P. CHIDAMBARAM versus DIRECTORATE OF ENFORCEMENT

[2019] 12 S.C.R.

P. CHIDAMBARAM

DIRECTORATE OF ENFORCEMENT

(Criminal Appeal No. 1340 of 2019)

BSEPTEMBER 05, 2019

[R. BANUMATHI AND A. S. BOPANNA, JJ.]

Prevention of Money Laundering Act, 2002 – ss.3 and 4 –Production of Documents in sealed cover for custodialinterrogation – Prosecution alleged irregularities in ForeignCInvestment Promotion Board (FIPB) clearance given to companyfor receiving foreign investment to the tune of Rs.305 crores againstapproved inflow of Rs.4.62 crores – Appellant was the then financeminister – CBI registered FIR against the appellant and otheraccused persons u/s.120 IPC r/w. s.420 IPC, s.8 and s.13(2) r/w.Ds.13(1)(d) of the Prevention of Corruption Act, 1988 – EnforcementDirectorate also registered case u/ss.3 and 4 of PMLA against theaccused persons – High Court dismissed the application for thegrant of anticipatory bail filed by the appellant and held it to be aclassic case of money-laundering – On appeal, before the SupremeCourt, respondent sought to produce the materials so collected in aEsealed cover and requested the Court to peruse the documents andmaterials to satisfy the conscience of the Court as to the necessityfor the custodial interrogation – Respondent contended that thematerials so collected cannot be shared with appellant at the initialstage when the Court was considering the matter for grant of pre-Farrest bail – Appellant contended that respondent cannot rely uponthe documents without furnishing those documents to the appellantor without questioning the appellant about the materials – Held:The Court can receive the materials/documents collected during theinvestigation and peruse the same to satisfy its conscience that theinvestigation is proceeding in the right lines and for the purpose ofGconsideration of grant of bail/anticipatory bail etc. - In the instantcase, sealed cover was received by the Court, however, the Courtrefrained from opening the sealed cover and perusing the documentsbecause if Court had made observations after perusal of thematerials, it might have caused prejudice to the appellant and other

co-accused who were not before the Court – Suffice to note that itwas the stage of considering the pre-arrest bail – In the initial stagesof investigation where the Court is considering the question of grantof regular bail or pre-arrest bail, it is not for the Court to enter intothe demarcated function of the investigation and collection ofevidence/materials for establishing the offence and interrogationof the accused and the witnesses – Since, the respondent hadcollected documents/materials for custodial interrogation of theappellant, the submission of the respondent was accepted for thelimited purpose of refusing pre-arrest bail to the appellant – PenalCode, 1860 – s.120B r/w. s.13(1)(d).

Prevention of Money Laundering Act, 2002 – ss.3 and 4 –Prevention of Corruption Act, 1988 – s.8 and 13(2) – r/w. s.13(1)(d)– Interrogation of the accused – Interferences of Judiciary in –Held: Interrogation of the accused and the answers elicited fromthe accused and the opinion whether the answers given by theaccused are ‘satisfactory’ or ‘evasive’, is purely within the domainof the investigating agency and the Court cannot substitute its viewsby conducting mini trial at various stages of investigation.

Prevention of Money Laundering Act, 2002 – ss.3 and 4 –Code of Criminal Procedure, 1973 – s.438 – Grant of anticipatorybail – Prosecution alleged irregularities in Foreign InvestmentPromotion Board (FIPB) clearance given to company for receivingforeign investment to the tune of Rs.305 crores against approvedinflow of Rs.4.62 crores – Appellant was the then finance minister –FIR was registered – Enforcement Directorate also registered caseu/ss. 3 and 4 of PMLA against the accused persons – High Courtdismissed the application for grant of anticipatory bail filed by theappellant – On appeal, held: Power u/s.438 Cr.P.C. is anextraordinary power and the same has to be exercised sparinglymore so, in cases of economic offences – Economic offences standas different class as they effect the economic fabric of the society– Grant of anticipatory bail at the stage of investigation may frustratethe investigating agency in interrogating the accused and incollecting the useful information and also the materials which mighthave been concealed – Success is such interrogation would eludeif the accused knows that he is protected by the order of the Court– In the instant case, having regard to the materials collected by the

Arespondent- Enforcement Directorate and considering the stage ofinvestigation, it was not fit case to grant anticipatory bail.

Code of Criminal Procedure, 1973 – s.438 – Constitution ofIndia – Art. 21 – Right of anticipatory bail, part of Art.21 of theConstitution of India or not – Held: The legislative intent behindBthe introduction of s.438 Cr.P.C. is to safeguard the individual’spersonal liberty and to protect him from the possibility of beinghumiliated and from being subjected to unnecessary police custody.However, the court must also keep in view that criminal offence isnot just an offence against an individual, rather the larger societalCinterest is at stake – Therefore, delicate balance is required to beestablished between the two rights-safeguarding the personal libertyof an individual and the societal interest – It cannot be said thatrefusal to grant anticipatory bail would amount to denial of therights conferred upon the appellant u/Art. 21 of the Constitution ofIndia.D

Words and Phrases – ‘reason to believe’ – Held: As perdefinition in s.26 IPC, person is said to be have ‘reason to believe’a thing, if he has sufficient cause to believe that thing but nototherwise – The specified officer must have ‘reason to believe’ onthe basis of material in his possession that the property sought toEbe attached is likely to be concealed, transferred on dealt with in amanner which may result in frustrating any proceedings forconfiscation of their property under the Prevention of Money -Laundering Act, 2002.

Words and Phrases – Economic offence – discussed.F

Dismissing the appeal, the Court

HELD: Whether Court can look into the documents/materials collected during investigation.

1. It is well-settled that the court can peruse the case diary/Gmaterials collected during investigation by the prosecution evenbefore the commencement of the trial inter-alia in circumstanceslike:- (i) to satisfy its conscience as to whether the investigationis proceeding in the right direction; (ii) to satisfy itself that theinvestigation has been conducted in the right lines and that thereH

is no misuse or abuse of process in the investigation; (iii) whetherregular or anticipatory bail is to be granted to the accused or not;(iv) whether any further custody of the accused is required forthe prosecution; (v) to satisfy itself as to the correctness of thedecision of the High Court/trial court which is under challenge.The above instances are only illustrative and not exhaustive.Where the interest of justice requires, the court has the powers,to receive the case diary/materials collected during theinvestigation. As held in Mukund Lal v. Union of India and Another,ultimately there can be no better custodian or guardian of theinterest of justice than the court trying the case. Needless topoint out that when the Court has received and perused thedocuments/materials, it is only for the purpose of satisfaction ofcourt’s conscience. In the initial stages of investigation, the Courtmay not extract or verbatim refer to the materials which the Courthas perused (as has been done in this case by the Single Judge)and make observations which might cause serious prejudice tothe accused in trial and other proceedings resulting in miscarriage

of justice. [Para 53][206-D-G]

Naresh Kumar Yadav v. Ravindra Kumar and others(2008) 1 SCC 632 : [2007] 11 SCR 615; Malkiat Singhand others v. State of Punjab (1991) 4 SCC 341 : [1991]2 SCR 256; R.K. Krishna Kumar v. State of Assam andothers (1998) 1 SCC 474 : [1997] 6 Suppl. SCR 153;Mukund Lal v. Union of India and another 1989 Supp.(1) SCC 622 : [1988] 3 Suppl. SCR 524; Sidharth andothers v. State of Bihar (2005) 12 SCC 545 : [2005] 3Suppl. SCR 800 – relied on.

Romila Thapar and Others v. Union of India and Others(2018) 10 SCC 753 : [2018] 11 SCR 951;Directorateof Enforcement and Another v. P.V. Prabhakar Rao(1997) 6 SCC 647 : [1997] 3 Suppl. SCR 247;Balakramv. State of Uttarakhand and others(2017) 7 SCC 668 :[2017] 5 SCR 367– referred to.

2. The Enforcement Directorate has produced the sealedcover before this Court containing the materials collected during

Ainvestigation and the same was received. Vide order dated29.08.2019, this Court has stated that the receipt of the sealedcover would be subject to our finding whether the court canperuse the materials or not. As discussed earlier, this Court hasheld that the court can receive the materials/documents collectedBduring the investigation and peruse the same to satisfy itsconscience that the investigation is proceeding in the right linesand for the purpose of consideration of grant of bail/anticipatorybail etc. In the present case, though sealed cover was received,this Court has consciously refrained from opening the sealedcover and perusing the documents. Lest, if this Court perusesCthe materials collected by the respondent and make someobservations thereon, it might cause prejudice to the appellantand the other co-accused who are not before this court whenthey are to pursue the appropriate relief before various forum.Suffice to note that at present, this Court is only at the stage ofDconsidering the pre-arrest bail. Since according to the respondent,they have collected documents/materials for which custodialinterrogation of the appellant is necessary, which this Court deemappropriate to accept the submission of the respondent for thelimited purpose of refusing pre-arrest bail to the appellant. [Para54][206-H; 207-A-D]E3. As rightly submitted by Solicitor General that if theaccused are to be confronted with the materials which werecollected by the prosecution/Enforcement Directorate with hugeefforts, it would lead to devastating consequences and woulddefeat the very purpose of the investigation into crimes, inFparticular, white collar offences. If the contention of the appellantis to be accepted, the investigating agency will have to questioneach and every accused such materials collected duringinvestigation and in this process, the investigating agency wouldbe exposing the evidence collected by them with huge effortsGusing their men and resources and this would give chance tothe accused to tamper with the evidence and to destroy the moneytrail apart from paving the way for the accused to influence thewitnesses. If the contention of the appellant is to be acceptedthat the accused will have to be questioned with the materials

and the investigating agency has to satisfy the court that theaccused was “evasive” during interrogation, the court will haveto undertake “mini trial” of scrutinizing the matter atintermediary stages of investigation like interrogation of theaccused and the answers elicited from the accused and to findout whether the answers given by the accused are ‘evasive’ orwhether they are ‘satisfactory’ or not. This could have never beenthe intention of the legislature either under PMLA or any otherstatute. [Para 58][208-D-G]

4. Interrogation of the accused and the answers elicitedfrom the accused and the opinion whether the answers given bythe accused are “satisfactory” or “evasive”, is purely within thedomain of the investigating agency and the court cannot substituteits views by conducting mini trial at various stages of theinvestigation. [Para 59][209-G-H]

5. The investigation of cognizable offence and the variousstages thereon including the interrogation of the accused isexclusively reserved for the investigating agency whose powersare unfettered so long as the investigating officer exercises hisinvestigating powers well within the provisions of the law andthe legal bounds. In exercise of its inherent power under Section482 Cr.P.C., the court can interfere and issue appropriate directiononly when the court is convinced that the power of theinvestigating officer is exercised mala fide or where there is abuseof power and non-compliance of the provisions of Code of CriminalProcedure. However, this power of invoking inherent jurisdictionto issue direction and interfering with the investigation isexercised only in rare cases where there is abuse of process ornon-compliance of the provisions of Criminal Procedure Code.[Para 60][209-A-C]

King-Emperor v. Khwaja Nazir AhmadAIR 1945 PC18 : [1944] SCC Online PC 29; Abhinandan Jha andothers v. Dinesh MishraAIR 1968 SC 117 : [1967]SCR 668;State of Bihar and another v. J.A.C. Saldanhaand others(1980) 1 SCC 554 : [1980] 2 SCR 16 –relied on.

178SUPREME COURT REPORTS

[2019] 12 S.C.R.

ADukhishyam Benupani, Asstt. Director, EnforcementDirectorate (FERA) v. Arun Kumar Bajoria (1998) 1SCC 52 : [1997] 5 Suppl. SCR 566;M.C. Abrahamand Another v. State of Maharashtra and Others (2003)2 SCC 649 : [2002] 5 Suppl. SCR 677;SubramanianBSwamy v. Director, Central Bureau of Investigation andanother (2014) 8 SCC 682 : [2014] 6 SCR 873;DivineRetreat Centre v. State of Kerala and Others (2008) 3SCC 542 : [2008] 4 SCR 701;State of Bihar andanother v. P.P. Sharma, IAS and another1992 Supp.(1) 222 : [1991] 2 SCR 1 – referred to.C

6. As held by the Supreme Court in catena of judgmentsthat there is well-defined and demarcated function in the fieldof investigation and its subsequent adjudication. It is not thefunction of the court to monitor the investigation process so longas the investigation does not violate any provision of law. It mustDbe left to the discretion of the investigating agency to decide thecourse of investigation. If the court is to interfere in each andevery stage of the investigation and the interrogation of theaccused, it would affect the normal course of investigation. Itmust be left to the investigating agency to proceed in its ownEmanner in interrogation of the accused, nature of questions putto him and the manner of interrogation of the accused.[Para 64][211-C-E]

7. It is one thing to say that if the power of investigationhas been exercised by an investigating officer mala fide or non-Fcompliance of the provisions of the Criminal Procedure Code inthe conduct of the investigation, it is open to the court to quashthe proceedings where there is clear case of abuse of power. Itis different matter that the High Court in exercise of its inherentpower under Section 482 Cr.P.C., the court can always issueappropriate direction at the instance of an aggrieved person ifGthe High Court is convinced that the power of investigation hasbeen exercised by the investigating officer mala fide and not inaccordance with the provisions of the Criminal Procedure Code.However, as pointed out earlier that power is to be exercised inrare cases where there is clear abuse of power and non-H

compliance of the provisions falling under Chapter-XII of theCode of Criminal Procedure requiring the interference of theHigh Court. In the initial stages of investigation where the courtis considering the question of grant of regular bail or pre-arrestbail, it is not for the court to enter into the demarcated functionof the investigation and collection of evidence/materials forestablishing the offence and interrogation of the accused and thewitnesses. [Para 65][211-E-H; 212-A]

Whether direction to produce the transcripts could beissued:-

7A. Since the interrogation of the accused and the questionsput to the accused and the answers given by the accused are partof the investigation which is purely within the domain of theinvestigation officer, unless satisfied that the police officer hasimproperly and illegally exercised his investigating powers inbreach of any statutory provision, the court cannot interfere. Inthe present case, no direction could be issued to the respondentto produce the transcripts of the questions put to the appellantand answers given by the appellant. [Para 66][212-C-D]

Grant of Anticipatory bail in exceptional cases:-

8. Ordinarily, arrest is part of procedure of theinvestigation to secure not only the presence of the accused butseveral other purposes. Power under Section 438 Cr.P.C. is anextraordinary power and the same has to be exercised sparingly.The privilege of the pre-arrest bail should be granted only inexceptional cases. The judicial discretion conferred upon thecourt has to be properly exercised after application of mind as tothe nature and gravity of the accusation; possibility of applicantfleeing justice and other factors to decide whether it is fit casefor grant of anticipatory bail. Grant of anticipatory bail to someextent interferes in the sphere of investigation of an offence andhence, the court must be circumspect while exercising such powerfor grant of anticipatory bail. Anticipatory bail is not to be grantedas matter of rule and it has to be granted only when the court isconvinced that exceptional circumstances exist to resort to thatextraordinary remedy. [Para 67][212-E-G]

180SUPREME COURT REPORTS

[2019] 12 S.C.R.

AState of M.P. and another v. Ram Kishna Balothia andanother(1995) 3 SCC 221 : [1995] 1 SCR 897;StateRep. By The CBI v. Anil Sharma (1997) 7 SCC 187 :[1997] 3 Suppl. SCR 737 ;Sudhir v. State ofMaharashtra and Another (2016) 1 SCC 146 : [2015]B12 SCR 387;Assistant Director, Directorate ofEnforcement v. Hassan Ali Khan (2011) 12 SCC 684;Adri Dharan Das v. State of W.B. (2005) 4 SCC 303 :[2005] 2 SCR 188;Siddharam Satlingappa Mhetre v.State of Maharashtra and Others (2011) 1 SCC 694 :[2010] 15 SCR 201;Jai Prakash Singh v. State of BiharCand another(2012) 4 SCC 379 :[2012] 5 SCR 1 75 –relied on.

9. Ordinarily, arrest is part of the process of theinvestigation intended to secure several purposes. There maybe circumstances in which the accused may provide informationDleading to discovery of material facts and relevant information.Grant of anticipatory bail may hamper the investigation. Pre-arrestbail is to strike balance between the individual’s right topersonal freedom and the right of the investigating agency tointerrogate the accused as to the material so far collected and toEcollect more information which may lead to recovery of relevantinformation. [Para 72][214-E-F]

Directorate of Enforcement v. Ashok Kumar Jain(1998)2 SCC 105 : [1998] 1 SCR 57 ; State of Gujarat v.Mohanlal Jitamalji Porwal and others(1987) 2 SCCF364 :[1987] (2) SCR 677 ; Y.S. Jagan Mohan Reddy v.CBI(2013) 7 SCC 439 : [2013] SCR 547 – relied on.Enforcement Officer, Ted, Bombay v. Bher Chand TikajiBora and others(1999) 5 SCC 720 – referred to.

10. Power under Section 438 Cr.P.C. being an extraordinaryGremedy, has to be exercised sparingly; more so, in cases ofeconomic offences. Economic offences stand as different classas they affect the economic fabric of the society. In Directorate ofEnforcement v. Ashok Kumar Jain, it was held that in economicoffences, the accused is not entitled to anticipatory bail. The

Solicitor General submitted that the “Scheduled offence” and“offence of money laundering” are independent of each otherand PMLA being special enactment applicable to the offence ofmoney laundering is not fit case for grant of anticipatory bail.The Solicitor General submitted that money laundering being aneconomic offence committed with much planning and deliberatedesign poses serious threat to the nation’s economy andfinancial integrity and in order to unearth the laundering and trailof money, custodial interrogation of the appellant is necessary.Grant of anticipatory bail at the stage of investigation may frustratethe investigating agency in interrogating the accused and incollecting the useful information and also the materials whichmight have been concealed. Success in such interrogation wouldelude if the accused knows that he is protected by the order ofthe court. Grant of anticipatory bail, particularly in economicoffences would definitely hamper the effective investigation.Having regard to the materials said to have been collected bythe respondent-Enforcement Directorate and considering thestage of the investigation, this Court is of the view that it is not afit case to grant anticipatory bail. [Paras 76, 77 and 81][216-E-G;218-B-C]

Shri Gurbaksh Singh Sibbia and others v. State ofPunjab(1980) 2 SCC 565 : [1980] 3 SCR 383;Additional District Magistrate, Jabalpur v. ShivakantShukla (1976) 2 SCC 521 : [1976] Suppl. SCR 172 ;Rao Shiv Bahadur Singh and another v. State of VindhyaPradeshAIR 1953 SC 394 : [1953] SCR 1188; Santoshs/o Dwarkadas Fafat v. State of Maharashtra(2017) 9SCC 714 : [2017] 10 SCR 129; Jai Prakash Singh v.State of Bihar and Another (2012) 4 SCC 379 : [2012]5 SCR 1;Nikesh Tarachand Shah v. Union of Indiaand another(2018) 11 SCC 1 : [2017] 12 SCR 358 –referred to.

182SUPREME COURT REPORTS

[2019] 12 S.C.R.

[1987] 2 SCR 677relied onPara 78A[2013] SCR 547relied onPara 79(1999) 5 SCC 720referred toPara 80

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.1340 of 2019

From the Judgment and Order dated 20.08.2019 of the High Courtof Delhi at New Delhi in Bail Application No. 1713 of 2018.

Kapil Sibal, Dr. Abhishek Manu Singhvi, Sr. Advs., Kunal Vajani,Arshdeep Singh Khurana, Amit Bhandari, Adit Pujari, Hitesh Rai, AkshatGupta, Ayush Agarwal, Karan Gogna, Aamir Khan, Aman Singh Brar,Akshay Sahni, Avishkar Singhavi, Mrs. Shally Bhasin, Advs. for theAppellant.

Tushar Mehta, SG, K. M. Natraj, ASG, Ms. Sonia Mathur, Sr.Adv., Zoheb Hossain, Rajat Nair, Ms. Kanu Aggarwal, A.K. Sharma,Rajeev Ranjan, Bhuvan Kapoor, Varun Chugh, B. Krishna Prasad, Advs.for the Respondent.

The Judgment of the Court was delivered by

R. BANUMATHI, J.

1. Leave granted.

2. This appeal relates to the alleged irregularities in ForeignInvestment Promotion Board (FIPB) clearance given to the INX Mediafor receiving foreign investment to the tune of Rs.305 crores againstapproved inflow of Rs.4.62 crores. The High Court of Delhi rejectedthe appellant’s plea for anticipatory bail in the case registered by CentralBureau of Investigation (CBI) being RC No.220/2017-E-0011 underSection 120B IPC read with Section 420 IPC, Section 8 and Section13(2) read with Section 13(1)(d) of the Prevention of Corruption Act,1988. By the impugned order dated 20.08.2019, the High Court alsorefused to grant anticipatory bail in the case registered by theEnforcement Directorate in ECIR No.07/HIU/2017 punishable underSections 3 and 4 of the Prevention of Money-Laundering Act, 2002.

3. Grievance of the appellant is that against the impugned orderof the High Court, the appellant tried to get the matter listed in the SupremeCourt on 21.08.2019; but the appellant could not get an urgent hearing in

Athe Supreme Court seeking stay of the impugned order of the High Court.The appellant was arrested by the CBI on the night of 21.08.2019. Sincethe appellant was arrested and remanded to custody in CBI case, inview of the judgment of the Constitution Bench in Shri Gurbaksh SinghSibbia and others v. State of Punjab(1980) 2 SCC 565, the appellantcannot seek anticipatory bail after he is arrested. Accordingly, SLP(Crl.)BNo.7525 of 2019 preferred by the appellant qua the CBI case wasdismissed as infructuous vide order dated 26.08.2019 on the ground thatthe appellant has already been arrested and remanded to custody. ThisCourt granted liberty to the appellant to work out his remedy in accordancewith law.

4. On 15.05.2017, CBI registered FIR in RC No.220/2017-E-0011under Section 120B IPC read with Section 420 IPC, Section 8 and Section13(2) read with Section 13(1)(d) of the Prevention of Corruption Act,1988 against the accused viz. (i) INX Media through its Director IndraniMukherjea; (ii) INX News through its Director Sh. Pratim MukherjeaD@ Peter Mukherjea and others; (iii) Sh. Karti P. Chidambaram; (iv)Chess Management Services through its Director Sh. Karti P.Chidambaram and others; (v) Advantage Strategic Consulting throughits Director Ms. Padma Vishwanathan @ Padma Bhaskararaman andothers; (vi) unknown officers/officials of Ministry of Finance, Govt. of

India; and (vii) other unknown persons for the alleged irregularities inEgiving FIPB’s clearance to INX Media to receive overseas funds ofRs.305 crores against approved Foreign Direct Investment (FDI) ofRs.4.62 crores.

5. Case of the prosecution in the predicate offence is that in 2007,INX Media Pvt. Ltd. approached Foreign Investment Promotion BoardF(FIPB) seeking approval for FDI upto 46.216 per cent of the issuedequity capital. While sending the proposal by INX Media to be placedbefore the FIPB, INX Media had clearly mentioned in it the inflow ofFDI to the extent of Rs.4,62,16,000/- taking the proposed issue at itsface value. The FIPB in its meeting held on 18.05.2007 recommendedGthe proposal of INX Media subject to the approval of the Finance Minister-the appellant. In the meeting, the Board did not approve the downstreaminvestment by INX Media in INX News. In violation of the conditions ofthe approval, the recommendation of FIPB:- (i) INX Media deliberatelymade downstream investment to the extent of 26% in the capital ofINX News Ltd. without specific approval of FIPB which included indirectH

foreign investment by the same Foreign Investors; (ii) generated morethan Rs.305 crores FDI in INX Media which is in clear violation of theapproved foreign flow of Rs.4.62 crores by issuing shares to the foreigninvestors at premium of more than Rs.800/- per share.

6. Upon receipt of complaint on the basis of cheque for anamount of Rs.10,00,000/- made in favour of M/s Advantage StrategicConsulting Private Limited (ASCPL) by INX Media, the investigationwing of the Income Tax Department proceeded to investigate the matterand the relevant information was sought from the FIPB, which in turn,vide its letter dated 26.05.2008 sought clarification from the INX Mediawhich justified its action saying that the downstream investment hasbeen authorised and that the same was made in accordance with theapproval of FIPB. It is alleged by the prosecution that in order to get outof the situation without any penal provision, INX Media entered into acriminal conspiracy with Sh. Karti Chidambaram, Promoter Director,Chess Management Services Pvt. Ltd. and the appellant-the then FinanceMinister of India. INX Media through the letter dated 26.06.2008 triedto justify their action stating that the downstream investment has beenapproved and the same was made in accordance with approval.7. The FIR further alleges that for the services rendered by Sh.Karti Chidambaram to INX Media through Chess Management Servicesin getting the issues scuttled by influencing the public servants of FIPBunit of the Ministry of Finance, consideration in the form of paymentswere received against invoices raised on INX Media by ASCPL. It isalleged in the FIR that the very reason for getting the invoices raised inthe name of ASCPL for the services rendered by Chess ManagementServices was with view to conceal the identity of Sh. KartiChidambaram inasmuch as on the day when the invoices were raisedand payment was received. It is stated that Sh. Karti Chidambaram wasthe Promoter, Director of Chess Management Services whereas ASCPLwas being controlled by him indirectly. It is alleged that the invoicesapproximately for an amount of Rs.3.50 crores were falsely got raisedin favour of INX Media in the name of other companies in which Sh.Karti Chidambaram was having sustainable interest either directly orindirectly. It is alleged that such invoices were falsely got raised forcreation of acquisition of media content, consultancy in respect of marketresearch, acquisition of content of various genre of Audio-Video etc. Itis alleged that INX Media Group in his record has clearly mentioned the

Apurpose of payment of Rs.10,00,000/- to ASCPL as towards“management consultancy charges towards FIPB notification andclarification”. Alleging that the above acts of omission and commissionprima facie disclose commission of offence, CBI has registered FIR inRC No.220/2017-E-0011 on 15.05.2017 under Section 120B read withSection 420 IPC, Section 8 and Section 13(2) read with Section 13(1)(d)Bof the Prevention of Corruption Act, 1988 against the aforesaid accused.

8. On the basis of the said FIR registered by CBI, the EnforcementDirectorate registered case in ECIR No.07/HIU/2017 against theaforesaid accused persons for allegedly committing the offencepunishable under Sections 3 and 4 of the Prevention of Money-LaunderingCAct, 2002 (PMLA). Ever since the registration of the cases in 2017,there were various proceedings seeking bail and number of otherproceedings pending filed by Sh. Karti Chidambaram and other accused.Finally, the Delhi High Court granted bail to Sh. Karti Chidambaram inINX Media case filed by CBI on 23.03.2018. Thereafter, the appellantDmoved Delhi High Court seeking anticipatory bail both in CBI case andalso in money-laundering case filed by Enforcement Directorate. On25.07.2018, the Delhi High Court granted the appellant interim protectionfrom arrest in both the cases and the same was extended till 20.08.2019– the date on which the High Court dismissed the appellant’s petitionrefusing to grant anticipatory bail.E

9. The High Court dismissed the application refusing to grantanticipatory bail to the appellant by holding that “it is classic case ofmoney-laundering”. The High Court observed that “it is clear caseof money-laundering”. The learned Single Judge dismissed theapplication for anticipatory bail by holding “that the alleged irregularitiesFcommitted by the appellant makes out prima facie case for refusingpre-arrest bail to the appellant”. The learned Single Judge also heldthat “considering the gravity of the offence and the evasive replygiven by the appellant to the questions put to him while he wasunder the protective cover extended to him by the court are the twinGfactors which weigh to deny the pre-arrest bail to the appellant”.Being aggrieved, the appellant has preferred this appeal.

10. Lengthy arguments were heard on number of hearingsstretched over for long time. Learned Senior counsel appearing for theappellant Mr. Kapil Sibal and Mr. Abhishek Manu Singhvi madeHmeticulous submissions on the concept of life and liberty enshrined in

Article 21 of the Constitution of India to urge that the appellant is entitledto the privilege of anticipatory bail. Arguments were also advanced onvarious aspects – whether the court can look into the materials producedby the respondent-Enforcement Directorate to seek custody of theappellant when the appellant was not confronted with those documentson the three dates of interrogation of the appellant conducted on19.12.2018, 01.01.2019 and 21.01.2019. Interlocutory application wasfiled by the appellant to produce the transcripts of the questions put tothe appellant and the answers given by the appellant, recorded byEnforcement Directorate. Countering the above submissions, Mr. TusharMehta, learned Solicitor General made the submissions that grant ofanticipatory bail is not part of Article 21 of the Constitution of India. Mr.Tushar Mehta urged that having regard to the materials collected by therespondent-Enforcement Directorate and the specific inputs and in viewof the provisions of the special enactment-PMLA, custodial interrogationof the appellant is required and the appellant is not entitled to the privilegeof anticipatory bail.

Contention of Mr. Kapil Sibal, learned Seniorcounsel:-

11. Mr. Kapil Sibal, learned Senior counsel appearing on behalf ofthe appellant submitted that the clearance for INX FDI was approvedby Foreign Investment Promotion Board (FIPB) consisting of sixSecretaries and the appellant as the then Finance Minister grantedapproval in the normal course of official business. The learned Seniorcounsel submitted that the crux of the allegation is that the appellant’sson Sh. Karti Chidambaram tried to influence the officials of FIPB forgranting ex-post facto approval for downstream investment by INXMedia to INX News; whereas neither the Board members of FIPB northe officials of FIPB have stated anything about the appellant’s son Sh.Karti Chidambaram that he approached and influenced them for ex-post facto approval. The learned Senior counsel contended that theentire case alleges about money paid to ASCPL and Sh. KartiChidambaram is neither the share-holder nor Director in the saidASCPL; but the Enforcement Directorate has falsely alleged that Sh.Karti Chidambaram has been controlling the company-ASCPL. It wassubmitted that the appellant has nothing to do with the said ASCPL towhom money has been paid by INX Media.

12. Taking us through the impugned judgment and the note said tohave been submitted by the Enforcement Directorate before the High

ACourt, the learned Senior counsel submitted that the learned Single Judgehas “copied and pasted” paragraphs after paragraphs of the note givenby the respondent in the court. It was urged that there was no basis forthe allegations contained in the said note to substantiate the allegedtransactions/transfer of money as stated in the tabular column given inthe impugned order.B

13. So far as the sealed cover containing the materials sought tobe handed over by the Enforcement Directorate, the learned Seniorcounsel raised strong objections and submitted that the EnforcementDirectorate cannot randomly produce the documents in the court “behindthe back” of the appellant for seeking custody of the appellant. StrongCobjections were raised for the plea of Enforcement Directorate requestingthe court to receive the sealed cover and for looking into the documents/material collected during the investigation allegedly showing the trail ofmoney in the name of companies and the money-laundering.14. The appellant was interrogated by the respondent on threeDdates viz. 19.12.2018, 01.01.2019 and 21.01.2019. So far as theobservation of the High Court that the appellant was “evasive” duringinterrogation, the learned Senior counsel submitted that the appellanthas well cooperated with the respondent and the respondent cannot allegethat the appellant was “non-cooperative”. On behalf of the appellant, anEapplication has also been filed seeking direction to the respondent toproduce the transcripts of the questioning conducted on 19.12.2018,01.01.2019 and 21.01.2019. The learned Senior counsel submitted thatthe transcripts will show whether the appellant was “evasive” or notduring his questioning as alleged by the respondent.

F15. Learned Senior counsel submitted that the provision foranticipatory bail i.e. Section 438 Cr.P.C. has to be interpreted in fairand reasonable manner and while so, the High Court has mechanicallyrejected the anticipatory bail. It was further submitted that in case ofoffences of the nature alleged, everything is borne out by the recordsand there is no question of the appellant being “evasive”. The learnedGSenior counsel also submitted that co-accused Sh. Karti Chidambaramand Padma Bhaskararaman were granted bail and the other accusedIndrani Mukherjea and Sh. Pratim Mukherjea @ Peter Mukherjea areon statutory bail and the appellant is entitled to bail on parity also.

Contention of Mr. Abhishek Manu Singhvi, learned SeniorHcounsel:-

16. Reiterating the submission of Mr. Kapil Sibal, Mr. AbhishekManu Singhvi, learned Senior counsel submitted that the EnforcementDirectorate cannot say that the appellant was “non-cooperative” and“evasive”. Mr. Singhvi also urged for production of transcripts i.e.questions put to the appellant and the answers which would show whetherthe appellant has properly responded to the questions or not. Placingreliance upon Additional District Magistrate, Jabalpur v. ShivakantShukla (1976) 2 SCC 521, the learned Senior counsel submitted thatthe respondent cannot rely upon the documents without furnishing thosedocuments to the appellant or without questioning the appellant aboutthe materials collected during the investigation. Reiterating the submissionof Mr. Sibal, Mr. Singhvi contended that the High Court has deniedanticipatory bail to the appellant on the basis of materials produced bythe respondent in the cover before the court which were never shown tothe appellant nor was the appellant confronted with the same. The learnedSenior counsel submitted that the alleged occurrence was of the year2007-08 and Sections 420 IPC and 120B IPC and Section 13 of thePrevention of Corruption Act were not part of the “scheduled offence”of Prevention of Money-Laundering Act in 2008 and were introducedby notification dated 01.06.2009 and in view of the protection givenunder Article 20(1) of the Constitution of India, there can never be aretrospective operation of criminal/penal statute. Placing reliance uponRao Shiv Bahadur Singh and another v. State of Vindhya PradeshAIR 1953 SC 394, it was contended that the appellant has to substantiatethe contention that the acts charged as offences were offences “at thetime of commission of the offence”. The learned Senior counsel urgedthat in 2007-2008 when the alleged acts of commission and omissionwere committed, they were not “scheduled offences” and henceprosecution under Prevention of Money-Laundering Act, 2002 is notmaintainable.17. The learned Senior counsel has taken strong exception to thetwo factors stated by the High Court in the impugned order for denyingpre-arrest bail i.e. (i) gravity of the offence; and (ii) the appellant was“evasive” to deny the anticipatory bail. The learned Senior counselsubmitted that the “gravity of the offence” cannot be the perception ofthe individual or the court and the test for “gravity of the offence” shouldbe the punishment prescribed by the statute for the offence committed.Insofar as the finding of the High Court that “the appellant was evasiveto the questions”, the learned Senior counsel submitted that the

Ainvestigating agency-Enforcement Directorate cannot expect an accusedto give answers in the manner they want and that the accused is entitledto protection under Article 20(3) of the Constitution of India. Reliancewas placed upon Santosh s/o Dwarkadas Fafat v. State ofMaharashtra(2017) 9 SCC 714.

BContention of Mr. TusharMehta, learned SolicitorGeneral:-

18. Taking us through the Statement of Objects and Reasonsand salient features of the PMLA, the learned Solicitor General submittedthat India is part of the global community having responsibility toCcrackdown on money-laundering with an effective legislation and PMLAis result of the joint initiatives taken by several nations. Taking usthrough the various provisions of the PMLA, the learned Solicitor Generalsubmitted that money-laundering poses serious threat to the financialsystem and financial integrity of the nation and has to be sternly dealtwith. It was submitted that PMLA offence has two dimensions –Dpredicate offence and money-laundering. Money-laundering is separateand independent offence punishable under Section 4 read with Section 3of the PMLA.

19. Learned Solicitor General submitted that under Section 19 ofPMLA, specified officers, on the basis of material in possession, havingEreason to believe which is to be recorded in writing that the person hasbeen guilty of the offence under the Act, have power to arrest. It wasurged that the power to arrest and necessary safeguards are enshrinedunder Section 19 of the Act. It was submitted that since respondent hascollected cogent materials to show that it is case of money-launderingFand the Enforcement Directorate has issued Letter rogatory and if theCourt intervenes by granting anticipatory bail, the authority cannotexercise the statutory right of arrest and interrogate the appellant.

20. The learned Solicitor General submitted that they have obtainedspecific inputs from overseas banks and also about the companies andGproperties and it is clear case of money-laundering. The learned SolicitorGeneral submitted that the Court has power to look into the materials socollected by the Enforcement Directorate and the same cannot be sharedwith the appellant at this initial stage when the Court is considering thematter for grant of pre-arrest bail. Relying upon number of judgments,the learned Solicitor General has submitted that as matter of practice,

Courts have always perused the case diaries produced by the prosecutionand receive and peruse the materials/documents to satisfy its judicialconscience. In support of his contention, learned Solicitor General placedreliance upon Romila Thapar and Others v. Union of India and Others(2018) 10 SCC 753, Jai Prakash Singh v. State of Bihar and Another(2012) 4 SCC 379 and Directorate of Enforcement and Another v.P.V. Prabhakar Rao (1997) 6 SCC 647 and other judgments andrequested the Court to peruse the materials produced by the EnforcementDirectorate in the sealed cover.21. Opposing the grant of anticipatory bail, the learned SolicitorGeneral submitted that the Enforcement Directorate has cogent evidenceto prove that it is case of money-laundering and there is need ofcustodial interrogation of the appellant. The learned Solicitor Generalsubmitted that the economic offences stand as class apart and custodialinterrogation is required for the Enforcement Directorate to trace thetrail of money and prayed for dismissal of the appeal.

22. As noted earlier, the predicate offences are under Sections120B IPC and 420 IPC, Section 8 and Section 13(2) read with Section13(1)(d) of Prevention of Corruption Act. Case is registered against theappellant and others under Sections 3 and 4 of PMLA. The main pointfalling for consideration is whether the appellant is entitled to the privilegeof anticipatory bail. In order to consider whether the appellant is to begranted the privilege of anticipatory bail, it is necessary to consider thesalient features of the special enactment – Prevention of Money-Laundering Act, 2002.

23. Prevention of Money-laundering Act, 2002 – SpecialEnactment:- Money-laundering is the process of concealing illicitsources of money and the launderer transforming the money proceedsderived from criminal activity into funds and moved to other institutionor transformed into legitimate asset. It is realised world around that moneylaundering poses serious threat not only to the financial systems of thecountries but also to their integrity and sovereignty. The Prevention ofMoney-laundering Act, 2002 was enacted in pursuance of the PoliticalDeclaration adopted by the Special Session of the United Nations GeneralAssembly held in June 1998, calling upon the Member States to adoptnational money-laundering legislation and programme, primarily with aview to meet out the serious threat posed by money laundering to thefinancial system of the countries and to their integrity and sovereignty.

A24. Statement of Objects and Reasons to the Prevention ofMoney-laundering Act, 2002 recognises that money laundering poses aserious threat not only to the financial systems of the countries but alsoto their integrity and sovereignty. PMLA is special enactment containingthe provisions with adequate safeguards with view to prevent money-laundering. The Preamble to the Prevention of Money-Laundering Act,B2002 states that “An Act to prevent money-laundering and to providefor confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidentalthereto.”

25. Chapter II of PMLA contains provisions relating to theCoffences of money-laundering. Section 2(1)(p) of PMLA defines “money-laundering” that it has the same meaning assigned to it in Section 3.Section 2(1)(ra) of PMLA defines “offence of cross border implications”.To prevent offences of “cross border implications”, PMLA containsSections 55 to 61 dealing with reciprocal arrangement for assistance inDcertain matters and procedure for attachment and confiscation of propertybetween the contracting States with regard to the offences of money-laundering and predicate offences. Section 2(1)(y) of PMLA defines“scheduled offence” which reads as under:-

“2. Definitions –E(1)……

(y) “scheduled offence” means –

(i)the offences specified under Part of the Scheduled; or

(ii)the offences specified under Part of the Schedule ifFthe total value involved in such offences is one crorerupees or more; or

(iii)the offences specified under Part of the Schedule.”

“Scheduled Offence” is sine qua non for the offence of money-laundering which would generate the money that is being laundered.GPMLA contains Schedules which originally contained three parts namelyPart A, Part and Part C. Part contains various paragraphs whichenumerate offences under the Indian Penal Code, Narcotic Drugs andPsychotropic Substances Act, 1985, offences under the ExplosivesSubstances Act, 1908 and the offences under the Prevention of CorruptionHAct, 1988 (paragraph 8) etc. The Schedule was amended by Act 21 of

2009 (w.e.f. 01.06.2009). Section 13 of Prevention of Corruption Actwas inserted in the Part of the Schedule to PMLA by the AmendmentAct, 16 of 2018 (w.e.f. 26.07.2018).

26. Section 3 of PMLA stipulates “money-laundering” to be anoffence. Section 3 of PMLA states that whosoever directly or indirectlyattempts to indulge or knowingly assists or knowingly is party or isactually involved in any process or activity connected with the proceedsof the crime and projecting it as untainted property shall be guilty of theoffences of money laundering. The provisions of the PMLA includingSection 3 have undergone various amendments. The words in Section 3“with the proceeds of crime and projecting” has been amended as“proceeds of crime including its concealment, possession, acquisitionor use and projecting or claiming” by the Amendment Act 2 of 2013(w.e.f. 15.02.2013).

27. Section 4 of PMLA deals with punishment for moneylaundering. Prior to Amendment Act 2 of 2013, Section 4 providedpunishment with rigorous imprisonment for term which shall not beless than three years but which may extend to seven years and the finewhich may extend to Rs.5,00,000/-. By Amendment Act 2 of 2013,Section 4 is amended w.e.f. 15.02.2013 vide S.O. 343(E) dated08.02.2013. Now, the punishment prescribed under Section 4 of PMLAto the offender is rigorous imprisonment for term which shall not beless than three years but which may extend to seven years and theoffender is also liable to pay fine. The limit of fine has been done awaywith and now after the amendment, appropriate fine even aboveRs.5,00,000/- can be imposed against the offender.

28. Section 5 of PMLA which provides for attachment of propertyinvolved in money laundering, states that where the Director or anyother officer not below the rank of Deputy Director authorised by theDirector for the purposes of this Section, has “reason to believe” (thereason for such belief to be recorded in writing), on the basis ofmaterial in his possession, that (a) any person is in possession of anyproceeds of crime; and (b) such proceeds of crime are likely to beconcealed, transferred or dealt with in any manner which may result infrustrating any proceedings relating to confiscation of such proceeds ofcrime under Chapter III, he may, by order in writing, provisionally attachsuch property for period not exceeding one hundred and fifty daysfrom the date of the order, in such manner as may be prescribed. Section

A5 provides that no such order of attachment shall be made unless, inrelation to the scheduled offence, report has been forwarded to aMagistrate under Section 173 of the Code of Criminal Procedure, 1973(2 of 1974), or complaint has been filed by person authorised toinvestigate the offence mentioned in that Schedule, before Magistrateor court for taking cognizance of the scheduled offence, as the caseBmay be.

29. The term “reason to believe” is not defined in PMLA. Theexpression “reason to believe” has been defined in Section 26 of IPC.As per the definition in Section 26 IPC, person is said to have “reasonto believe” thing, if he has sufficient cause to believe that thing butCnot otherwise. The specified officer must have “reason to believe” onthe basis of material in his possession that the property sought to beattached is likely to be concealed, transferred or dealt with in mannerwhich may result in frustrating any proceedings for confiscation of theirproperty under the Act. It is stated that in the present case, exercisingDpower under Section 5 of the PMLA, the Adjudicating Authority hadattached some of the properties of the appellant. Challenging theattachment, the appellant and others are said to have preferred appealbefore the Appellate Tribunal and stay has been granted by the AppellateAuthority and the said appeal is stated to be pending.

E30. As rightly submitted by the learned Solicitor General, sufficientsafeguards are provided under the provisions of PMLA. Under Section5 of PMLA, the Director or any other officer not below the rank ofDeputy Director authorised by the Director for the purposes of Section5 who passed the impugned order is required to have “reason tobelieve” that the properties sought to be attached would be transferredFor dealt with in manner which would frustrate the proceedings relatingto confiscation of such properties. Further, the officer who passed theorder of attachment is required to record the reasons for such belief.The provisions of the PMLA and the Rules also provide for manner offorwarding copy of the order of provisional attachment of propertyGalong with material under sub-section (2) of Section 5 of PMLA to theAdjudicating Authority.

31. In order to ensure the safeguards, in exercise of power underSection 73 of PMLA, the Central Government has framed “ThePrevention of Money-Laundering(The Manner of Forwarding aHCopy of the Order of Provisional Attachment of Property along with

the Material, and Copy of the Reasons along with the Material inrespect of Survey, to the Adjudicating Authority and its period ofRetention)Rules, 2005”. Rule 3 of the said Rules provides for mannerof forwarding copy of the order of provisional attachment of propertyalong with the material under sub-section (2) of Section 5 of the Act tothe Adjudicating Authority. Rule 3 stipulates various safeguards as tothe confidentiality of the sealed envelope sent to the AdjudicatingAuthority.

32. Section 17 of PMLA deals with the search and seizure. Section17 which deals with search and seizure states that where the Directoror any other officer not below the rank of Deputy Director authorisedby him for the purposes of this section on the basis of the information inhis possession has “reason to believe” (reason for such belief to berecorded in writing) that any person has committed an offence whichconstitutes the money laundering or is in possession of any proceeds ofcrime involved in money laundering etc. may search building, place andseize any record or property found as result of such search. Section 17of PMLA also uses the expression “reason to believe” and “reasonfor such belief to be recorded in writing”. Here again, the authorisedofficer shall immediately on search and seizure or upon issuance offreezing order forward copy of the reasons so recorded along with thematerial in his possession to the Adjudicating Authority in “sealedenvelope” in the manner as may be prescribed and such AdjudicatingAuthority shall keep such reasons and material for such period as maybe prescribed. In order to ensure the sanctity of the search and seizureand to ensure the safeguards, in exercise of power under Section 73 ofPMLA, the Central Government has framed “The Prevention ofMoney-Laundering (Forms, Search and Seizure or Freezing andthe Manner of Forwarding the Reasons and Material to theAdjudicating Authority, Impounding and Custody of Records andthe period of Retention) Rules, 2005”.

33. Section 19 of PMLA deals with the power of the specifiedofficer to arrest. Under sub-section (1) of Section 19 of PMLA, thespecified officer viz. the Director, the Deputy Director, Assistant Directoror any other officer authorised in this behalf by the Central Governmentby general or special order, on the basis of the material in possession,having “reason to believe” and “reasons for such belief be recordedin writing” that the person has been guilty of offence punishable under

Athe PMLA, has power to arrest such person. The authorised officer isrequired to inform the accused the grounds for such arrest at the earliestand in terms of sub-section (3) of Section 19 of the Act, the arrestedperson is required to be produced to the jurisdictional Judicial Magistrateor Metropolitan Magistrate within 24 hours excluding the journey timefrom the place of arrest to the Magistrate’s Court. In order to ensure theBsafeguards, in exercise of power under Section 73 of the Act, the CentralGovernment has framed “The Prevention of Money-Laundering (TheForms and the Manner of Forwarding Copy of Order of Arrest ofa Person along with the Material to the Adjudicating Authority andits Period of Retention) Rules, 2005”. Rule 3 of the said Rules requiresCthe arresting officer to forward copy of order of arrest and the materialto the Adjudicating Authority in sealed cover marked “confidential”and Rule 3 provides for the manner in maintaining the confidentiality ofthe contents.

34. As rightly submitted by Mr. Tushar Mehta, the procedure underDPMLA for arrest ensures sufficient safeguards viz.:- (i) only the specifiedofficers are authorised to arrest; (ii) based on “reasons to believe”that an offence punishable under the Act has been committed; (iii) thereasons for such belief to be recorded in writing; (iv) evidence and thematerial submitted to the Adjudicating Authority in sealed envelope in

the manner as may be prescribed ensuring the safeguards in maintainingEthe confidentiality; and (v) every person arrested under PMLA to beproduced before the Judicial Magistrate or Metropolitan Magistrate within24 hours. Section 19 of PMLA provides for the power to arrest to thespecified officer on the basis of material in his possession and has “reason

to believe” and the “reasons for such belief to be recorded inFwriting” that any person has been guilty of an offence punishable underPMLA. The statutory power has been vested upon the specified officersof higher rank to arrest the person whom the officer has “reason tobelieve” that such person has been guilty of an offence punishableunder PMLA. In cases of PMLA, in exercising the power to grantanticipatory bail would be to scuttle the statutory power of the specifiedGofficers to arrest which is enshrined in the statute with sufficientsafeguards.

35. Section 71 of PMLA gives overriding effect to the provisionsof PMLA. Section 71 of PMLA states that the provisions of the Actwould have overriding effect on the provisions of all other Acts applicable.H

The provisions of PMLA shall prevail over the contrary provisions ofthe other Acts. Section 65 of PMLA states that the provisions of Codeof Criminal Procedure, 1973 shall apply to the provisions under the Actinsofar as they are not inconsistent with the provisions of PMLA.

36. Insofar as the issue of grant of bail is concerned, Section 45of PMLA starts with non-obstante clause. Section 45 imposes twoconditions for grant of bail to any person accused of any offencepunishable for term of imprisonment of more than three years underPart-A of the Schedule of the Act viz., (i) that the prosecutor must begiven an opportunity to oppose the application for such bail; (ii) that thecourt must be satisfied that there are reasonable grounds for believingthat the accused persons is not guilty of such offence and that he is notlikely to commit any offence while on bail.

37. The twin conditions under Section 45(1) for the offencesclassified thereunder in Part-A of the Schedule was held arbitrary anddiscriminatory and invalid in Nikesh Tarachand Shah v. Union of Indiaand another(2018) 11 SCC 1. Insofar as the twin conditions for releaseof accused on bail under Section 45 of the Act, the Supreme Court heldthe same to be unconstitutional as it violates Articles 14 and 21 of theConstitution of India. Subsequently, Section 45 has been amended byAmendment Act 13 of 2008. The words “imprisonment for term ofimprisonment of more than three years under Part of the Schedule”has been substituted with “accused of an offence under this Act…..”.Section 45 prior to Nikesh Tarachand and post Nikesh Tarachandreads as under:-

38. The occurrence was of the year 2007-2008. CBI registeredthe case against Sh. Karti Chidambaram, the appellant and others on15.05.2017 under Sections 120-B IPC read with Section 420 IPC andunder Section 8 and Section 13(2) read with Section 13(1)(d) of theEPrevention of Corruption Act. Learned Senior counsel for the appellant,Mr. A.M. Singhvi has submitted that there could not have been ‘reasonsto believe’ that the appellant has committed the offence under Section 3of PMLA, since in 2007-2008 the time of commission of alleged offence,Sections 120-B IPC and 420 IPC and Section 13 of the Prevention ofFCorruption Act were not there in Part ‘A’ of the Schedule to PMLA andwere included in Part ‘A’ of the Schedule only by Amendment Act 21 of2009 w.e.f. 01.06.2009 and w.e.f. 26.07.2018 respectively and therefore,no prima-facie case of commission of offence by the appellant underPMLA is made out. It was urged that under Article 20 of the Constitution,no person shall be convicted of any offence except for violation of lawGin force at the time of the commission of that act charged as offence.When Section 120B IPC and Section 420 IPC and Section 13 ofPrevention of Corruption Act were not then included in Part of theSchedule, in 2007-2008, then the appellant and others cannot be said tohave committed the offence under PMLA. Insofar as Section 8 of theHPrevention of Corruption Act is concerned, it was submitted that Section

8 of the Prevention of Corruption Act is not attracted against the appellantas there are no allegations in the FIR that the appellant accepted oragreed to accept any gratification as motive or reward for inducingany public servant and hence, the accusation under Section 8 of thePrevention of Corruption Act does not apply to the appellant. It wasfurther submitted that even assuming Section 8 of the Prevention ofCorruption Act is made out, the amount allegedly paid to ASCPL wasonly Rs.10,00,000/- whereas, Rs.30,00,000/- was the amount thenstipulated to attract Section 8 to be the Scheduled offence under Part Aof the Schedule to the Act and therefore, there was no basis for offenceagainst the appellant and in such view of the matter, the appellant isentitled for anticipatory bail.

39. Section 45 of the PMLA makes the offence of moneylaundering cognizable and non-bailable and no person accused of anoffence punishable for term of imprisonment of more than three yearsunder Part of the Schedule shall be released on bail unless the twinconditions thereon are satisfied. Section 120-B IPC – CriminalConspiracy and Section 420 IPC - Cheating and dishonestly inducingdelivery of property were included in Part of the Schedule to PMLAby way of Amendment Act 21 of 2009 w.e.f. 01.06.2009 and by way ofAmendment Act 2 of 2013 w.e.f. 15.02.2013. Likewise, Section 13 ofthe Prevention of Corruption Act has been introduced to Part of theSchedule (Paragraph 8) by way of Amendment Act 16 of 2018 w.e.f.26.07.2018. As pointed out earlier, the FIR was registered by CBI underSection 8 of the Prevention of Corruption Act also which was then inPart of the Schedule at the time of alleged commission of offence.

40. Learned Senior counsel submitted that since the offence underSections 120-B IPC and 420 IPC and under Section 13 of Prevention ofCorruption Act were included in the Schedule only w.e.f. 01.06.2009and w.e.f. 26.07.2018 respectively and there can never be retrospectiveoperation of criminal/penal statue and the test is not whether theproceeds are retained by the person; but the test as laid down by theConstitution Bench of this Court is, the test of the acts constituting theoffence at the time of the commission of the offence and the appellantcannot be proceeded with prosecution under PMLA in violation ofconstitutional protection under Article 20(1) of the Constitution of India.

41. Under Article 20(1) of the Constitution, no person shall beconvicted of any offence except for violation of law in force at the time

Aof commission of that act charged as an offence. FIR for the predicateoffence has been registered by CBI under Section 120B IPC, 420 IPCand Section 13 of the Prevention of Corruption Act and also under Section8 of the Prevention of Corruption Act. As discussed earlier, Section120B IPC and Section 420 IPC were included in Part of the Scheduleonly by Amendment Act 21 of 2009 w.e.f. 01.06.2009. Section 13 of theBPrevention of Corruption Act was included in Part of the Schedule byAmendment Act 16 of 2018 w.e.f. 26.07.2018. Section 8 of the Preventionof Corruption Act is punishable with imprisonment extending upto sevenyears. Section 8 of the Prevention of Corruption Act was very muchavailable in Part of the Schedule of PMLA at the time of allegedCcommission of offence in 2007-2008. It cannot therefore be said that theappellant is proceeded against in violation of Article 20(1) of theConstitution of India for the alleged commission of the acts which wasnot an offence as per law then in existence. The merits of the contentionthat Section 8 of the Prevention of Corruption Act cannot be the predicate

offence qua the appellant, cannot be gone into at this stage when thisDCourt is only considering the prayer for anticipatory bail.

42. Yet another contention advanced on behalf of the appellant isthat minimum threshold for the Enforcement Directorate to acquirejurisdiction at the relevant time was Rs.30 lakhs whereas, in the presentcase, there is no material to show any payment apart from the sum ofERs.10 lakhs (approximately) allegedly paid by INX Media to ASCPLwith which the appellant is said to be having no connection whatsoever.The merits of the contention that Section 8 of the Prevention of CorruptionAct (then included in Schedule of the PMLA in 2007-08) whetherattracted or not and whether the Enforcement Directorate had theFthreshold to acquire jurisdiction under PMLA cannot be considered atthis stage while this Court is considering only the prayer for anticipatorybail.

43. In terms of Section 4 of the PMLA, the offence of money-laundering is punishable with rigorous imprisonment for term not lessGthan three years extending to seven years and with fine. The SecondSchedule to the Criminal Procedure Code relates to classification ofoffences against other laws and in terms of the Second Schedule of theCode, an offence which is punishable with imprisonment for three yearsand upward but not more than seven years is cognizable and non-bailable offence. Thus, Section 4 of the Act read with the Second ScheduleH

of the Code makes it clear that the offences under the PMLA arecognizable offences. As pointed out earlier, Section 8 of the Preventionof Corruption Act was then found mention in Part ‘A’ of the Schedule(Paragraph 8). Section 8 of the Prevention of Corruption Act ispunishable for term extending to seven years. Thus, the essentialrequirement of Section 45 of PMLA “accused of an offence punishablefor term of imprisonment of more than three years under Part ‘A’ ofthe Schedule” is satisfied making the offence under PMLA. There is nomerit in the contention of the appellant that very registration of the FIRagainst the appellant under PMLA is not maintainable.

Whether Court can look into the documents/materialscollected during investigation

44. During the course of lengthy hearing, much arguments wereadvanced mainly on the question whether the court can look into thedocuments and materials produced by the prosecution before the courtwithout first confronting the accused with those materials.

45. The learned Solicitor General submitted that during investigation,the Enforcement Directorate has collected materials and overseas bankshave given specific inputs regarding the companies and properties thatmoney has been parked in the name of shell companies and the saidmoney has been used to make legitimate assets and that custodialinterrogation is necessary with regard to the materials so collected. Thelearned Solicitor General sought to produce the materials so collected inthe sealed cover and requested the court to peruse the documents andthe materials to satisfy the conscience of the court as to the necessityfor the custodial interrogation.

46. Contention of learned Solicitor General requesting the courtto peruse the documents produced in the sealed cover was stronglyobjected by the appellant on the grounds :– (i) that the EnforcementDirectorate cannot randomly place the documents in the court behindthe back of the accused to seek custody of the accused; (ii) the materialsso collected by Enforcement Directorate during investigation cannot beplaced before the court unless the accused has been confronted withsuch materials.

47. Mr. Kapil Sibal, learned Senior counsel submitted that thestatements recorded under Section 161 Cr.P.C. are part of the casediary and the case diary must reflect day to day movement of the

Ainvestigation based on which the investigating agency came to theconclusion that the crime has been committed so that final report canbe filed before the court. The learned Senior counsel submitted thatduring the course of such investigation, the investigating officer maydiscover several documents which may have bearing on the crimeBcommitted; however the documents themselves can never be the partof the case diary and the documents would be piece of documentaryevidence during trial which would be required to be proved in accordancewith the provisions of the Evidence Act before such documents can berelied upon for the purpose of supporting the case of prosecution.Enforcement Directorate does not maintain case diary; but maintainCthe file with paginated pages. It was urged that even assuming thatthere is case diary maintained by the respondent in conformity withSection 172 Cr.P.C., the opinion of the investigating officer for theconclusion reached by the authorised officer under PMLA, can neverbe relied upon for the purposes of consideration of anticipatory bail.

48. Having regard to the submissions, two points arise forconsideration – (i) whether the court can/cannot look into the documents/materials produced before the court unless the accused was earlierconfronted with those documents/materials?; and (ii) whether the courtis called upon to hold mini inquiry during the intermediary stages ofEinvestigation by examining whether the questions put to the accused are‘satisfactory’ or ‘evasive’, etc.?

49. Sub-section (2) of Section 172 Cr.P.C. permits any court tosend for case diary to use them in the trial. Section 172(3) Cr.P.C.specifically provides that neither the accused nor his agents shall beFentitled to call for case diary nor shall he or they be entitled to see themmerely because they are referred to by the court. But if they are usedby the police officer who made them to refresh his memory or if thecourt uses them for the purpose of contradicting the such police officer,the provisions of Section 161 Crl.P.C. or the provision of Section 145 ofthe Evidence Act shall be complied with. In this regard, the learnedGSolicitor General placed reliance upon Balakram v. State of Uttarakhandand others(2017) 7 SCC 668. Observing that the confidentiality isalways kept in the matter of investigation and it is not desirable to makeavailable the police diary to the accused on his demand, in Balakram,the Supreme Court held as under:-

“15. The police diary is only record of day-to-day investigationmade by the investigating officer. Neither the accused nor hisagent is entitled to call for such case diary and also are not entitledto see them during the course of inquiry or trial. The unfetteredpower conferred by the statute under Section 172(2) CrPC onthe court to examine the entries of the police diary would notallow the accused to claim similar unfettered right to inspect thecase diary.

17. From the aforementioned, it is clear that the denial of right tothe accused to inspect the case diary cannot be characterised asunreasonable or arbitrary. The confidentiality is always kept inthe matter of investigation and it is not desirable to make availablethe police diary to the accused on his demand.”

50. Reiterating the same principles in Sidharth and others v.State of Bihar (2005) 12 SCC 545, the Supreme Court held as under:-

“27. Lastly, we may point out that in the present case, we havenoticed that the entire case diary maintained by the police wasmade available to the accused. Under Section 172 of the CriminalProcedure Code, every police officer making an investigation hasto record his proceedings in diary setting forth the time at whichthe information reached him, the time at which he began and closedhis investigation, the place or places visited by him and statementof the circumstances ascertained through his investigation. It isspecifically provided in sub-clause (3) of Section 172 that neitherthe accused nor his agents shall be entitled to call for such diariesnor shall he or they be entitled to see them merely because theyare referred to by the court, but if they are used by the policeofficer who made them to refresh his memory, or if the court usesthem for the purpose of contradicting such police officer, theprovisions of Section 161 CrPC or the provisions of Section 145of the Evidence Act shall be complied with. The court isempowered to call for such diaries not to use it as evidence but touse it as aid to find out anything that happened during theinvestigation of the crime. These provisions have been incorporatedin the Code of Criminal Procedure to achieve certain specificobjectives. The police officer who is conducting the investigation

Amay come across series of information which cannot be divulgedto the accused. He is bound to record such facts in the case diary.But if the entire case diary is made available to the accused, itmay cause serious prejudice to others and even affect the safetyand security of those who may have given statements to the police.The confidentiality is always kept in the matter of criminalBinvestigation and it is not desirable to make available the entirecase diary to the accused. In the instant case, we have noticedthat the entire case diary was given to the accused and theinvestigating officer was extensively cross-examined on manyfacts which were not very much relevant for the purpose of theCcase. The learned Sessions Judge should have been careful inseeing that the trial of the case was conducted in accordancewith the provisions of CrPC.” [underlining added]

The same position has been reiterated in Naresh Kumar Yadavv. Ravindra Kumar and others(2008) 1 SCC 632 [Paras 11 to 14],Malkiat Singh and others v. State of Punjab(1991) 4 SCC 341D[Para 11] and other judgments.

51. It is seen from various judgments that on several instances,court always received and perused the case diaries/materials collectedby the prosecution during investigation to satisfy itself as to whether theinvestigation is proceeding in the right direction or for consideration ofEthe question of grant of bail etc. In Directorate of Enforcement andanother v. P.V. Prabhakar Rao(1997) 6 SCC 647, the Supreme Courtperused the records to examine the correctness of the order passed bythe High Court granting bail. In R.K. Krishna Kumar v. State of Assamand others (1998) 1 SCC 474, the Supreme Court received courtFdiary maintained under Section 172 Cr.P.C. and perused the case diaryto satisfy itself that the investigation has revealed that the companythereon has funded the organisation (ULFA) and that the appellantsthereon had role to play in it. While considering the question of arrestof five well known human rights activists, journalists, advocates andpolitical workers, in Romila Thapar and Others v. Union of India andGOthers (2018) 10 SCC 753, this Court perused the registers containingrelevant documents and the case diary produced by the State ofMaharashtra. However, the court avoided to dilate on the factual positionemerging therefrom on the ground that any observation made thereonmight cause prejudice to the accused or to the prosecution in any manner.Upholding the validity of Section 172(3) Crl.P.C. and observing that “there

can be no better custodian or guardian of the interest of justice than thecourt trying the case”, in Mukund Lal v. Union of India and another1989 Supp. (1) SCC 622, the Supreme Court held as under:-

“So far as the other parts are concerned, the accused need notnecessarily have right of access to them because in criminaltrial or enquiry, whatever is sought to be proved against theaccused, will have to be proved by the evidence other than thediary itself and the diary can only be used for very limited purposeby the court or the police officer as stated above. ………. Whenin the enquiry or trial, everything which may appear against theaccused has to be established and brought before the court byevidence other than the diary and the accused can have the benefitof cross-examining the witnesses and the court has power to callfor the diary and use it, of course not as evidence but in aid of theenquiry or trial, I am clearly of the opinion, that the provisions”under Section 172(3) CrPC cannot be said to be unconstitutional.We fully endorse the reasoning of the High Court and concurwith its conclusion.We are of the opinion that the provision embodied insub-section (3) of Section 172 of the CrPC cannot be characterised asunreasonable or arbitrary. Under sub-section (2) of Section 172 CrPCthe court itself has the unfettered power to examine the entries in thediaries. This is very important safeguard. The legislature has reposedcomplete trust in the court which is conducting the inquiry or the trial. Ithas empowered the court to call for any such relevant case diary; ifthere is any inconsistency or contradiction arising in the context of thecase diary the court can use the entries for the purpose of contradictingthe police officer as provided in sub-section (3) of Section 172 of theCrPC. Ultimately there can be no better custodian or guardian of theinterest of justice than the court trying the case. No court will deny toitself the power to make use of the entries in the diary to the advantageof the accused by contradicting the police officer with reference to thecontents of the diaries. In view of this safeguard, the charge ofunreasonableness or arbitrariness cannot stand scrutiny. ……. Publicinterest demands that such an entry is not made available to the accusedfor it might endanger the safety of the informants and it might deter theinformants from giving any information to assist the investigating agency,…….” [underlining added]

A52. So far as the production of the case diary during trial andreference to the same by the court and the interdict against accused tocall for case diary is governed by Section 172 Cr.P.C. As per sub-section(3) of Section 172, neither the accused nor his agent is entitled to call forsuch case diaries and also not entitled to see them during the course ofenquiry or trial. The case diaries can be used for refreshing memory byBthe investigating officer and court can use it for the purpose ofcontradicting such police officer as per provisions of Section 161 orSection 145 of the Indian Evidence Act. Unless the investigating officeror the court so uses the case diary either to refresh the memory or forcontradicting the investigating officer as previous statement under SectionC161, after drawing his attention under Section 145, the entries in casediary cannot be used by the accused as evidence (vide Section 172(3)Cr.P.C.).

53. It is well-settled that the court can peruse the case diary/materials collected during investigation by the prosecution even beforeDthe commencement of the trial inter-alia in circumstances like:- (i) tosatisfy its conscience as to whether the investigation is proceeding in theright direction; (ii) to satisfy itself that the investigation has been conductedin the right lines and that there is no misuse or abuse of process in theinvestigation; (iii) whether regular or anticipatory bail is to be granted to

the accused or not; (iv) whether any further custody of the accused isErequired for the prosecution; (v) to satisfy itself as to the correctness ofthe decision of the High Court/trial court which is under challenge. Theabove instances are only illustrative and not exhaustive. Where theinterest of justice requires, the court has the powers, to receive the casediary/materials collected during the investigation. As held in MukundFLal, ultimately there can be no better custodian or guardian of the interestof justice than the court trying the case. Needless to point out that whenthe Court has received and perused the documents/materials, it is onlyfor the purpose of satisfaction of court’s conscience. In the initial stagesof investigation, the Court may not extract or verbatim refer to thematerials which the Court has perused (as has been done in this case byGthe learned Single Judge) and make observations which might causeserious prejudice to the accused in trial and other proceedings resultingin miscarriage of justice.

54. The Enforcement Directorate has produced the sealed coverbefore us containing the materials collected during investigation and theH

same was received. Vide order dated 29.08.2019, we have stated thatthe receipt of the sealed cover would be subject to our finding whetherthe court can peruse the materials or not. As discussed earlier, we haveheld that the court can receive the materials/documents collected duringthe investigation and peruse the same to satisfy its conscience that theinvestigation is proceeding in the right lines and for the purpose ofconsideration of grant of bail/anticipatory bail etc. In the present case,though sealed cover was received by this Court, we have consciouslyrefrained from opening the sealed cover and perusing the documents.Lest, if we peruse the materials collected by the respondent and makesome observations thereon, it might cause prejudice to the appellant andthe other co-accused who are not before this court when they are topursue the appropriate relief before various forum. Suffice to note thatat present, we are only at the stage of considering the pre-arrest bail.Since according to the respondent, they have collected documents/materials for which custodial interrogation of the appellant is necessary,which we deem appropriate to accept the submission of the respondentfor the limited purpose of refusing pre-arrest bail to the appellant.

55. Of course, while considering the request for anticipatory bailand while perusing the materials/note produced by the EnforcementDirectorate/CBI, the learned Single Judge could have satisfied hisconscience to hold that it is not fit case for grant of anticipatory bail.On the other hand, the learned Single Judge has verbatim quoted thenote produced by the respondent-Enforcement Directorate. The learnedSingle Judge, was not right in extracting the note produced by theEnforcement Directorate/CBI which in our view, is not correct approachfor consideration of grant/refusal of anticipatory bail. But such incorrectapproach of the learned Single Judge, in our view, does not affect thecorrectness of the conclusion in refusing to grant of anticipatory bail tothe appellant in view of all other aspects considered herein.

Re: Contention:-The appellant should have beenconfronted with the materials collected by the EnforcementDirectorate earlier, before being produced to the court.

56. On behalf of the appellant, it was contended that the materialsproduced by the Enforcement Directorate could have never been reliedupon for the purpose of consideration of anticipatory bail unless theappellant was earlier confronted with those documents/materials. It wassubmitted that if the appellant’s response was completely “evasive” and

A“non co-operative” during the three days when he was interrogated i.e.19.12.2018, 01.01.2019 and 21.01.2019, the respondent should placebefore the court the materials put to the appellant and the responseselicited from the accused to demonstrate to the court that “the accusedwas completely evasive and non-co-operative”.B57. Contention of the appellant that the court will have to scrutinise

B57. Contention of the appellant that the court will have to scrutinisethe questions put to the accused during interrogation and answers givenby the appellant and satisfy itself whether the answers were “evasive ornot”, would amount to conducting “mini trial” and substituting court’sview over the view of the investigating agency about the “cooperation”or “evasiveness” of the accused and thereafter, the court to decide theCquestions of grant of anticipatory bail. This contention is far-fetched anddoes not merit acceptance.58. As rightly submitted by learned Solicitor General that if theaccused are to be confronted with the materials which were collectedby the prosecution/Enforcement Directorate with huge efforts, it wouldDlead to devastating consequences and would defeat the very purpose ofthe investigation into crimes, in particular, white collar offences. If thecontention of the appellant is to be accepted, the investigating agencywill have to question each and every accused such materials collectedduring investigation and in this process, the investigating agency wouldbe exposing the evidence collected by them with huge efforts using theirEmen and resources and this would give chance to the accused to tamperwith the evidence and to destroy the money trail apart from paving theway for the accused to influence the witnesses. If the contention of theappellant is to be accepted that the accused will have to be questionedwith the materials and the investigating agency has to satisfy the courtFthat the accused was “evasive” during interrogation, the court will haveto undertake “mini trial” of scrutinizing the matter at intermediary stagesof investigation like interrogation of the accused and the answers elicitedfrom the accused and to find out whether the answers given by theaccused are ‘evasive’ or whether they are ‘satisfactory’ or not. Thiscould have never been the intention of the legislature either under PMLAGor any other statute.

59. Interrogation of the accused and the answers elicited fromthe accused and the opinion whether the answers given by the accusedare “satisfactory” or “evasive”, is purely within the domain of theinvestigating agency and the court cannot substitute its views byHconducting mini trial at various stages of the investigation.

60. The investigation of cognizable offence and the various stagesthereon including the interrogation of the accused is exclusively reservedfor the investigating agency whose powers are unfettered so long as theinvestigating officer exercises his investigating powers well within theprovisions of the law and the legal bounds. In exercise of its inherentpower under Section 482 Cr.P.C., the court can interfere and issueappropriate direction only when the court is convinced that the power ofthe investigating officer is exercised mala fide or where there is abuseof power and non-compliance of the provisions of Code of CriminalProcedure. However, this power of invoking inherent jurisdiction to issuedirection and interfering with the investigation is exercised only in rarecases where there is abuse of process or non-compliance of the provisionsof Criminal Procedure Code.

61. In King-Emperor v. Khwaja Nazir AhmadAIR 1945 PC18 : 1944 SCC Online PC 29, it was held as under:-

“…..it is of the utmost importance that the judiciary should notinterfere with the police in matters which are within their provinceand into which the law imposes upon them the duty of enquiry.

In India as has been shown there is statutory right on the part ofthe police to investigate the circumstances of an alleged cognizablecrime without requiring any authority from the judicial authorities,and it would, as their Lordships think, be an unfortunate result if itshould be held possible to interfere with those statutory rights byan exercise of the inherent jurisdiction of the Court. The functionsof the judiciary and the police are complementary not overlappingand the combination of individual liberty with due observance oflaw and order is only to be obtained by leaving each to exerciseits own function, always, of course, subject to the right of theCourt to intervene in an appropriate case when moved under S.491 of the Crl. P.C. ….” [underlining added]62. The above decision in Khwaja Nazir Ahmad has been quotedwith approval by the Supreme Court in Abhinandan Jha and others v.Dinesh MishraAIR 1968 SC 117 and State of Bihar and another v.J.A.C. Saldanha and others(1980) 1 SCC 554. Observing that theinvestigation of the offence is the field exclusively reserved for theexecutive through the police department and the superintendence overwhich vests in the State Government, in J.A.C. Saldanha, it was heldas under:-

A“25.There is clear-cut and well demarcated sphere of activityin the field of crime detection and crime punishment. Investigationof an offence is the field exclusively reserved for the executivethrough the police department the superintendence over whichvests in the State Government. The executive which is chargedwith duty to keep vigilance over law and order situation is obligedBto prevent crime and if an offence is alleged to have been committedit is its bounded duty to investigate into the offence and bring theoffender to book. Once it investigates and finds an offence havingbeen committed it is its duty to collect evidence for the purpose ofproving the offence. Once that is completed and the investigatingCofficer submits report to the court requesting the court to takecognizance of the offence under Section 190 of the Code its dutycomes to an end. On cognizance of the offence being taken bythe court the police function of investigation comes to an endsubject to the provision contained in Section 173(8), therecommences the adjudicatory function of the judiciary to determineDwhether an offence has been committed and if so, whether by theperson or persons charged with the crime by the police in its reportto the court, and to award adequate punishment according to lawfor the offence proved to the satisfaction of the court. There isthus well defined and well demarcated function in the field ofEcrime detection and its subsequent adjudication between the policeand the Magistrate. This had been recognised way back in KingEmperor v. Khwaja Nazir Ahmad AIR 1944 PC 18 ……...”.

The same view was reiterated in Dukhishyam Benupani, Asstt.Director, Enforcement Directorate (FERA) v. Arun Kumar BajoriaF(1998) 1 SCC 52, M.C. Abraham and Another v. State ofMaharashtra and Others (2003) 2 SCC 649, Subramanian Swamyv. Director, Central Bureau of Investigation and another(2014) 8SCC 682and Divine Retreat Centre v. State of Kerala and Others(2008) 3 SCC 542.

G63. Investigation into crimes is the prerogative of the police andexcepting in rare cases, the judiciary should keep out all the areas ofinvestigation. In State of Bihar and another v. P.P. Sharma, IAS andanother1992 Supp. (1) 222, it was held that “The investigating officeris an arm of the law and plays pivotal role in the dispensation of criminaljustice and maintenance of law and order. …..Enough power is thereforeH

given to the police officer in the area of investigating process and grantingthem the court latitude to exercise its discretionary power to make asuccessful investigation…”. In Dukhishyam Benupani, Asstt. Director,Enforcement Directorate (FERA) v. Arun Kumar Bajoria (1998) 1SCC 52, this Court held that “……it is not the function of the court tomonitor investigation processes so long as such investigation does nottransgress any provision of law. It must be left to the investigating agencyto decide the venue, the timings and the questions and the manner ofputting such questions to persons involved in such offences. blanketorder fully insulating person from arrest would make his interrogationa mere ritual.”64. As held by the Supreme Court in catena of judgments thatthere is well-defined and demarcated function in the field of investigationand its subsequent adjudication. It is not the function of the court tomonitor the investigation process so long as the investigation does notviolate any provision of law. It must be left to the discretion of theinvestigating agency to decide the course of investigation. If the court isto interfere in each and every stage of the investigation and theinterrogation of the accused, it would affect the normal course ofinvestigation. It must be left to the investigating agency to proceed in itsown manner in interrogation of the accused, nature of questions put tohim and the manner of interrogation of the accused.

65. It is one thing to say that if the power of investigation hasbeen exercised by an investigating officer mala fide or non-complianceof the provisions of the Criminal Procedure Code in the conduct of theinvestigation, it is open to the court to quash the proceedings wherethere is clear case of abuse of power. It is different matter that theHigh Court in exercise of its inherent power under Section 482 Cr.P.C.,the court can always issue appropriate direction at the instance of anaggrieved person if the High Court is convinced that the power ofinvestigation has been exercised by the investigating officer mala fideand not in accordance with the provisions of the Criminal ProcedureCode. However, as pointed out earlier that power is to be exercised inrare cases where there is clear abuse of power and non-complianceof the provisions falling under Chapter-XII of the Code of CriminalProcedure requiring the interference of the High Court. In the initialstages of investigation where the court is considering the question ofgrant of regular bail or pre-arrest bail, it is not for the court to enter into

Athe demarcated function of the investigation and collection of evidence/materials for establishing the offence and interrogation of the accusedand the witnesses.

66. Whether direction to produce the transcripts could beissued:- Contention of the appellant is that it has not been placed beforeBthe court as to what were the questions/aspects on which the appellantwas interrogated on 19.12.2018, 01.01.2019 and 21.01.2019 and theEnforcement Directorate has not been able to show as to how theanswers given by the appellant are “evasive”. It was submitted that theinvestigating agency-Enforcement Directorate cannot expect the accusedto give answers in the manner they want and the investigating agencyCshould always keep in their mind the rights of the accused protectedunder Article 20(3) of the Constitution of India. Since the interrogationof the accused and the questions put to the accused and the answersgiven by the accused are part of the investigation which is purely withinthe domain of the investigation officer, unless satisfied that the policeDofficer has improperly and illegally exercised his investigating powers inbreach of any statutory provision, the court cannot interfere. In thepresent case, no direction could be issued to the respondent to producethe transcripts of the questions put to the appellant and answers givenby the appellant.

EGrant of Anticipatory bail in exceptional cases:-

67. Ordinarily, arrest is part of procedure of the investigation tosecure not only the presence of the accused but several other purposes.Power under Section 438 Cr.P.C. is an extraordinary power and thesame has to be exercised sparingly. The privilege of the pre-arrest bailFshould be granted only in exceptional cases. The judicial discretionconferred upon the court has to be properly exercised after applicationof mind as to the nature and gravity of the accusation; possibility ofapplicant fleeing justice and other factors to decide whether it is fitcase for grant of anticipatory bail. Grant of anticipatory bail to someextent interferes in the sphere of investigation of an offence and hence,Gthe court must be circumspect while exercising such power for grant ofanticipatory bail. Anticipatory bail is not to be granted as matter of ruleand it has to be granted only when the court is convinced that exceptionalcircumstances exist to resort to that extraordinary remedy.

68. On behalf of the appellant, much arguments were advancedHcontending that anticipatory bail is facet of Article 21 of the Constitution

of India. It was contended that unless custodial interrogation is warranted,in the facts and circumstances of the case, denial of anticipatory bailwould amount to denial of the right conferred upon the appellant underArticle 21 of the Constitution of India.

69. Article 21 of the Constitution of India states that no personshall be deprived of his life or personal liberty except according toprocedure prescribed by law. However, the power conferred by Article21 of the Constitution of India is not unfettered and is qualified by thelater part of the Article i.e. “…except according to procedureprescribed by law.” In State of M.P. and another v. Ram KishnaBalothia and another(1995) 3 SCC 221, the Supreme Court heldthat the right of anticipatory bail is not part of Article 21 of theConstitution of India and held as under:-

“7. ……We find it difficult to accept the contention that Section438 of the Code of Criminal Procedure is an integral part of Article21. In the first place, there was no provision similar to Section 438in the old Criminal Procedure Code. The Law Commission in its41st Report recommended introduction of provision for grant ofanticipatory bail. It observed:

“We agree that this would be useful advantage. Though wemust add that it is in very exceptional cases that such power shouldbe exercised.”

In the light of this recommendation, Section 438 was incorporated,for the first time, in the Criminal Procedure Code of 1973. Lookingto the cautious recommendation of the Law Commission, thepower to grant anticipatory bail is conferred only on Court ofSession or the High Court. Also, anticipatory bail cannot be grantedas matter of right. It is essentially statutory right conferredlong after the coming into force of the Constitution. It cannot beconsidered as an essential ingredient of Article 21 of theConstitution.And its non-application to certain special categoryof offences cannot be considered as violative of Article 21.”[underlining added]

70. We are conscious of the fact that the legislative intent behindthe introduction of Section 438 Cr.P.C. is to safeguard the individual’spersonal liberty and to protect him from the possibility of being humiliatedand from being subjected to unnecessary police custody. However, the

Acourt must also keep in view that criminal offence is not just an offenceagainst an individual, rather the larger societal interest is at stake.Therefore, delicate balance is required to be established between thetwo rights - safeguarding the personal liberty of an individual and thesocietal interest. It cannot be said that refusal to grant anticipatory bailwould amount to denial of the rights conferred upon the appellant underBArticle 21 of the Constitution of India.

71. The learned Solicitor General has submitted that dependingupon the facts of each case, it is for the investigating agency to confrontthe accused with the material, only when the accused is in custody. Itwas submitted that the statutory right under Section 19 of PMLA has anCin-built safeguard against arbitrary exercise of power of arrest by theinvestigating officer. Submitting that custodial interrogation is recognisedmode of interrogation which is not only permissible but has been held tobe more effective, the learned Solicitor General placed reliance uponState Rep. By The CBI v. Anil Sharma (1997) 7 SCC 187; Sudhir v.DState of Maharashtra and Another (2016) 1 SCC 146; and AssistantDirector, Directorate of Enforcement v. Hassan Ali Khan (2011) 12SCC 684.

72. Ordinarily, arrest is part of the process of the investigationintended to secure several purposes. There may be circumstances inEwhich the accused may provide information leading to discovery ofmaterial facts and relevant information. Grant of anticipatory bail mayhamper the investigation. Pre-arrest bail is to strike balance betweenthe individual’s right to personal freedom and the right of the investigatingagency to interrogate the accused as to the material so far collected andto collect more information which may lead to recovery of relevantFinformation. In State Rep. By The CBI v. Anil Sharma (1997) 7 SCC187, the Supreme Court held as under:-

“6. We find force in the submission of the CBI that custodialinterrogation is qualitatively more elicitation-oriented thanquestioning suspect who is well ensconced with favourableorder under Section 438 of the Code. In case like this effectiveinterrogation of suspected person is of tremendous advantagein disinterring many useful informations and also materials whichwould have been concealed. Success in such interrogation wouldelude if the suspected person knows that he is well protected andinsulated by pre-arrest bail order during the time he is

interrogated. Very often interrogation in such condition wouldreduce to mere ritual. The argument that the custodialinterrogation is fraught with the danger of the person beingsubjected to third-degree methods need not be countenanced, for,such an argument can be advanced by all accused in all criminalcases. The Court has to presume that responsible police officerswould conduct themselves in responsible manner and that thoseentrusted with the task of disinterring offences would not conductthemselves as offenders.”

73. Observing that the arrest is part of the investigation intendedto secure several purposes, in Adri Dharan Das v. State of W.B. (2005)4 SCC 303, it was held as under:-

“19. Ordinarily, arrest is part of the process of investigationintended to secure several purposes. The accused may have tobe questioned in detail regarding various facets of motive,preparation, commission and aftermath of the crime and theconnection of other persons, if any, in the crime. There may becircumstances in which the accused may provide informationleading to discovery of material facts. It may be necessary tocurtail his freedom in order to enable the investigation to proceedwithout hindrance and to protect witnesses and persons connectedwith the victim of the crime, to prevent his disappearance, tomaintain law and order in the locality. For these or other reasons,arrest may become an inevitable part of the process ofinvestigation. The legality of the proposed arrest cannot be goneinto in an application under Section 438 of the Code. The role ofthe investigator is well defined and the jurisdictional scope ofinterference by the court in the process of investigation is limited.The court ordinarily will not interfere with the investigation of acrime or with the arrest of the accused in cognizable offence.An interim order restraining arrest, if passed while dealing withan application under Section 438 of the Code will amount tointerference in the investigation, which cannot, at any rate, bedone under Section 438 of the Code.”

74. In Siddharam Satlingappa Mhetre v. State of Maharashtraand Others (2011) 1 SCC 694, the Supreme Court laid down the factorsand parameters to be considered while dealing with anticipatory bail. Itwas held that the nature and the gravity of the accusation and the exact

DEFG

Arole of the accused must be properly comprehended before arrest ismade and that the court must evaluate the available material against theaccused very carefully. It was also held that the court should also considerwhether the accusations have been made only with the object of injuringor humiliating the applicant by arresting him or her.

75. After referring to Siddharam Satlingappa Mhetre and otherjudgments and observing that anticipatory bail can be granted only inexceptional circumstances, in Jai Prakash Singh v. State of Biharand another(2012) 4 SCC 379, the Supreme Court held as under:-

“19. Parameters for grant of anticipatory bail in serious offenceCare required to be satisfied and further while granting such relief,the court must record the reasons therefor. Anticipatory bail canbe granted only in exceptional circumstances where the court isprima facie of the view that the applicant has falsely been enropedin the crime and would not misuse his liberty. (See D.K. GaneshBabu v. P.T. Manokaran (2007) 4 SCC 434, State ofDMaharashtra v. Mohd. Sajid Husain Mohd. S. Husain (2008)1 SCC 213 and Union of India v. Padam Narain Aggarwal(2008) 13 SCC 305.)”

Economic Offences:-

E76. Power under Section 438 Cr.P.C. being an extraordinaryremedy, has to be exercised sparingly; more so, in cases of economicoffences. Economic offences stand as different class as they affectthe economic fabric of the society. In Directorate of Enforcement v.Ashok Kumar Jain(1998) 2 SCC 105, it was held that in economicoffences, the accused is not entitled to anticipatory bail.F

77. The learned Solicitor General submitted that the “Scheduledoffence” and “offence of money laundering” are independent of eachother and PMLA being special enactment applicable to the offence ofmoney laundering is not fit case for grant of anticipatory bail. Thelearned Solicitor General submitted that money laundering being anGeconomic offence committed with much planning and deliberate designposes serious threat to the nation’s economy and financial integrityand in order to unearth the laundering and trail of money, custodialinterrogation of the appellant is necessary.78. Observing that economic offence is committed with deliberateHdesign with an eye on personal profit regardless to the consequence to

the community, in State of Gujarat v. Mohanlal Jitamalji Porwal andothers(1987) 2 SCC 364, it was held as under:-

“5. ….The entire community is aggrieved if the economic offenderswho ruin the economy of the State are not brought to book. Amurder may be committed in the heat of moment upon passionsbeing aroused. An economic offence is committed with coolcalculation and deliberate design with an eye on personal profitregardless of the consequence to the community. disregard forthe interest of the community can be manifested only at the costof forfeiting the trust and faith of the community in the system toadminister justice in an even-handed manner without fear ofcriticism from the quarters which view white collar crimes with apermissive eye unmindful of the damage done to the nationaleconomy and national interest…..”

79. Observing that economic offences constitute class apartand need to be visited with different approach in the matter of bail, inY.S. Jagan Mohan Reddy v. CBI(2013) 7 SCC 439, the SupremeCourt held as under:-

“34.Economic offences constitute class apart and need to bevisited with different approach in the matter of bail. Theeconomic offences having deep-rooted conspiracies and involvinghuge loss of public funds need to be viewed seriously andconsidered as grave offences affecting the economy of the countryas whole and thereby posing serious threat to the financial healthof the country.

35. While granting bail, the court has to keep in mind the natureof accusations, the nature of evidence in support thereof, theseverity of the punishment which conviction will entail, thecharacter of the accused, circumstances which are peculiar tothe accused, reasonable possibility of securing the presence ofthe accused at the trial, reasonable apprehension of the witnessesbeing tampered with, the larger interests of the public/State andother similar considerations.” [underlining added]

80. Referring to Dukhishyam Benupani, Assistant Director,Enforcement Directorate (FERA) v. Arun Kumar Bajoria(1998) 1SCC 52, in Enforcement Officer, Ted, Bombay v. Bher Chand TikajiBora and others(1999) 5 SCC 720, while hearing an appeal by the

AEnforcement Directorate against the order of the Single Judge of theBombay High Court granting anticipatory bail to the respondent thereon,the Supreme Court set aside the order of the Single Judge grantinganticipatory bail.

81. Grant of anticipatory bail at the stage of investigation mayBfrustrate the investigating agency in interrogating the accused and incollecting the useful information and also the materials which might havebeen concealed. Success in such interrogation would elude if the accusedknows that he is protected by the order of the court. Grant of anticipatorybail, particularly in economic offences would definitely hamper theeffective investigation. Having regard to the materials said to have beenCcollected by the respondent-Enforcement Directorate and consideringthe stage of the investigation, we are of the view that it is not fit caseto grant anticipatory bail.82. In case of money-laundering where it involves many stagesof “placement”, “layering i.e. funds moved to other institutions to concealDorigin” and “interrogation i.e. funds used to acquire various assets”, itrequires systematic and analysed investigation which would be of greatadvantage. As held in Anil Sharma, success in such interrogation wouldelude if the accused knows that he is protected by pre-arrest bailorder. Section 438 Cr.P.C. is to be invoked only in exceptional casesEwhere the case alleged is frivolous or groundless. In the case in hand,there are allegations of laundering the proceeds of the crime. TheEnforcement Directorate claims to have certain specific inputs fromvarious sources, including overseas banks. Letter rogatory is also said tohave been issued and some response have been received by thedepartment. Having regard to the nature of allegations and the stage ofFthe investigation, in our view, the investigating agency has to be givensufficient freedom in the process of investigation. Though we do notendorse the approach of the learned Single Judge in extracting the noteproduced by the Enforcement Directorate, we do not find any groundwarranting interference with the impugned order. Considering the factsGand circumstances of the case, in our view, grant of anticipatory bail tothe appellant will hamper the investigation and this is not fit case forexercise of discretion to grant anticipatory bail to the appellant.

83. In the result, the appeal is dismissed. It is for the appellant towork out his remedy in accordance with law. As and when the applicationHfor regular bail is filed, the same shall be considered by the learned trial

court on its own merits and in accordance with law without beinginfluenced by any of the observations made in this judgment and theimpugned order of the High Court.

Ankit Gyan

Appeal dismissed.