to validate an invalid law or to legalise impost of tax illegally made and collected or to remove the norm of invalidation or provide a remedy. These are not judicial functions but the exclusive province of the legislature. Therefore, they are not encroachment on judicial power. (8) In exercising legislative power, the legislature by mere declaration, without anything more, cannot directly overrule, revise or override a judicial decision. It can render judicial decision ineffective by enacting valid law on the topic within its legislative field fundamentally altering or changing its character retrospectively. The changed or altered conditions are such that the previous decision would not have been rendered by the court, if those conditions had existed at the time of declaring the law as invalid. It is also empowered to give effect to retrospective legislation with a deeming date or with effect from a particular date. The legislature can change the character of the tax or duty from impermissible to permissible tax but the tax or levy should answer such character and the legislature is competent to recover the invalid tax validating such a tax on removing the invalid base for recovery from the subject or render the recovery from the State ineffectual. It is competent for the legislature to enact the law with retrospective effect and authorise its agencies to levy and collect the tax on that basis, make the imposition of levy collected and recovery of the tax made valid, notwithstanding the declaration by the court or the direction given for recovery thereof. (9) The consistent thread that runs through all the decisions of this Court is that the legislature cannot directly overrule the decision or make a direction as not binding on it but has power to make the decision ineffective by removing the base on which the decision was rendered, consistent with the law of the Constitution and the legislature must have competence to do the same.” (emphasis supplied) 125. We may also usefully refer to the dictum in Narain Singh606, it was held as under: “21. The power of the sovereign legislature to legislate within its field, both prospectively and retrospectively cannot be questioned. This position has been settled in many judgments of this Court. Some of them may be considered below. In Bhubaneshwar Singh v. Union of India607 the Court expressly approved the aforesaid position in para 9 at pp. 82-83. Insofar as the validating Acts are concerned, this Court in Bhubaneshwar Singh608 also considered the question in para 11 and held that the Court has the powers by virtue of such validating legislation, to “wipe out” judicial pronouncements of the High Court and the Supreme Court by removing the defects in the statute retrospectively when such statutes had been declared ultra vires by Courts in view of its defects. 22. This Court in Bhubaneshwar Singh609 has held that such legislative exercise will not amount to encroachment on the judicial power. This Court has accepted that such legislative device which removes the vice in previous legislation is not considered an encroachment on judicial power. In support of the aforesaid proposition, this Court in Bhubaneshwar Singh610 relied on the VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 606 Supra at Footnote No.305 607 Supra at Footnote No.301 608 Supra at Footnote No.301 609 Supra at Footnote No.301 610 Supra at Footnote No.301 proposition laid down by Hidayatullah, C.J. speaking for the Constitution Bench in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality611. 23. Again in Indian Aluminium Co. v. State of Kerala612 this Court while summarising the principle held that a legislature cannot directly overrule a judicial decision but it has the power to make the decision ineffective by removing the basis on which the decision is rendered, while at the same time adhering to the constitutional imperatives and the legislature is competent to do so [see para 56 sub-para (9) at p. 1446]. 24. In Comorin Match Industries (P) Ltd. v. State of T.N.613, the facts were that the assessment orders passed under the Central Sales Tax Act were set aside by the High Court and the State was directed to refund the amount to the assessee. As the State failed to carry it out, contempt petitions were filed but the assessment orders were validated by passing the Amendment Act of 1969 with retrospective effect and the Court held that the tax demanded became valid and enforceable. 25. The Court in Comorin Match case614 held that in such a situation the State will not be precluded from realising the tax due as subsequently the assessment order was validated by the amending Act of 1969 and the order passed in the contempt proceeding will not have the effect of the writing off the debt which is statutorily owed by the assessee to the State. The learned Judges held that the effect of the amending Act is retrospective validation of the assessment orders which were struck down by the High Court. Therefore, the assessment order is legislatively valid and the tax demands are also enforceable. 26. It is therefore clear where there is a competent legislative provision which retrospectively removes the substratum of foundation of a judgment, the said exercise is a valid legislative exercise provided it does not transgress any other constitutional limitation. Therefore, this Court cannot uphold the reasoning in the High Court 611 Supra at Footnote No.300 612 Supra at Footnote No.303 613 Supra at Footnote No.302 614 Supra at Footnote No.302 judgment that the impugned amendment is invalid just because it nullifies some provisions of the earlier Act.” (emphasis supplied) There are long line of decisions restating the above position and the recent being Cheviti Venkanna Yadav615, which after analysing all the relevant authorities on the point, noted in paragraph 30 as follows: “30. From the aforesaid authorities, it is settled that there is a demarcation between the legislative and judicial functions predicated on the theory of separation of powers. The legislature has the power to enact laws including the power to retrospectively amend laws and thereby remove causes of ineffectiveness or invalidity. When a law is enacted with retrospective effect, it is not considered as an encroachment upon judicial power when the legislature does not directly overrule or reverse a judicial dictum. The legislature cannot, by way of an enactment, declare a decision of the court as erroneous or a nullity, but can amend the statute or the provision so as to make it applicable to the past. The legislature has the power to rectify, through an amendment, a defect in law noticed in the enactment and even highlighted in the decision of the court. This plenary power to bring the statute in conformity with the legislative intent and correct the flaw pointed out by the court, can have a curative and neutralising effect. When such a correction is made, the purpose behind the same is not to overrule the decision of the court or encroach upon the judicial turf, but simply enact a fresh law with retrospective effect to alter the foundation and meaning of the legislation and to remove the base on which the judgment is founded. This does not amount to statutory overruling by the legislature. In this manner, the earlier decision of the court becomes non-existent and unenforceable for interpretation of the new legislation. No doubt, the new legislation can be tested and challenged on its own merits and on the question whether the legislature possesses the competence to legislate on the subject- VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 615 Supra at Footnote No.307 matter in question, but not on the ground of overreach or colourable legislation.” (emphasis supplied) From the above discussion, it is amply clear that the twin conditions declared as unconstitutional by this Court in Nikesh Tarachand Shah616 was in reference to the provision, as it existed at the relevant time, predicating application of Section 45 of the 2002 Act to only offences punishable for a term of imprisonment of more than three years under Part A of the Schedule of the 2002 Act and not even linked to the offences of money-laundering under the 2002 Act. The reasons which weighed with this Court for declaring the twin conditions in Section 45(1), as it stood at the relevant time, unconstitutional in no way obliterated the provision from the statute book. Therefore, it was open to the Parliament to cure the defect noted by this Court and to revive the same provision as in the present form, post amendment Act 13 of 2018 with effect form 19.4.2018. 126. Having said thus, we must now address the challenge to the twin conditions as applicable post amendment of 2018. That challenge will have to be tested on its own merits and not in reference to the reasons weighed with this Court in declaring the provision, (as it existed at the relevant time), applicable only to offences punishable for a term of imprisonment of more than three years under Part A of the Schedule to the 2002 Act. Now, the provision (Section 45) including twin conditions would apply to the offence(s) under the 2002 Act itself. The provision post 2018 amendment, is in the nature of no bail in relation to the offence of money-laundering unless the twin conditions are fulfilled. The twin conditions are that there are reasonable grounds for believing that the accused is not guilty of offence of money-laundering and that he is not likely to commit any offence while on bail. Considering the purposes and objects of the legislation in the form of 2002 Act and the background in which it had been enacted owing to the commitment made to the international bodies and on their recommendations, it is plainly clear that it is a special legislation to deal with the subject of money-laundering activities having transnational impact on the financial systems including sovereignty and integrity of the countries. This is not an ordinary offence. To deal with such serious offence, stringent measures are provided in the 2002 Act for prevention of money-laundering and combating menace 616 Supra at Footnote No.3 of money-laundering, including for attachment and confiscation of proceeds of crime and to prosecute persons involved in the process or activity connected with the proceeds of crime. In view of the gravity of the fallout of money-laundering activities having transnational impact, a special procedural law for prevention and regulation, including to prosecute the person involved, has been enacted, grouping the offenders involved in the process or activity connected with the proceeds of crime as a separate class from ordinary criminals. The offence of money- laundering has been regarded as an aggravated form of crime “world over”. It is, therefore, a separate class of offence requiring effective and stringent measures to combat the menace of money-laundering. 127. There is no challenge to the provision on the ground of legislative competence. The question, therefore, is: whether such classification of offenders involved in the offence of money-laundering is reasonable? Considering the concern expressed by the international community regarding the money-laundering activities world over and the transnational impact thereof, coupled with the fact that the presumption that the Parliament understands and reacts to the needs of its own people as per the exigency and experience gained in the implementation of the law, the same must stand the test of fairness, reasonableness and having nexus with the purposes and objects sought to be achieved by the 2002 Act. Notably, there are several other legislations where such twin conditions have been provided for617. Such twin conditions in the concerned provisions have been tested from time to time and have stood the challenge of the constitutional validity thereof. The successive decisions of this Court dealing with analogous provision have stated that VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 617 Central Legislations:- Section 36AC of Drugs and Cosmetics Act, 1940; Section 51A of the Wild Life (Protection) Act, 1972; Section 6A of the Suppression of Unlawful Acts against Safety of Civil Aviation Act, 1982; Section 15 Terrorist Affected Areas Act (Special Courts), 1984; Section 37 of the Narcotic Drugs and Psychotropic Substances Act, 1985; Section 20 of the Terrorist and Disruptive Activities (Prevention) Act, 1987; Section 8 of the Suppression Of Unlawful Acts Against Safety Of Maritime Navigation and Fixed Platforms On Continental Shelf Act, 2002; Section 212 of the Companies Act, 2013; and Section 12 of the Anti-Hijacking Act, 2016. State Legislations:- Section 19 of the Uttar Pradesh Gangsters and Anti-Social Activities (Prevention) Act, 1986; Section 21 of the Maharashtra Control of Organised Crime Act, 1999; Section 22 of the Karnataka Control of Organized Crime Act, 2000; Section 21 of the Telangana Control of Organized Crime Act, 2001 (renamed from Andhra Pradesh COCA, 2001); Section 18 of the Sikkim Anti-Drugs Act, 2006; Section 20 of the Gujrat Control of Terrorism and Organised Crime Act, 2015; Section 19 of the Mizoram Drug (Controlled Substances) Act, 2016; and Section 18 of the Haryana Control of Organised Crime Act, 2020. the Court at the stage of considering the application for grant of bail, is expected to consider the question from the angle as to whether the accused was possessed of the requisite mens rea. The Court is not required to record a positive finding that the accused had not committed an offence under the Act. The Court ought to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. The duty of the Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. Further, the Court is required to record a finding as to the possibility of the accused committing a crime which is an offence under the Act after grant of bail. 128. For understanding whether such twin conditions can be regarded as reasonable condition, we may usefully refer to the decision of the Constitution Bench of this Court in Kartar Singh618. While dealing with the challenge to Section 20(8) of TADA Act, the Court rejected the argument that such provision results in deprivation of liberty and violates Articles 14 and 21 of the Constitution. It noted that such provision imposes complete ban on release of accused on bail involved in the stated offence under the special legislation, but that ban stands diluted by virtue of twin conditions. It noted that rest of the provision, as in the case of the Section 45 of the 2002 Act, is comparable with the conditions specified in the 1973 Code for release of accused on bail concerning ordinary offence under general law. The Constitution Bench approved the dictum in Usmanbhai Dawoodbhai Memon619 and in paragraph 349 noted thus: “349. The conditions imposed under Section 20(8)(b), as rightly pointed out by the Additional Solicitor General, are in consonance with the conditions prescribed under clauses (i) and (ii) of sub-section (1) of Section 437 and clause (b) of sub-section (3) of that section. Similar to the conditions in clause (b) of sub-section (8), there are provisions in various other enactments — such as Section 35(1) of Foreign Exchange Regulation Act and Section 104(1) of the Customs Act to the effect that any authorised or empowered officer under the respective Acts, if, has got reason to believe that any person in India or within the Indian customs waters has been guilty of an offence punishable under the respective 618 Supra at Footnote No.190 619 Supra at Footnote No.202 Acts, may arrest such person. Therefore, the condition that “there are grounds for believing that he is not guilty of an offence”, which condition in different form is incorporated in other Acts such as clause (i) of Section 437(1) of the Code and Section 35(1) of FERA and 104(1) of the Customs Act, cannot be said to be an unreasonable condition infringing the principle of Article 21 of the Constitution.” (emphasis supplied) Again, in paragraph 351, the Constitution Bench observed thus: “351. No doubt, liberty of a citizen must be zealously safeguarded by the courts; nonetheless the courts while dispensing justice in cases like the one under the TADA Act, should keep in mind not only the liberty of the accused but also the interest of the victim and their near and dear and above all the collective interest of the community and the safety of the nation so that the public may not lose faith in the system of judicial administration and indulge in private retribution.” (emphasis supplied) We may immediately note that this judgment has been considered by the two-Judge Bench of this Court in Nikesh Tarachand Shah620 in paragraph 47 and distinguished in the following words: “47. …. It is clear that this Court upheld such a condition only because the offence under TADA was a most heinous offence in which the vice of terrorism is sought to be tackled. Given the heinous nature of the offence which is punishable by death or life imprisonment, and given the fact that the Special Court in that case was a Magistrate and not a Sessions Court, unlike the present case, Section 20(8) of TADA was upheld as being in consonance with conditions prescribed under Section 437 of the Code of Criminal Procedure. In the present case, it is Section 439 and not Section 437 of the Code of Criminal Procedure that applies. Also, the offence that is spoken of in Section 20(8) is an offence under TADA itself and not an offence VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 620 Supra at Footnote No.3 under some other Act. For all these reasons, the judgment in Kartar Singh621 cannot apply to Section 45 of the present Act.” (emphasis supplied) 129. With utmost humility at our command, we do not agree with this (highlighted) observation. The reason for distinguishing the enunciation of the Constitution Bench noted above, is not only inapposite, but it is not consistent with the provisions in both the Acts. Even the TADA Act, the appointment of Designated Court is from amongst the Sessions Judge or Additional Sessions Judge in any State and the offences under that Act were made exclusively triable before such Designated Court and not the Magistrate. The powers of the Magistrate were required to be bestowed on the Designated Court being the Sessions Judge for the limited purpose of proceeding with the case directly before it. This is amply clear, inter alia, from Section 9, in particular Clause (6) thereof, including Sections 20(3)622 and 20(4)623 of the TADA Act. Same is the logic adopted under Chapter VII of the 2002 Act in constituting the Special Courts and empowering the Sessions Judge appointed as Special Court with the powers of the Magistrate. That aspect has been dealt 621 Supra at Footnote No.190 622 20. Modified application of certain provisions of the Code .- (1) ….. (3) Section 164 of the Code shall apply in relation to a case involving an offence punishable under this Act or any rule made thereunder, subject to the modification that the reference in sub-section (1) thereof to “Metropolitan Magistrate or Judicial Magistrate” shall be construed as a reference to “Metropolitan Magistrate”, “Judicial Magistrate, Executive Magistrate or Special Executive Magistrate”. 623 20. Modified application of certain provisions of the Code .- (1) ….. (4) Section 167 of the Code shall apply in relation to a case involving an offence punishable under this Act or any rule made thereunder subject to the modifications that— (a) the reference in sub-section (1) thereof to “Judicial Magistrate” shall be construed as reference to “Judicial Magistrate or Executive Magistrate or Special Executive Magistrate”; (b) the reference in sub-section (2) thereof the “fifteen days”, “ninety days” and “sixty days”, wherever they occur, shall be construed as references to “sixty days”, one hundred and eighty days and one hundred and eighty days respectively; and (bb) sub-section (2), after the proviso, the following proviso shall be inserted, namely: “Provided further that, if it is not possible to complete the investigation within the said period of one hundred and eighty days, the Designated Court with by the Constitution Bench in paragraphs 342 to 344, while approving the exposition in Usmanbhai Dawoodbhai Memon624. The same reads thus: “342. Sub-section (8) which imposes a complete ban on release on bail against the accused of an offence punishable under this Act minimises or dilutes that ban under two conditions, those being (1) the Public Prosecutor must be given an opportunity to oppose the bail application for such release; and (2) where the Public Prosecutor opposes the bail application the court must be satisfied that the two conditions, namely, (a) there are reasonable grounds for believing that the person accused is not guilty of such offence and (b) he is not likely to commit any offence while on bail. Sub- section (9) qualifies sub-section (8) to the effect that the above two limitations imposed on grant of bail specified in sub-section (8) are in addition to the limitations under the Code or any other law for the time being in force on granting of bail. Section 436 of the Code provides for grant of bail to a person accused of a bailable offence, while Section 437 provides for grant of bail to any accused of, or suspected of, the commission of any non-bailable offence. Nonetheless, sub-section (1) of Section 437 imposes certain fetters on the exercise of the powers of granting bail on fulfilment of two conditions, namely (1) if there appear reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life; and (2) if the offence complained of is a cognizable offence and that the accused had been previously convicted of an offence punishable with death, imprisonment for life or imprisonment for seven years or more or he had previously convicted on two or more occasions of a nonbailable and cognizable offence. Of course, these two conditions are subject to three provisos attached to sub-section (1) of Section 437. But we are not very much concerned about the provisos. However, sub-section (3) of Section 437 gives discretion to the court to grant bail attached with some conditions if it considers necessary VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] shall extend the said period up to one year, on the report of the Public Prosecutor indicating the progress of the investigation and the specific reasons for the detention of the accused beyond the said period of one hundred and eighty days; and. (c) sub-section (2-A) thereof shall be deemed to have been omitted. 624 Supra at Footnote No.202 or in the interest of justice. For proper understanding of those conditions or limitations to which two other conditions under clauses (a) and (b) of sub-section (8) of Section 20 of the TADA Act are attached, we reproduce those conditions in Section 437(3) hereunder: “437. (3) * (a) in order to ensure that such person shall attend in accordance with the conditions of the bond executed under this Chapter, or (b) in order to ensure that such person shall not commit an offence similar to the offence of which he is accused or of the commission of which he is suspected, or (c) otherwise in the interests of justice.” 343. Section 438 of the code speaks of bail and Section 439 deals with the special powers of High Court or Court of Session regarding bail. It will be relevant to cite Section 439(1)(a) also, in this connection, which reads as follows: “439. Special powers of High Court or Court of Session regarding bail.— (1) A High Court or Court of Session may direct— (a) that any person accused of an offence and in custody be released on bail, and if the offence is of the nature specified in sub-section (3) of Section 437, may impose any condition which it considers necessary for the purposes mentioned in that sub- section; (b) …” 344. In this connection, we would like to quote the following observation of this Court in Usmanbhai Dawoodbhai Memon v. State of Gujarat625, with which we are in agreement : (SCC pp. 286-287, para 19) “Though there is no express provision excluding the applicability of Section 439 of the Code similar to the one contained in Section 20(7) of the Act in relation to a case involving the arrest of any person on an accusation of having committed an 625 Supra at Footnote No.202 offence punishable under the Act or any rule made thereunder, but that result must, by necessary implication, follow. It is true that the source of power of a Designated Court to grant bail is not Section 20(8) of the Act as it only places limitations on such power. This is made explicit by Section 20(9) which enacts that the limitations on granting of bail specified in Section 20(8) are ‘in addition to the limitations under the Code or any other law for the time being in force’. But it does not necessarily follow that the power of a Designated Court to grant bail is relatable to Section 439 of the Code. It cannot be doubted that a Designated Court is ‘a court other than the High Court or the Court of Session’ within the meaning of Section 437 of the Code. The exercise of the power to grant bail by a Designated Court is not only subject to the limitations contained therein, but is also subject to the limitations placed by Section 20(8) of the Act.”” This portion of the judgment of the Constitution Bench has not been noticed in Nikesh Tarachand Shah626. Further, we do not agree with the observations suggestive of that the offence of money-laundering is less heinous offence than the offence of terrorism sought to be tackled under TADA Act or that there is no compelling State interest in tackling offence of money-laundering. The international bodies have been discussing the menace of money-laundering on regular basis for quite some time; and strongly recommended enactment of stringent legislation for prevention of money-laundering and combating with the menace thereof including to prosecute the offenders and for attachment and confiscation of the proceeds of crime having direct impact on the financial systems and sovereignty and integrity of the countries. That concern has been duly noted even in the opening part of the introduction and Statement of Objects and Reasons, for which the 2002 Act came into being. This declaration by the Parliament itself is testimony of compelling necessity to have stringent regime (enactment) for prevention and control of the menace of money-laundering. Be it noted that under Article 38 of the Constitution of India, it is the duty of the State to secure social, economic and political justice and minimize income inequalities. Article 39 of the Constitution mandates the State to prevent concentration of wealth, thus, to realize its socialist goal, it becomes imperative for the VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 626 Supra at Footnote No.3 State to make such laws, which not only ensure that the unaccounted money is infused back in the economic system of the country, but also prevent any activity which damages the economic fabric of the nation. It cannot be gainsaid that social and economic offences stand on a graver footing as they not only involve an individual direct victim, but harm the society as a whole627. Thus, the Law Commission also in its 47th report recommended an increase in punishment for most of the offences considered therein. Further, the quantum of punishment for money- laundering offence, being only seven years, cannot be the basis to undermine the seriousness and gravity of this offence. The quantum of sentence is a matter of legislative policy. The punishment provided for the offence is certainly one of the principles in deciding the gravity of the offence, however, it cannot be said that it is the sole factor in deciding the severity of offence as contended by the petitioners. Money-laundering is one of the heinous crimes, which not only affects the social and economic fabric of the nation, but also tends to promote other heinous offences, such as terrorism, offences related to NDPS Act, etc. It is a proven fact that international criminal network that support home grown extremist groups relies on transfer of unaccounted money across nation States628, thus, by any stretch of imagination, it cannot be said that there is no compelling State interest in providing stringent conditions of bail for the offence of money-laundering. In Ram Jethmalani & Ors. vs. Union of India & Ors.629, the Court expounded the theory of “soft state” which is used to describe a nation which is not capable of preventing the offence of money-laundering. The Court held thus: “13. The concept of a “soft state” was famously articulated by the Nobel Laureate, Gunnar Myrdal. It is a broad-based assessment of the degree to which the State, and its machinery, is equipped to deal with its responsibilities of governance. The more soft the State is, greater the likelihood that there is an unholy nexus between the law maker, the law keeper, and the law breaker.” (emphasis supplied) 627 47th Law Commission Report 628 Ram Jethmalani & Ors. vs. Union of India & Ors., (2011) 8 SCC 1 629 (2011) 8 SCC 1 (also at Footnote No.628) In Mohanlal Jitamalji Porwal630, while explaining the impact of economic offences on the community, the Court observed that usually the community view the economic offender with a permissive eye, although the impact of the offence is way greater than that of offence of murder. The Court held thus: “5..…The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest. ……” (emphasis supplied) In Rohit Tandon631&632, this Court observed as follows:- “21. The consistent view taken by this Court is that economic offences having deep-rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Further, when attempt is made to project the proceeds of crime as untainted money and also that the allegations may not ultimately be established, but having been made, the burden of proof that the monies were not the proceeds of crime and were not, therefore, tainted shifts on the accused persons under Section 24 of the 2002 Act.” (emphasis supplied) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 630 Supra at Footnote No.254 631 Supra at Footnote No.189 632 Supra at Footnote No.189 Thus, it is well settled by the various decisions of this Court and policy of the State as also the view of international community that the offence of money-laundering is committed by an individual with a deliberate design with the motive to enhance his gains, disregarding the interests of nation and society as a whole and which by no stretch of imagination can be termed as offence of trivial nature. Thus, it is in the interest of the State that law enforcement agencies should be provided with a proportionate effective mechanism so as to deal with these types of offences as the wealth of the nation is to be safeguarded from these dreaded criminals. As discussed above, the conspiracy of money- laundering, which is a three-staged process, is hatched in secrecy and executed in darkness, thus, it becomes imperative for the State to frame such a stringent law, which not only punishes the offender proportionately, but also helps in preventing the offence and creating a deterrent effect. 130. In the case of the 2002 Act, the Parliament had no reservation to reckon the offence of money-laundering as a serious threat to the financial systems of our country, including to its sovereignty and integrity. Therefore, the observations and in particular in paragraph 47 of Nikesh Tarachand Shah633, are in the nature of doubting the perception of the Parliament in that regard, which is beyond the scope of judicial review. That cannot be the basis to declare the law manifestly arbitrary. 131. It is important to note that the twin conditions provided under Section 45 of the 2002 Act, though restrict the right of the accused to grant of bail, but it cannot be said that the conditions provided under Section 45 impose absolute restraint on the grant of bail. The discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the principles of law as provided under Section 45 of the 2002 Act. While dealing with a similar provision prescribing twin conditions in MCOCA, this Court in Ranjitsing Brahmajeetsing Sharma634, held as under: “44. The wording of Section 21(4), in our opinion, does not lead to the conclusion that the court must arrive at a positive finding that the applicant for bail has not committed an offence under the Act. If such a construction is placed, the court intending to grant bail must arrive at a finding that the applicant 633 Supra at Footnote No.3 634 Supra at Footnote No.275 (also at Footnote No.53) has not committed such an offence. In such an event, it will be impossible for the prosecution to obtain a judgment of conviction of the applicant. Such cannot be the intention of the legislature. Section 21(4) of MCOCA, therefore, must be construed reasonably. It must be so construed that the court is able to maintain a delicate balance between a judgment of acquittal and conviction and an order granting bail much before commencement of trial. Similarly, the Court will be required to record a finding as to the possibility of his committing a crime after grant of bail. However, such an offence in futuro must be an offence under the Act and not any other offence. Since it is difficult to predict the future conduct of an accused, the court must necessarily consider this aspect of the matter having regard to the antecedents of the accused, his propensities and the nature and manner in which he is alleged to have committed the offence. 45. It is, furthermore, trite that for the purpose of considering an application for grant of bail, although detailed reasons are not necessary to be assigned, the order granting bail must demonstrate application of mind at least in serious cases as to why the applicant has been granted or denied the privilege of bail. 46. The duty of the court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the basis of broad probabilities. However, while dealing with a special statute like MCOCA having regard to the provisions contained in sub-section (4) of Section 21 of the Act, the court may have to probe into the matter deeper so as to enable it to arrive at a finding that the materials collected against the accused during the investigation may not justify a judgment of conviction. The findings recorded by the court while granting or refusing bail undoubtedly would be tentative in nature, which may not have any bearing on the merit of the case and the trial court would, thus, be free to decide the case on the basis of evidence adduced at the trial, without in any manner being prejudiced thereby” (emphasis supplied) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] We are in agreement with the observation made by the Court in Ranjitsing Brahmajeetsing Sharma635. The Court while dealing with the application for grant of bail need not delve deep into the merits of the case and only a view of the Court based on available material on record is required. The Court will not weigh the evidence to find the guilt of the accused which is, of course, the work of Trial Court. The Court is only required to place its view based on probability on the basis of reasonable material collected during investigation and the said view will not be taken into consideration by the Trial Court in recording its finding of the guilt or acquittal during trial which is based on the evidence adduced during the trial. As explained by this Court in Nimmagadda Prasad636, the words used in Section 45 of the 2002 Act are “reasonable grounds for believing” which means the Court has to see only if there is a genuine case against the accused and the prosecution is not required to prove the charge beyond reasonable doubt. 132. Sub-section (6) of Section 212 of the Companies Act imposes similar twin conditions, as envisaged under Section 45 of the 2002 Act on the grant of bail, when a person is accused of offence under Section 447 of the Companies Act which punishes fraud, with punishment of imprisonment not less than six months and extending up to 10 years, with fine not less than the amount involved in the fraud, and extending up to 3 times the fraud. The Court in Nittin Johari637, while justifying the stringent view towards grant of bail with respect to economic offences held that- “24. At this juncture, it must be noted that even as per Section 212(7) of the Companies Act, the limitation under Section 212(6) with respect to grant of bail is in addition to those already provided in the CrPC. Thus, it is necessary to advert to the principles governing the grant of bail under Section 439 of the CrPC. Specifically, heed must be paid to the stringent view taken by this Court towards grant of bail with respect of economic offences. In this regard, it is pertinent to refer to the following observations of this Court in Y.S. Jagan Mohan Reddy638: (SCC p.449, paras 34-35) 635 Supra at Footnote No.275 (also at Footnote No.53) 636 Supra at Footnote No.256 637 Supra at Footnote No.291 638 Supra at Footnote No.255 “34. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deep–rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. 35. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.” (emphasis supplied) 133. This Court has been restating this position in several decisions, including Gautam Kundu639 and Amit Kumar640. Thus, while considering the application for bail under Section 45 of the 2002 Act, the Court should keep in mind the abovementioned principles governing the grant of bail. The limitations on granting bail as prescribed under Section 45 of the 2002 Act are in addition to the limitations under the 1973 Code. 134. As aforementioned, similar twin conditions have been provided in several other special legislations641 validity whereof has been VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 639 Supra at Footnote No.207 640 Supra at Footnote No.258 641 (i) Section 43D(5) of the UAPA [Zahoor Ahmad Shah Watali (supra at Footnote No.290)]; (ii) Section 21(4) of the MCOCA [Vishwanath Maranna Shetty (supra at Footnote No.287); Chenna Boyanna Krishna Yadav (supra at Footnote No.283) and Ranjitsing Brahmajeetsing Sharma (supra at Footnote Nos.53 and 275)]; (iii) Section 21(5) of the MCOCA [Bharat Shanti Lal Shah (supra at Footnote No.285); (iv) Section 37 of the NDPS Act [R. Paulsamy (supra at Footnote No.277); Gurcharan Singh (supra at Footnote No.278); Ahmadalieva Nodira (supra at Footnote No.276); Abdulla (supra at Footnote No.280); Karma Phuntsok (supra at Footnote No.282); N.R. Mon (supra at Footnote No.284); Rattan Mallik alias Habul (supra at Footnote No.286); Satpal Singh (supra at Footnote No.289); and Niyazuddin Sk. (supra at Footnote No.288); and (v) Section 212(6) of the Companies Act [Nittin Johari (supra at Footnote No.291)]. upheld by this Court being reasonable and having nexus with the purposes and objects sought to be achieved by the concerned special legislations. Besides the special legislation, even the provisions in the general law, such as 1973 Code stipulate compliance of preconditions before releasing the accused on bail. The grant of bail, even though regarded as an important right of the accused, is not a mechanical order to be passed by the Courts. The prayer for grant of bail even in respect of general offences, have to be considered on the basis of objective discernible judicial parameters as delineated by this Court from time to time, on case-to-case basis. 135. We are conscious of the fact that in paragraph 53 of the Nikesh Tarachand Shah642, the Court noted that it had struck down Section 45 of the 2002 as a whole. However, in paragraph 54, the declaration is only in respect of further (two) conditions for release on bail as contained in Section 45(1), being unconstitutional as the same violated Articles 14 and 21 of the Constitution. Be that as it may, nothing would remain in that observation or for that matter, the declaration as the defect in the provision [Section 45(1)], as existed then, and noticed by this Court has been cured by the Parliament by enacting amendment Act 13 of 2018 which has come into force with effect from 19.4.2018. We, therefore, confined ourselves to the challenge to the twin conditions in the provision, as it stands to this date post amendment of 2018 and which, on analysis of the decisions referred to above dealing with concerned enactments having similar twin conditions as valid, we must reject the challenge. Instead, we hold that the provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act to combat the menace of money-laundering having transnational consequences including impacting the financial systems and sovereignty and integrity of the countries. 136. It was urged that the scheduled offence in a given case may be a non-cognizable offence and yet rigors of Section 45 of the 2002 Act would result in denial of bail even to such accused. This argument is founded on clear misunderstanding of the scheme of the 2002 Act. As we have repeatedly mentioned in the earlier part of this judgment that the offence of money-laundering is one wherein a person, directly or indirectly, attempts to indulge or knowingly assists or knowingly is a 642 Supra at Footnote No.3 party or is actually involved in any process or activity connected with the proceeds of crime. The fact that the proceeds of crime have been generated as a result of criminal activity relating to a scheduled offence, which incidentally happens to be a non-cognizable offence, would make no difference. The person is not prosecuted for the scheduled offence by invoking provisions of the 2002 Act, but only when he has derived or obtained property as a result of criminal activity relating to or in relation to a scheduled offence and then indulges in process or activity connected with such proceeds of crime. Suffice it to observe that the argument under consideration is completely misplaced and needs to be rejected. 137. Another incidental issue that had been raised is about the non-application of rigors of Section 45 of the 2002 Act in respect of anticipatory bail filed under Section 438 of the 1973 Code. This submission presumably is linked to the observation in paragraph 42 in the case of Nikesh Tarachand Shah643. Similar argument was considered in The Asst. Director Enforcement Directorate vs. Dr. V.C. Mohan644. We are in agreement with the observation in this decision that it is one thing to say that Section 45 of the 2002 Act refers to a scheduled offence under the general law, but, as noted earlier, the offence under this Act in terms of Section 3 is specific to involvement in any process or activity connected with the proceeds of crime which is generated as a result of criminal activity relating to a scheduled offence. It is also true that Section 45 does not make specific reference to Section 438 of the 1973 Code, but it cannot be overlooked that sub-section (1) opens with a non- obstante clause and clearly provides that anything contained in the 1973 Code (2 of 1974), no person accused of an offence under this Act shall be released on bail or on his own bond, unless the stipulations provided therein are fulfilled. On account of the non-obstante clause in Section 45(1) of the 2002 Act, the sweep of that provision must prevail in terms of Section 71 of the 2002 Act. Further, the expression “anticipatory bail” is not used either in the 1973 Code or the 2002 Act. The relief granted in terms of Section 438 of the 1973 Code is one of directing release of the person on “bail” in case of his arrest; and such a relief has been described in judicial pronouncements as anticipatory bail. Section 45(1) uses generic expression “bail” without reference to any provision of the 1973 Code, such as Sections 437, 438 and 439 of the 1973 Code. Concededly, Section 65 of the 2002 Act states that the provisions of the 1973 Code shall VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 643 Supra at Footnote No.3 644 Criminal Appeal No.21 of 2022, decided on 4.1.2022 apply to the provisions under the Act insofar as they are not inconsistent with the provisions of the 2002 Act. Further, Section 71 of the Act gives overriding effect to the Act. Section 45 of the Act begins with a non- obstante clause, thus excluding the application of the 1973 Code in matters related to “bail”. The word “anticipatory bail” has not been defined under the 1973 Code. In Sushila Aggarwal645, it was held as under: “7.1. At the outset, it is required to be noted that as such the expression “anticipatory bail” has not been defined in the Code. As observed by this Court in Balchand Jain646, “anticipatory bail” means “bail in anticipation of arrest”. As held by this Court, the expression “anticipatory bail” is a misnomer inasmuch as it is not as if bail is presently granted by the court in anticipation of arrest. An application for “anticipatory bail” in anticipation of arrest could be moved by the accused at a stage before an FIR is filed or at a stage when FIR is registered but the charge sheet has not been filed and the investigation is in progress or at a stage after the investigation is concluded. Power to grant “anticipatory bail” under Section 438 of the CrPC vests only with the Court of Session or the High Court. Therefore, ultimately it is for the court concerned to consider the application for “anticipatory bail” and while granting the “anticipatory bail” it is ultimately for the court concerned to impose conditions including the limited period of “anticipatory bail”, depends upon the stages at which the application for anticipatory bail is moved. A person in whose favour a pre-arrest bail order is made under Section 438 of the CrPC has to be arrested. However, once there is an order of pre-arrest bail/anticipatory bail, as and when he is arrested he has to be released on bail. Otherwise, there is no distinction or difference between the pre-arrest bail order under Section 438 and the bail order under Section 437 & 439 CrPC. The only difference between the pre-arrest bail order under Section 438 and the bail order under Sections 437 and 439 is the stages at which the bail order is passed. The bail order under Section 438 CrPC is prior to his arrest and in anticipation of his arrest and the order of bail under Sections 437 and 439 is after a person is arrested. A bare reading of Section 438 CrPC shows that there is nothing in the language of the Section which goes to 645 Supra at Footnote No.318 646Balchand Jain (Shri) vs. State of Madhya Pradesh, (1976) 4 SCC 572 show that the pre-arrest bail granted under Section 438 has to be time-bound. The position is the same as in Section 437 and Section 439 CrPC.” (emphasis supplied) Thus, anticipatory bail is nothing but a bail granted in anticipation of arrest, hence, it has been held in various judgments by this Court that the principles governing the grant of bail in both cases are more or less on the same footing, except that in case of anticipatory bail the investigation is still underway requiring the presence of the accused before investigation authority. Thus, ordinarily, anticipatory bail is granted in exceptional cases where the accused has been falsely implicated in an offence with a view to harass and humiliate him. Therefore, it would not be logical to disregard the limitations imposed on granting bail under Section 45 of the 2002 Act, in the case of anticipatory bail as well. 138. In P. Chidambaram647, this Court observed that the power of anticipatory bail should be sparingly exercised in economic offences and held thus: “77. After referring to Siddharam Satlingappa Mhetre648 and other judgments and observing that anticipatory bail can be granted only in exceptional circumstances, in Jai Prakash Singh v. State of Bihar649 , the Supreme Court held as under: (SCC p.386, para 19) “19. Parameters for grant of anticipatory bail in a serious offence are required to be satisfied and further while granting such relief, the court must record the reasons therefor. Anticipatory bail can be granted only in exceptional circumstances where the court is prima facie of the view that the applicant has falsely been enroped in the crime and would not misuse his liberty. (See D.K. Ganesh Babu v. P.T. Manokaran650 , State of Maharashtra v. Mohd. Sajid Husain Mohd. S. Husain651 and Union of India v. Padam Narain Aggarwal652) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 647 Supra at Footnote No.21 648Siddharam Satlingappa Mhetre vs. State of Maharashtra & Ors., (2011) 1 SCC 694 649 (2012) 4 SCC 379 650 (2007) 4 SCC 434 651 (2008) 1 SCC 213 652 Supra at Footnote No.246 Economic Offences 78. Power under Section 438 CrPC 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 Jain653, it was held that in economic offences, the accused is not entitled to anticipatory bail. 83. 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, we are of the view that it is not a fit case to grant anticipatory bail. 84. In a case of money-laundering where it involves many stages of “placement”, “layering i.e. funds moved to other institutions to conceal origin” and “interrogation i.e. funds used to acquire various assets”, it requires systematic and analysed investigation which would be of great advantage. As held in Anil Sharma654, success in such interrogation would elude if the accused knows that he is protected by a pre-arrest bail order. Section 438 CrPC is to be invoked only in exceptional cases where the case alleged is frivolous or groundless. In the case in hand, there are allegations of laundering the proceeds of the crime. The Enforcement Directorate claims to have certain specific inputs from various sources, including overseas banks. Letter rogatory is also said to have been issued and some response have been received by the Department. 653 (1998) 2 SCC 105 654State rep. by the C.B.I. vs. Anil Sharma, (1997) 7 SCC 187 Having regard to the nature of allegations and the stage of the investigation, in our view, the investigating agency has to be given sufficient freedom in the process of investigation. Though we do not endorse the approach of the learned Single Judge in extracting the note produced by the Enforcement Directorate, we do not find any ground warranting interference with the impugned order655. Considering the facts and circumstances of the case, in our view, grant of anticipatory bail to the appellant will hamper the investigation and this is not a fit case for exercise of discretion to grant anticipatory bail to the appellant.” (emphasis supplied) 139. Therefore, as noted above, investigation in an economic offence, more so in case of money-laundering, requires a systematic approach. Further, it can never be the intention of the Parliament to exclude the operation of Section 45 of 2002 Act in the case of anticipatory bail, otherwise, it will create an unnecessary dichotomy between bail and anticipatory bail which not only will be irrational but also discriminatory and arbitrary. Thus, it is totally misconceived that the rigors of Section 45 of the 2002 Act will not apply in the case of anticipatory bail. 140. Suffice it to observe that it would be preposterous and illogical to hold that if a person applies for bail after arrest, he/she can be granted that relief only if the twin conditions are fulfilled in addition to other stipulations predicated in the 1973 Code; but another person, who is yet to be arrested in connection with the same offence of money-laundering, will not be required to fulfil such twin conditions whilst considering application for grant of bail under Section 438 of the 1973 Code. The relief of bail, be it in the nature of regular bail or anticipatory bail, is circumscribed by the stipulations predicated in Section 45 of the 2002 Act. The underlying principles of Section 45 of the 2002 Act would get triggered in either case before the relief of bail in connection with the offence of money-laundering is taken forward. Any other view would be counterproductive and defeat the purposes and objects behind the stringent provision enacted by the Parliament for prevention of money- laundering and to combat the menace on account of such activity which directly impacts the financial systems, including the sovereignty and integrity of the country. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 655 P. Chidambaram vs. Central Bureau of Investigation, 2019 SCC OnLine Del 9703 141. As a result, we have no hesitation in observing that in whatever form the relief is couched including the nature of proceedings, be it under Section 438 of the 1973 Code or for that matter, by invoking the jurisdiction of the Constitutional Court, the underlying principles and rigors of Section 45 of the 2002 must come into play and without exception ought to be reckoned to uphold the objectives of the 2002 Act, which is a special legislation providing for stringent regulatory measures for combating the menace of money-laundering. 142. There is, however, an exception carved out to the strict compliance of the twin conditions in the form of Section 436A of the 1973 Code, which has come into being on 23.6.2006 vide Act 25 of 2005. This, being the subsequent law enacted by the Parliament, must prevail. Section 436A of the 1973 Code reads as under: “656[436A. Maximum period for which an undertrial prisoner can be detained.— Where a person has, during the period of investigation, inquiry or trial under this Code of an offence under any law (not being an offence for which the punishment of death has been specified as one of the punishments under that law) undergone detention for a period extending up to one-half of the maximum period of imprisonment specified for that offence under that law, he shall be released by the Court on his personal bond with or without sureties: Provided that the Court may, after hearing the Public Prosecutor and for reasons to be recorded by it in writing, order the continued detention of such person for a period longer than one-half of the said period or release him on bail instead of the personal bond with or without sureties: Provided further that no such person shall in any case be detained during the period of investigation, inquiry or trial for more than the maximum period of imprisonment provided for the said offence under that law. Explanation.—In computing the period of detention under this section for granting bail, the period of detention passed due to delay in proceeding caused by the accused shall be excluded.]” In the Statement of Objects and Reasons, it was stated thus: 656 Ins. by Act 25 of 2005, sec. 36 (w.e.f. 23-6-2006) “There had been instances, where under-trial prisoners were detained in jail for periods beyond the maximum period of imprisonment provided for the alleged offence. As remedial measure section 436A has been inserted to provide that where an under-trial prisoner other than the one accused of an offence for which death has been prescribed as one of the punishments, has been under detention for a period extending to one-half of the maximum period of imprisonment provided for the alleged offence, he should be released on his personal bond, with or without sureties. It has also been provided that in no case will an under-trial prisoner be detained beyond the maximum period of imprisonment for which he can be convicted for the alleged offence.” 143. In Hussainara Khatoon & Ors. vs. Home Secretary, State of Bihar, Patna657, this Court stated that the right to speedy trial is one of the facets of Article 21 and recognized the right to speedy trial as a fundamental right. This dictum has been consistently followed by this Court in several cases. The Parliament in its wisdom inserted Section 436A under the 1973 Code recognizing the deteriorating state of undertrial prisoners so as to provide them with a remedy in case of unjustified detention. In Supreme Court Legal Aid Committee Representing Undertrial Prisoners vs. Union of India & Ors.658, the Court, relying on Hussainara Khatoon659, directed the release of prisoners charged under the Narcotic Drugs and Psychotropic Act after completion of one-half of the maximum term prescribed under the Act. The Court issued such direction after taking into account the non obstante provision of Section 37 of the NDPS Act, which imposed the rigors of twin conditions for release on bail. It was observed: “15. ….We are conscious of the statutory provision finding place in Section 37 of the Act prescribing the conditions which have to be satisfied before a person accused of an offence under the Act can be released. Indeed we have adverted to this section in the earlier part of the judgment. We have also kept in mind the interpretation placed on a similar provision in Section 20 of the TADA Act by the Constitution Bench in Kartar Singh v. State of Punjab660. Despite this provision, we have directed as above VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 657 (1980) 1 SCC 98 658 (1994) 6 SCC 731 659 Supra at Footnote No.657 660 Supra at Footnote No.190 mainly at the call of Article 21 as the right to speedy trial may even require in some cases quashing of a criminal proceeding altogether, as held by a Constitution Bench of this Court in A.R. Antulay v. R.S. Nayak661, release on bail, which can be taken to be embedded in the right of speedy trial, may, in some cases be the demand of Article 21. As we have not felt inclined to accept the extreme submission of quashing the proceedings and setting free the accused whose trials have been delayed beyond reasonable time for reasons already alluded to, we have felt that deprivation of the personal liberty without ensuring speedy trial would also not be in consonance with the right guaranteed by Article 21. Of course, some amount of deprivation of personal liberty cannot be avoided in such cases; but if the period of deprivation pending trial becomes unduly long, the fairness assured by Article 21 would receive a jolt. It is because of this that we have felt that after the accused persons have suffered imprisonment which is half of the maximum punishment provided for the offence, any further deprivation of personal liberty would be violative of the fundamental right visualised by Article 21, which has to be telescoped with the right guaranteed by Article 14 which also promises justness, fairness and reasonableness in procedural matters. …” 144. The Union of India also recognized the right to speedy trial and access to justice as fundamental right in their written submissions and, thus, submitted that in a limited situation right of bail can be granted in case of violation of Article 21 of the Constitution. Further, it is to be noted that the Section 436A of the 1973 Code was inserted after the enactment of the 2002 Act. Thus, it would not be appropriate to deny the relief of Section 436A of the 1973 Code which is a wholesome provision beneficial to a person accused under the 2002 Act. However, Section 436A of the 1973 Code, does not provide for an absolute right of bail as in the case of default bail under Section 167 of the 1973 Code. For, in the fact situation of a case, the Court may still deny the relief owing to ground, such as where the trial was delayed at the instance of accused himself. 145. Be that as it may, in our opinion, this provision is comparable with the statutory bail provision or, so to say, the default bail, to be granted 661 (1992) 1 SCC 225 in terms of Section 167 of the 1973 Code consequent to failure of the investigating agency to file the chargesheet within the statutory period and, in the context of the 2002 Act, complaint within the specified period after arrest of the person concerned. In the case of Section 167 of the 1973 Code, an indefeasible right is triggered in favour of the accused the moment the investigating agency commits default in filing the chargesheet/complaint within the statutory period. The provision in the form of Section 436A of the 1973 Code, as has now come into being is in recognition of the constitutional right of the accused regarding speedy trial under Article 21 of the Constitution. For, it is a sanguine hope of every accused, who is in custody in particular, that he/she should be tried expeditiously — so as to uphold the tenets of speedy justice. If the trial cannot proceed even after the accused has undergone one-half of the maximum period of imprisonment provided by law, there is no reason to deny him this lesser relief of considering his prayer for release on bail or bond, as the case may be, with appropriate conditions, including to secure his/her presence during the trial. 146. Learned Solicitor General was at pains to persuade us that this view would impact the objectives of the 2002 Act and is in the nature of super imposition of Section 436A of the 1973 Code over Section 45 of the 2002 Act. He has also expressed concern that the same logic may be invoked in respect of other serious offences, including terrorist offences which would be counterproductive. So be it. We are not impressed by this submission. For, it is the constitutional obligation of the State to ensure that trials are concluded expeditiously and at least within a reasonable time where strict bail provisions apply. If a person is detained for a period extending up to one-half of the maximum period of imprisonment specified by law and is still facing trial, it is nothing short of failure of the State in upholding the constitutional rights of the citizens, including person accused of an offence. 147. Section 436A of the 1973 Code, is a wholesome beneficial provision, which is for effectuating the right of speedy trial guaranteed by Article 21 of the Constitution and which merely specifies the outer limits within which the trial is expected to be concluded, failing which, the accused ought not to be detained further. Indeed, Section 436A of the 1973 Code also contemplates that the relief under this provision cannot be granted mechanically. It is still within the discretion of the Court, unlike the default bail under Section 167 of the 1973 Code. Under Section VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 436A of the 1973 Code, however, the Court is required to consider the relief on case-to-case basis. As the proviso therein itself recognises that, in a given case, the detention can be continued by the Court even longer than one-half of the period, for which, reasons are to be recorded by it in writing and also by imposing such terms and conditions so as to ensure that after release, the accused makes himself/herself available for expeditious completion of the trial. 148. However, that does not mean that the principle enunciated by this Court in Supreme Court Legal Aid Committee Representing Undertrial Prisoners662, to ameliorate the agony and pain of persons kept in jail for unreasonably long time, even without trial, can be whittled down on such specious plea of the State. If the Parliament/Legislature provides for stringent provision of no bail, unless the stringent conditions are fulfilled, it is the bounden duty of the State to ensure that such trials get precedence and are concluded within a reasonable time, at least before the accused undergoes detention for a period extending up to one-half of the maximum period of imprisonment specified for the concerned offence by law. [Be it noted, this provision (Section 436A of the 1973 Code) is not available to accused who is facing trial for offences punishable with death sentence]. 149. In our opinion, therefore, Section 436A needs to be construed as a statutory bail provision and akin to Section 167 of the 1973 Code. Notably, learned Solicitor General has fairly accepted during the arguments and also restated in the written notes that the mandate of Section 167 of the 1973 Code would apply with full force even to cases falling under Section 3 of the 2002 Act, regarding money-laundering offences. On the same logic, we must hold that Section 436A of the 1973 Code could be invoked by accused arrested for offence punishable under the 2002 Act, being a statutory bail. SECTION 50 OF THE 2002 ACT 150. The validity of this provision has been challenged on the ground of being violative of Articles 20(3) and 21 of the Constitution. For, it allows the authorised officer under the 2002 Act to summon any person and record his statement during the course of investigation. Further, the provision mandates that the person should disclose true and correct facts known to his personal knowledge in connection with the 662 Supra at Footnote No.658 subject matter of investigation. The person is also obliged to sign the statement so given with the threat of being punished for the falsity or incorrectness thereof in terms of Section 63 of the 2002 Act. Before we proceed to analyse the matter further, it is apposite to reproduce Section 50 of the 2002 Act, as amended. The same reads thus: “50. Powers of authorities regarding summons, production of documents and to give evidence, etc.—(1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:— (a) discovery and inspection; (b) enforcing the attendance of any person, including any officer of a 663[reporting entity], and examining him on oath; (c) compelling the production of records; (d) receiving evidence on affidavits; (e) issuing commissions for examination of witnesses and documents; and (f) any other matter which may be prescribed. (2) The Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act. (3) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (4) Every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 663 Subs. by Act 2 of 2013, sec. 22, for “banking company or a financial institution or a company” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). (5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not— (a) impound any records without recording his reasons for so doing; or (b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the 664[Joint Director].” 151. Section 50 forms part of Chapter VIII of the 2002 Act which deals with matters connected with authorities referred to in Section 48 in the same Chapter. Section 50 has been amended vide Act 2 of 2013 and again, by Act 13 of 2018. Nothing much would turn on these amendments. 152. By this provision, the Director has been empowered to exercise the same powers as are vested in a civil Court under the 1908 Code while trying a suit in respect of matters specified in sub-section (1). This is in reference to Section 13 of the 2002 Act dealing with powers of Director to impose fine in respect of acts of commission and omission by the banking companies, financial institutions and intermediaries. From the setting in which Section 50 has been placed and the expanse of empowering the Director with same powers as are vested in a civil Court for the purposes of imposing fine under Section 13, is obviously very specific and not otherwise. 153. Indeed, sub-section (2) of Section 50 enables the Director, Additional Director, Joint Director, Deputy Director or Assistant Director to issue summon to any person whose attendance he considers necessary for giving evidence or to produce any records during the course of any investigation or proceeding under this Act. We have already highlighted the width of expression “proceeding” in the earlier part of this judgment and held that it applies to proceeding before the Adjudicating Authority or the Special Court, as the case may be. Nevertheless, sub-section (2) 664 Subs. by Act 13 of 2018, sec. 208(f), for “Director” (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19th April, 2018). empowers the authorised officials to issue summon to any person. We fail to understand as to how Article 20(3) would come into play in respect of process of recording statement pursuant to such summon which is only for the purpose of collecting information or evidence in respect of proceeding under this Act. Indeed, the person so summoned, is bound to attend in person or through authorised agent and to state truth upon any 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 of the 2002 Act. The criticism is essentially because of sub-section (4) which provides that every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the IPC. Even so, the fact remains that Article 20(3) or for that matter Section 25 of the Evidence Act, would come into play only when the person so summoned is an accused of any offence at the relevant time and is being compelled to be a witness against himself. This position is well-established. The Constitution Bench of this Court in M.P. Sharma665 had dealt with a similar challenge wherein warrants to obtain documents required for investigation were issued by the Magistrate being violative of Article 20(3) of the Constitution. This Court opined that the guarantee in Article 20(3) is against “testimonial compulsion” and is not limited to oral evidence. Not only that, it gets triggered if the person is compelled to be a witness against himself, which may not happen merely because of issuance of summons for giving oral evidence or producing documents. Further, to be a witness is nothing more than to furnish evidence and such evidence can be furnished by different modes. The Court went on to observe as follows: “Broadly stated the guarantee in article 20(3) is against “testimonial compulsion”. It is suggested that this is confined to the oral evidence of a person standing his trial for an offence when called to the witness-stand. We can see no reason to confine the content of the constitutional guarantee to this barely literal import. So to limit it would be to rob the guarantee of its substantial purpose and to miss the substance for the sound as stated in certain American decisions. The phrase used in Article 20(3) is “to be a witness”. A person can “be a witness” not merely by giving oral evidence but also by producing documents or making intelligible gestures as in VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 665 Supra at Footnote No.324 (also at Footnote No.47) the case of a dumb witness (See section 119 of the Evidence Act) or the like. “To be a witness” is nothing more than “to furnish evidence”, and such evidence can be furnished through the lips or by production of a thing or of a document or in other modes. So far as production of documents is concerned, no doubt Section 139 of the Evidence Act says that a person producing a document on summons is not a witness. But that section is meant to regulate the right of cross-examination. It is not a guide to the connotation of the word “witness”, which must be understood in its natural sense, i.e., as referring to a person who furnishes evidence. Indeed, every positive volitional act which furnishes evidence is testimony, and testimonial compulsion connotes coercion which procures the positive volitional evidentiary acts of the person, as opposed to the negative attitude of silence or submission on his part. Nor is there any reason to think that the protection in respect of the evidence so procured is confined to what transpires at the trial in the court room. The phrase used in article 20(3) is “to be a witness” and not to “appear as a witness”. It follows that the protection afforded to an accused in so far as it is related to the phrase “to be a witness” is not merely in respect of testimonial compulsion in the court room but may well extend to compelled testimony previously obtained from him. It is available therefore to a person against whom a formal accusation relating to the commission of an offence has been levelled which in the normal course may result in prosecution. Whether it is available to other persons in other situations does not call for decision in this case.” (emphasis supplied) 154. In the case of Mohammed Dastagir666, the Court restated that the requirement to invoke the protection under Article 20(3) is that the person must be formally accused of the offence and observed thus: “(9) … “Considered in this light, the guarantee under Art. 20(3) would be available in the present cases these petitioners against whom a First Information Report has been recorded as accused therein. It would extend to any 666 Supra at Footnote No.325 compulsory process for production of evidentiary documents which are reasonably likely to support a prosecution against them.” These observations were unnecessary in Sharma’s case667, having regard to the fact that this Court held that the seizure of documents on a search warrant was not unconstitutional as that would not amount to a compulsory production of incriminating evidence. In the present case, even on what was stated in Sharma’s case668, there was no formal accusation against the appellant relating to the commission of an offence. Mr. Kaliyappan had clearly stated that he was not doing any investigation. It does not appear from his evidence that he had even accused the appellant of having committed any offence. Even if it were to be assumed that the appellant was a person accused of an offence the circumstances do not establish that he was compelled to produce the money which he had on his person. No doubt he was asked to do so. It was, however, within his power to refuse to comply with Mr. Kaliyappan’s request. In our opinion, the facts established in the present case show that the appellant was not compelled to produce the currency notes and therefore do not attract the provisions of Art. 20(3) of the Constitution.” (emphasis supplied) 155. In yet another case in Raja Narayanlal Bansilal669, the Constitution Bench dealt with the challenge to the validity of the notice served on the appellant for asking the appellant to attend the office of the Inspector appointed by the Central Government to investigate into the affairs of the company and for giving statement and producing books of accounts and other documents. The Court repelled the said challenge in the following words: “(23)…….Similarly, for invoking the constitutional right against testimonial compulsion guaranteed under Art. 20(3) it must appear that a formal accusation has been made against the party pleading the guarantee and that it relates to the commission of an offence which in the normal course may result in prosecution.… . VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 667 Supra at Footnote No.324 (also at Footnote No.47) 668 Supra at Footnote No.324 (also at Footnote No.47) 669 Supra at Footnote No.327 (25) ……The cardinal words of the section are those which empower the Commissioner or his inspector to examine into and report on the affairs of the society”. Thus it is clear that the examination of, or investigation into, the affairs of the company cannot be regarded as a proceeding started against any individual after framing an accusation against him. Besides it is quite likely that in some cases investigation may disclose that there are no irregularities, or if there are they do not amount to the commission of any offence; in such cases there would obviously be no occasion for the Central Government to institute criminal proceedings under S. 242(1). Therefore, in our opinion, the High Court was right in holding that when the inspector issued the impugned notices against the appellant he cannot be said to have been accused of any offence; and so the first essential condition for the application of Art. 20(3) is absent. We ought to add that in the present case the same conclusion would follow even if the clause “accused of any offence” is interpreted more liberally than was done in the case of M.P. Sharma670 because even if the expression “accused of any offence” is interpreted in a very broad and liberal way it is clear that at the relevant stage the appellant has not been, and in law cannot be, accused of any offence. ….” (emphasis supplied) 156. Again, the question came up for consideration before the eleven Judges of this Court in Kathi Kalu Oghad671, wherein the Court noted that the person on whom summon has been served, must fulfil the character of an accused person at the time of making the statement. The Court expounded thus: “(15) In order to bring the evidence within the inhibitions of cl. (3) of Art. 20 it is must be shown not only that the person making the statement was an accused at the time he made it and that it had a material bearing on the criminality of the maker of the statement, but also that he was compelled to make that statement. ‘Compulsion’ in the context, must mean what 670 Supra at Footnote No.324 (also at Footnote No.47) 671 Supra at Footnote No.44 in law is called ‘duress’. In the Dictionary of English Law by Earl Jowitt, ‘duress’ is explained as follows: “Duress is where a man is compelled to do an act by injury, beating or unlawful imprisonment (sometimes called duress in strict sense) or by the threat of being killed, suffering some grievous bodily harm, or being unlawfully imprisoned (sometimes called menace, or duress per mines). Duress also includes threatening, beating or imprisonment of the wife, parent or child of a person.” (emphasis supplied) 157. In another celebrated decision of this Court in Romesh Chandra Mehta672, while following the earlier decisions and dealing with the challenge in reference to the provisions of the Sea Customs Act, the Court noted thus: “In the two earlier cases M.P. Sharma’s case673 and Raja Narayanlal Bansilal Case674 this Court in describing a person accused used the expression “against whom a formal accusation had been made”, and in Kathi Kalu Oghad’s case675 this Court used the expression “the person accused must have stood in the character of an accused person”. Counsel for Mehta urged that the earlier authorities were superseded in Kathi Kalu Oghad’s case676 and it was ruled that a statement made by a person standing in the character of a person accused of an offence is inadmissible by virtue of Art. 20(3) of the Constitution. But the Court in Kathi Kalu Oghad’s case677 has not set out a different test for determining the stage when a person may be said to be accused of an offence. In Kathi Kalu Oghad’s case678 the Court merely set out the principles in the light of the effect of a formal accusation on a person, viz., that he stands in the character of an accused person at the time when he makes the statement. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 672 Supra at Footnote No.119 673 Supra at Footnote No.324 (also at Footnote No.47) 674 Supra at Footnote No.327 675 Supra at Footnote No.44 676 Supra at Footnote No.44 677 Supra at Footnote No.44 678 Supra at Footnote No.44 Normally a person stands in the character of an accused when a First Information Report is lodged against him in respect of an offence before an Officer competent to investigate it, or when a complaint is made relating to the commission of an offence before a Magistrate competent to try or send to another Magistrate for trial the offence. Where a Customs Officer arrests a person and informs that person of the grounds of his arrest, (which he is bound to do under Art. 22(1) of the Constitution) for the purposes of holding an enquiry into the infringement of the provisions of the Sea Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence. In the case of an offence by infringement of the Sea Customs Act and punishable at the trial before a Magistrate there is an accusation when a complaint is lodged by an officer competent in that behalf before the Magistrate.” (emphasis supplied) 158. Relying on the exposition in Nandini Satpathy679, it was urged that it is not necessary that a formal accusation is made against the person in the form of FIR/ECIR/chargesheet/complaint to invoke protection under Article 20(3) of the Constitution and that protection is available even to a suspect at the time of interrogation. (See also Balkishan A. Devidayal680 and Selvi681). 159. In the context of the 2002 Act, it must be remembered that the summon is issued by the Authority under Section 50 in connection with the inquiry regarding proceeds of crime which may have been attached and pending adjudication before the Adjudicating Authority. In respect of such action, the designated officials have been empowered to summon any person for collection of information and evidence to be presented before the Adjudicating Authority. It is not necessarily for initiating a prosecution against the noticee as such. The power entrusted to the designated officials under this Act, though couched as investigation in real sense, is to undertake inquiry to ascertain relevant facts to facilitate initiation of or pursuing with an action regarding proceeds of crime, if the situation so warrants and for being presented before the Adjudicating 679 Supra at Footnote No.35 680 Supra at Footnote Nos.120 (also at Footnote No.41) 681 Supra at Footnote No.43 Authority. It is a different matter that the information and evidence so collated during the inquiry made, may disclose commission of offence of money-laundering and the involvement of the person, who has been summoned for making disclosures pursuant to the summons issued by the Authority. At this stage, there would be no formal document indicative of likelihood of involvement of such person as an accused of offence of money-laundering. If the statement made by him reveals the offence of money-laundering or the existence of proceeds of crime, that becomes actionable under the Act itself. To put it differently, at the stage of recording of statement for the purpose of inquiring into the relevant facts in connection with the property being proceeds of crime is, in that sense, not an investigation for prosecution as such; and in any case, there would be no formal accusation against the noticee. Such summons can be issued even to witnesses in the inquiry so conducted by the authorised officials. However, after further inquiry on the basis of other material and evidence, the involvement of such person (noticee) is revealed, the authorised officials can certainly proceed against him for his acts of commission or omission. In such a situation, at the stage of issue of summons, the person cannot claim protection under Article 20(3) of the Constitution. 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. Further, it would not preclude the prosecution from proceeding against such a person including for consequences under Section 63 of the 2002 Act on the basis of other tangible material to indicate the falsity of his claim. That would be a matter of rule of evidence. 160. The Andhra Pradesh High Court in Dalmia Cement (Bharat) Limited682, while dealing with the purpose of investigation under Section 50(2) noted that it is essentially for collecting evidence with regard to the involvement of a person or about existence of certain facts concerning proceeds of crime or process or activity connected with proceeds of crime, such inquiry or investigation could be commenced on the basis of information to be recorded in the internal document maintained by the authority authorised also described as ECIR. The High Court noted as follows: VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 682 Supra at Footnote No.234 “33. In the light of the detailed submissions of the learned senior counsel on either side, the point for consideration is: Whether the summons issued to the second petitioner under Section 50(2) and (3) of PMLA is violative of the Constitutional protection and guarantee under Article 20(3) of the Constitution of India. 47. At this stage, therefore, investigation is only for the purpose of collecting evidence with regard to proceeds of crime in the hands of the persons suspected and their involvement, if any, in the offence under Section 3 of PMLA. I am, therefore, unable to equate ECIR registered by the first respondent to an FIR under Section 154 Cr.P.C and consequently, I agree with the learned Additional Solicitor General that under PMLA the petitioners are not accused at present. Consequently, therefore, the submission on behalf of the petitioners on the assumption that petitioners are accused under PMLA is liable to be rejected.” (emphasis supplied) 161. The Delhi High Court also had occasion to examine the provisions of the 2002 Act in Vakamulla Chandrashekhar683 and noted the special feature of the 2002 Act which deals with both civil and criminal consequences as against the offender. Having so noted, the High Court observed as follows: “11. The act of money laundering has both civil and criminal consequences for the perpetrator. To deal with the civil consequences, the Act creates, and empowers the adjudicating authority (under Section 2(1)(a) read with Section 6) with powers of a Civil Court to summon, direct production of documents and evidence (see Section 11), and adjudicate on the issue whether any property is involved in money laundering (Section 8). It also creates the right of appeal from orders of the Adjudicating Authority (Section 26), and designates the Appellate Tribunal authorized to hear appeals (Section 2(b) read with Section 25). It also creates a right of further appeal before the High Court (Section 42).” 683 Supra at Footnote No.226 162. It is, thus, clear that the power invested in the officials is one for conducting inquiry into the matters relevant for ascertaining existence of proceeds of crime and the involvement of persons in the process or activity connected therewith so as to initiate appropriate action against such person including of seizure, attachment and confiscation of the property eventually vesting in the Central Government. 163. We are conscious of the fact that the expression used in Section 2(1)(na) of the 2002 Act is “investigation”, but there is obvious distinction in the expression “investigation” occurring in the 1973 Code. Under Section 2(h) of the 1973 Code, the investigation is done by a “police officer” or by any person (other than a Magistrate) who is authorised by a Magistrate thereby to collect the evidence regarding the crime in question. Whereas, the investigation under Section 2(1)(na) of the 2002 Act is conducted by the Director or by an authority authorised by the Central Government under the 2002 Act for the collection of evidence for the purpose of proceeding under this Act. Obviously, this investigation is in the nature of inquiry to initiate action against the proceeds of crime and prevent activity of money-laundering. In the process of such investigation, the Director or the authority authorised by the Central Government referred to in Section 48 of the 2002 Act is empowered to resort to attachment of the proceeds of crime and for that purpose, also to do search and seizure and to arrest the person involved in the offence of money-laundering. While doing so, the prescribed authority (Director, Additional Director, Joint Director, Deputy Director or Assistant Director) alone has been empowered to summon any person for recording his statement and production of documents as may be necessary by virtue of Section 50 of the 2002 Act. Sensu stricto, at this stage (of issuing summon), it is not an investigation for initiating prosecution in respect of crime of money-laundering as such. That is only an incidental matter and may be the consequence of existence of proceeds of crime and identification of persons involved in money-laundering thereof. The legislative scheme makes it amply clear that the authority authorised under this Act is not a police officer as such. This becomes amply clear from the speech of the then Finance Minister delivered in 2005, which reads thus: “Sir, the Money-Laundering Act was passed by this House in the year 2002, and number of steps have to be taken to implement it. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] Sir, two kinds of steps were required. One was to appoint an authority who will gather intelligence and information, and the other was an authority to investigate and prosecute. This Act was made to implement the political declaration adopted by the Special Session of the UN General Assembly in 1999. Section 1(3) of the Act stipulates that the Act will come into force on such date as the Central Government may by notification appoint. While we were examining the question of notifying the Act, I found that there was certain lacunae in the Act. I regret to say that not enough homework had been done in the definitions, and in the division of responsibility and authority. So, in consultation with the Ministry of Law, we came to the conclusion that these lacunae had to be removed. Broadly, the reasons for the amendment are the following. Under the existing provisions in Section 45 of the Act, every offence is cognizable. If an offence is cognizable, then any police officer in India can arrest an offender without warrant. At the same time, under Section 19 of the Act, only a Director or a Deputy Director or an Assistant Director or any other officer authorised, may arrest an offender. Clearly, there was a conflict between these two provisions. Under Section 45(1)(b) of the Act, the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint made in writing by the Director or any other officer authorised by the Central Government. So, what would happen to an arrest made by any police officer in the case of a cognizable offence? Which is the court that will try the offence? Clearly, there were inconsistencies in these provisions. They have now been removed. We have now enabled only the Director or an officer authorised by him to investigate offences. Of course, we would, by rule, set up a threshold; and, below that threshold, we would allow State police officers also to take action. The second anomaly that we found was that the expression “investigation officer” and the word “investigation” occur in a number of sections but they were not defined in the Act. Consequently, one has to go to the definition in the Criminal Procedure Code and that Code provides only “investigation by a police officer or by an officer authorised by a magistrate”. So, clearly, there was a lacuna in not enabling the Director or the Assistant Director under this Act to investigate offences. That has been cured now. What we are doing is, we are inserting a new Section, 2(n)(a) defining the term, ‘investigation’; making an amendment to Sections 28, 29 and 30, dealing with tribunals; amending Sections 44 and 45 of the Act to make the offence non-cognisable so that only the Director could take action; and also making consequential changes in Section 73. I request hon. Members to kindly approve of these amendments so that the Act could be amended quickly and we could bring it into force.” (emphasis supplied) From this speech, it is more than clear that the intention of the Parliament was to empower the prescribed Authority under Section 48 including the class of officers appointed for the purposes of this Act to investigate the matters falling within the purview of the Act and in the manner specified in that regard. By inserting Section 45(1A) in the 2002 Act vide amendment Act 20 of 2005, was essentially to restrict and explicitly disable the police officer from taking cognizance of the offence of money-laundering much less investigating the same. It is a provision to restate that only the Authority (Section 48) under this Act is competent to do investigation in respect of matters specified under the 2002 Act and none else. This provision rules out coextensive power to local police as well as the authority authorised. As aforementioned, the officer specifically authorised is also expected to confine the inquiry/investigation only in respect of matters under this Act and in the manner specified therein. 164. The purposes and objects of the 2002 Act for which it has been enacted, is not limited to punishment for offence of money- laundering, but also to provide measures for prevention of money- laundering. It is also to provide for attachment of proceeds of crime, which are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceeding relating to confiscation of such proceeds under the 2002 Act. This Act is also to compel the banking companies, financial institutions and intermediaries to maintain VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] records of the transactions, to furnish information of such transactions within the prescribed time in terms of Chapter IV of the 2002 Act684. 164A. Considering the above, it is unfathomable as to how the authorities referred to in Section 48 can be described as police officer. The word “police” in common parlance means a civil force whose main aim is to prevent and detect crimes and to maintain law and order of the nation as expounded in Barkat Ram685. In this decision, while dealing with the role of Customs Officer under the Land Customs Act, 1924686, the Court opined as follows: “The Police Act, 1861 (Act V of 1861), is described as an Act for the regulation of police, and is thus an Act for the regulation of that group of officers who come within the word ‘police’ whatever meaning be given to that word. The preamble of the Act further says: ‘whereas it is expedient to re-organise the police and to make it a more efficient instrument for the prevention and detection of crime, it is enacted as follows’. This indicates that the police is the instrument for the prevention and detection of crime which can be said to be the main object and purpose of having the police. Sections 23 and 25 lay down the duties of the police officers and s. 20 deals with the authority they can exercise. They can exercise such authority as is provided for a police officer under the Police Act and any Act for regulating criminal procedure. The authority given to police officers must naturally be to enable them to discharge their duties efficiently. Of the various duties mentioned in s. 23, the more important duties are to collect and communicate intelligence affecting the public peace, to prevent the commission of offences and public nuisances and to detect and bring offenders to justice and to apprehend all persons whom the police officer is legally authorised to apprehend. It is clear, therefore, in view of the nature of the duties imposed on the police officers, the nature of the authority conferred and the purpose of the police Act, that the powers which the police officers enjoy are powers for the effective prevention and detection of crime in order to maintain law and order.” (emphasis supplied) 684 See Pareena Swarup (supra at Footnote No.366) 685 Supra at Footnote No.24 686 For short, “Land Customs Act” And again, opined thus: “….The Customs Officer, therefore, is not primarily concerned with the detection and punishment of crime committed by a person, but is mainly interested in the detection and prevention of smuggling of goods and safeguarding the recovery of customs duties. He is more concerned with the goods and customs duty, than with the offender.” Thus, this Court concluded that the Customs Officer under the Land Customs Act is not a police officer within the meaning of Section 25 of the Evidence Act. In that, the main object of the Customs Officer is to safeguard goods and customs duty and detection and prevention of crime is an ancillary function. 165. On similar lines, in the case of Raja Ram Jaiswal687, while examining the efficacy of confession made to an Excise Inspector under the 1915 Act, the Court held as follows: “(10). …Thus he can exercise all the powers which an officer in charge of a police station can exercise under Chapter XIV of the Code of Criminal Procedure. He can investigate into offences, record statements of the persons questioned by him, make searches, seize any articles connected with an offence under the Excise Act, arrest an accused person, grant him bail, send him up for trial before a Magistrate, file a charge- sheet and so on. Thus his position in so far as offences under the Excise Act committed within the area to which his appointment extends are concerned is not different from that of an officer in charge of a police station. As regards these offences not only is he charged with the duty of preventing their commission but also with their detection and is for these purposes empowered to act in all respects as an officer in charge of a police station. No doubt unlike an officer in charge of a police station he is not charged with the duty of the maintenance of law and order nor can he exercise the powers of such officer with respect to offences under the general law or under any other special laws. But all the same, in so far as offences under the Excise Act are concerned, there is no distinction whatsoever in the nature of the powers he exercises and those which a police VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 687 Supra at Footnote No.30 officer exercises in relation to offences which it is his duty to prevent and bring to light. It would be logical, therefore, to hold that a confession recorded by him during an investigation into an excise offence cannot reasonably be regarded as anything different from a confession to a police officer. For, in conducting the investigation he exercises the powers of a police officer and the act itself deems him to be a police officer, even though he does not belong to the police force constituted under the Police Act. It has been held by this court that the expression “police officer” in S. 25 of the Evidence Act is not confined to persons who are members of the regularly constituted police force. The position of an Excise Officer empowered under S. 77(2) of the Bihar and Orissa Excise Act is not analogous to that of a Customs Officer for two reasons. One is that the Excise Officer, does not exercise any judicial powers just as the Customs Officer does under the Sea Customs Act, 1878. Secondly, the Customs Officer is not deemed to be an officer in charge of a police station and therefore can exercise no powers under the Code of Criminal Procedure and certainly not those of an officer in charge of a police station. No doubt, he too has the power to make a search, to seize articles suspected to have been smuggled and arrest persons suspected of having committed an offence under the Sea Customs Act. But that is all. Though he can make an enquiry, he has no power to investigate into an offence under S. 156 of the Code of Criminal Procedure. Whatever powers he exercises are expressly set out in the Sea Customs Act. Though some of those set out in Ch. XVII may be analogous to those of a Police Officer under the Code of Criminal Procedure they are not identical with those of a police officer and are not derived from or by reference to the Code. In regard to certain matters, he does not possess powers even analogous to those of a Police Officer. Thus he is not entitled to submit a report to a Magistrate under S. 190 of the Code of Criminal Procedure with a view that cognizance of the offence be taken by the Magistrate. Section 187(A) of the Sea Customs Act specifically provides that cognizance of an offence under the Sea Customs Act can be taken only upon a complaint in writing made by the Customs Officers or other officer of the customs not below the rank of an Assistant Collector of Customs authorised in this behalf by the Chief Customs Officer. (11) 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 S. 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 S. 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 S. 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.” (emphasis supplied) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 166. Again, in the case of Badaku Joti Svant688, the Constitution Bench of this Court held that a Central Excise Officer exercising power under Central Excise and Salt Act, 1944 is not a police officer as he does not possess the power to submit a charge-sheet under Section 173 of the 1973 Code. The Court noted thus: “(9) …..It is urged that under sub-s. (2) of S. 21 a Central Excise Officer under the Act has all the powers of an officer-in-charge of a police station under Chap. XIV of the Cr.P.C. and, therefore, he must be deemed to be a police officer within the meaning of those words in S. 25 of the Evidence Act. It is true that sub-s. (2) confers on the Central Excise Officer under the Act the same powers as an officer-in-charge of a police station has when investigating a cognizable case; but this power is conferred for the purpose of sub-s. (1) which gives power to a Central Excise Officer to whom any arrested person is forwarded to inquire into the charge against him. Thus under S. 21 it is the duty of the Central Excise Officer to whom an arrested person is forwarded to inquire into the charge made against such person. Further under proviso (a) to sub-s. (2) of S. 21 if the Central Excise Officer is of opinion that there is sufficient evidence or reasonable ground of suspicion against the accused person, he shall either admit him to bail to appear before a Magistrate having jurisdiction in the case, or forward him in custody to such Magistrate. It does not, however, appear that a Central Excise Officer under the Act has power to submit a charge-sheet under S. 173 of the Cr.P.C. Under S. 190 of the Cr.P.C. a Magistrate can take cognizance of any offence either (a) upon receiving a complaint of facts which constitute such offence, or (b) upon a report in writing of such facts made by any police officer, or (c) upon information received from any person other than a police officer, or upon his own knowledge or suspicion, that such offence has been committed. A police officer for purposes of Cl. (b) above can in our opinion only be a police officer properly so-called as the scheme of the Code of Criminal Procedure shows and it seems therefore that a Central Excise Officer will have to make a complaint under Cl. (a) above if he wants the Magistrate to take cognizance of an offence, for 688 Supra at Footnote No.357 example, under S. 9 of the Act. Thus though under sub-s. (2) of S. 21 the Central Excise Officer under the Act has the powers of an officer-in-charge of a police station when investigating a cognizable case, that is for the purpose of his inquiry under sub-s. (1) of S. 21. Section 21 is in terms different from S. 78(3) of the Bihar and Orissa Excise Act, 1915 which came to be considered in Raja Ram Jaiswal’s case689 and which provided in terms that “for the purposes of S. 156 of the Cr.P.C., 1898, the area to which an excise officer empowered under S. 77, sub-s. (2), is appointed shall be deemed to be a police-station, and such officer shall be deemed to be the officer-in-charge of such station”. It cannot therefore be said that the provision in S. 21 is on par with the provision in S. 78(3) of the Bihar and Orissa Excise Act. All that S. 21 provides is that for the purpose of his enquiry, a Central Excise Officer shall have the powers of an officer-in-charge of a police station when investigating a cognizable case. But even so it appears that these powers do not include the power to submit a charge-sheet under S. 173 of the Cr.P.C., for unlike the Bihar and Orissa Excise Act, the Central Excise Officer is not deemed to be an officer in charge of a police station.” 167. Another Constitution Bench of this Court in Romesh Chandra Mehta690 concluded that a Customs Officer under the Sea Customs Act, 1878 could not be coined as a police officer and noted thus: “…..The Customs Officer does not exercise, when enquiring into a suspected infringement of the Sea Customs Act, powers of investigation which a police-officer may in investigating the commission of an offence. He is invested with the power to enquire into infringements of the Act primarily for the purpose of adjudicating forfeiture and penalty. He has no power to investigate an offence triable by a Magistrate, nor has he the power to submit a report under s. 173 of the Code of Criminal Procedure. He can only make a complaint in writing before a competent Magistrate.” VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 689 Supra at Footnote No.30 690 Supra at Footnote No.119 “…..But the test for determining whether an officer of customs is to be deemed a police officer is whether he is invested with all the powers of a police officer qua investigation of an offence, including the power to submit a report under s. 173 of the Code of Criminal Procedure. It is not claimed that a Customs Officer exercising power to make an enquiry may submit a report under s. 173 of the Code of Criminal Procedure.” (emphasis supplied) 168. The petitioners, however, have pressed into service exposition of this Court in the recent decision in Tofan Singh691, which had occasion to deal with the provisions of the NDPS Act wherein the Court held that the designated officer under that Act must be regarded as a police officer. The Court opined that the statement made before him would be violative of protection guaranteed under Article 20(3) of the Constitution. This decision has been rightly distinguished by the learned Additional Solicitor General on the argument that the conclusion reached in that judgment is on the basis of the legislative scheme of the NDPS Act, which permitted that interpretation. However, it is not possible to reach at the same conclusion in respect of the 2002 Act for more than one reason. In this decision, the Court first noted that the Act (NDPS Act) under consideration was a penal statute. In the case of 2002 Act, however, such a view is not possible. The second aspect which we have repeatedly adverted to, is the special purposes and objects behind the enactment of the 2002 Act. As per the provisions of the NDPS Act, it permitted both a regular police officer as well as a designated officer, who is not a defined police officer, to investigate the offence under that Act. This has resulted in discrimination. Such a situation does not emerge from the provisions of the 2002 Act. The 2002 Act, on the other hand, authorises only the authorities referred to in Section 48 to investigate/inquire into the matters under the Act in the manner prescribed therein. The provision inserted in 2005 as Section 45(1A) is not to empower the regular police officers to take cognizance of the offence. On the other hand, it is a provision to declare that the regular police officer is not competent to take cognizance of offence of money-laundering, as it can be investigated only by the authorities referred to in Section 48 of the 2002 Act. The third aspect which had weighed with the Court in Tofan Singh692 is that the police officer investigating an offence under 691 Supra at Footnote No.31 (also at Footnote No.24) 692 Supra at Footnote No.31 (also at Footnote No.24) the NDPS Act, the provisions of Sections 161 to 164 of the 1973 Code as also Section 25 of the Evidence Act, would come into play making the statement made before them by the accused as inadmissible. Whereas, the investigation into the same offence was to be done by the designated officer under the NDPS Act, the safeguards contained in Sections 161 to 164 of the 1973 Code and Section 25 of the Evidence Act, will have no application and the statement made before them would be inadmissible in evidence. This had resulted in discrimination. No such situation emerges from the provisions of the 2002 Act. Whereas, the 2002 Act clearly authorises only the authorities under the 2002 Act referred to in Section 48 to step in and summon the person when occasion arises and proceed to record the statement and take relevant documents on record. For that, express provision has been made authorising them to do so and by a legal fiction, deemed it to be a statement recorded in a judicial proceeding by virtue of Section 50(4) of the 2002 Act. A regular police officer will neither be in a position to take cognizance of the offence of money-laundering, much less be permitted to record the statement which is to be made part of the proceeding before the Adjudicating Authority under the 2002 Act for confirmation of the provisional attachment order and confiscation of the proceeds of crime for eventual vesting in the Central Government. That may entail in civil consequences. It is a different matter that some material or evidence is made part of the complaint if required to be filed against the person involved in the process or activity connected with money-laundering so as to prosecute him for offence punishable under Section 3 of the 2002 Act. The next point which has been reckoned by this Court in the said decision is that in the provisions of NDPS Act, upon culmination of investigation of crime by a designated officer under that Act (other than a Police Officer), he proceeds to file a complaint; but has no authority to further investigate the offence, if required. Whereas, if the same offence was investigated by a regular Police Officer after filing of the police report under Section 173(2) of the 1973 Code, he could still do further investigation by invoking Section 173(8) of the 1973 Code. This, on the face of it, was discriminatory. 169. Notably, this dichotomy does not exist in the 2002 Act for more than one reason. For, there is no role for the regular Police Officer. The investigation is to be done only by the authorities under the 2002 Act and upon culmination of the investigation, to file complaint before the Special Court. Moreover, by virtue of Clause (ii) of Explanation in Section 44(1) of the 2002 Act, it is open to the authorities under this Act to bring VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] any further evidence, oral or documentary, against any accused person involved in respect of offence of money-laundering, for which, a complaint has already been filed by him or against person not named in the complaint and by legal fiction, such further complaint is deemed to be part of the complaint originally filed. Strikingly, in Tofan Singh692A the Court also noted that, while dealing with the provisions of the NDPS Act, the designated officer has no express power to file a closure report unlike the power bestowed on the police officer, if he had investigated the same crime under the NDPS Act. Once again, this lack of authority to file closure report is not there in the 2002 Act. For, by the virtue of proviso in Section 44(1)(b), after conclusion of investigation, if no offence of money-laundering is made out requiring filing of a complaint, the Authority under the Act expected to file such complaint, is permitted to file a closure report before the Special Court in that regard. In that decision, while analysing the provisions of the Section 67 of the NDPS Act, the Court noted that the statement recorded under Section 67 of that Act was to be held as inadmissible in all situations. That renders Section 53A of the same Act otiose. Section 53A of the NDPS Act is about relevancy of statement made under certain circumstances. Realising the conflicting position emerging in the two provisions, the issue came to be answered. 170. However, in the case of provisions of the 2002 Act, there is no similar provision as Section 53A of the NDPS Act. As a result, even this deficiency noticed in that judgment has no application to the provisions of the 2002 Act. The Court also noted in that decision that unlike the provisions of in the Customs Acts, 1962, Central Excise Act, 1944 and Railway Property (Unlawful Possession) Act, 1966, in the case of NDPS Act prevention, detection and punishment of crime cannot be said to be ancillary to the purpose of regulating and exercising of control over narcotic drugs and psychotropic substances. 171. We have already adverted to the purposes and objects for enacting the 2002 Act. It is a sui generis legislation, not only dealing with the prevention, detection, attachment, confiscation, vesting and making it obligatory for the banking companies, financial institutions and intermediaries to comply with certain essential formalities and make them accountable for failure thereof, and also permits prosecution of the persons found involved in the money-laundering activity. Keeping in mind the 692A Supra at Footnote No.31 (also at Footnote No.24) sweep of the purposes and objectives of the 2002 Act, the reason weighed with this Court while dealing with the provisions of the NDPS Act, will have no bearing whatsoever. In that decision, this Court also noted that the offences under the NDPS Act are cognizable as opposed to other statutes referred to above. The scheme of the NDPS Act, including regarding making offences under that Act as cognizable by the designated officer as well as the local police, and the scheme of the 2002 Act is entirely different. 171A. Indeed, in the original 2002 Act, as enacted, the offence of money-laundering was made cognizable as a result of which confusion had prevailed in dealing with the said crime when the legislative intent was only to authorise the Authority under the 2002 Act to deal with such cases. That position stood corrected in 2005, as noticed earlier. The fact that the marginal note of Section 45 retains marginal note that offences to be cognizable and non-bailable, however, does not mean that the regular Police Officer is competent to take cognizance of the offence of money- laundering. Whereas, that description has been retained for the limited purpose of understanding that the offence of money-laundering is cognizable and non-bailable and can be inquired into and investigated by the Authority under the 2002 Act alone. 172. In other words, there is stark distinction between the scheme of the NDPS Act dealt with by this Court in Tofan Singh693 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 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. 173. We may note that the learned Additional Solicitor General was at pains to persuade us to take the view that the decision in Tofan Singh694 is per incuriam. For the reasons already noted, we do not deem it necessary to examine that argument. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 693 Supra at Footnote No.31 (also at Footnote No.24) 694 Supra at Footnote No.31 (also at Footnote No.24) SECTION 63 OF THE 2002 ACT 174. By this provision, penal consequences are provided in respect of acts of commission and omission by any person who wilfully and maliciously gives false information and so causing an arrest or a search under this Act; also against the person legally bound to state the truth of any matter relating to an offence under Section 3, but refuses to answer such any question put to him by the Authority under the 2002 Act or refuses to sign any statement made by him in the course of any proceedings under the Act including failure to attend or produce books of account or documents when called upon to do so. Section 63 reads thus: “63. Punishment for false information or failure to give information, etc.—(1) Any person wilfully and maliciously giving false information and so causing an arrest or a search to be made under this Act shall on conviction be liable for imprisonment for a term which may extend to two years or with fine which may extend to fifty thousand rupees or both. (2) If any person,— (a) being legally bound to state the truth of any matter relating to an offence under section 3, refuses to answer any question put to him by an authority in the exercise of its powers under this Act; or (b) refuses to sign any statement made by him in the course of any proceedings under this Act, which an authority may legally require to sign; or (c) to whom a summon is issued under section 50 either to attend to give evidence or produce books of account or other documents at a certain place and time, omits to attend or produce books of account or documents at the place or time, he shall pay, by way of penalty, a sum which shall not be less than five hundred rupees but which may extend to ten thousand rupees for each such default or failure. (3) No order under this section shall be passed by an authority referred to in sub-section (2) unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter by such authority. 695[(4) Notwithstanding anything contained in clause (c) of sub- section (2), a person who intentionally disobeys any direction issued under section 50 shall also be liable to be proceeded against under section 174 of the Indian Penal Code (45 of 1860).]” This provision is only an enabling provision and applies to situations referred to therein. It is in the nature of providing consequences for not discharging the burden or cooperating with the authorities during the proceedings before the Authority and pursuant to summons, production of documents and to give evidence is issued by such Authority in exercise of power under Section 50 of the 2002 Act. The power exercised by the Authority is analogous to power vested in a civil Court under the 1908 Code while trying a suit in respect of matters referred to in Section 50 of the 2002 Act. This is in the nature of deeming provision empowering the concerned Authority to ensure prevention of money-laundering and also to take consequential steps for attachment and confiscation of the property involved in such money-laundering to be vested in the Central Government. Absent such authority given to the Director under the 2002 Act, the inquiry or investigation required to be done for fulfilling the mandate predicated under the 2002 Act, would eventually result in paper inquiry and no meaningful purpose would be served much less to combat the menace of money-laundering. In such inquiry if misleading revelations are made by any person or for that matter fails to cooperate, is required to be proceeded in accordance with law. In that sense, Section 63 is the procedure established by law. It is unfathomable to countenance the argument that such a provision must be regarded as unreasonable or manifestly arbitrary. It has clear nexus with the purposes and objects sought to be achieved by the 2002 Act. SCHEDULE OF THE 2002 ACT 175. The expression “scheduled offence” has been defined in Section 2(1)(y). This provision assumes significance as it has direct link with the definition of “proceeds of crime”. In that, the property derived or obtained as a result of criminal activity relating to notified offences, termed as scheduled offence, is regarded as tainted property and dealing with such property in any manner is an offence of money-laundering. The Schedule is in three parts, namely Part A, B and C. Part A of the Schedule consists of 29 paragraphs. These paragraphs deal with respective enactments and the offences specified thereunder which are 695 Ins. by Act 2 of 2013, sec.26 (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] regarded as scheduled offences. Similarly, Part B deals with offence under the Customs Act specifically and Part C is in relation to offence of cross border implications. The Schedule reads thus: 696 Subs. by Act 2 of 2013, Sec. 30(i), for Part A (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). Earlier Part A was amended by Act 21 of 2009, sec. 13 (w.e.f. 1-6- 2009). PARAGRAPH 2 OFFENCES UNDER THE NARCOTIC DRUGS AND PSYCHOTROPIC SUBSTANCES ACT, 1985 (61 of 1985) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] PARAGRAPH 3 OFFENCES UNDER THE EXPLOSIVE SUBSTANCES ACT, 1908 (6 of 1908) PARAGRAPH 4 OFFENCES UNDER THE UNLAWFUL ACTIVITIES (PREVENTION) ACT, 1967 (37 of 1967) PARAGRAPH 5 OFFENCES UNDER THE ARMS ACT, 1959 (54 of 1959) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] PARAGRAPH 6 OFFENCES UNDER THE WILD LIFE (PROTECTION) ACT, (53 of 1972) PARAGRAPH 7 OFFENCES UNDER THE IMMORAL TRAFFIC (PREVENTION) ACT, 1956 (104 of 1956) 697[PARAGRAPH 8 OFFENCES UNDER THE PREVENTION OF CORRUPTION ACT, 1988 (49 of 1988) PARAGRAPH 9 OFFENCES UNDER THE EXPLOSIVES ACT, 1884 (4 of 1884) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] PARAGRAPH 10 OFFENCES UNDER THE ANTIQUITIES AND ARTS TREASURES ACT, 1972 (52 of 1972) PARAGRAPH 11 OFFENCES UNDER THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 (15 of 1992) PARAGRAPH 12 OFFENCES UNDER THE CUSTOMS ACT, 1962 (52 of 1962) PARAGRAPH 13 OFFENCES UNDER THE BONDED LABOUR SYSTEM (ABOLITION) ACT, 1976 (19 of 1976) PARAGRAPH 14 OFFENCES UNDER THE CHILD LABOUR (PROHIBITION AND REGULATION) ACT, 1986 (61 of 1986) PARAGRAPH 15 OFFENCES UNDER THE TRANSPLANTATION OF HUMAN ORGANS ACT, 1994 (42 of 1994) PARAGRAPH 16 OFFENCES UNDER THE JUVENILE JUSTICE (CARE AND PROTECTION OF CHILDREN) ACT, 2000 (56 of 2000) PARAGRAPH 17 OFFENCES UNDER THE EMIGRATION ACT, 1983 (31 of 1983) PARAGRAPH 18 OFFENCES UNDER THE PASSPORTS ACT, 1967 (15 of 1967) PARAGRAPH 19 OFFENCES UNDER THE FOREIGNERS ACT, 1946 (31 of 1946) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] PARAGRAPH 20 OFFENCES UNDER THE COPYRIGHT ACT, 1957 (14 of 1957) PARAGRAPH 21 OFFENCES UNDER THE TRADE MARKS ACT, 1999 (47 of 1999) PARAGRAPH 22 OFFENCES UNDER THE INFORMATION TECHNOLOGY ACT, 2000 (21 of 2000) PARAGRAPH 23 OFFENCES UNDER THE BIOLOGICAL DIVERSITY ACT, (18 of 2003) PARAGRAPH 24 OFFENCES UNDER THE PROTECTION OF PLANT VARIETIES AND FARMERS’ RIGHTS ACT, 2001 (53 of 2001) PARAGRAPH 25 OFFENCES UNDER THE ENVIRONMENT PROTECTION ACT, 1986 (29 of 1986) PARAGRAPH 26 OFFENCES UNDER THE WATER (PREVENTION AND CONTROL OF POLLUTION) ACT, 1974 (6 of 1974) PARAGRAPH 27 OFFENCES UNDER THE AIR (PREVENTION AND CONTROL OF POLLUTION) ACT, 1981 (14 of 1981) VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] PARAGRAPH 28 OFFENCES UNDER THE SUPPRESSION OF UNLAWFUL ACTS AGAINST SAFETY OF MARITIME NAVIGATION AND FIXED PLATFORMS ON CONTINENTAL SHELF ACT, (69 of 2002) 698[PARAGRAPH 29 OFFENCE UNDER THE COMPANIES ACT, 2013 (18 of 2013) 699[PART B OFFENCE UNDER THE CUSTOMS ACT, 1962 700[PART C An offence which is the offence of cross border implications and is specified in,— (1) Part A; or 701[***] (3) the offences against property under Chapter XVII of the Indian Penal Code.] 702[(4) The offence of wilful attempt to evade any tax, penalty or interest referred to in section 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.]” 698 Ins. by Act 13 of 2018, sec. 208(h) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19th April, 2018). 699Ins. by the Finance Act, 2015 (20 of 2015), sec. 151 (w.e.f. 14-5-2015). Earlier Part B was amended by Act 21 of 2009, sec. 13 (w.e.f. 1-6-2009) and was omitted by Act 2 of 2013, sec. 30(ii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). 700 Ins. by Act 21 of 2009, sec. 13(iii) (w.e.f. 1-6-2009). 701Omitted by Act 2 of 2013, sec. 30(iii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8- 2-2013). 702 Ins. by Act 22 of 2015, sec. 88 (w.e.f. 1-7-2015, vide S.O. 1790(E), dated 1st July, 2015). This Schedule has been amended by Act 21 of 2009, Act 2 of 2013, Act 22 of 2015, Act 13 of 2018 and Act 16 of 2018, thereby inserting new offences to be regarded as scheduled offence. The challenge is not on the basis of legislative competence in respect of enactment of Schedule and the amendments thereto from time to time. However, it had been urged before us that there is no consistency in the approach as it includes even minor offences as scheduled offence for the purposes of offence of money-laundering, more so even offences which have no trans-border implications and are compoundable between the parties. The classification or grouping of offences for treating the same as relevant for constituting offence of money-laundering is a matter of legislative policy. The Parliament in its wisdom has regarded the property derived or obtained as a result of specified criminal activity, being an offence under the concerned legislation mentioned in the Schedule. The fact that some of the offences may be non-cognizable offences under the concerned legislation or regarded as minor and compoundable offences, yet, the Parliament in its wisdom having perceived the cumulative effect of the process or activity concerning the proceeds of crime generated from such criminal activities as being likely to pose threat to the economic stability, sovereignty and integrity of the country and thus, grouped them together for reckoning it as an offence of money-laundering, is a matter of legislative policy. It is not open to the Court to have a second guess at such a policy. 175A. Needless to underscore that the 2002 Act is intended to initiate action in respect of money-laundering activity which necessarily is associated with the property derived or obtained by any person, directly or indirectly, as a result of specified criminal activity. The prosecution under this Act is not in relation to the criminal activity per se but limited to property derived or obtained from specified criminal activity. Resultantly, the inclusion of criminal activity which has been regarded as non-cognizable, compoundable or minor offence under the concerned legislation, should have no bearing to answer the matter in issue. In that, the offence of money-laundering is an independent offence and the persons involved in the commission of such offence are grouped together as offenders under this Act. There is no reason to make distinction between them insofar as the offence of money-laundering is concerned. In our opinion, therefore, there is no merit in the argument under consideration. VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] ECIR VIS-À-VIS FIR 176. As per the procedure prescribed by the 1973 Code, the officer in-charge of a police station is under an obligation to record the information relating to the commission of a cognizable offence, in terms of Section 154 of the 1973 Code703. There is no corresponding provision in the 2002 Act requiring registration of offence of money-laundering. As noticed earlier, the mechanism for proceeding against the property being proceeds of crime predicated in the 2002 Act is a sui generis procedure. No comparison can be drawn between the mechanism regarding prevention, investigation or trial in connection with the scheduled offence governed by the provisions of the 1973 Code. In the scheme of 2002 Act upon identification of existence of property being proceeds of crime, the Authority under this Act is expected to inquire into relevant aspects in relation to such property and take measures as may be necessary and specified in the 2002 Act including to attach the property for being dealt with as per the provisions of the 2002 Act. We have elaborately adverted to the procedure to be followed by the authorities for such attachment of the property being proceeds of crime and the follow-up steps of confiscation upon confirmation of the provisional attachment order by the Adjudicating Authority. For facilitating the Adjudicating Authority to confirm the provisional attachment order and direct confiscation, the authorities under the 2002 Act (i.e., Section 48) are expected to make an inquiry and investigate. Incidentally, when sufficient credible information is gathered by the authorities during such inquiry/investigation indicative of involvement of any person in any process or activity connected with the proceeds of crime, it is open to such authorities to file a formal complaint before the Special Court naming the concerned person for offence of money-laundering under Section 3 of this Act. Considering the scheme of the 2002 Act, though the offence of money-laundering is otherwise regarded as cognizable offence (cognizance whereof can be taken only by the authorities referred to in Section 48 of this Act and not by jurisdictional police) and punishable under Section 4 of the 2002 Act, special complaint procedure is prescribed by law. This procedure overrides the procedure prescribed under 1973 Code to deal with other offences (other than money-laundering offences) in the matter of registration of offence and inquiry/investigation thereof. This special procedure must prevail in terms of Section 71 of the 2002 Act and also keeping in mind Section 65 of the same Act. In other words, 703 Lalita Kumari (supra at Footnote Nos.13 and 206) the offence of money-laundering cannot be registered by the jurisdictional police who is governed by the regime under Chapter XII of the 1973 Code. The provisions of Chapter XII of the 1973 Code do not apply in all respects to deal with information derived relating to commission of money- laundering offence much less investigation thereof. The dispensation regarding prevention of money-laundering, attachment of proceeds of crime and inquiry/investigation of offence of money-laundering upto filing of the complaint in respect of offence under Section 3 of the 2002 Act is fully governed by the provisions of the 2002 Act itself. To wit, regarding survey, searches, seizures, issuing summons, recording of statements of concerned persons and calling upon production of documents, inquiry/ investigation, arrest of persons involved in the offence of money- laundering including bail and attachment, confiscation and vesting of property being proceeds of crime. Indeed, after arrest, the manner of dealing with such offender involved in offence of money-laundering would then be governed by the provisions of the 1973 Code – as there are no inconsistent provisions in the 2002 Act in regard to production of the arrested person before the jurisdictional Magistrate within twenty-four hours and also filing of the complaint before the Special Court within the statutory period prescribed in the 1973 Code for filing of police report, if not released on bail before expiry thereof. 177. Suffice it to observe that being a special legislation providing for special mechanism regarding inquiry/investigation of offence of money-laundering, analogy cannot be drawn from the provisions of 1973 Code, in regard to registration of offence of money-laundering and more so being a complaint procedure prescribed under the 2002 Act. Further, the authorities referred to in Section 48 of the 2002 Act alone are competent to file such complaint. It is a different matter that the materials/ evidence collected by the same authorities for the purpose of civil action of attachment of proceeds of crime and confiscation thereof may be used to prosecute the person involved in the process or activity connected with the proceeds of crime for offence of money-laundering. Considering the mechanism of inquiry/investigation for proceeding against the property (being proceeds of crime) under this Act by way of civil action (attachment and confiscation), there is no need to formally register an ECIR, unlike registration of an FIR by the jurisdictional police in respect of cognizable offence under the ordinary law. There is force in the stand taken by the ED that ECIR is an internal document created by the department before initiating penal action or prosecution against the person involved with VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] process or activity connected with proceeds of crime. Thus, ECIR is not a statutory document, nor there is any provision in 2002 Act requiring Authority referred to in Section 48 to record ECIR or to furnish copy thereof to the accused unlike Section 154 of the 1973 Code. The fact that such ECIR has not been recorded, does not come in the way of the authorities referred to in Section 48 of the 2002 Act to commence inquiry/ investigation for initiating civil action of attachment of property being proceeds of crime by following prescribed procedure in that regard. 178. The next issue is: whether it is necessary to furnish copy of ECIR to the person concerned apprehending arrest or at least after his arrest? Section 19(1) of the 2002 Act postulates that after arrest, as soon as may be, the person should be informed about the grounds for such arrest. This stipulation is compliant with the mandate of Article 22(1) of the Constitution. Being a special legislation and considering the complexity of the inquiry/investigation both for the purposes of initiating civil action as well as prosecution, non-supply of ECIR in a given case cannot be faulted. The ECIR may contain details of the material in possession of the Authority and recording satisfaction of reason to believe that the person is guilty of money-laundering offence, if revealed before the inquiry/investigation required to proceed against the property being proceeds of crime including to the person involved in the process or activity connected therewith, may have deleterious impact on the final outcome of the inquiry/investigation. So long as the person has been informed about grounds of his arrest that is sufficient compliance of mandate of Article 22(1) of the Constitution. Moreover, the arrested person before being produced before the Special Court within twenty- four hours or for that purposes of remand on each occasion, the Court is free to look into the relevant records made available by the Authority about the involvement of the arrested person in the offence of money- laundering. In any case, upon filing of the complaint before the statutory period provided in 1973 Code, after arrest, the person would get all relevant materials forming part of the complaint filed by the Authority under Section 44(1)(b) of the 2002 Act before the Special Court. 179. Viewed thus, supply of ECIR in every case to person concerned is not mandatory. From the submissions made across the Bar, it is noticed that in some cases ED has furnished copy of ECIR to the person before filing of the complaint. That does not mean that in every case same procedure must be followed. It is enough, if ED at the time of arrest, contemporaneously discloses the grounds of such arrest to such person. Suffice it to observe that ECIR cannot be equated with an FIR which is mandatorily required to be recorded and supplied to the accused as per the provisions of 1973 Code. Revealing a copy of an ECIR, if made mandatory, may defeat the purpose sought to be achieved by the 2002 Act including frustrating the attachment of property (proceeds of crime). Non-supply of ECIR, which is essentially an internal document of ED, cannot be cited as violation of constitutional right. Concededly, the person arrested, in terms of Section 19 of the 2002 Act, is contemporaneously made aware about the grounds of his arrest. This is compliant with the mandate of Article 22(1) of the Constitution. It is not unknown that at times FIR does not reveal all aspects of the offence in question. In several cases, even the names of persons actually involved in the commission of offence are not mentioned in the FIR and described as unknown accused. Even, the particulars as unfolded are not fully recorded in the FIR. Despite that, the accused named in any ordinary offence is able to apply for anticipatory bail or regular bail, in which proceeding, the police papers are normally perused by the concerned Court. On the same analogy, the argument of prejudice pressed into service by the petitioners for non-supply of ECIR deserves to be answered against the petitioners. For, the arrested person for offence of money- laundering is contemporaneously informed about the grounds of his arrest; and when produced before the Special Court, it is open to the Special Court to call upon the representative of ED to produce relevant record concerning the case of the accused before him and look into the same for answering the need for his continued detention. Taking any view of the matter, therefore, the argument under consideration does not take the matter any further. ED MANUAL 180. It had been urged that the 2002 Act creates an overbroad frame with no fetters on investigation. Besides questioning the refusal to furnish copy of ECIR, grievance is also made about the opacity surrounding the usage of ED Manual. Relying on Section 4(b)(v) of the RTI Act, it was urged that it was obligatory on the part of the Public Authority to publish the stated Manual within 120 days of the enactment of RTI Act. All other authorities including the Central Vigilance Commission, Income-tax Authorities, Authorities under 1962 Act, Police Authorities, Jail Authorities have adhered to this statutory compliance, VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] except the ED. In response, it is submitted by the learned Additional Solicitor General that ED Manual is an internal departmental document only for the use of officers of the ED. It is to give them guidance on proper enforcement of 2002 Act and outlines the procedure for implementation of the provisions of this Act. In addition, reliance is placed on the exposition of the Constitution Bench of this Court in Lalita Kumari704. In paragraph 89 of this decision, the Court observed thus: “89. Besides, the learned Senior Counsel relied on the special procedures prescribed under the CBI Manual to be read into Section 154. It is true that the concept of “preliminary inquiry” is contained in Chapter IX of the Crime Manual of CBI. However, this Crime Manual is not a statute and has not been enacted by the legislature. It is a set of administrative orders issued for internal guidance of the CBI officers. It cannot supersede the Code. Moreover, in the absence of any indication to the contrary in the Code itself, the provisions of the CBI Crime Manual cannot be relied upon to import the concept of holding of preliminary inquiry in the scheme of the Code of Criminal Procedure. At this juncture, it is also pertinent to submit that CBI is constituted under a special Act, namely, the Delhi Special Police Establishment Act, 1946 and it derives its power to investigate from this Act.” 181. It is true that the ED Manual may be an internal document for departmental use and in the nature of set of administrative orders. It is equally true that the accused or for that matter common public may not be entitled to have access to such administrative instructions being highly confidential and dealing with complex issues concerning mode and manner of investigation, for internal guidance of officers of ED. It is also correct to say that there is no such requirement under the 2002 Act or for that matter, that there is nothing like investigation of a crime of money-laundering as per the scheme of 2002 Act. The investigation, however, is to track the property being proceeds of crime and to attach the same for being dealt with under the 2002 Act. Stricto sensu, it is in the nature of an inquiry in respect of civil action of attachment. Nevertheless, since the inquiry in due course ends in identifying the offender who is involved in the process or activity connected with the proceeds of crime and then to prosecute him, it is possible for the department to outline the situations in which that course could be adopted 704 Supra at Footnote No.206 (also at Footnote No.13) in reference to specific provisions of 2002 Act or the Rules framed thereunder; and in which event, what are the options available to such person before the Authority or the Special Court, as the case may be. Such document may come handy and disseminate information to all concerned. At least the feasibility of placing such document on the official website of ED may be explored. APPELLATE TRIBUNAL 182. Serious grievance has been made about the vacancies in the Appellate Tribunal despite the serious prejudice being caused on account of provisional attachment order and, in some cases, taking over possession of the property so attached. This grievance, even though genuine, cannot be the basis to test the validity of the provisions of the 2002 Act or to question the efficacy of those provisions on that account. The Parliament by this special legislation having created an expert body being Appellate Tribunal to deal with matters concerning attachment, possession and confiscation and vesting of property in the Central Government, it is, but necessary, that the forum should be functional and accessible to the aggrieved persons uninterruptedly. We need to impress upon the Executive to take necessary corrective measures in this regard. Absent such forum, the aggrieved persons have to rush to the High Court on every occasion which indeed is avoidable. PUNISHMENT UNDER SECTION 4 OF THE 2002 ACT 183. It is urged that there is no gradation of punishment depending on the nature of offence which may be committed by the principal offender and other offenders. Section 4704A of the 2002 Act makes no distinction between person directly involved in the process or activity connected with the proceeds of crime and the other not so directly involved. Further, the scheduled offence may have been committed by 704A 4. 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. **The words “which may extend to five lakh rupees” omitted by Act 2 of 2013, sec. 4 (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] someone else and the offence of money-laundering by third person owing to being involved in the process or activity connected with the proceeds of crime. The petitioners have relied on Section 201 and 212 of IPC. It is their case that this distinction is absent in Section 4 of the 2002 Act which provides that the term of rigorous imprisonment shall not be less than three years and extend upto seven years or ten years, as the case may be, with fine. This argument to say the least is flimsy and tenuous. For, the punishment under Section 4 is not in relation to the predicate offence, but offence of money-laundering under Section 3 of the 2002 Act. The person may be involved in any one or more than one process or activity connected with the proceeds of crime. All of them are treated as one class of offender involved in money-laundering. The proceeds of crime may be derived or obtained as a result of criminal activity with which the offender involved in money-laundering offence may not be directly concerned at all. Even so, he becomes liable to be proceeded under Section 3 and punished under Section 4 of the 2002 Act. The principle of an accessory after the fact will have no application to the offence of money-laundering. Suffice it to observe that the argument under consideration is devoid of merit. 184. On the basis of same analogy, it was argued that the twin conditions of bail contained in Section 45 of the 2002 Act would act grossly disproportionate and illogical qua a person who is not directly connected with the scheduled offence but merely an accessory after the fact. Even this argument needs to be stated to be rejected for the same reason. 185. The above analysis, in our view, is sufficient to answer the diverse issues canvassed before us. We have attempted to extensively deal with the essential aspects to record our conclusion issue-wise. Further, we do not wish to dissect every reported decision cited before us to obviate prolixity. 186. We once again clarify that in this judgment, we have confined our analysis only to the issues regarding the validity and interpretation of the provisions of the 2002 Act, referred to above. We have not dealt with any other issue involved in individual cases concerning 2002 Act as the parties have been given liberty to pursue their other remedies before appropriate forum. Furthermore, we have delinked the matters pertaining to other legislations and issues arising therefrom from this batch of cases, for being proceeded appropriately. CONCLUSION 187. In light of the above analysis, we now proceed to summarise our conclusion on seminal points in issue in the following terms: – (i) The question as to whether some of the amendments to the Prevention of Money-laundering Act, 2002 could not have been enacted by the Parliament by way of a Finance Act has not been examined in this judgment. The same is left open for being examined along with or after the decision of the Larger Bench (seven Judges) of this Court in the case of Rojer Mathew705. (ii) The expression “proceedings” occurring in Clause (na) of Section 2(1) of the 2002 Act is contextual and is required to be given expansive meaning to include inquiry procedure followed by the Authorities of ED, the Adjudicating Authority, and the Special Court. (iii) The expression “investigation” in Clause (na) of Section 2(1) of the 2002 Act does not limit itself to the matter of investigation concerning the offence under the Act and is interchangeable with the function of “inquiry” to be undertaken by the Authorities under the Act. (iv) The Explanation inserted to Clause (u) of Section 2(1) of the 2002 Act does not travel beyond the main provision predicating tracking and reaching upto the property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence. (v) (a) Section 3 of the 2002 Act has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration of tainted property in the formal economy. The Explanation inserted to Section 3 by way of amendment of 2019 does not expand the purport of Section 3 but is only clarificatory in nature. It clarifies the word “and” preceding the expression projecting or claiming as “or”; and being a clarificatory amendment, it would make no difference even if it is introduced by way of Finance Act or otherwise. (b) Independent of the above, we are clearly of the view that the expression “and” occurring in Section 3 has to be construed as “or”, to 705 Supra at Footnote No.90 VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] give full play to the said provision so as to include “every” process or activity indulged into by anyone. Projecting or claiming the property as untainted property would constitute an offence of money-laundering on its own, being an independent process or activity. (c) The interpretation suggested by the petitioners, that only upon projecting or claiming the property in question as untainted property that the offence of Section 3 would be complete, stands rejected. (d) The offence under Section 3 of the 2002 Act is dependent on illegal gain of property as a result of criminal activity relating to a scheduled offence. It is concerning the process or activity connected with such property, which constitutes the offence of money-laundering. The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money- laundering against him or any one claiming such property being the property linked to stated scheduled offence through him. (vi) Section 5 of the 2002 Act is constitutionally valid. It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards as delineated by us hereinabove are effective measures to protect the interests of person concerned. (vii) The challenge to the validity of sub-section (4) of Section 8 of the 2002 Act is also rejected subject to Section 8 being invoked and operated in accordance with the meaning assigned to it hereinabove. (viii) The challenge to deletion of proviso to sub-section (1) of Section 17 of the 2002 Act stands rejected. There are stringent safeguards provided in Section 17 and Rules framed thereunder. Moreover, the pre- condition in the proviso to Rule 3(2) of the 2005 Rules cannot be read into Section 17 after its amendment. The Central Government may take necessary corrective steps to obviate confusion caused in that regard. (ix) The challenge to deletion of proviso to sub-section (1) of Section 18 of the 2002 Act also stands rejected. There are similar safeguards provided in Section 18. We hold that the amended provision does not suffer from the vice of arbitrariness. (x) The challenge to the constitutional validity of Section 19 of the 2002 Act is also rejected. There are stringent safeguards provided in Section 19. The provision does not suffer from the vice of arbitrariness. (xi) Section 24 of the 2002 Act has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act and cannot be regarded as manifestly arbitrary or unconstitutional. (xii) (a) The proviso in Clause (a) of sub-section (1) of Section 44 of the 2002 Act is to be regarded as directory in nature and this provision is also read down to mean that the Special Court may exercise judicial discretion on case-to-case basis. (b) We do not find merit in the challenge to Section 44 being arbitrary or unconstitutional. However, the eventualities referred to in this section shall be dealt with by the Court concerned and by the Authority concerned in accordance with the interpretation given in this judgment. (xiii) (a) The reasons which weighed with this Court in Nikesh Tarachand Shah706 for declaring the twin conditions in Section 45(1) of the 2002 Act, as it stood at the relevant time, as unconstitutional in no way obliterated the provision from the statute book; and it was open to the Parliament to cure the defect noted by this Court so as to revive the same provision in the existing form. (b) We are unable to agree with the observations in Nikesh Tarachand Shah707 distinguishing the enunciation of the Constitution Bench decision in Kartar Singh708; and other observations suggestive of doubting the perception of Parliament in regard to the seriousness of the offence of money-laundering, including about it posing serious threat to the sovereignty and integrity of the country. (c) The provision in the form of Section 45 of the 2002 Act, as applicable post amendment of 2018, is reasonable and has direct nexus with the purposes and objects sought to be achieved by the 2002 Act and does not suffer from the vice of arbitrariness or unreasonableness. 706 Supra at Footnote No.3 707 Supra at Footnote No.3 708 Supra at Footnote No.190 VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] (d) As regards the prayer for grant of bail, irrespective of the nature of proceedings, including those under Section 438 of the 1973 Code or even upon invoking the jurisdiction of Constitutional Courts, the underlying principles and rigours of Section 45 may apply. (xiv) The beneficial provision of Section 436A of the 1973 Code could be invoked by the accused arrested for offence punishable under the 2002 Act. (xv) (a) The process envisaged by Section 50 of the 2002 Act 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 under the 2002 Act (referred to in Section 48), are not police officers as such. (b) The statements recorded by the Authorities under the 2002 Act are not hit by Article 20(3) or Article 21 of the Constitution of India. (xvi) Section 63 of the 2002 Act providing for punishment regarding false information or failure to give information does not suffer from any vice of arbitrariness. (xvii) The inclusion or exclusion of any particular offence in the Schedule to the 2002 Act is a matter of legislative policy; and the nature or class of any predicate offence has no bearing on the validity of the Schedule or any prescription thereunder. (xviii) (a) In view of special mechanism envisaged by the 2002 Act, ECIR cannot be equated with an FIR under the 1973 Code. ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the Authorities referred to in Section 48 to commence inquiry/investigation for initiating “civil action” of “provisional attachment” of property being proceeds of crime. (b) Supply of a copy of ECIR in every case to the person concerned is not mandatory, it is enough if ED at the time of arrest, discloses the grounds of such arrest. (c) However, when the arrested person is produced before the Special Court, it is open to the Special Court to look into the relevant records presented by the authorised representative of ED for answering the issue of need for his/her continued detention in connection with the offence of money-laundering. (xix) Even when ED manual is not to be published being an internal departmental document issued for the guidance of the Authorities (ED officials), the department ought to explore the desirability of placing information on its website which may broadly outline the scope of the authority of the functionaries under the Act and measures to be adopted by them as also the options/remedies available to the person concerned before the Authority and before the Special Court. (xx) The petitioners are justified in expressing serious concern bordering on causing injustice owing to the vacancies in the Appellate Tribunal. We deem it necessary to impress upon the executive to take corrective measures in this regard expeditiously. (xxi) The argument about proportionality of punishment with reference to the nature of scheduled offence is wholly unfounded and stands rejected. ORDER T.P. (Crl.) No. 150/2016, T.P. (Crl.) Nos. 151-157/2016, T.P. (C) No. 1583/2018 and T.P. (Crl.) No. 435/2021 1. These transfer petitions are disposed of with liberty to the private parties to pursue the proceedings pending before the High Court. The contentions, other than dealt with in this judgment, are kept open, to be decided in those proceedings on its own merits. It would be open to the parties to pursue all (other) contentions in those proceedings, except the question of validity and interpretation of the concerned provision(s) already dealt with in this judgment. T.C. (Crl.) Nos.3/2018 and 4/2018 2. In these transferred cases, the parties are relegated before the High Court by restoring the concerned writ petition(s) to the file of the concerned High Court to its original number limited to consider relief of discharge/bail/quashing, as the case may be, on its own merits and in accordance with law. It would be open to the parties to pursue all (other) contentions in those proceedings, except the question of validity and interpretation of the concerned provision(s) already dealt with in this judgment. The transferred cases are disposed of accordingly. W.P. (Crl.) Nos. 169/2020, 370/2021, 454/2021 and 475/2021 3. (a) These writ petitions involve issues relating to Finance Bill/ Money Bill. Hence, the same are delinked, to be heard along with Civil VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] Appeal No.8588 of 2019 titled ‘Rojer Mathew vs. South Indian Bank Ltd. & Ors.’. W.P. (Crl.) Nos. 251/2018 and 532/2021 (b) In these writ petitions, as the relief claimed was only regarding the validity and interpretation of the provisions of the 2002 Act, the same are disposed of in terms of this judgment. W.P. (Crl.) Nos. 152/2016, 202/2017, 26/2018, 33/2018, 75/ 2018, 117/2018, 173/2018, 175/2018, 184/2018, 226 of 2018, 309/2018, 333/2018, 9/2019, 16/2019, 49/2019, 122/2019, 127/2019, 139/2019, 147/2019, 205/2019, 217/2019, 244/ 2019, 272/2019, 283/2019, 289/2019, 300/2019, 308/2019, 326/2019, 365/2019, 367/2019, 39/2020, 259/2020, 60/2020, 91/2020, 239/2020, 267/2020, 366/2020, 385/2020, 404/2020, 429/2020, 18/2021, 19/2021, 21/2021, 27/2021, 66/2021, 179/2021, 199/2021, 207/2021, 239/2021, 263 of 2021, 268/ 2021, 282/2021, 303/2021, 305/2021, 323/2021 and 453/ (c) In these writ petitions as further relief of bail/discharge/quashing has been prayed, the same are disposed of in terms of this judgment with liberty to the private parties to pursue further reliefs before the appropriate forum, leaving all contentions in that regard open, to be decided on its own merits. Crl. A. Nos. 1269/2017, 1270/2017, 223/2018, 391-392/ 2018, 793-794/2018, 1210/2018 and 682/2019 SLP (Crl.) Nos. 4634/2014, 9987/2015, 10018/2015, 10019/ 2015, 993/2016, 1271-1272/2017, 2890/2017, 5487/2017, 1701-1703/2018, 1705/2018, 5444/2018, 6922/2018, 8156/ 2018, 5350/2019, 8174/2019, 9652/2019, 10627/2019, 260/ 2020, 3474/2020, 6128/2020, 609/2021, 734/2021, 1355/ 2021, 1403/2021, 1440/2021, 1586/2021, 1855/2021, 1920/ 2021, 2237/2021, 2250/2021, 2435/2021, 2818/2021, 3228/ 2021, 3274/2021, 3439/2021, 3514/2021, 3629/2021, 3769/ 2021, 3813/2021, 3921/2021, 4024/2021, 4834/2021, 5156/ 2021, 5174/2021, 5252/2021, 5457/2021, 5652/2021, 5696- 97/2021, 6189/2021, 7021-23/2021 and 8429/2021 SLP (C) Nos. 28394/2011, 28922/2011, 29273/2011 and 8764-67/2021 Diary Nos. 9360/2018, 9365/2018, 17000/2018, 17462/2018, 20250/2018 and 22529/2018, 8626/2021 and 11605/2021 4. These appeals/petitions are de-tagged and ordered to be listed separately before appropriate Bench as the impugned judgment in the concerned case deals with the prayer for bail/discharge/quashing. This relief will have to be decided on case-to-case basis. Accordingly, these matters be listed separately before appropriate Bench. The Registry to do the needful in this regard. 709WP (Crl.) Nos. 336/2018, 173/2019, 212/2019, 253/2019, 261/2019, 266/2019, 273/2019, 285/2019, 288/2019, 298/ 2019, 299/2019, 306/2019, 346/2019, 09/2020, 35/2020, 49/ 2020, 52/2020, 240/2020 and 329/2020 WP (C) Nos. 1401/2020 and 56/2021 SLP (Crl.) Nos. 1534/2018, 2971/2018, 7408/2018, 11049/ 2018, 11839/2019, 1732/2020, 2023/2020 and 6303/2020; 710WP (Crl.) Nos. 119/2019, 239/2019, 263/2019, 36/2020, 124/2020, 137/2020, 140/2020, 142/2020, 145/2020, 228/ 2020, 69/2021, 359/2021 and 520/2021 SLP (Crl.) Nos. 1114/2018, 1115/2018, 618/2020, 2814/2020, 6456/2020, 6660/2020, 6338/2021 and 6847/2021; 711WP (Crl.) Nos. 118/2019, 267/2019, 286/2019, 287/2019, 303/2019, 305/2019, 309/2019, 313/2019, 28/2020, 61/2020, 89/2020, 90/2020, 93/2020, 184/2020, 221/2020, 223/2020, 285/2020, 286/2020, 410/2020, 411/2020, 04/2021, 06/2021, 33/2021, 40/2021, 47/2021, 144/2021 and 301/2021 SLP (Crl.) Nos. 244/2019, 3647/2019, 4322-24/2019, 4546/ 2019, 5153/2019, 9541/2019, 647/2020, 3366/2020, 5536/ 2020, 1031/2021, 1072/2021, 1073/2021, 1107/2021, 2050- 54/2021 and 6834/2019 SLP (C) No. 20310/2021 Diary No. 31616/2021; VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF INDIA & ORS. [A. M. KHANWILKAR, J.] 709 These matters relate to the Customs Act, 1962 710 These matters relate to the Companies Act, 2013 711 These matters relate to Central Goods and Services Tax Act, 2017 712WP (Crl.) Nos. 05/2020, 311/2020, 380/2020, 387/2020 and 11/2021 SLP (Crl.) Nos. 4078/2018, 8111/2019 and 6172/2020 Transferred Case (Crl.) No. 5/2018 Diary No. 41063/2015 5. In these cases, the challenge is regarding the validity and interpretation of other statutes (other than 2002 Act), such as Indian Penal Code, 1860, Code of Criminal Procedure, 1973, Customs Act, 1962, Prevention of Corruption Act, 1988, Companies Act, 2013, Central Goods & Services Act, 2017, etc. Hence, the same are delinked and be placed before the appropriate Bench “group-wise/Act-wise” as indicated above. The Registry to do the needful in that regard. 6. The interim relief granted in the petitions/appeals which are disposed of in terms of this order, to continue for a period of four weeks from today, to enable the private parties to take recourse to appropriate remedies before the concerned forum, if so advised. 7. The interim relief granted in petitions/appeals, which are delinked and ordered to be listed separately or otherwise, shall continue for four weeks from today, with liberty to the parties to mention for early listing of the concerned case including for continuation/vacation of the interim relief. Bibhuti Bhushan Bose Issues Answered. 712 These matters relate to Indian Penal Code, 1860, Prevention of Corruption Act, 1988, Information Technology Act, 2000, Foreign Contribution (Regulation) Act, 2010, etc.