Introduction
In a landmark judgment, the Hon’ble Supreme Court of India (‘SC’) provided a comprehensive interpretation of various provisions under the Prevention of Money Laundering Act, 2002 (‘PMLA’) and the Code of Criminal Procedure, 1973 (‘CrPC’). This ruling in Tarsem Lal v. Directorate of Enforcement[i], significantly impacts how Special Courts handle PMLA cases, offering a fresh perspective on the legal procedures surrounding anticipatory bail and summoning. The judgment particularly focuses on whether a summons or a warrant should be issued when taking cognizance of such complaints.
Brief Facts
The appellants were arrayed as accused under s. 44(1)(b) of the PMLA and were denied anticipatory bail. The case involved accused persons who were not arrested after the registration of the enforcement case information report (‘ECIR’) until the Special Court took cognizance of an offence punishable under s. 4 of the PMLA.
Cognizance was taken on complaints filed under s. 44(1)(b) of the PMLA. The appellants did not appear before the Special Court after being served a summons. Subsequently, the Special Court issued warrants to secure their presence. The appellants applied for anticipatory bail, which was rejected by both the Special Court and the High Court (‘HC’). They then appealed to the SC, which provided interim protection from arrest.
Held
The SC allowed the appeals but declined to grant anticipatory bail. It set aside the warrants issued against the appellants, subject to the conditions that they appear before the Special Court within 1 month from the judgment date and file an undertaking to appear regularly unless specifically exempted under s. 205 of the CrPC, along with furnishing bonds under s. 88 CrPC to the satisfaction of the Special Court.
The SC addressed the applicability of CrPC provisions to complaints under s. 44(1)(b) of the PMLA. It held that if a prima facie PMLA offence is established, the Special Court can issue process as per s. 204(1) of the CrPC. Since the punishment under s. 4 of the PMLA exceeds 3 years, the complaint is treated as a warrant case as per s. 2(x) CrPC. The SC ruled that once cognizance is taken of an offence punishable under s. 4 PMLA, the Directorate of Enforcement (‘ED’) and its officers cannot arrest a person shown as an accused in the complaint under s. 19 of the PMLA.
It was noted that under s. 204(1)(b) of the CrPC, the Special Court can issue either a summons or a warrant, with a preference for summons unless the accused is likely to tamper with evidence or evade the process of law. The SC stated that for complaints under s. 44(1)(b) of the PMLA, the Court should issue a summons first. If the accused does not appear after being served a summons, the Special Court can issue a warrant under s. 70 of the CrPC. Thus, if the accused evades, a bailable warrant (‘BW’) and subsequently a non-bailable warrant (‘NBW’) can be issued.
The SC examined the purpose of s. 88 of the CrPC, concluding that it allows, but does not mandate, the Court to require bonds based on the facts of each case. The Additional Solicitor General’s (‘ASG’) argument about deemed custody upon appearance by summons was rejected. The SC held that s. 88 of the CrPC is consistent with PMLA provisions and applies after the filing of a complaint under s. 44(1)(b) of the PMLA. The SC also stated that an order accepting bonds under s. 88 does not amount to a grant of bail.
The SC clarified that if the accused was not arrested before the complaint but defied s. 50 summons of the PMLA, the Special Court may initially issue a BW but should generally issue a summons. If the accused is already on bail, only a summons should be issued. The SC emphasized that under s. 61 of the CrPC, a summons is intended to secure the presence of the accused, not to place them in custody. Consequently, compliance with a summons does not imply that the accused is in custody, thereby negating the need to apply for bail upon their appearance in court.
Accordingly, the ASG’s argument that an accused must apply for bail upon appearing before the Special Court was rejected. The SC held that s. 437(1) of the CrPC does not apply to Sessions Courts or Special Courts, as specified in s. 44(1)(d) of the PMLA. Additionally, the SC noted that s. 205 of the CrPC, which allows the court to dispense with the personal attendance of the accused, applies as there is no inconsistency with PMLA provisions. It clarified that personal attendance can only be enforced if necessary, and an accused appearing pursuant to a summons cannot be deemed to be in custody.
Our Analysis
This judgment meticulously balances the rights of the accused with the procedural necessities of the PMLA. By emphasizing the preference for issuing summons over warrants, the SC safeguards the liberty of individuals against unnecessary custodial actions and offers a roadmap for the accused in such cases. The SC’s emphasis on the purpose of a summons – to ensure attendance, not custody – is particularly noteworthy.
The decision also clarifies the application of various CrPC provisions to PMLA proceedings and redefines procedures to be followed by Special Courts after the registration of the ECIR and the issuance of summons. By interpreting ss. 204, 205, and 88 of the CrPC in conjunction with PMLA provisions, the SC ensures procedural fairness while enabling effective enforcement of the law. Allowing the furnishing of bonds under s. 88 of CrPC, rather than automatically resorting to custodial measures, highlights the importance of the role of the Special Courts and the limitations on the powers of the ED once cognizance of an offence has been taken. This judgment is a significant contribution to PMLA jurisprudence, given its detailed analysis and clear articulation of how the PMLA and CrPC provisions harmoniously interact.
End Note
[i] [2024] 162 taxmann.com 538 (SC), [dated: 16.05.2024]
Read a related court ruling by our associate, Ms. Shivangi Bharadwaj here: A Case of Non-Application of Mind: Supreme Court Grants an Unusual Release to a PMLA Accused
Authored by Srishty Jaura, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.
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