The Judgment in V. Senthil Balaji v. State — On Remands to Custody and S. 167 of the Code (Part Two)

 (This is the second in a two-part post. For the first post, click here)

The previous post in this series began a discussion of the Supreme Court's judgment in V. Senthil Balaji v. State [Crl. Appeal Nos. 2284-85 of 2023 (Decided on 07.08.2023) ("Balaji")]. It looked at the reasoning adopted by the Supreme Court while concluding that procedures governing arrests under the general law — i.e., the Criminal Procedure Code 1973 ["Cr.P.C."] — did not apply to arrests under the Prevention of Money Laundering Act 2002 ["PMLA"] because this was not ordinary police but a 'sui generis' scheme, while at the same time concluding that officers of the Enforcement Directorate arresting persons under PMLA could be granted custody of the arrested person as provided under the Cr.P.C. even though the said provisions applied to police (which the Directorate officials were not).

This post turns to the Court's findings in Balaji on how should we interpret the legal provision pertaining to extended custodial detention of arrested persons during the pendency of an investigation — Section 167 of the Cr.P.C. Before turning to the Court's findings, it will be helpful to extract the relevant portions of the provision:

167. Procedure when investigation cannot be completed in twenty-four hours.—

(1) Whenever any person is arrested and detained in custody, and it appears that the investigation cannot be completed within the period of twenty-four hours fixed by section 57, and there are grounds for believing that the accusation or information is well founded, the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of sub-inspector, shall forthwith transmit to the nearest Judicial Magistrate a copy of the entries in the diary hereinafter prescribed relating to the case, and shall at the same time forward the accused to such Magistrate. 

(2) The Magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole; and if he has no jurisdiction to try the case or commit it for trial, and considers further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction: 

Provided that — (a) the Magistrate may authorise the detention of the accused person, otherwise than in custody of the police, beyond the period of fifteen days, if he is satisfied that adequate grounds exist for doing so, but no Magistrate shall authorise the detention of the accused person in custody under this paragraph for a total period exceeding— 

(i) ninety days, where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of not less than ten years;

(ii) sixty days, where the investigation relates to any other offence.

What Balaji says on Section 167

The discussion on Section 167 in Balaji takes place at two places — first at paras 50 to 66, and then from paras 73 to 79 of the judgment. The reason the Court wNIas called upon to interpret the provision may first be clarified. Here, the accused was arrested under PMLA, and the agency sought and obtained his custody from the concerned court, but before the agency could seek and actually take custody, the accused had been shifted to hospital for emergency procedures. The accused remained in hospital for the next two weeks. The agency renewed its request for taking custody of the accused upon his discharge. According to counsel for the accused, however, the agency was barred from taking custody now. It was argued that the 'fifteen days' referred to in Section 167(2) Cr.P.C. which spelt out the outer limit of custody possible for an investigative agency was a reference to the first fifteen days of custody, and not any point thereafter. Since the accused had already spent more than two weeks in custody, this period had lapsed, and the Directorate could not be helped. This was not a first principles pitch — it relied entirely upon a previous judgment of the Supreme Court in CBI v. Anupam J. Kulkarni [AIR 1992 SC 1768 ("Anupam Kulkarni")]. 

The Supreme Court in Anupam Kulkarni had explicitly and unequivocally held that the 'fifteen days' were the first fifteen days of custody, and did not refer to a period of fifteen days that applied across the broader time frame of 60 or 90 days. On this reading, the Court in Anupam Kulkarni dismissed applications of the CBI which sought to obtain physical custody of an accused outside of the first fifteen days, on grounds that the accused had been admitted to hospital for a few of those days and thus became unavailable to the CBI for questioning. 

There had been recent rumblings of discontent with the bright-line rule of Anupam Kulkarni emerging from the Supreme Court when in April a different bench agreed to create an exception and grant custody outside of fifteen days because it was of the view that the accused had acted in bad faith. In Balaji, not only does the Court reinforce this view that the fifteen days have to refer to a period when actual custody could be taken (para 60) but it gives the discontent with Anupam Kulkarni much firmer expression. The bench of Two Justices (same as the strength of the bench in Anupam Kulkarni) in Balaji has expressly voiced its disagreement with the view that custody with agencies must be limited to only the first fifteen days, and recommending that the matter be placed for consideration by a bench of larger strength. 

To understand why the Court in Balaji has concluded thus, we must turn to paras 50 to 66, and then paras 73 to 79. The main plank of the Court's reasoning is simple — nowhere does Section 167 itself state that police custody is limited to the first fifteen days. It says that the magistrate may authorise detention in custody from 'time to time', for a term not exceeding fifteen days 'in the whole'. This 'in the whole' cannot be read as the first fifteen days, but must refer to the outer limit of permissible detention in custody during an investigation which is either 90 days or 60 days (depending upon the offence). It acknowledges that the time limits have an Article 21 element and are a means to ensure speedy investigations, but it firmly holds that the Anupam Kulkarni view is principally wrong and this textual / plain / literal reading of Balaji ought to be favoured — "any other interpretation would seriously impair the power of investigation" (para 63). [Coincidentally, the Court was also not keen to provide any notice to prior to arrest on similar grounds of it seriously impairing investigations (para 33).]

Why Balaji is wrong in its reading of Section 167

There may or may not be a hearing on this issue of how to read Section 167 by a bench of larger strength — the Chief Justice may conclude that it is unnecessary, or perhaps the provision itself will be rendered a relic of the past with the new Sanhitas come into force. Nevertheless, it is important to understand why the view taken in Balaji is incorrect.

Let us take the statutory interpretation facets first. Balaji pens an ode to plain / literal / textual reading of a statute to convince us that such a reading ought to be followed in this case. But in tune with the double-speak found elsewhere in the judgment, we find that the Court abandons the statutory text when it suits the conclusions the Court wants to arrive it. In telling us that the limit of fifteen days can span across the overall period of 90 / 60 days, Balaji fails to pay heed to the phrase "the period of fifteen days" which the proviso refers to. This is not "a period" of fifteen days over which detention in custody of an agency can take place, but a definite, "the period" of fifteen days during which the detention can take place. It has to, therefore, be a continuous period, and not one that can be shaved off and broken up across a 90 / 60 day period. 

If the Court in Balaji had engaged more closely with the decision in Anupam Kulkarni, it would have realised that Anupam Kulkarni was not seemingly operating with the old Cr.P.C. in mind, but it was very much aware of the new law. This is where the history behind the provision becomes critical to understand, something which Balaji does a great disservice to, more so because what it offers to us is a half-baked historical approach with the comparison table (para 50) which merely presents the 1898 Code along side with the 1973 Code and plays spot the differences. 

A Short History of Section 167(2)

There is a journey from the old Code to the 1973 Code, a reason behind the choices made by Parliament when it enacted Section 167 and the other provisions of the 1973 Code. Without even attempting to delve into this history, the Court in Balaji could not have made assumptions about what might have been the legislative intent behind the phrasing of Section 167 as it was brought in the 1973 Code.

What is this history? Section 167 of the old 1898 Code permitted only fifteen days of custody during an investigation. This prompted a practice where police filed incomplete chargesheets only to make sure that the accused remained in custody while the investigation could continue, resulting in lengthy detentions at a stage even before the court was anywhere near starting proceedings. Parliament wanted to fix this aspect of the existing setup and speed up the process. 

This is the story that we find in different Law Commission Reports (repeated in judgments later), but none of these detail the drafting process of the new provisions, which is what we now turn to. The result of the initial discussions around a new Code was draft Section 170 in the Criminal Procedure Code Bill of 1970, the relevant portion of which read as follows:

(2) The magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such magistrate thinks fit, for a term not exceeding fifteen days in the whole ... 

Provided that — 

(a) the magistrate may extend the term beyond the period of fifteen days if he is satisfied that adequate grounds exist for doing so; 

 ...  

As can be seen, the idea of 60 / 90 day limits was absent in this first iteration of the new Code. As was the idea of default bail. Instead the idea was to stick to fifteen day periods, requiring constant monitoring by court. The time limits, and default bail, both came into the draft after the Joint Committee of Parliament considered the draft, which also recommended reworking the clauses to retain the old statutory scheme for ease of convenience (something the Sanhitas' drafters may have done well to remember). When the Bill was introduced in Parliament, it contained the time limit scheme and the relevant part read as follows:

(2) The Magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole ... 

Provided that — 

(a) the Magistrate may extend the term beyond the period of fifteen days if he is satisfied that adequate grounds exist for doing so; but no magistrate shall authorise the detention of the accused in custody for a total period exceeding ninety days ... 

... 

Again, there is another critical difference in how Section 167(2) was in the draft legislation as compared to what was finally enacted. There is no fifteen day limit on police custody in this draft whatsoever. There is a fifteen day period in which custody can be granted, following which there is the possibility of extension, up to ninety days, if deemed necessary by the court. 

In effect, then, the draft of the new law permitted much longer police custody than even the old Code. This problem was not lost on Parliament. When the clause was taken up for discussion on 09.05.1973, the issue was flagged by Dinesh Joarder and was reiterated by other members in their initial speeches. During the clause-by-clause discussions on 01.09.1973, the Government accepted the suggested amendments by B.R. Shukla to draft Section 167, which sought to make it clear that any extension of custody beyond the fifteen day period would be "otherwise than in the custody of the police". (Far more debate took place, and even led Section 167 to be reconsidered later, on account of the introduction of default bail).

Thus, what is clear is this. Parliament knew how the Old Code worked and saw the first fifteen days after an arrest as a period where detention in custody was somewhat permissible. It did not restrict these powers further. However, it sought to put an end to filing of incomplete chargesheets by police through explicitly permitting detention in custody during investigations up to a certain period. While doing so, it created a draft which made it ambiguous as to whether the extension outside the first fifteen days could contemplate detention in police custody. Members of Parliament flagged this ambiguity during debates, and the draft law was suitably amended to make it clear that extension of custody outside of that first fifteen day period could never contemplate detention in police custody.

This was the understanding followed by courts in the aftermath of the new code being brought into force. The Delhi High Court in Dharam Pal [1980 CriLJ 1394] dealt with a challenge by the state to orders of a magistrate refusing to grant police custody within the first fifteen days of arrest as judicial custody had been granted. The High Court held that altering the nature of custody was possible and arguably necessary, but was only possible within the first fifteen days from a plain reading of the law. In setting aside the order, even though the first fifteen days of custody had lapsed, the High Court directed the magistrate to consider the matter as on the date when police sought the remand. 

An even clearer exposition of how Section 167 was understood and applied was seen in the Kerala High Court's judgment of K.V. Sadanandan [1984 CriLJ 1823]. Applying Section 167 was a two-step exercise, as the Court explained. Section 167(2) explained that the first step was first deciding to decide the nature of detention in custody for fifteen days in the whole. Only if at the end of this period the Court remained of a view that further detention was necessary, it could resort to the proviso, and extend detention up to the 60 / 90 days, but the nature of such detention could only be "otherwise than in the custody of the police". 

Therefore, Anupam Kulkarni did not mistakenly apply the law thinking it was dealing with the 1898 Code as Balaji suggests, but it was following what had emerged as an established view across courts, and was also the correct view deciphered from a textual reading of Section 167 itself. 

The Promise of Liberty

In failing to consult the history behind Section 167, it is no wonder that the Court in Balaji commits such serious errors as to assuming the correct legislative intent behind the provision. At no point was it in the mind of Parliament to grant police the custody of persons in a manner even broader than the colonial 1898 Code. The very purpose behind the comprehensive restructuring of Section 167 by Parliament in 1973 was to send a clear signal to police that their languorous investigations spread over months if not years were antithetical to personal liberty that the Constitution respected and guaranteed through Article 21. If such kinds of investigations were in the minds of agencies, then it was precisely Parliament's intent to impair the power of police to continue with such practices. 

That Balaji found it difficult to accept this clear intention is not a unique feat. Similar difficulties were, in fact, experienced in the context of the other part of Section 167 i.e. the insertion of default bail provisions, when they came, which the Supreme Court had gone so far as to comment was Parliament's creation of a "paradise for criminals". Yet, no matter how unpalatable to its sensibilities Court must honour legislative intent, and not find ways to skirt around it as long as it remains palpable to the Constitution itself. And, by all accounts, Section 167 in prescribing a limit on police custody as being permissible only during the first fifteen days of arrest is certainly not contrary to the Constitution. 

The conclusions in Balaji on this aspect of reading Section 167(2) of the Cr.P.C. are, therefore, incorrect.

The Judgment in V. Senthil Balaji v. State — On Arrest and ED Custody (Part One)

On 07.08.2023, a Division Bench of the Supreme Court delivered its judgment in a batch of petitions concerning the legality of the arrest and detention of V. Senthil Balaji, a Minister in the State of Tamil Nadu, by officers of the Enforcement Directorate on allegations of offences under the Prevention of Money Laundering Act 2002 ["PMLA"] [V. Senthil Balaji v. State rep. by Deputy Director & Ors., Crl. Appeal Nos. 2284-85 of 2023 (Decided on 07.08.2023) ("Balaji")]. 

The facts are recounted at the outset in Balaji, and in the orders passed by the Madras High Court [here, and here] which ultimately led to the case moving up to the Supreme Court. Rather than set them out in the same extensive, and contested, detail, for this post I will only narrate the most critical aspects of the case: (i) There was an arrest by the Enforcement Directorate, (ii) A judicial order granting custody of V. Senthil Balaji to the Directorate was passed, (iii) The Directorate could not take his custody within the first fifteen days of his arrest because of health issues forcing Mr. Balaji to be admitted to the hospital.  

Mr. Balaji and his family contended before the Supreme Court that his arrest illegal, as well as the order granting his custody to the Directorate, and even if neither of these claims were accepted then Mr. Balaji could only be sent to custody in jail since fifteen days had elapsed since his arrest. In Balaji, the Supreme Court rejected each of these contentions, and went ahead to cast doubts over the existing legal position as per which detention of an accused outside of the first fifteen days of an arrest could only be in jail and not with the investigating agency. 

Through this post and the next, an effort will be made to examine the judgment and the Court's answers. In this post, the focus is on the conclusion that the arrest was legal, and that the Enforcement Directorate could take custody of an accused during the investigation. The next post will specifically engage with how the Court in Balaji construed the relevant provisions of the Criminal Procedure Code 1973 ["Cr.P.C."] i.e., interpretation of Section 167, Cr.P.C., in respect of the nature of detention after arrest.

A Digression

Before going forward with the discussion, a digression. The opinion in Balaji is divided into sections to deal with specific issues, many of which begin with a quotation, presumably for pithily presenting to a reader the lens through which the Court viewed the issue at hand. Picking quotations, however, is a tricky path to tread; not only must we be careful about who is being quoted, but we must also be careful about not using a sentence or remark out of context. 

The quotations in Balaji, unfortunately, falter on both fronts. "All power is of an encroaching nature" is a quote used at the start of the section in the judgment which hopes to explain how the PMLA contains a set of provisions which place reasonable restrictions on the power of arrest. Not only is it wrongly attributed to Justice Frankfurter's opinion (dissenting, mind you) in Trop v. Dulles [356 U.S. 86 (1958)] — it is in fact attributed in the opinion itself to James Madison (Federalist No. 48) — but the context of this quote is entirely misplaced. The quote is a critique of state power, not a paean to it. 

Later on, a phrase attributed to Sophocles, "Law can never be enforced unless fear supports them", is used to emphasise how the PMLA itself has provisions punishing misuse of arrest powers by officers. This is a surprisingly popular phrase with Indian courts, and its proper context has been detailed elsewhere just to highlight how problematic its invocation in any judicial order within a democratic republic ought to be. And, lastly, there is a quote attributed to Benjamin Cardozo — "Justice, though due to the accused, is due to the accuser too". A remark made in the context of the problems of overturning a conviction for murder on grounds of procedural error comes to justify the vesting of greater powers with the state for restraining personal liberty during the investigation phase.

Arrest and Custody with the Enforcement Directorate

On Arrest

Mr. Balaji's arrest was challenged on a very simple point. It was contended that while the PMLA allowed for the arrest of persons by Enforcement Directorate officials under Section 19 of that Act, the procedure for such an arrest was not specific anywhere in Section 19 or other provisions of the PMLA. This silence of the PMLA required consulting the general law of the Cr.P.C., since Section 65 of the PMLA rendered the Cr.P.C. applicable wherever it was not inconsistent with anything in the PMLA. Pursuing the argument to its logical end, it was contended that since the PMLA offences were only punishable up to seven years, the Cr.P.C. arrest procedure (as explained by the Supreme Court itself) required prior notices to an accused under Section 41-A of the Cr.P.C. or specific justifications for departing from this course to jump to an arrest.

Balaji held that this contention was based on a flawed premise, since Section 19 did in fact lay out how the arrest was to be carried out. The PMLA had, in the words of the Supreme Court, a "comprehensive procedure" [para 32] and a "different and distinct methodology [compared to Cr.P.C.]" [para 33] in place on the matter, which meant that resort to the Cr.P.C. would not be permissible as it would create a conflict between the two regimes. A clause which merely (i) lists the officer capable of exercising arrest powers, (ii) reiterates constitutional mandates about informing a person about grounds of arrest and their timely production before court, and (iii) specifies one procedural aspect (sending a copy of the arrest order in a sealed cover to another authority) is a "comprehensive procedure" [This becomes "rigorous procedure" in para 82]. There could not be a lower threshold to cross. Curiously enough, at a subsequent place in the judgment [para 67], the Court says that "Section 19 of the PMLA, 2002 supplemented by Section 167 of the CrPC, 1973 does provide adequate safeguards to an arrested person" leaving one further in doubt as to the comprehensive nature of Section 19.  

The Court offers supporting arguments to justify the interpretive choice being made in Balaji. The Court notes that introducing a requirement of issuing a notice prior to arrest, as under Section 41-A of the Cr.P.C., "might seriously impair the ongoing investigation" by placing a person in the "know-how" [para 33]. In any event, the Court notes Section 41-A was never seen as being applicable to anything other than minor offences [para 37]. Both lines of argument are deeply concerning. In seemingly restricting the scope of Section 41-A to so-called minor offences not only does the Court add context to the text of the statute which is notably absent — the provision does not restrict itself to minor offences, but all offences that are punishable with terms up to seven years in prison — but the Court also betrays its own recent history where it was using this provision to strike a fairer bargain between investigative needs and individual liberty. In promoting secrecy of investigations as a justification for arrest, the Court conflates the presumed need to be discreet about ongoing investigations with the entirely separate issue of considering what are proportionate intrusions into personal liberty to safeguard state interests. We have on display the classic anti-terror / serious crime gambit — the executive raises the stakes so high that courts are cowered into thinking that nothing other than completely sacrificing individual liberty to secure the state's interests is acceptable, lest the very state perish.  

On Custody

Which then brings us to the issue of what happens after arrests of persons. Here, as in most other cases, the Enforcement Directorate sought to take custody of the accused for purposes of investigation. However, the "comprehensive procedure" on arrest which the Court extolled in Balaji was surprisingly silent on such matters, requiring a reference to the general law under the Cr.P.C. 

This meant turning to Section 167 Cr.P.C., and that provision presented a slight issue. Section 167 permits court-sanctioned custodial detentions of persons after their arrest, and says that persons may either be detained in custody of the court by being placed in jail, or in the custody of the investigating agency by being placed in the lockup area that an agency would have. Unfortunately, the provision does not use the phrase "investigating agency", and instead refers specifically to "police custody" on this matter. This is where the problem arises: the Enforcement Directorate, much like many other central agencies, does not want its officers to be called "police" and nor is not seen as "police" in the eyes of courts. But if the Directorate has no police officers, then how can Section 167 which permits "police" custody allow a person to be detained by this agency's officials?

Convincing argument, or mere sophistry? Balaji concluded it was the latter, but without offering any clear reasons. At one place, the Court held that since Section 167 refers to detention in "such custody" as is considered fit by the judge, this would permit detention with agencies other than police as well [paras 45, 55, 85]. At another place, the Court concluded that since Section 167 was indeed applicable to the PMLA context to determine the maximum time of detention post arrest, its provisions permitting the detention of persons in the custody of the agency also had to be applied [paras 26, 70, 83]. And, briefly, the Court also hinted that this issue had already been considered in respect of other agencies in this fashion such as the Customs Act 1962, albeit those specific statutes specifically permitted treating officials as police officers for purposes of seeking custodial detention [para 82].  

Taken separately, or all together, it is difficult to remain convinced by the reasons offered by the Court for concluding that the terms of the PMLA, read together with the Cr.P.C., permit officials of the Directorate of Enforcement to obtain custodial detention of arrested persons. With respect to "such custody" in Section 167(1), it is rather surprising that in a judgment where the Court repeatedly insists upon reading provisions as a whole, on this aspect the Court was more than willing to read one phrase in isolation because it helped prop up its conclusions. Section 167(1) certainly refers to "such custody", but reference to the remainder of the provision makes it apparent that this is a binary between "police" and "court" / "judicial" custody. Reliance upon the 37th Report of the Law Commission on this issue by the Court [para 55] was entirely misplaced, firstly because it considered Section 167 as it was in the 1898 Code which did not contain the remaining clauses clarifying the binary choice before a court today, and secondly because the relevant para of that Report equated "such custody" as being outside of an investigative agency, which is certainly not what the Court in Balaji sought to conclude.

There is no gainsaying that in respect of the several other central agencies, earlier decisions of the Court had permitted custodial detention of an accused to be granted to them. This included even the Directorate officials. Unfortunately, there is equally no disputing the fact that the relevant provisions in those statutes were differently worded than the PMLA. Surely, a "comprehensive" and "rigorous" statutory procedure on the matter of arrests could not have accidentally been left ominously silent on this crucial issue of what happens after an arrest? Where on the one hand the Court emphasises relying upon the plain text of laws to infer legislative intent, one wonders why the same standards do not apply when it was confronted with a clear distinction between the PMLA on the one hand, and earlier laws on such matters on the other.  

If the Court was of the view that Parliament had erred in not repeating the same formula of older laws in the PMLA, it was nevertheless bound to follow the law is it stood or offer strong reasons for filling up what it saw as a gap. It did neither in Balaji.    

Contrary to what Balaji seems to portray, applying Section 167 Cr.P.C. together with Section 19 PMLA without necessarily permitting custodial detention of persons with Enforcement Directorate officers was far from being a strained or piecemeal way of applying both statutes together. Might it have been intended by Parliament to deny the agency investigating PMLA offences custodial detention, because such cases are the product of investigations done by other agencies where accused persons would likely have been arrested and questioned in custody? Considering that arrest powers under PMLA are pegged at a higher threshold than the Cr.P.C. — which the Court in Balaji agrees with — to permit arrest only where officers have reasons to believe a person is guilty of an offence, perhaps Parliament intentionally decided to not permit persons being detained in investigative custody with an agency which already has enough material to conclude the person is guilty of the crime?

The House that Vijay Madanlal Choudhary Built

Balaji comes barely a year after the Supreme Court had decided various issues in context of the PMLA in Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. [2022 SCC OnLine 929 ("VMC")] [Discussed on the Blog here and here]. At the heart of VMC was the Court's finding that the PMLA was not a penal or civil statute but a 'sui generis' legislation. On the strength of this finding the Court constructed a defence of the PMLA's validity, including its provisions on arrest and bail. As argued elsewhere, this defence was high on rhetoric and low on reasoning, deploying phrases like 'sui generis' to evade critical scrutiny of the law and support vesting broad powers with the executive. How does anyone but the creator and framer of a 'sui generis' know what it needs and what it doesn't?  

The 'sui generis' argument could not be tested before the bench in Balaji which was of lesser strength than VMC, but its shadow loomed large over the arguments being made here, and in a sense foretold the result. Because the PMLA is a 'sui generis' regime, even patently limited procedures can appear "comprehensive" and "rigorous" to a Court because these might be exactly what a 'sui generis' regime needs. 

Balaji thus offers a good glimpse of the house that VMC has built for dealing with any future challenges to how the PMLA operates. Persons contesting the government are essentially with an onerous handicap, as the goalpost itself is a perpetually shapeshifting, 'sui generis' one.

Conclusion

The Court in Balaji upheld a reading of the PMLA and the Cr.P.C. which permits Enforcement Directorate officials to arrest persons without notice and in the absence of any compelling justification behind such an arrest without notice. It also upheld a reading of the laws which permit the detention of arrested persons in the custody of Directorate officials. In doing so, it has only reiterated how most courts had been applying the law and not shaken up the status quo to any great extent. What is more interesting is the rather timid set of reasons the Court was able to muster in support of its conclusions. In effect, this is perhaps the state of things to come for all things PMLA, where 'sui generis' can help sustain anything and everything under this statute.

The next post considers the Court's conclusions on a different issue, the interpretation of Section 167 of the Cr.P.C., where the Court has taken big strides towards upsetting the status quo. 

Anticipatory Bail under the CGST Act

On 17.07.2023, a Division Bench of the Supreme Court passed a curious judgment and final order in State of Gujarat v. Choodamani Parmeshwaran Iyer Etc. [SLP (Crl.) 4212-13 of 2019, decided on 17.07.2023 (Choodamani)]. The controversy arose out of petitions filed before the Gujarat High Court where persons challenged summons received by them under Section 70 of the Central Goods and Services Act 2017 [CGST Act]. The concerned persons and their firms were already facing a tax inquiry and feared that the notices might lead to their arrests. Accordingly, writ petitions were filed before the High Court, requesting for directions to the authorities to not take 'coercive action' pending the determination of the tax inquiry. 

The High Court, in an order dated 24.12.2018, agreed, being swayed by the plea that the concerned firms were willing to fully participate in the inquiry process which it was directed had to be concluded within eight weeks. This order was challenged by the State of Gujarat in 2019 itself, but besides getting a relaxation on the time limit for completing the tax inquiry, it did not manage to get any relief in respect of the protection against any coercive action. As a result, the inquiry apparently kept languishing, since the concerned persons did not respond to summonses knowing that they had protection from arrest. 

The Supreme Court finally decided the petitions in Choodamani and set aside the order in its entirety. It held that the High Court not have interfered with the statutory power of arrest conferred upon authorities by the CGST Act, drawing inspiration for this conclusion from earlier cases such as Union of India v. Padam Narain Aggarwal [(2008) 13 SCC 305]. The problematic nature of this view which deprives courts of striking a useful balance between the interests of the state and individual, and of the judgment in Padam Narain Aggarwal, have both been discussed recently in a post on the blog and I need not elaborate on it further.

What is of interest for this post is a separate observation in Choodamani. After referring to Padam Narain Aggarwal, it has held that the High Court's order was incorrect for a separate reason altogether: the High Court granted reliefs akin to anticipatory bail under Section 438 of the Criminal Procedure Code 1973 in the context of the CGST Act where such reliefs were impossible.

The paragraph in question merits repeating in full:

Thus, the position of law is that if any person is summoned under Section 69 of the CGST Act, 2017 for the purpose of recording of his statement, the provisions of Section 438 of Criminal Procedure Code 1908 cannot be invoked. We say so as no First Information Report gets registered before the power of arrest under Section 69(1) of the CGST Act, 2017 is invoked and in such circumstances, the person summoned cannot invoke Section 438 of the Code of Criminal Procedure for anticipatory bail. The only way a person summoned can seek protection against the pre-trial arrest is to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India. 

To conclude that anticipatory bail is not envisaged under the CGST Act merely because there is no First Information Report being registered is as incorrect as proposition as any. The legal position of there being no necessity for any FIR to be registered for considering anticipatory bail is as clear as day. In no uncertain terms did the Constitution Bench in Sibbia [(1980) 2 SCC 565] declare that the filing of an FIR is not a condition precedent to the exercise of powers under Section 438 of the Criminal Procedure Code. Benches of varying strengths have repeated in unison ever since that the question which courts have to consider while exercising their powers of granting anticipatory bail is not the existence of any FIR, but the reasonableness of the purported apprehension in the mind of an accused of an arrest being imminent in respect of accusations disclosing a non-bailable offence. 

Nothing in the CGST Act requires courts to depart from this settled view, and it is safe to conclude that the Supreme Court of India was aware of this while passing Choodamani. Therefore, it is arguably safe to assume that this sentence is one of the many errors that have crept in this paragraph inadvertently — such as the reference to Section 69 when obviously Section 70 of the CGST Act was in the mind of the Court, and referring to the Criminal Procedure Code of '1908' when it could have only meant to refer to the 1973 Code.

Choodamani cannot, therefore, stand for the blanket proposition that no anticipatory bail request can ever be preferred in the context of the CGST Act. At best, it can only bolster the statutory position, that the accused must demonstrate reasonable apprehensions in respect of non-bailable offences under the CGST Act (which also contains bailable offences, for which anticipatory bail cannot apply). A clarification would not hurt, of course, to ensure that such an obviously inadvertent error may not come to prejudice the interests of personal liberty in the future, as even the mistakes of the Supreme Court are often too difficult to ignore for the courts below.