As per the latest Annual Report for financial year 2018-19 released by the Reserve Bank of India, the amount involved in the banking fraud cases has gone up by whooping 73.8 percent involving a total of Rs 71,542.93 crores, which sufficiently explains the imminent need for stringent enforcement of money laundering laws in India. Considering the deep rooted conspiracies involved in commission of such economic offences, the Hon'ble Supreme Court of India has taken a stricter and stringent view on such offences and different yardsticks have been prescribed in dealing with the cases pertaining to commission of economic offences. In pursuance of which, the Hon'ble Supreme Court recently denied to convert the non-bailable warrants issued against the persons accused for money laundering. Similarly, different approach has been prescribed for deciding the anticipatory bails pertaining to such offences. The article discusses such recent legal developments pertaining to the money laundering cases which are bound to have far are reaching consequences on the rights of the persons alleged for commission of such economic offences.
- Supreme Court upholds summoning of accused through non-bailable warrants after taking cognizance on the Complaint under PMLA, 2002.
As per section 45 of the PMLA, 2002 the Special Court takes the cognizance of the offence punishable u/s 4 of the PMLA, 2002 upon receiving the complaint in writing from the authorized person. Thereafter the process is issued to the person against whom the cognizance is taken to secure his presence before the Court. The law confers the discretion on the court to decide the manner of summoning i.e. whether the accused person is to be called through summon or warrants.
Recently, the Hon'ble Supreme Court has vide its order dated 10.02.2020 dismissed the Special Leave Petitions filed against the Judgment pronounced by the Hon'ble Rajasthan High Court in the case of Shyam Sundar Singhvi & Ors. v. Union of India & Ors. [Hereinafter referred as "Shyam Sundar Singhvi Case"] wherein the Hon'ble High Court dismissed the bunch of petitions seeking conversion of non-bailable warrants issued by the Learned Special Court after taking the cognizance against the Petitioners on the Complaint filed by the Enforcement Directorate alleging the commission of offence under section 3 and 4 of the PMLA, 2002. The non-bailable warrants were issued by the learned Special Court at the first instance itself, in order to secure the presence of the accused person before the Court.
The Petitioners challenged the issuance of warrants by the Learned Special Court by relying on the celebrated principle laid down by the Hon'ble Apex Court in its landmark Judgment of Inder Mohan Goswami v. Union of India. [Hereinafter referred as "Inder Mohan Goswami Case"] wherein the Hon'ble Court held that "In complaint cases, at the first instance, the court should direct serving of the summons along with the copy of the complaint. If the accused seem to be avoiding the summons, the court, in the second instance should issue bailable- warrant. In the third instance, when the court is fully satisfied that the accused is avoiding the courts proceeding intentionally, the process of issuance of the non-bailable warrant should be resorted to. Personal liberty is paramount, therefore, we caution courts at the first and second instance to refrain from issuing non-bailable warrants". The said principle was further upheld by the Hon'ble Apex Court in the case of Vikas v. State of Rajasthan.
The Accused-Petitioners contended that they duly cooperated in the investigation carried by the Enforcement Directorate, after completion of which the Complaint was filed before the Learned Special Court. However, the Learned Court ignored the aforementioned principle of law and while taking the cognizance on the Complaint, directly issued the non-bailable warrants merely to seek the presence of accused person in the Court. The Petitioners contended that no investigation remains pending in the said case and they are ready and willing to appear before the Learned Special Court and face the trial.
The Hon'ble Rajasthan High Court dismissed the Petitions by holding that the general principle laid down by the Hon'ble Apex Court in the Inder Mohan Goswami Case cannot be applied to the economic offences and separate yardsticks are required to be adopted for such offences which affects the society at large. While dismissing the Petitions, the Hon'ble Court held that "This court finds that time and again the Apex Court has laid down the law that economic offences are required to be dealt with strict approach as these offences affect the economy of the whole Nation and economic offences are committed with a pre-meditated design. This court finds that the economic offences stand on a different footing and they constituent a class apart and need to be visited with a different approach." The Hon'ble Court further observed that interference in the order of the Learned Subordinate Court would result in giving undue leverage to the persons accused of committing economic offences having severe impact on the society.
It is pertinent to note that the aforementioned Judgment pronounced by the Hon'ble Rajasthan High Court marked an exception to the general approach adopted across the Country wherein the Hon'ble High Courts have time and again applied the principle laid down in the Inder Mohan Goswami Case in the PMLA, 2002 cases while converting the Non-Bailable warrants in the Bailable warrants or summons. The Hon'ble Rajasthan High Court has itself passed several orders modifying the orders of the Learned Special Court by converting the Non-Bailable Warrants into the Bailable warrants.
The Hon'ble Supreme Court of India dismissed the Special Leave Petition filed against such order by observing that "we do not find any reason to interfere in these matters" and thus, the Judgment of the Hon'ble Rajasthan High Court in the case of Shyam Sundar Singhvi Case has attained its finality from the Hon'ble Apex Court and is now the binding principle of law on all the courts across the Country.
- Maintainability of Anticipatory Bail in the economic Offences.
The Hon'ble Supreme Court has maintained its strict stand while dealing with the anticipatory bails in the cases pertaining to the commission of economic offences. Recently, while dismissing the anticipatory bail application of the Shri P. Chidambaram in the Money Laundering Case, the Hon'ble Supreme Court of India observed that "Power under Section 438 Cr.P.C. being an extraordinary remedy, has to be exercised sparingly; more so, in cases of economic offences. Economic offences stand as a different class as they affect the economic fabric of the society. In Directorate of Enforcement v. Ashok Kumar Jain (1998) 2 SCC 105, it was held that in economic offences, the accused is not entitled to anticipatory bail.............. Grant of anticipatory bail, particularly in economic offences would definitely hamper the effective investigation." The stricter approach, while considering the anticipatory bail in the economic offences, was also called for by the Hon'ble Court in the cases of Y.S. Jagan Mohan Reddy v. CBI (2013) 7 SCC 439 and State of Gujarat v. Mohanlal Jitamalji Porwal and others (1987) 2 SCC 364.
Thus, the grant of anticipatory bail in the economic offences cannot be sought on the grounds relied to seek anticipatory bail in any other offence. The same can be sought only in the exceptional and extraordinary circumstances wherein the Applicant is able to establish that the allegations levelled against him are frivolous and groundless. Similar view also taken by the Hon'ble Court in the case of Central Bureau of Investigation v. Ramendu Chattopadhyaywherein the Hon'ble Court cancelled the bail granted to the accused persons in the chit fund scam.
The aforementioned principles laid down by the Hon'ble Supreme Court may stand diluted in light of the observations made by the Hon'ble Constitutional Bench in the Case of Sushila Aggarwal v. State (NCT of Delhi) wherein while deciding the reference, the Hon'ble Constitutional Bench has also observed that " the answer to the first question in the reference made to this bench is that there is no offence, per se, which stands excluded from the purview of Section 438, - except the offences mentioned in Section 438 (4)." Thus, the Hon'ble Constitutional Bench has ruled that there cannot be a blanket ban on grant of anticipatory bail and the same has to be decided on the basis of the facts and circumstances of the case and the natures of alleged offence, inter alia.
Analysis of the Judgments and way ahead
It is a settled proposition of law that usually a person is taken in custody when he is required for interrogation, recoveries are to be effected from such person, there exist a possibility that such person would temper with the evidences or he would flew away to evade the proceedings. However, in the cases where the accused person has duly cooperated in the entire investigation carried out by specialized investigating agency and such person was not arrested by the investigation agency itself during the entire investigation, though the agency was conferred with the power of arrest such person, it would be safe to presume that the aforementioned circumstances warranting arrest were not found to exist.
The Learned Special Court may not be said to be justified in issuing the non-bailable warrant at the first instance merely to seek the attendance of the accused in Court after taking the cognizance on the Complaint of the Enforcement Directorate as it would result in presuming that if the accused is called through the summons or bailable warrant then he would rather flew away and would not appear before the Court. Such presumption stands contrary to the factual position and previous conduct of the accused wherein he himself has cooperated in the investigation pursuant to which the complaint was filed before the Learned Special Court. In any way, if the accused fails to appear before the Court in compliance of the summons issued, the Learned Trial court is always possessed with the power to issue the Non-Bailable warrants on the next date, which has been duly dealt with in the Inder Mohan Goswami case wherein the Hon'ble Apex court has observed that Non-bailable warrant should be issued when it is reasonable to believe that the person will not voluntarily appear in court or the police authorities are unable to find the person to serve him with a summon.
Here it is pertinent to consider the Hon'ble Apex Court has itself held in the case of P. Chidambaram v. Directorate of Enforcement that need of person to be kept in custody has to be determined by applying the Triple Test (flight risk, tampering with evidence and influencing of witnesses) and the same cannot be rejected merely on the ground that offences under the PMLA are heinous and severe in nature. However, without the evaluation of any such circumstance prescribed in the Triple Test, the issuance of the Non-Bailable warrant at the first instance has been held to be justified by the Hon'ble Rajasthan High court and further confirmed by the Hon'ble Supreme Court.
The need for stringent outlook towards the Socio-Economic offences has been the major reason assigned by the Hon'ble Rajasthan High Court for denying the applicability of the principle laid down in Inder Mohan Goswami Case which primarily deals with the manner of summoning of accused to the Court. The Hon'ble Court has not gone into the aspect that the Learned Special Court always possess the power to decide the gravity and seriousness of the offence at the time of hearing the Bail application of the Accused person which would be filed by him immediately on appearing before the Learned Court. It is pertinent to state here the offence under section 3 and 4 of PMLA, 2002 is a non-bailable offence and the accused summoned by the Court is required to move the bail application before the Learned Special Court to seek the regular bail from the Court.
On one hand, the stringent and prompt action against the persons alleged for offence of money laundering is the need of hour. However, on the other hand, the issuance of non-bailable warrants involves interferences with personal liberty of the person who yet to face trial and prove his innocence.
ConclusionThe aforementioned proposition of law, as settled in the case of Shyam Sundar Singhvi Case, is bound to have far reaching consequences not just in the PMLA Cases but also in all other case falling in the category of socio-economic offences including the White-collar crimes, tax evasion cases, trafficking etc., the glimpse of which has been duly provided in the Forty-Seventh Report of the Law Commission of India.
Mohit Khandelwal is Advocate at Rajasthan High Court, Jaipur Bench. The author's views are personal.
 Shyam Sundar Singhvi v. Union of India, Special Leave to Appeal (Crl.) No. 792/2020. Available at https://main.sci.gov.in/supremecourt/2020/3488/3488_2020_6_69_20419_Order_10-Feb-2020.pdf
 S.B. Criminal Miscellaneous (Petition) Nos. 2872, 4770, 4771, 5426, 5427, 5430 and 5524/2019; MANU/RH/0096/2020.Available at
 Inder Mohan Goswami v. Union of India, AIR 2008 SC 251.
 Vikas v. State of Rajasthan, (2014) 3 SCC 321.
 Pushpendra Agarwal v. Mukesh Kumar Meena, S.B. Criminal Misc. Petition No. 7892/2018, Mahesh Mudgal V. Alok Kumar, S.B. Criminal Misc. Petition No. 2044/2019, Oro Trade Network and Ors. v. State of Rajasthan, S.B. Criminal Revision No. 1915/2018.
 P. Chidambaram v. Directorate Of Enforcement, AIR 2019 SC 4198.
 Central Bureau of Investigation v. Ramendu Chattopadhyay, 2019 (16) SCALE 563.
 Sushila Aggarwal v. State (NCT of Delhi), AIR 2020 SC 831.
 P. Chidambaram v. Directorate of Enforcement, 2019 (16) SCALE 870.
 Sanjay Chandra vs CBI, (2012) 1 SCC 40.