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Ashok Munilal Jain And Another v. Assistant Director, Directorate Of Enforcement .
Factual and Procedural Background
The Directorate of Enforcement, Chennai registered ECIR No. ECIR/CEZO/19/2016 against the present appellant on the basis of a CBI case concerning A. Sekar Reddy and others, including unnamed bank officials. The appellant was arrested and placed in judicial custody. He moved two applications before the trial court: (1) a regular bail application under Section 439 of the Code of Criminal Procedure, 1973 (CrPC), and (2) an application for “statutory bail” under Section 167(2) CrPC on the ground that no complaint had been filed within 60 days of his detention. The trial court dismissed both applications, holding inter alia that Section 167(2) CrPC does not apply to prosecutions under the Prevention of Money-Laundering Act, 2002 (PMLA). The High Court of Madras affirmed the trial court’s view in 2017 SCC OnLine Mad 19776. The appellant appealed to the Supreme Court.
Legal Issues Presented
- Whether the provisions of Section 167(2) of the CrPC, which confer a right to default/ statutory bail when no complaint is filed within the prescribed period, apply to investigations and prosecutions under the PMLA.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Directorate of Enforcement v. Deepak Mahajan, (1994) 3 SCC 440 | Held that Section 167(2) CrPC governs production and detention of persons arrested under special fiscal statutes (FERA and Customs Act). | The Court relied on this judgment to affirm that Section 167(2) CrPC likewise applies to arrests under the PMLA. |
| 2017 SCC OnLine Mad 19776 (Madras High Court) | The High Court had held that Section 167(2) CrPC is inapplicable to PMLA proceedings. | The Supreme Court expressly disagreed with and overturned this view. |
Court's Reasoning and Analysis
The Supreme Court scrutinised the orders of both the trial court and the High Court and found that the High Court merely endorsed the trial court’s conclusion without independent reasoning. The Court emphasised:
- Statutory Incorporation of CrPC: Sections 44–46 and 65 of the PMLA explicitly incorporate CrPC provisions into PMLA proceedings unless inconsistent with the Act. Section 65 states that CrPC provisions apply to “arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings” under PMLA.
- General Application Clause in CrPC: Under Section 4(2) CrPC, its procedures apply to offences under any other law unless expressly excluded. The Court noted no express exclusion in the PMLA.
- Binding Precedent: The decision in Deepak Mahajan was cited to demonstrate that Section 167(2) CrPC governs detention even under special statutes, reinforcing the applicability of default bail provisions.
- Concession by Respondent: The learned Attorney General did not dispute the legal position that Section 167(2) CrPC applies.
Consequently, because no complaint was filed within 60 days of the appellant’s custody, the statutory right to bail under Section 167(2) CrPC had accrued.
Holding and Implications
Appeal Allowed. The appellant is entitled to statutory bail and is to be released forthwith, subject to conditions to be set by the trial court. The connected writ petition and special leave petition were dismissed as withdrawn.
Implications: The ruling clarifies that the default-bail provisions in Section 167(2) CrPC apply to investigations under the PMLA. This reinforces the procedural safeguards of the CrPC in money-laundering prosecutions and limits prolonged custody without timely filing of a complaint.
Order
1. With the consent of the learned counsel appearing for the parties, we have heard the matter finally at this stage.
Criminal Appeal No. 566 of 2017
[Arising out of SLP (Criminal) No. 2301 of 2017]
2. Leave granted. The Enforcement Case Information Report (ECIR) No. ECIR/CEZO/19/2016 has been registered by the Directorate of Enforcement, Chennai, essentially against the appellant herein. The aforesaid case was registered on the basis of a criminal case registered by CBI, Chennai, against one A. Sekar Reddy and five others and also some other unknown bank officials. The appellant was arrested. He filed application for bail under Section 439 of the Code of Criminal Procedure (CrPC). During the pendency of the said bail application, the appellant filed another application praying for grant of statutory bail as, according to him, when the period of 60 days of judicial custody of the appellant was over, no complaint was filed. He, thus, invoked the provisions of Section 167(2) CrPC while requesting for statutory bail. Both these applications were dismissed by the trial court. Application for grant of bail was dismissed on merits. As far as application for statutory bail filed under Section 167(2) CrPC is concerned, the trial court held the view that the provisions of Section 167(2) CrPC are not applicable to cases arising out of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as “the PMLA Act”). The appellant challenged this order in the High Court. The High Court has affirmed 2017 SCC OnLine Mad 19776 the order of the trial court and dismissed the petition of the appellant accepting the reasons given by the trial court that provisions of Section 167(2) CrPC are not applicable in the cases arising out of the PMLA Act.
3. We have gone through the orders passed by the trial court as well as by the High Court. We may state at the outset that insofar as the High Court is concerned, it has not given any reasons in support of its aforesaid view except endorsing the view of the trial court to the effect that the provisions of Section 167(2) CrPC are not applicable to the cases under the PMLA Act. This position in law stated by the trial court does not appear to be correct and even the learned Attorney General appearing for the respondent could not dispute the same. We may record that as per the provisions of Section 4(2) CrPC, the procedure contained therein applies in respect of special statutes as well unless the applicability of the provisions is expressly barred. Moreover, Sections 44 to 46 of the PMLA Act specifically incorporate the provisions of CrPC to the trials under the PMLA Act. Thus, not only that there is no provision in the PMLA Act excluding the applicability of CrPC, on the contrary, provisions of CrPC are incorporated by specific inclusion. Even Section 65 of the PMLA Act itself settles the controversy beyond any doubt in this behalf which reads as under:
“65. Code of Criminal Procedure, 1973 to apply.—The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act.”
4. We may also refer to the judgment of this Court in Directorate of Enforcement v. Deepak Mahajan (1994) 3 SCC 440 wherein it was held as under:
“136. In the result, we hold that sub-sections (1) and (2) of Section 167 are squarely applicable with regard to the production and detention of a person arrested under the provisions of Section 35 of FERA and Section 104 of the Customs Act and that the Magistrate has jurisdiction under Section 167(2) to authorise detention of a person arrested by any authorised officer of the Enforcement under FERA and taken to the Magistrate in compliance of Section 35(2) of FERA.”
5. We, thus, do not agree with the opinion of the High Court that the provisions of Section 167(2) CrPC would not be applicable to the proceedings under the PMLA Act. In the present case, as no complaint was filed even after the expiry of 60 days from the date when the appellant was taken into custody, he was entitled to statutory bail in view of the provisions contained in Section 167(2) CrPC.
6. This appeal is, accordingly, allowed and as a result thereof, the appellant shall be given the benefit of statutory bail and be released forthwith subject to the conditions that may be imposed by the trial court.
Writ Petition (Criminal) No. 40 of 2017
Special Leave Petition (Criminal) No. 2278 of 2017
7. In view of the orders passed as aforesaid, as prayed for, the aforesaid writ petition and the special leave petition are dismissed as withdrawn.
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