Friday, 4 November 2022

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

  Our conclusion, therefore, is that the Special Court

established under the Act is a court of exclusive jurisdiction.

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

court of original criminal jurisdiction and has all the powers of

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

308.”

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

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

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

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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

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

Coram:  MR. JUSTICE M. NAGAPRASANNA

DATED: 17TH DAY OF OCTOBER, 2022


The petitioner is before this Court calling in question order

dated 14-09-2022 passed by the I Additional Chief Metropolitan

Magistrate, Bengaluru in C.C.No.25035 of 2022 in a case

concerning offences punishable under Sections 34, 120B, 420, 465,

468 and 471 of the IPC.

2. Heard Sri Sandesh J.Chouta, learned senior counsel

appearing for the petitioner, K.S. Abhijith, learned High Court

Government Pleader for respondents 1 and 2 and Sri Madhukar

Deshpande, learned Special Public Prosecutor appearing for

respondent No.3.

3. Shorn of details, the facts in brief, are as follows:-

A crime comes to be registered in Crime No.48 of 2022 before

the Chowk Police Station, Kalaburagi in which the petitioner is one

of the accused. The same is transferred to the 2nd respondent, the

Investigating Agency. Another crime comes to be registered in

Crime No.60 of 2022 before the High Grounds Police Station against

34 persons in which petitioner is accused No.29. The latter crime

was registered during the time when the earlier crime was under

investigation. On 26.07.2022 the police filed charge sheet in Crime

No.60 of 2022. The petitioner throughout has been in prison either

concerning crime No.48 of 2022 or crime No.60 of 2022.

4. The issue in the case at hand is not with regard to merits

of the matter concerning either of the crimes. What drives the

petitioner to this Court is that on 30-08-2022 the 3rd respondent/

Directorate of Enforcement (‘ED’ for short) files an application under

Section 50(3) of the Prevention of Money Laundering Act, 2002

(‘the PMLA’ for short) before the concerned Court i.e., the learned

Magistrate in C.C.No.25035 of 2022 seeking permission to record

written statement of five accused including the petitioner who are in

judicial custody and to allow two officers of the ED with a laptop

and a printer for the purpose of recording the statements and also

sought a direction to the Jail Authorities to cooperate for recording

of such statements. The petitioner filed his objections to the said

application on 05-09-2022. The learned Magistrate considering

both the application and the objection filed, allows the application

and permits the ED to record the statements as was sought for in

the application. It is this order of the learned Magistrate that drives

the petitioner to this Court.

5. The learned senior counsel Sri Sandesh J.Chouta,

appearing for the petitioner would contend that once an

Enforcement Case Information Report in ECIR

No.ECIR/BGZO/68/2022 (for short ‘ECIR’) is registered all actions

and any permission that is to be sought has to be before the

Sessions Court as the competent Court or the designated Court to

permit such application would only be the Special Court and the

Special Court is the Sessions Court. The learned Magistrate could

not have permitted recording of statement by his order, as the

order is one without jurisdiction. He would place reliance upon the

judgment of the co-ordinate Bench of this Court in DR.

MADHUKAR G.ANGUR v. ENFORCEMENT OF DIRECTORATE –

Criminal Petition No.1189 of 2022 decided on 30th March,

2022, the judgment of the Apex Court in the case of HARSHAD

S.MEHTA v. STATE OF MAHARASHTRA – (2001)8 SCC 257 and

the judgment of the Apex Court in A.R.ANTULAY v. R.S.NAYAK –

AIR 1988 SC 1531 to buttress his submission.

6. On the other hand, the learned counsel representing ED

Mr. Madhukar Deshpande would refute the submissions to contend

that no doubt proceedings or trial will have to be conducted by the

designated Court, but the petitioner could not have been

summoned by the ED for recording of the statement after

registration of the crime as he is in judicial custody in C.C.No.25035

of 2022. Once he is in custody of the Court, an application has to

be moved before the Court concerned which has passed order of

judicial custody. Therefore, no fault can be found in the order

passed by the learned Magistrate in permitting the ED to record

statement of the petitioner and would rely on a judgment in the

case of NIRANJAN SINGH v. PRABHAKAR RAJARAM KHAROTE

– (1980) 2 SCC 559 wherein the Apex Court considers what would

be the meaning of custody, to buttress his submission.

7. I have given my anxious consideration to the submissions

made by the respective learned counsel and perused the material

on record.

8. Before embarking upon the consideration of respective

contentions on merit, I deem it appropriate to notice the statutory

frame work of the PMLA. Section 2 of the PMLA deals with

definitions. Section 2(1)(z) defines a ‘Special Court’ to mean a

Court of Session designated as Special Court under sub-section (1)

of Section 43. It is not in dispute that an ECIR is filed against the

petitioner and it is in furtherance of the said registration of the

crime, statements of the petitioner are sought to be recorded by

the respondent/ED to consider whether there is an offence made

out against the petitioner for offences punishable under the PMLA.

Now PMLA would mean offences punishable under Chapter II which

deals with offence of money laundering. Chapter-II encompasses

within itself Sections 3 and 4 of the PMLA. Sections 3 and 4 thereof

read as follows:

“3. Offence of money-laundering.—Whosoever

directly or indirectly attempts to indulge or knowingly assists

or knowingly is a party or is actually involved in any process or

activity connected with the proceeds of crime including its

concealment, possession, acquisition or use and projecting or

claiming it as untainted property shall be guilty of offence of

money-laundering.

Explanation.—For the removal of doubts, it is hereby

clarified that,—

(i) a person shall be guilty of offence of moneylaundering

if such person is found to have directly or

indirectly attempted to indulge or knowingly assisted

or knowingly is a party or is actually involved in one or

more of the following processes or activities connected

with proceeds of crime, namely—

(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e) projecting as untainted property; or

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

(ii) the process or activity connected with proceeds of

crime is a continuing activity and continues till such

time a person is directly or indirectly enjoying the

proceeds of crime by its concealment or possession or

acquisition or use or projecting it as untainted

property or claiming it as untainted property in any

manner whatsoever.

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.”

It is to unearth whether the petitioner has indulged himself in acts

that would become punishable under the aforesaid provisions of the

PMLA an ECIR is registered. Section 43 of the PMLA reads as

follows:

“43. Special Courts.—(1) The Central Government,

in consultation with the Chief Justice of the High Court,

shall, for trial of offence punishable under Section 4, by

notification, designate, one or more Courts of Session as

Special Court or Special Courts for such area or areas or

for such case or class or group of cases as may be

specified in the notification.

Explanation.—In this sub-section, “High Court” means

the High Court of the State in which a Sessions Court

designated as Special Court was functioning immediately

before such designation.


(2) While trying an offence under this Act, a Special

Court shall also try an offence, other than an offence referred

to in sub-section (1), with which the accused may, under the

Code of Criminal Procedure, 1973 (2 of 1974), be charged at

the same trial.”

(Emphasis supplied)

Section 43 directs constitution of a Special Court or a designated

Court and such Court to be the Court of Session. Therefore, in

terms of Section 43 for trying the offence punishable under the

PMLA designated Court is the Court of Session. Section 44 of the

PMLA reads as follows:

“44. Offences triable by Special Courts.—(1)

Notwithstanding anything contained in the Code of Criminal

Procedure, 1973 (2 of 1974),—

(a) an offence punishable under Section 4 and any

scheduled offence connected to the offence under

that section shall be triable by the Special Court

constituted for the area in which the offence has

been committed:

Provided that the Special Court, trying a

scheduled offence before the commencement of

this Act, shall continue to try such scheduled

offence; or

(b) a Special Court may, upon a complaint made by

an authority authorised in this behalf under this

Act take cognizance of offence under Section 3,

without the accused being committed to it for

trial:

Provided that after conclusion of investigation, if

no offence of money laundering is made out

requiring filing of such complaint, the said

authority shall submit a closure report before the

Special Court; or

(c) if the court which has taken cognizance of the

scheduled offence is other than the Special Court

which has taken cognizance of the complaint of

the offence of money-laundering under subclause

(b), it shall, on an application by the

authority authorised to file a complaint under this

Act, commit the case relating to the scheduled

offence to the Special Court and the Special Court

shall, on receipt of such case proceed to deal with

it from the stage at which it is committed.

(d) a Special Court while trying the scheduled offence

or the offence of money-laundering shall hold trial

in accordance with the provisions of the Code of

Criminal Procedure, 1973 (2 of 1974), as it

applies to a trial before a Court of Session.

Explanation.—For the removal of doubts, it is clarified

that,—

(i) the jurisdiction of the Special Court while dealing

with the offence under this Act, during

investigation, enquiry or trial under this Act, shall

not be dependent upon any orders passed in

respect of the scheduled offence, and the trial of

both sets of offences by the same court shall not

be construed as joint trial;

(ii) the complaint shall be deemed to include any

subsequent complaint in respect of further

investigation that may be conducted to bring any

further evidence, oral or documentary, against

any accused person involved in respect of the

offence, for which complaint has already been

filed, whether named in the original complaint or

not.

(2) Nothing contained in this section shall be deemed to

affect the special powers of the High Court regard 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.”

Section 44 deals with offences triable by Special Court. Special

Court would mean the Court of Session. Section 44(1)(c) mandates

that if the Court which has taken cognizance of a scheduled offence

is other than the Special Court, it shall immediately commit the

same to the Special Court. Section 50 of the PMLA reads as follows:

“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 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).

(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 Joint Director.”

(Emphasis supplied)

Section 50 empowers the authorities under the PMLA with regard to

summons, production of documents and to give evidence. Sub-

Section (3) of Section 50 directs that all persons so summoned

shall be bound to attend in person or through authorized agents

and shall be bound to state the truth upon any subject with respect

to which they are examined or make statements and produce

documents as may be required. Therefore, the authority under the

PMLA does have power to summon and record statement of

witnesses in terms of Section 50 of the Act. Section 71 of the PMLA

reads as follows:

“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.

Section 71 of the PMLA makes the provisions of PMLA to have

overriding effect notwithstanding anything inconsistent therewith

contained in any other law for the time being in force. It is the

interpretation of the aforesaid provisions that has become

necessary in the case at hand.

9. The petitioner is in judicial custody concerning crime No.60

of 2022. Charge sheet has been filed and the petitioner continues to

be in judicial custody and the matter is pending consideration

before the Court of the learned Magistrate in C.C.No.25035 of 2022.

The issue involved is the alleged scam with regard to recruitment of

Police Sub-Inspectors in the year 2021. Huge cash flow is also

alleged in the case at hand. It is, therefore, to get into the angle of

money laundering an ECIR comes to be registered against the

petitioner. Pursuant to registration of ECIR, the authorities, as

obtaining under Section 50 of the PMLA, sought to record the

statements of the petitioner with regard to registration of crime. In

terms of Section 50(2) of the PMLA which empowers the Director or

an authority authorized for collection of evidence, the statements of

the petitioner including others who are in judicial custody

concerning C.C.No.25035 of 2022 are sought to be recorded.

Therefore, the application was filed before the concerned Court. The

application so filed before the concerned Court by the ED is titled

“APPLICATION TO RECORD STATEMENTS UNDER SECTION 50(3)

OF THE PREVENTION OF MONEY LAUNDERING ACT, 2002” and the

plea of the ED before the learned Magistrate is as follows:

“1. Shailendra Kumar Choubey, working as Assistant

Director in the Directorate of Enforcement, Bengaluru begs

leave to this Court to file this application to record statement

of the respondent No.2/accused No.1. Respondent

No.29/Accused No.28, Respondent No.31/ Accused No.30,

Respondent No.32/Accused No.31 and Respondent

No.28/Accused No.27 (who are under the judicial custody of

this Hon’ble Court), by virtue of Section 50(2) & (3) of the

Prevention of Money Laundering Act, 2002 (hereinafter

referred to as an “Act’; for the sake of brevity), as such I am

well conversant with the facts of the case from the office

records.

2. It is humbly submitted that the Applicant is the

Investigating Officer and authorized to investigate cases under

Section 48 & 49 of the PMLA, 2002.

3. It is respectfully submitted that the Applicant

Department is the sole Investigation Agency under the Act and

the main objects of the Act are to confiscate the movable and

immovable properties which are proceeds of crime and

involved in money laundering and also to punish the offenders

of money laundering.

4. It is humbly submitted that the brief facts of the

scheduled offence case are that High Grounds Police Station

registered an FIR vide crime No.48/2022 against the above

said accused persons under Section 120B, 409, 420, 465, 468,

471 r/w 34 of IPC, 1860. It is alleged that these accused were

involved in the irregularities observed in Police Sub-Inspector

Recruitment, 2021, Karnataka State Police Examination. These

people have been actively involved in the colluding with some

candidates who used illegal means to get selection in the said

examination. There were around 8 FIRs registered by various

Police Stations against the candidates and Police authorities in

the recruitment Cell.”

The afore-quoted title and the plea for filing the application would

unmistakably indicate that the ED wanted to record statements

under sub-sections (2) & (3) of Section 50 of the PMLA and it was

described that the signatory to the application was the Investigating

Officer who was authorized to investigate under Sections 48 and 49

of the PMLA. Sections 48 and 49 deal with authorities under the

PMLA. Therefore, the intention of the Investigating Officer who was

appointed to investigate into the ECIR so registered against the

petitioner and others was to record statements in terms of subsections

(2) and (3) of Section 50. Therefore, the provisions of

PMLA were invoked against the petitioner and it is during

investigation where the offence under Sections 3 and 4 is made out

the statements are sought to be recorded.

10. If the ED wants to invoke the provisions of the PMLA to

discern the offence under Section 3 of the PMLA, the designated

Court is the Court of Session alone which had the power to even

consider any application emanating from the provisions of the PMLA

as the offence supra, Section 43 supra and Section 71 clearly mean

that the designate Court to try anything emanating from the PMLA

is the Special Court and the Special Court is the Court of Session.

Section 71 has overriding effect on any law. The petitioner may

have been in custody concerning C.C.No.25035 of 2022 and the

said custody is ordered by the learned Magistrate. Merely because

custody is ordered by the learned Magistrate, he cannot be clothed

with the powers of a Court of Session, which alone has the power to

consider any application of the kind that was made before the

learned Magistrate. The learned Magistrate was dealing with an


application filed under Section 50 of the PMLA. It was completely

without jurisdiction for the learned Magistrate to have considered

the application filed under Section 50 of the PMLA. It ought to have

been placed before the concerned Court for taking permission to

record the statements as it is trite that the Special Court can always

have the power of the Magistrate and not the other way round since

it touches upon the jurisdiction. PMLA mandates that anything

emanating from the PMLA shall be considered only by the Special

Court.

11. The answer to a question concerning jurisdiction, can be

either a ‘yes’ or a ‘no’ and never be ‘may be’. Since the

unequivocal interpretation of the PMLA is that everything shall be

placed before the Special Court, the application so filed under

Section 50 of the PMLA could not have been placed before the

learned Magistrate, notwithstanding the fact that the petitioner is in

judicial custody concerning a case and the said custody is ordered

by the learned Magistrate. The acts of the accused may result in

several proceedings under the IPC, under special enactments or

under any other law that would govern such accused and those


enactments may require the accused to be tried before a Special

Court. If the offence alleged is amalgam of the offences under the

IPC which is to be tried before a Magistrate and the other offences

to be tried before a Special Judge, any proceedings that the

prosecution wants to initiate under special enactment it shall be

only before the Special Court. Reference being made to the

judgments of the Apex Court in the cases of HARSHAD S.MEHTA

(supra), A.R.ANTULAY (supra) and VIJAY MADANLAL

CHOUDHARY AND OTHERS v. UNION OF INDIA AND OTHERS1

in the circumstances becomes apposite. I deem it appropriate to

notice the judgment in the case of VIJAY MADANLAL

CHOUDHARY (supra) at the outset. The Apex Court, while

considering entire spectrum of the PMLA and with regard to

constitution of Special Courts, has held as follows:

“352. 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

1 2022 SCC OnLine SC 929

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 Criminal Procedure Code, 1973

(2 of 1974), be charged at the same trial.”

353. 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 Criminal

Procedure Code, 1973 (2 of 1974),—

(a) an offence punishable under section 4 and any

scheduled offence connected to the offence under

that section shall be triable by the Special Court

constituted for the area in which the offence has

been committed:

Provided that the Special Court, trying a

scheduled offence before the commencement of

this Act, shall continue to try such scheduled

offence; or

(b) a Special Court may, upon a complaint made by

an authority authorised in this behalf under this

Act take cognizance of offence under section 3,

without the accused being committed to it for

trial.

Provided that after conclusion of investigation, if no

offence of money-laundering is made out requiring filing


of such complaint, the said authority shall submit a

closure report before the Special Court; or

(c) if the court which has taken cognizance of the

scheduled offence is other than the Special Court

which has taken cognizance of the complaint of

the offence of money-laundering under subclause

(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 Criminal

Procedure Code, 1973 (2 of 1974) as it applies to

a trial before a Court of Session.

Explanation.—For the removal of doubts, it is clarified

that,—

(i) the jurisdiction of the Special Court while dealing

with the offence under this Act, during

investigation, enquiry or trial under this Act, shall

not be dependent upon any orders passed in

respect of the scheduled offence, and the trial of

both sets of offences by the same court shall not

be construed as joint trial;

(ii) the complaint shall be deemed to include any

subsequent complaint in respect of further

investigation that may be conducted to bring any

further evidence, oral or documentary, against

any accused person involved in respect of the

offence, for which complaint has already been

filed, whether named in the original complaint or

not.

(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 Criminal Procedure Code, 1973 (2 of

1974) and the High Court may exercise such powers including

the power under clause (b) of subsection (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.”

354. This provision opens with a non-obstante clause

making it clear that the dispensation provided therein is

notwithstanding anything 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 Criminal

Procedure Code, 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.”

355. 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 Criminal

Procedure Code, 1973 (2 of 1974),—

Provided that the Special Court, trying a

scheduled offence before the commencement of this

Act, shall continue to try such scheduled offence; or;

(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:

….”

356. 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 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.

357. 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.”

(Emphasis supplied)

The Apex Court holds that the offences falling under the PMLA shall

be tried only by the Special Court that is the Court of Session and

Section 71 of the PMLA has overriding effect over any other law for

the time being in force.

12. It is now germane to notice the judgment of Seven Judge

Bench of the Apex Court in the case of A.R.ANTULAY v.

R.S.NAYAK2 (supra). A Constitution Bench had directed the matter

to be transferred to a High Court for conduct of enquiry. This order

comes to be recalled by a Seven Judge Bench holding that the

jurisdiction that is not conferred under the Act cannot be conferred

even by the Court. The Apex Court in the said judgment holds as

follows:

“7. The State Government on 15-1-1983, notified the

appointment of Shri R.B. Sule as the Special Judge to try the

offences specified under Section 6(1) of the 1952 Act. On or

about 25-7-1983, it appears that Shri R.B. Sule, Special Judge

discharged the appellant holding that a member of the

Legislative Assembly is a public servant and there was no valid

sanction for prosecuting the appellant.

8. On 16-2-1984, in an appeal filed by Respondent 1

directly under Article 136, a Constitution Bench of this Court

held that a member of the Legislative Assembly is not a public

servant and set aside the order of Special Judge Sule. Instead

of remanding the case to the Special Judge for disposal in

accordance with law, this Court suo motu withdrew the Special

Cases No. 24/82 and 3/83 (arising out of a complaint filed by

one P.B. Samant) pending in the Court of Special Judge,

Greater Bombay, Shri R.B. Sule and transferred the same to

the Bombay High Court with a request to the learned Chief

Justice to assign these two cases to a sitting Judge of the High

Court for holding the trial from day to day. These directions

were given, according to the appellant, without any pleadings,

without any arguments, without any such prayer from either

side and without giving any opportunity to the appellant to


AIR 1988 SC 1531

make his submissions before issuing the same. It was

submitted that the appellant's right to be tried by a competent

court according to the procedure established by law enacted

by Parliament and his rights of appeal and revision to the High

Court under Section 9 of the 1952 Act had been taken away.

… …. ….

14. P.S. Shah, J. to whom the cases were referred to

from D.N. Mehta. J. on 24-7-1986 proceeded to frame as

many as 79 charges against the appellant and decided not to

proceed against the other named co-conspirators. This is the

order impugned before us. Being aggrieved by the aforesaid

order the appellant filed the present Special Leave Petition

(Cri) No. 2519 of 1986 questioning the jurisdiction to try the

case in violation of the appellant's fundamental rights

conferred by Articles 14 and 21 and the provisions of the Act

of 1952. The appellant also filed Special Leave Petition (Cri)

No. 2518 of 1986 against the judgment and order dated 21-8-

1986 of P.S. Shah, J. holding that none of the 79 charges

framed against the accused required sanction under Section

197(1) of the Code. The appellant also filed a Writ Petition No.

542 of 1986 challenging a portion of Section 197(1) of Code as

ultra vires Articles 14 and 21 of the Constitution.

… …. …

19. In this appeal two questions arise, namely, (1)

whether the directions given by this Court on 16-2-1984

in R.S. Nayak v. A.R. Antulay [(1984) 2 SCC 183, 243: 1984

SCC (Cri) 172: (1984) 2 SCR 495, 557] withdrawing the

Special Case No. 24 of 1982 and Special Case No. 3 of 1983

arising out of the complaint filed by one Shri P.B. Samant

pending in the Court of Special Judge, Greater Bombay, Shri

R.B. Sule, and transferring the same to the High Court of

Bombay with a request to the Chief Justice to assign these two

cases to a sitting Judge of the High Court, in breach of Section

7(1) of the Act of 1952 which mandates that offences as in

this case shall be tried by a Special Judge only thereby

denying at least one right of appeal to the appellant was

violative of Articles 14 and 21 of the Constitution and whether

such directions were at all valid or legal, and (2) if such

directions were not at all valid or legal in view of the order

dated 17-4-1984 referred to hereinbefore, is this appeal

sustainable or the grounds therein justifiable in these


proceedings. In other words, are the said directions in a

proceeding inter partes binding even if bad in law or violative

of Articles 14 and 21 of the Constitution and as sued are

immune from correction by this Court even though they cause

prejudice and do injury? These are the basic questions which

this Court must answer in this appeal.

… … …

22. The only question with which we are concerned in

this appeal is, whether the case which is triable under the

1952 Act only by a Special Judge appointed under Section 6 of

the said Act could be transferred to the High Court for trial by

itself or by this Court to the High Court for trial by it. Section

406 of the Code deals with transfer of criminal cases and

provides power to this Court to transfer cases and appeals

whenever it is made to appear to this Court that an order

under this section is expedient for the ends of justice. The law

provides that this Court may direct that any particular case or

appeal be transferred from one High Court to another High

Court or from a criminal court subordinate to one High Court

to another criminal court of equal or superior jurisdiction

subordinate to another High Court. Equally Section 407 deals

with the power of the High Court to transfer cases and

appeals. Under Section 6 of the 1952 Act, the State

Government is authorised to appoint as many Special Judges

as may be necessary for such area or areas for specified

offences including offences under the Act. Section 7 of the

1952 Act deals with cases triable by Special Judges. The

question, therefore, is whether this Court under Section 406 of

the Code could have transferred a case which was triable only

by a Special Judge to be tried by the High Court or even if an

application had been made to this Court under Section 406 of

the Code to transfer the case triable by a Special Judge to

another Special Judge could that be transferred to a High

Court, for trial by it. It was contended by Shri Rao that the

jurisdiction to entertain and try cases is conferred either by

the Constitution or by the laws made by Parliament. He

referred to us the powers of this Court under Articles 32, 131,

137, 138, 140, 142, 145(1) of the Constitution. He also

referred to Entry 77 of List I of the Constitution which deals

with the constitution of the courts. He further submitted that

the appellant has a right to be tried in accordance with law

and no procedure which will deny the equal protection of law


can be invented and any order passed by this Court which will

deny equal protection of laws would be an order which is void

by virtue of Article 13(2) of the Constitution. He referred us to

the previous order of this Court directing the transfer of cases

to the High Court and submitted that it was a nullity because

of the consequences of the wrong directions of this Court. The

enormity of the consequences warranted this Court's order

being treated as a nullity. The directions denied the appellant

the remedy by way of appeal as of right. Such erroneous or

mistaken directions should be corrected at the earliest

opportunity, Shri Rao submitted.

… … … ….

24. Section 7(1) of the 1952 Act creates a condition

which is sine qua non for the trial of offences under Section

6(1) of the said Act. The condition is that notwithstanding

anything contained in the Code of Criminal Procedure or any

other law, the said offences shall be triable by Special Judges

only. (emphasis supplied). Indeed conferment of the exclusive

jurisdiction of the Special Judge is recognised by the judgment

delivered by this Court in A.R. Antulay v. Ramdas Sriniwas

Nayak [(1984) 2 SCC 500: 1984 SCC (Cri) 277: (1984) 2 SCR

914] where this Court had adverted to Section 7(1) of the

1952 Act and at p. 931 (SCC p. 514) observed that Section 7

of the 1952 Act conferred exclusive jurisdiction on the Special

Judge appointed under Section 6 to try cases set out in

Sections 6(1)(a) and 6(1)(b) of the said Act. The court

emphasised that the Special Judge had exclusive jurisdiction to

try offences enumerated in Section 6(1)(a) and (b). In spite of

this while giving directions in the other matter, that is, R.S.

Nayak v. A.R. Antulay [(1984) 2 SCC 183, 243: 1984 SCC

(Cri) 172: (1984) 2 SCR 495, 557] this Court directed transfer

to the High Court of Bombay the cases pending before the

Special Judge. It is true that Section 7(1) and Section 6 of the

1952 Act were referred to while dealing with the other matters

but while dealing with the matter of directions and giving the

impugned directions, it does not appear that this court kept in

mind the exlusiveness of the jurisdiction of the Special Court

to try the offences enumerated in Section 6.

… …. ….

59. Here the appellant has a further right under Article

21 of the Constitution — a right to trial by a Special Judge


under Section 7(1) of the 1952 Act which is the procedure

established by law made by the Parliament, and a further right

to move the High Court by way of revision or first appeal

under Section 9 of the said Act. He has also a right not to

suffer any order passed behind his back by a court in violation

of the basic principles of natural justice. Directions having

been given in this case as we have seen without hearing the

appellant though it appears from the circumstances that the

order was passed in the presence of the counsel for the

appellant, these were bad.

… … ….

80. In giving the directions this Court infringed the

constitutional safeguards granted to a citizen or to an accused

and injustice results therefrom. It is just and proper for the

court to rectify and recall that injustice, in the peculiar facts

and circumstances of this case.”

The Apex Court in the case of HARSHAD S.MEHTA v. STATE OF

MAHARASHTRA3 (supra) has held as follows:

“Criminal courts are normally constituted under the

provisions of the Criminal Procedure Code. Section 6 of the

Code of Criminal Procedure, 1973 (for short “the Code”)

provides for the classes of criminal courts. In addition to the

provisions contained in the Code or the old Code of 1898, from

time to time, enactments have been passed providing that in

respect of certain offences, there will be a Special Court

manned by persons having specified qualifications. In the

present appeals, we are concerned with such an enactment,

namely, the Special Court (Trial of Offences Relating to

Transactions in Securities) Act, 1992 (“the Act” for short). The

passing of the Act was preceded by an Ordinance which was

promulgated on 6-6-1992.

… … … …

6. The Act has an overriding effect as provided in

Section 13 which, inter alia, stipulates that the provisions of

the Act shall have effect notwithstanding anything inconsistent

therewith contained in any other law for the time being in

3 (2001)8 SCC 257


force. Section 14 is the rule-making power of the Central

Government. Section 15 repeals the Ordinance.

… … … …

22. The Special Court may not be a criminal court as

postulated by Section 6 of the Code. All the same, it is a

criminal court of original jurisdiction. On this count the doubt,

if any, stands resolved by the decision of the Constitution

Bench of this Court in A.R. Antulay v. Ramdas Sriniwas

Nayak [(1984) 2 SCC 500 (p. 527, para 27) : 1984 SCC (Cri)

277] . In Antulay case [(1984) 2 SCC 500 (p. 527, para 27) :

1984 SCC (Cri) 277] the Constitution Bench said that shorn of

all embellishment, the Special Court is a court of original

criminal jurisdiction and to make it functionally oriented some

powers were conferred by the statute setting it up and except

those specifically conferred and specifically denied, it has to

function as a court of original criminal jurisdiction not being

hidebound by the terminological status description of

Magistrates or a Court of Session. Under the Code, it will enjoy

all powers which a court of original criminal jurisdiction enjoys

save and except the ones specifically denied.

... … … …

62. Our conclusion, therefore, is that the Special Court

established under the Act is a court of exclusive jurisdiction.

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

court of original criminal jurisdiction and has all the powers of

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

308.”

A Three Judge Bench of the Apex Court in the case of HARSHAD

S.MEHTA followed the judgment in the case of A.R.ANTULAY

(supra) to hold, if a Special Court is created under the provisions of

a special enactment, the proceedings falling under that enactment

shall be held only before the Special Court. For this purpose the

Apex Court holds that the Special Court enjoys all the powers of the

court of original jurisdiction and it holds a dual capacity and powers

of both the Magistrate and the Court of Session depending upon the

stage of the case.

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

the application filed under Section 50 of the Act, this Court is of the

considered view that the application was not maintainable before

the learned Magistrate, since the Court did not have the power to

direct recording of statements for it to become a record under the

PMLA, the order which is passed by the Court which did not have a

jurisdiction to even consider any application under the PMLA, is

rendered unsustainable. There can be no qualm about the

principles laid down in the judgment rendered in the case of

NIRANJAN SINGH (supra) relied on by the learned counsel

representing the ED to mean what is custody, but the judgment is

inapplicable to the facts of the case at hand as it does not deal with

issues concerning jurisdiction. Therefore, in view of the preceding

analysis, the order passed on the application by the learned

Magistrate requires appropriate interference and is to be

consequently obliterated.


14. For the aforesaid reasons, I pass the following:

O R D E R

(i) The Writ Petition is allowed.

(ii) The impugned order dated 14.09.2022 passed by the

I Additional Chief Metropolitan Magistrate, Bengaluru in

C.C.No.25035 of 2022 stands quashed.

(iii) The 3rd respondent - Enforcement Directorate is

reserved liberty to file an application of the kind that it

has filed before the learned Magistrate, before the

Special Court, which shall deal with it in accordance

with law.


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