A Cross-Country Caper and Constitutional Criminal Procedure

"He was a humble man who shunned publicity and lived a quiet life. He was born in Cologne, Germany ... [and] came to America as an immigrant with a middle school education. ... He bought his first building in Los Angeles when he was 21, an endeavour that bloomed into a real estate empire. He came to Las Vegas in 1955 to purchase the failing Moulin Rouge, which he turned into a success."

This description of a Las Vegas tycoon appears in his obituary of 2019. Understandably, it is silent about the more colourful exploits of this gentleman from around the time that he was building up his empire. Exploits that have made him a household name for Indian criminal law and procedure.

With "records as long as adding machine rolls", Thomas Dana and our tycoon, Leo Roy Frey, bought off a diplomat's car in Paris and bribed the garage staff to keep the diplomatic numberplate. Of course, there were some other modifications — they had created a secret compartments to stash gold and undeclared currency notes. Frey and Dana took off to India with the car. They reached Punjab and were crossing the border to Pakistan from Attari on June 23, 1957 where they were stopped by Indian customs authorities. 

Frey and Dana filled out their customs declaration forms stating they were carrying hardly anything of value on their person — INR 40, USD 30, some personal effects — but the authorities were unconvinced. A personal search of both persons revealed items of more than INR 1 lakh (at the time) and, as luck would have it, the secret compartments in the car were discovered as well. The authorities had stumbled upon a serious smuggling effort and had just about managed to stop it.

Leo Frey and Thomas Dana were apprehended and the rest, as they say, is history. They made the quiet the buzz in national and international dailies covering the story of the "luxury Lincoln car" of the smugglers. So much so that these persons sought contempt proceedings to quell the media coverage (but failed). What we are concerned is not the scandal, but the two constitutional law cases that their subsequent prosecution led to — reported as Leo Roy Frey v. Superintendent, District Jail, Amritsar [1958 SCR 822 ("Leo Roy Frey")] and Thomas Dana v. State of Punjab [1959 SCR (Supp) 274 ("Thomas Dana")].

The Curious Procedural History of the Case

At the heart of the two cases was an identical issue — could Frey and Dana be prosecuted before a court for offences under the Foreign Exchange Regulation Act, 1947 and the Sea Customs Act of 1878, even after the two had been subjected to heavy penalties (INR 25 lakhs at the time) by the Customs Department for having violated these laws? The contention was that it would violate the right against double jeopardy, secured under Article 20(2).  

It is fascinating that the judgments in Leo Roy Frey and Thomas Dana are barely a year apart — the first petition was decided on 31.10.1957, and the second one on 04.11.1958. How they managed to get cases up to the Supreme Court so quickly is one thing, but it is also intriguing as to why the Supreme Court heard Thomas Dana on double jeopardy grounds after having dismissed Leo Roy Frey barely a year ago. Yes, procedurally there was a slight difference — the first petitions were filed while the prosecution in court was pending, and the second set were filed after the court had convicted the petitioners. But the issue was exactly the same, which suggests a suboptimal utilisation of time by a Court already pressed for it.

To understand the Court's justification for this, we need to take a look at close look at how the protection against double jeopardy is worded under Article 20(2), and how the Court had looked at it thus far. The clause states: "No person shall be prosecuted and punished for the same offence more than once". Critical are the words and phrases "prosecuted", "punished", and "same offence". 

The following permutations arise:

• You can be proceeded against twice where the first case was not a "prosecution" — prior civil liability is not covered, essentially.
• You can be proceeded twice if there was a prior acquittal in the prosecution — the clause is narrow and only protects if one was prosecuted and punished earlier.
• You can be proceeded against twice if the second prosecution is not for the "same offence".

Reading Thomas Dana, we get an answer as to why the Court agreed to hear the second case. It notes that the first judgment in Leo Roy Frey dismissed the petition on considerations that the second case was not a prosecution for "same offence". The Collector of Customs had levied penalties for violating the Foreign Exchange Regulation Act and the Sea Customs Act. However, the court case was also for offences under Section 120-B of the Indian Penal Code 1860 which punished criminal conspiracy, "which certainly was not one of the heads of charge before the Collector of Customs." What the judgment in Leo Roy Frey did not rule on was whether even if it was the same offence, whether the prior proceeding before the Collector of Customs could be seen as a "prosecution" at all. That became the focus for the Court in Thomas Dana, where the Court ultimately held that the Collector of Customs proceedings were not a "prosecution".   

This is an acceptable explanation until we start to scratch the surface a little bit. Leo Roy Frey held that the court case was not for the same offence as proceedings before the Collector, and ultimately that court had gone and convicted the petitioners for the conspiracy charge. Therefore, that objection equally stood when     the Supreme Court heard Thomas Dana, which rendered the judgment purely academic in a sense. What's more, this was not even a novel academic discussion — more than five years earlier, in Maqbool Hussain v. State of Bombay [1953 SCR 730 ("Maqbool Hussain")], the Supreme Court had held that proceedings before a Collector of Customs were not a "prosecution". 

So, just why exactly did the Court revisit a point that a bench of Five Justices had already decided, in what was at best an academic discussion? The answer, to hazard a guess, might be in the fact that except Sudhi Ranjan Das, C.J., the bench composition in both Thomas Dana and Leo Roy Frey is entirely different. Perhaps, the Thomas Dana bench did not agree with the earlier view,—that Subba Rao J. penned a dissent suggests some discomfort was there— but the Chief Justice, who had authored Leo Roy Frey and was on the bench for Maqbool Hussain (along with NH Bhagwati J., who was also on the Thomas Dana Bench), ultimately got the others around to agree. 

We will never know for sure, but it is enjoyable to speculate. Having done so we can turn our attention more keenly to how the affair of the luxurious Lincoln afforded an opportunity for the Supreme Court to address the law itself.          

Getting the Law Wrong, Twice

The conclusions of the Supreme Court in Leo Roy Frey and Thomas Dana were set out above. The meaning of "same offence" came to read by the Court in Leo Roy Frey as requiring the same heads of charge, and since the petitioners "were not and could never be charged with" conspiracy before the Collector, there was no question of triggering double jeopardy. The outcome was that even when a perusal of the two sets of proceedings made it clear that the allegations were identical, merely invoking different offences could obviate the double jeopardy protection. And in Thomas Dana, the Court approved its own earlier view that "prosecution" for double jeopardy only meant a trial before a criminal court, excluding all tribunals no matter how serious the financial penalties might be.

Future benches of the Supreme Court, when commenting upon fundamental rights, would often go on to note the need to privilege substance over form in these matters for these were fundamental rights that they were dealing with. The verdicts in Leo Roy Frey and Thomas Dana, much like many others in the field of constitutional criminal procedure, are a perfect example of privileging form over substance instead. It is perhaps because these protections are all traceable to pre-existing statutory provisions. Rather than pull up the statutory law, the Court consistently dragged down its reflection in the fundamental rights. 

What is the substance in double jeopardy? The idea that a person ought not to be repeatedly harassed by the state for the same set of allegations. It is about the might of the state being used to repeatedly target an individual, and that targeting does not disappear if the state wears a different cloak each time it comes out with its daggers. A very narrow reading of the "same offence" is nothing less than creating a backdoor for both parliament and the executive, and adding to it the idea that tribunals can impose unlimited penalties in addition to any court proceedings is then inviting them to walk through it. That invitation has been graciously accepted — central and state legislatures have gone on to create overlapping penal statutes allowing multiplicity of actions to subsist, ensuring that some persons will forever remain ensnared within the criminal process. In almost all of these scenarios, a parallel process is conceived of before a tribunal, with powers to impose severe financial penalties and civil disqualifications. 

The result is a fundamental right against double jeopardy that is practically toothless to prevent any but the most egregious cases of abuse of powers by the state, and a mushrooming of penal laws across the statute book. Reminding us that, in criminal law at least, the Supreme Court has regretfully refused to embrace the fundamental nature of the rights guaranteed by the Constitution.  

Taking a Closer Look at the Criminal Procedure Identification Act & Rules

The Criminal Procedure Identification Act, 2002 ["CPIA"] was passed this April amidst significant criticism [see, for instance, here, here and here]. The issues identified with this law were across a wide spectrum — the attack on the right to privacy, the uncertain status of the forensic 'science' at play, the lack of clarity in terms of implementation. Some of these concerns, it was assumed, would be addressed by way of Rules (ignoring whether or not such delegation of statutory functions to rules was legal). Now, on September 19, 2022, the Government of India has notified Rules under the CPIA, laying down the framework for implementing this statute. 

This post does not re-agitate the issues on forensic science aspects or the mechanics of why some people (myself included) consider the CPIA to be a serious assault on privacy (where the Rules in fact compound problems by making data deletion more tedious and opaque). What I am interested in here is focusing on how the CPIA has, according to my preliminary reading at least, has placed the National Crime Records Bureau ["NCRB"] at the heart of how identification of persons will work henceforth in the criminal justice system. 

This post first gives a brief about what the NCRB is, it then explains its place of prominence in the CPIA regime, and argues that vesting such responsibilities with the NCRB is a problem and seriously worrying from a privacy perspective.

NCRB — A Brief History

Most people hear of the NCRB only once every year when the annual crime statistics are published. Both the statistics and the organisation responsible for curating these promptly leave the public consciousness after this annual event. Which is why it may be interesting to learn a little about its history, helpfully provided on the NCRB website. 

While annual crime statistics have been running since the mid 1950s, the NCRB was only established in 1985 and it is not a statutory body. Instead, its moment of creation can be traced to a gazette dated 10.03.1985 carrying a "Resolution" of the Union Ministry of Home Affairs (pursuant to a draft). The Resolution notes that the Union Government accepted a resolution of the National Police Commission "in regard to setting up of the National Crime Records Bureau at the Centre and Creation of State Crimes Records Bureaux and the District Crime Records Bureaux in the States by the State Governments." It further states that the "President has been pleased to constitute the National Crime Records Bureau" which will be "an attached office of the Ministry of Home Affairs". 

Various existing offices were to be merged with the newly-formed NCRB, which was tasked with the following objectives:

• To function as a clearing house of information on crime and criminals including those operating at national and international levels so as to assist the investigators, and others in linking crimes to their perpetrators;
• To store, coordinate and disseminate information on inter-state and international criminals from and to respective states, national investigating agencies, courts and prosecutors in india without having to refer to the police station records;
• To collect and process crime statistics at the national level;
• To receive from and supply data to penal and correctional agencies for their tasks of rehabilitation of criminals, their remand, parole, premature release etc.
• To coordinate, guide and assist the functioning of the State Crime Records Bureaux;
• To provide training facilities to personnel of the Crime Records Bureaux; and
• To evaluate, develop and modernise Crime Records Bureaux.

These objectives suggest that the NCRB has not been envisioned as discharging any active role in police investigations, and nor was it ever given the responsibility of being a primary source of information. The information-sharing for active cases was specifically worded to cover sharing information pertaining to "criminals" and did not imagine a role for NCRB in the day-to-day running of a criminal investigation at all. It appears to have been imagined, arguably, as an institution meant to ease information flows across the various investigating agencies, courts, as well as the public. 

The NCRB in the CPIA Regime

Section 4 of the CPIA went where no law had gone before and directly makes the NCRB responsible for: (a) collection of the record of measurements, (b) storage, preservation, and destruction of such records at the national level, (c) processing such records with criminal records, and (d) sharing such records with law enforcement agencies. It appears to be the first time that an act of parliament has conferred powers of any nature on to the NCRB. 

Why is this worrying? Simply put, because the CPIA authorises housing sensitive personal data with an attached office of the Ministry of Home Affairs that has no independent legal existence save a resolution passed by the government. Which necessarily means that there is no statutory safeguard for the enormous data which will now come to be with the NCRB in terms of its storage, processing, sharing or deletion; we will not know where this data is, who is using it, and how it is stored. And nothing can stop the government from passing yet another resolution, without any accountability of debate or discussion in parliament, simply removing the NCRB and declaring that information stored by it will remain in the ministry, at some unclear place.

The closest analogy in terms of having an authority which deals with sensitive personal data of the kinds that the NCRB will get access to is the proposed regime created under the DNA Technology (Use and Application) Bill. It is not without its problems, but at least that regime has a clear statutory basis outlining who the authority is, where and how it stores data, and who is accountable if there is a breach (well, sort of). Empowering an institution to deal with sensitive personal data that owes its existence to little more than a government resolution is as obvious an affront to the requirement of having a legal basis for enacting a regime that infringes the right to privacy as any. It is oddly reminiscent of the early days of Aadhaar and how from 2009 and 2016 the entire program operated basis notifications without a law to anchor the regime. The similarities have been heightened owing to the way in which the Rules envisage the NCRB as providing the function of "matching" samples with identities (more below).  

Which brings us to the second, related problem. Section 4 of the CPIA provides that the manner of discharging responsibilities vested with the NCRB would be prescribed by Rules. In a sense, this clause leaves the possibility for at least the processes to be regulated by institutions or actors governed by statute, especially the actual task of identifying persons. What have the Rules done, you ask? Rather than actually prescribing the manner in which the NCRB will do things, as the section had said, the Rules simply tell us that all of this will be decided by the NCRB itself later, through a "Standard Operating Procedure" that it is supposed to publish. On top of which, Rule 5(3) says that the task of actually matching the records will be done by the NCRB itself. 

If the government giving up its job of creating a law to regulate collection, storage, and processing of sensitive personal data wasn't bad enough, the Rules have compounded that abdication of responsibility by failing to offer any oversight to the process altogether. The NCRB—that mighty attached office of the Ministry established pursuant to resolutions—will decide how agencies will collect data for the purposes of digital comparisons, how it will be stored, processed, shared, and deleted, including prescribing the IT systems which will be used for all this. 

Amidst all this, the very task of doing the identification has also been given to the NCRB by Rule 5(3). At one level it is similar to how currently a request for matching samples is sent to the forensic expert. But without getting into the issue of whether NCRB actually possesses expertise to carry out the task of comparison, the difference in the CPIA model of identification is that it is not being done on a case to case basis but it runs a sample against a database, thereby increasing the chances of false matches tremendously especially since forensic sciences are by design inexact and imperfect (There are such databases in operation, such as one for the comparison of fingerprints and are susceptible to this issue). 

What would help counter such problems would be having an independent agency prescribe standards for data collection, processing and giving results of 'matching', or at least sign off to affirm their legitimacy. Which brings us back full-circle to Section 4 of the CPIA putting out that thought, but the Rules failing to implement it and leaving the NCRB to act as judge, jury, and executioner. 

Rather than solve problems that the CPIA created, the Rules have essentially kicked the can further down the road and created new problems in the process (above and beyond what has been identified here).

Conclusion

Should laws be passed to help improve policing and criminal investigations? Absolutely. Does that mean all laws that are passed with that purported objective should avoid any sort of scrutiny altogether? Absolutely not. The CPIA touches upon ideas and approaches that are in vogue the world over which rely on "databasing" as an investigating tool where entire groups of people are permanently under suspicion. They are extremely undesirable, if you wanted my opinion, but are nearly inescapable today. 

What the CPIA does, in a sense, is to have an Aadhaar style system in place in the context of criminal investigations where the NCRB will do what the UIDAI is doing. The inspiration has been so strong, that the government again opted to make a non-statutory body responsible for the entire data collection and processing exercise, and on this limited point itself the CPIA regime must be brought to halt as soon as possible before we have yet another fait accompli on our hands. 

There are obviously many arguments to make in respect of the problems with the kind of database that the CPIA is creating, for that we keep our powder dry. 

Of Old Wine in New Bottles — The Judgment in Vijay Madanlal Choudhary (Part One)

After marathon hearings, the Supreme Court finally pronounced its judgment on 27.07.2022 in a batch of over 200 petitions where the legality of various provisions under the Prevention of Money Laundering Act, 2002 ["PMLA"] had been challenged. This judgment — bearing the title Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. [SLP Crl No. 4364 of 2014] for the lead matter — runs into 545 pages, but it is not a difficult read. Not because one is a cynic and the outcome was as expected, but because reading the judgment in Vijay Madanlal Choudhary is like listening to a greatest hits collection of the Supreme Court's past forays into examining the legality of socio-economic offences. 

Which is why, before getting into any analysis of this judgment, it is important that we dispel the thought that the Supreme Court has gone out of its way in this judgment to strike a blow for fundamental freedoms. It was quite the opposite — the Supreme Court merely had to remain on the path that it had chartered for more than half a century to arrive at the verdict in Vijay Madanlal Choudhary, and it happily chose this conservative path rather than adopt a radical departure from the status quo. 

In respect of the analysis itself, there are many ways in which one could go about it. Rather than taking up each issue as done in the judgment, I have divided it into two posts: the first considering the substantive offence, the second the procedural aspects and offering a summing up of the discussion.

Scheduled Offences and the PMLA

A intentionally killed B — that is a shorthand way of describing murder. If you then read A murdered B, you know what it means. Can we do the same for money laundering? A launders property — does that make sense intuitively? Folklore suggests that the idea was always about projecting tainted assets as being untainted. But even at this stage, you are in trouble, because now how does one figure out what are tainted assets? This, in a nutshell, is the peculiarity of the money laundering offence — in India, and many parts of the world, it is tied to the occurrence of prior criminal activity as a result of which some property was either derived or obtained. It is not like murder, cheating, or forgery — it criminalises what comes after.  

This is how the PMLA also operates. Money laundering, as it is understood under Section 3 of the PMLA, is not merely dealing with property, but 'proceeds of crime' which refer to the property one derives or obtains (directly or indirectly) by virtue of a 'scheduled offence'. So, unless an offence is mentioned as part of the Schedule to the PMLA, whatever happens thereafter is not the concern of the PMLA, because any property generated as a result would not be 'proceeds of crime'. 

The Supreme Court in Vijay Madanlal Choudhary has re-emphasised this filial linkage between the idea of money laundering under PMLA and the prior criminal activity that led to generating tainted assets. As a result, where the underlying prosecution goes (either on acquittal or discharge) then the money laundering case would die a natural death. So far so good. In the same breath, though, the Court has also endorsed the claim that money laundering is an independent offence when it comes to construing the guarantee under Article 20(1) of the Constitution against retrospective penalisation or enhanced punishment. The problem with this Janus-faced approach was explained, at length, in the discussion on the Prakash Industries judgment of the Delhi High Court and I won't repeat it here. To wit, both limbs of Article 20(1) are being attracted. 

Firstly, because by applying PMLA prior to 2005, or situations prior to the time when an offence was included in the schedule, means crossing the rubicon and changing the nature of property retrospectively. If the test is that the property derived or obtained from committing a scheduled offence is proceeds of crime, then in these cases at the time when I derived or obtained the property, it could not be proceeds of crime because the PMLA did not exist / offence was not part of the schedule. If I am retaining or using that property after that date, then I have not derived or obtained the property after 2005, thereby eliminating that most critical limb from the money laundering definition.

Secondly, because in effect, money laundering by its very nature is a statutory enhancement of punishment on acts that I did in the past. This is especially so where we consider property crimes — A cheated B and obtained property prior to 2005 and continued to retain that property — allowing PMLA to now operate in such cases practically sanctions this very transaction with a new punishment. By not adding that additional punishment to the offence of cheating itself but instead labelling one segment of that transaction as a new crime under a different statute, Parliament ought not to be able to sidestep a fundamental right.

(There are other issues arising from this 'PMLA is an independent offence' approach on the side of process, which will get taken up in the next post).

The Validity of the Schedule

This was not the only constitutional issue which was canvassed concerning scheduled offences. The very schedule was questioned on grounds of arbitrariness. This argument, in a sense though not so explicitly portrayed in the judgment, actually relies upon that same concept of money laundering as an independent offence. The Court does not shy away from generic remarks about the awfulness of money laundering and how it is the repose of terrorists and financial criminals. These comments, by themselves, clearly expose some kind of independent value judgment that is underlying the idea of money laundering, which finds statutory expression in how the PMLA did not get triggered by all criminal acts, but only those deigned to be included in the Schedule. 

If money laundering has an independent value as a 'wrong' in our system, which the statute chooses to only link to the offences deemed important enough to be part of the schedule, that logic cannot be undermined by simply going ahead and adding every offence in the statute book. To put it another way, if the statutory scheme displays a need for discretion in the kinds of cases associated with money laundering, then a constitutional guarantee against arbitrariness reads a necessary element of rationality in how to exercise that kind of discretion, leaving it open for a court to inquire whether or not that constitutional benchmark is being met. By adding all sorts of offences to the schedule, it was argued that this key component of reasonableness was rendered missing from the schedule as it stood today. 

The Court did not appreciate this aspect of the contention at all. Instead, it chose to simply shut shop and proclaim that any additions / deletions in the PMLA schedule expressed a legislative policy that could not be second-guessed by the Court — a rather frank note of obeisance from a constitutional court. The choice was unfortunate, and it would be surprising if other courts in the future adopt such a posture.  

'Or', 'And'

There is a lot of controversy about the reading of the 'and' in the definition of money laundering as an 'or' by the Supreme Court. Yes, words ought to mean as they should, but in this case at least there was some material led by the government (in the form of reports from the FATF) to suggest that there was an honest error in the statute. Many courts had been accepting this view even in 2013 — something that India had told the FATF  — and the Supreme Court has stamped this view with its approval. As a result, it found nothing wrong with the Explanation as well.

A 'Sui Generis' Statute? The Bridge between Substance and Procedure

Throughout Vijay Madanlal Choudhary, the Court emphasises that the PMLA is a sui generis and multi-faceted law, and not just a penal statute. Sure, it creates offences, but it also carries a large mechanism of civil processes for attachment and confiscation of property, besides casting reporting requirements on persons. The reporting obligations are ultimately linked to helping discover money laundering offences so this does not take us too far, and nor does the court press it into service much. The sui generis logic is largely premised on the existence of the attachment process. 

This reasoning is critical to how it justifies the validity of the various provisions conferring investigative powers upon the state machinery — by diluting the penal elements of the law and re-characterising the substantive nature of the PMLA, the Court is able to justify its procedural scheme which does not confer the same level of protections as other penal statutes. This, according to me, is one of the most important issues which lies at the heart of the judgment and the PMLA in general, which is why it becomes all the more important to subject this reasoning to close scrutiny.

Yes, the PMLA does have a machinery for attachment and confiscation. And, yes, this is not the first statute to provide for it (as the Court points out at the start of its analysis). However, there are differences in the PMLA and other laws on this front. 

Other laws, such as the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (central law), operate only after the criminal action was completed and use a conviction as a trigger for confiscation. Still others, such as the Orissa Special Courts Act, 2006 and Bihar Special Courts Act, 2009 (state laws), or the Fugitive Economic Offenders Act 2018 (central law) trigger attachment on based on some offence but also permit confiscation of that property independent of whatever happens in respect of the trial for that offence. 

The PMLA allows for attachment independent of any money laundering prosecution being filed, but only allows it to last for a maximum of 180 + 365 days in matters where no such prosecution is launched. And, critically, confiscation of attached assets is only permitted upon conviction for the money laundering offence. Therefore, even though civil actions may be initiated independent of criminal proceedings, the structure of the PMLA civil action is such that it must be tied to the criminal proceeding sooner rather than later.

Over the years, these linkages between the criminal prosecutions and the civil action have been watered down in the statute, often as a response to FATF reports. Nevertheless, the umbilical cord has not been cut, and without a criminal prosecution no civil action can sustain itself in the long run. In such a scenario, where the offence of money laundering is at the heart of the law, can it really be said that the PMLA is not a penal statute? 

Conclusion and Next Post

This post primarily covered how Vijay Madanlal Choudhary engaged with the offence of money laundering under the PMLA. It ended with critiquing the Court's conclusion that the PMLA is a sui generis law and not a penal statute, which renders it justifiable for the procedural safeguards  ordinarily guaranteed to defendants under penal laws to not be applicable in the PMLA context. The next post turns to the Supreme Court's engagement with these procedural aspects of the law, which is where the conservatism of the judgment really shines through.

Prakash Industries and Interpreting the PMLA

The Delhi High Court has passed a detailed judgment in the matters of Hi-Tech Mercantile and Prakash Industries [Order dated 19.07.2022 in WP(C) No. 14999 of 2021 ("Prakash Industries"], touching on issues pertaining to the Prevention of Money Laundering Act 2002 [“PMLA”]. Holding in favour of the Petitioners and terminating the PMLA proceedings, the High Court considered four critical issues: (i) the interplay between a scheduled offence and the PMLA proceeding; (ii) the scope of the phrase “proceeds of crime”; (iii) the breadth of attachment powers, and; (iv) the application of Article 20(1) of the Constitution of India to the PMLA context. The first two issues were held in favour of the Petitioner, the third arose due to a purported conflict between earlier orders of courts, and the fourth was decided in favour of the Respondent. 

This post is not seriously concerned with the second issue of whether an allocation of a coal block could be seen as being proceeds of crime for the PMLA. Rather, the focus here is how Prakash Industries engages with the links between PMLA proceedings and the scheduled offence, while also elaborating on the purported conflict on understanding the scope of attachment powers. It is argued here that the Court’s conclusions on the attachment powers issue are ultimately correct. However, in respect of the latter issue,  the Court has created a curious contradiction by concluding that PMLA actions and scheduled offence proceedings are inextricably linked, but Article 20(1) would sever that link. The distinctions drawn are more an exercise in sophistry, looking to the form rather than substance of the matter, and do not do justice to the scope and ambit of the constitutional guarantee of Article 20(1). 

A Quick Background

The PMLA punishes practically anything to do with “proceeds of crime”, and it defines this concept in Section 2(1)(u):

“proceeds of crime” means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad;

Explanation. — For the removal of doubts, it is hereby clarified that “proceeds of crime” include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence

If the PMLA relies on proceeds of crime to come into action, then proceeds of crime in turn rely upon the commission of a scheduled offence, which is defined in Section 2(1)(y) as referred to the offences that are specified in the schedules to the PMLA.

The Axis Bank - Seema Garg Controversy on Understanding "Proceeds of Crime" [Paras 66-81]

If we return to the proceeds of crime definition, it can be separated into three limbs — (i) property that is "derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence" (read with the explanation); (ii) the "value of any such property"; (iii) where "such property is taken or held outside the country" then property "equivalent in value held within the country or abroad".

In Prakash Industries, the Court observed that there appeared to be a conflict in how the second and third limbs of the proceeds of crime definition were being interpreted by courts. It noted the Punjab & Haryana High Court's decision in Seema Garg [Order dated 06.03.2020 in PMLA O&M No. 1 of 2019] as having read the statute in a manner contrary to the Delhi High Court's earlier decision in Axis Bank [Order dated 02.04.2019 in Crl. A. 143/2018].

What had Seema Garg done? It had held that the second limb (value of any such property) bore a live link with the first limb (property derived or obtained from a scheduled offence), to the degree that it must be borne from the first limb. So, if the proceeds of crime generated from committing the scheduled offence are cash, and that cash is invested towards building a house, then that house is the kind of property that the second limb covers. As against this, the third limb could cover any property of the defendant, acquired before or after commission of the offence, which was of equivalent value to proceeds of crime identified by the prosecution. If both the second and third limbs covered any property of equivalent value, this meant that one of the two was redundant, which could not be the correct way to read the statute. 

Axis Bank differed from Seema Garg by rejecting the view that the second limb only covers property that is birthed from the first limb. Instead, it held that both the second and third limbs could cover any property which was of equivalent value. There was no redundancy because the third limb only covered cases where the proceeds of crime were taken out of India, which was beyond the scope of the second limb. Noticing the possible hardship resulting from this reading, the Delhi High Court in Axis Bank had insisted upon requiring the prosecution to give reasons why it was going past the first limb and demonstrate that the proceeds of crime derived or obtained from commission of the scheduled offence were not available.     

In Prakash Industries, the Delhi High Court agreed with its earlier orders in Axis Bank, emphasising that the view taken in Seema Garg would amount to deleting the second limb altogether. Further, it held that such a view would limit the scope of attachment powers in a manner contrary to the legislative intent behind enacting the PMLA, as the statute imagined scenarios where proceeds of crime would be layered by sophisticated means rendering them untraceable for attachment. The Court re-emphasised the safeguard of requiring the prosecution to demonstrate why it had to resort to attach anything other than the proceeds of crime so identified. 

Limiting the second limb of Section 2(1)(u) to only cover property which was birthed from the proceeds of crime generated from the scheduled offence might appear too limited a view of the law considering its intent and the ease with which the proceeds of crime might be layered in the financial system — cash can get invested in a host of financial instruments, held in the names of various persons. Moreover, it is next to impossible to prove the level of causation demanded by Seema Garg where proceeds of crime go into a bank account and merge with existing balances — if INR 5,00,000/- alleged to be proceeds of crime hits an account which already had INR 5,00,000/-, then how do we establish that the watch bought from the bank account was due to the proceeds of crime and not existing balances? Which is why the more relaxed view adopted in Axis Bank is preferable. But, the cost of adopting this view is that it brings with it the very real risks of the Enforcement Directorate simply not making the effort to trace the proceeds of crime and instead attaching legitimate assets causing undue hardship to defendants and innocent third parties. To its credit, the PMLA does provide for an agency in the form of the Adjudicating Authority to exercise oversight over what the Enforcement Directorate does and ensure that this doesn't happen. That this Authority might not be doing its job is, arguably, not a valid reason to erect limits within the statute itself.         

The Scheduled Offence and PMLA: A Peculiar Relationship

It was contended by the Enforcement Directorate in Prakash Industries (as it is contended by this agency in many other cases) that the offence of money laundering is an independent offence and unconnected to the fate of the scheduled offence. Thus, it sought to argue that even if a court discharges / acquits the accused or quashes proceedings relating to the scheduled offence, that would not affect the PMLA proceeding since the latter was an independent offence. This argument is sought to be anchored in Section 44 of the statute which provides that PMLA proceedings are not 'dependent' on the scheduled offence. 

A cursory reading of Section 2(1)(u) and the definition of the money laundering offence would be enough to reject this contention — since proceeds of crime, the beating heart of the PMLA, are expressly linked to a scheduled offence, a finding that there was no scheduled offence would naturally entail that no proceeds of crime were generated, and thus the PMLA cause of action would not lie. A finding to this effect came to be passed recently by the Supreme Court in a peculiar fact context [J. Sekar v. Directorate of Enforcement, Crl. A. No. 738 of 2022 (Order dated 05.05.2022) — not cited in Prakash Industries]. But the language of the High Court in Prakash Industries in rejecting this argument of the Directorate is more expansive and hopefully marks the end to this particular contention being raised [Paras 36-65] (till the day the statute de-links "proceeds of crime" from the scheduled offence altogether).     

While on the one hand the Delhi High Court in Prakash Industries characterised the relationship between the PMLA cause of action and a scheduled offence as 'inextricable', it curiously did not find any problems in viewing these two as stand-alone processes when it came to application of the constitutional guarantee under Article 20(1) against retrospective punishment.  

"Article 20(1):— No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence."

The issues of retrospective penalisation before the High Court in Prakash Industries were straightforward. If the PMLA itself had come into force from 2005, then could it apply to cases emanating from scheduled offences registered prior in time? And, if a specific offence itself came to be added to the schedule on date X, then could a PMLA prosecution lie in respect of the proceeds of crime for cases registered prior to X date notifying the offence as a "scheduled offence"? 

The High Court concluded that allowing a PMLA prosecution to run in both these scenarios would not violate the bar against retrospective penalisation under Article 20(1). This is because the cause of action did not stand completed on the date of the commission of the scheduled offence and generation of any proceeds of crime, since the PMLA went beyond this and punished possession or use of such proceeds at any point of time. Thus, it was more like a situation where some elements for the cause of action were being drawn from a point of time prior to the legislation coming into effect, rather than the entire cause of action having been complete before that date and its character being changed retrospectively. 

Holding that the PMLA proceedings can subsist even in cases where the underlying scheduled offence was either prior in time to the PMLA coming into force, or the offence being incorporated into the schedule, is a conclusion which comes under some difficulty when scrutinised. Especially, if one is of the view — as the Court in Prakash Industries is — that the scheduled offence is inextricably linked to the PMLA cause of action. This is because before the coming into force of the PMLA, or Date X, the property generated by committing the crime could not be proceeds of crime, since the offence was not a scheduled offence. If the Act goes back in time to a point when the scheduled offence did not exist, it means that the properties in question were not proceeds of crime, and therefore it would not attract the terms of Section 3, PMLA. To place this in the language of Article 20(1) which prohibits punishment "for a violation of law in force at the time of the commission of the act charged as an offence", it is clear that the "act charged" in the PMLA context will always have to be read together with the concept of a "scheduled offence" which is what can lead to any proceeds of crime arising in the first place.

The second limb of Article 20(1) is also attracted here, something which the Court did not fully appreciate in Prakash Industries. Giving the PMLA retrospective effect is problematic because it would alter the nature of events completed in the past, rather than simply rely upon an acquired status or characteristic of persons or things to give the law effect. The commission of a scheduled offence which led to generation of some property is an event which, through a separate law, is sought to be saddled with additional liability.  This is unlike, say, the following scenarios:

• A law is passed requiring persons to obtain a license for keeping alcohol at home. D has alcohol at home prior to the law being passed, and refuses to get a license. The law would, rightly, punish D for failing to get a license in respect of this alcohol which she had acquired prior to the law coming into force. The infraction here is the failure to get a license, and it would continue for each day that the person refuses to get a license. 
• Possession of items already criminalised by an existing law is made more severely punishable by a new law. This new law would certainly apply to items possessed at a date that is prior to the law being enforced. However, it could not apply to cases already registered prior to the law coming into force. This scenario is akin to the one before the Supreme Court in Mohan Lal [(2015) 6 SCC 222] which in my view correctly noted that the NDPS Act would cover cases in which possession continued from a time prior to that Act coming into force, but incorrectly applied the Act to that specific case which had been registered prior to the NDPS Act coming into force and thus should have been governed by the Opium Act instead. 

The PMLA might be criminalising possession or use of certain items, but it is not analogous to issues of possessing alcohol without license or drugs after a law criminalises possession. This is because the PMLA relates back to a set of events (commission of scheduled offence) which when they were committed did not attract the additional penalty of inviting criminal proceedings under the PMLA against an individual. It is no better than a law which says that all persons convicted of any offence in the past will now be open to suffering additional prosecutions for having possessed or used property derived as a result of that offence. 

This issue of Article 20(1) would also prevent invoking PMLA for its attachment processes, because just how there is an inextricable link between the scheduled offence and PMLA prosecution, there is such a link between the PMLA prosecution and the attachment process. Unlike, say, the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act 1976 ["SAFEMA"] where forfeiture proceedings may use the fact of a prior prosecution but work entirely independent of such a prosecution, the proceedings of attachment and confiscation under the PMLA cannot exist independent of a criminal proceeding under the PMLA. Which is why relying on cases which term forfeiture under these parallel regimes as not being "penalties" for purposes of Article 20(1) — such as Biswanath Bhattacharya [AIR 2014 SC 1003] would be inappropriate for the PMLA context.

Conclusion

In a judgment where the High Court emphasised on the inextricable link between the scheduled offence and the money laundering offence, it has ultimately undone its own finding by enabling retrospective operation of the money laundering offence by, somehow, concluding that this link is perhaps not so inextricable after all. The latter is an erroneous view, which fails to give full import to a constitutional mandate carried in Article 20(1), and may expose countless persons to harassment by re-opening closed transactions on the strength of untested allegations by an agency. Since it has come at a time when the Supreme Court is also poised to deliver a judgment on various aspects of the PMLA, the observations of the Delhi High Court in Prakash Industries may end up having a rather short shelf life. In some respects, such an outcome might not be for the worst. Unless, of course, this judgment presages what is yet to come.

Section 144 Cr.P.C. — Part VI: Continuity and Change (1941 to 1950)

(This is the sixth post in a multi-part series. The earlier posts can be accessed here)

The two previous posts in this series charted the slow but determined emergence of Section 144, in what was the Criminal Procedure Code of 1898, as an integral part of the toolkit of repressive laws that was used by administrators to mercilessly stifle political activity across British India. This post turns our attention to the decade of Indian independence, and of course, the adoption of India's Constitution. 

Crisis, Section 144, and the Public Order Acts

If one were to go along with the conventional representation of 1947 being the high-point in a long struggle for Indian independence, then the years leading up to it were nothing short of a maddening crescendo in terms of ordinary life. The Second World War consumed the world till 1945, and for India this meant the almost full-scale devolution of powers to executive officials under wartime legislation. During which time the country also saw the Quit India Movement and its bloody suppression by the colonial administration. 

I mentioned in the introduction that Section 144, Cr.P.C. had come to be identified as part of a repressive laws toolkit. However, as I had reflected in the previous post as well, for many legislators this blackballing of Section 144, Cr.P.C. masked a deep underlying consensus between the colonial and nationalist leaders about the utility of this provision. A legislative measure conferring wide powers on the executive to efficiently control public order emergencies was seen as a necessary part of ordinary law. 

Thus, while the nationalist legislators certainly tried hard to carve out exceptions for political acts from within the scope of this provision, at the same time, they remained supporters of Section 144, Cr.P.C., as long as it was "properly used". What might this mean? For instance, using Section 144 promptly to quell any communal riots. Considering how rapidly communal violence escalated in several parts of India during this decade, it helps explain why there is a surprising absence of critical commentary (and appellate court litigation on public order issues) around Section 144 in the archive for this period. 

If anything, the withdrawal of wartime legislation, coupled with rising communal violence, labour agitation, and the political activity pressing for independence, made many administrators skeptical about the sufficiency of ordinary laws such as Section 144 to deal with the problem at hand. This prompted a wave of special, province-level ordinances in 1946, which were soon followed by statutes in 1947, such as the "Assam Maintenance of Public Order Act". 

Not only did the statutes have similar names [almost all of them were the "(Insert) Maintenance of Public Order Act"] but they were also very similar in terms of content: wide-ranging powers were conferred upon the executive to deal with all sorts of public order problems with minimal judicial review. Thus, towards the maintenance of public order, executive officials had been conferred with powers for preventive detention, externment (ordering a person to leave an area for a specified period of time), imposition of collective fines and, of course, prohibitory orders akin to Section 144. 

Independence, Public Order, and the Constitution

On June 26, 1947, the Chief Commissioner of Delhi passed Order No. F.2(16)47-R&J, whereby he extended the existing Section 144 Orders "prohibiting all meetings of ten or more persons and all kinds of audible or visible demonstrations in any public street or place within the area of New Delhi" for a further period of two months. 

Thus, underneath the fiery inspiration of Pandit Nehru's speech which promised freedom at the stroke of the midnight hour, there lay the cold legality of a Section 144 order. It lay there, waiting, as India joyously celebrated independence. But it was not long before that Section 144 and the rest of the repressive laws toolkit swiftly came to the fore to remind all Indians just how limited our newfound freedom was going to be. 

Indeed, while communal tensions remained a major overt reason for retaining the untrammelled executive powers conferred by the Public Order Acts, these powers also came to be unscrupulously used by the new nationalist governments in the years following independence to quell any political opposition and labour agitations, and Section 144 orders remained in force for several months at a time in various places. All of this, of course, led to fierce litigation. But since most of it was concerning the preventive detention aspects of the Public Order Acts I have refrained from engaging with it in great detail here. 

Only rarely does one get a sense of this turmoil while reading the proceedings of the Constituent Assembly, which worked tirelessly during this time. But what was unsaid in the Assembly itself can be heard loudly in the text of the document that it authored. Yes, there were fundamental rights guaranteed by the Constitution. But the civil liberties that were ardently fought for now came with many fetters, in the form of explicit restrictions to fundamental freedoms and the rejection of the Due Process Clause, which gave a renewed lease of life to many loathsome colonial laws as well most parts of the Public Order Acts.  

Thus, in his Presidential Address before the Indian Civil Liberties' Conference in July 1949, Justice (retd.) P.R. Das lamented that

This, then is the position in India today. We have no protection against tyrannical laws; we have no protection against the arbitrariness of the Executive Government. The Constitution has deliberately provided for "executive justice" and not for "rule of law" ... We have the same Police Raj; orders under Section 144, Code of Criminal Procedure, continue to be made; and lathi charges have not been stopped.    

 

Continuity and Change

India's founding moment has attracted considerable scholarly attention from all quarters of late. Some argue that the adoption of a Constitution and recognition of universal suffrage marked a transformative moment where people became citizens from being subjects, and the country shifting to a governance of justification. Another important conversation has been around the idea of colonial continuities, which in some measure interrogates whether this transfer of power was really transformative. The Public Order Acts that ruled the realm between 1946 to 1950 offer a fantastic site of inquiry on these lines, and I can only hope that they get the scholarly attention that they deserve.

But what about Section 144, the protagonist of our narrative? The recognition of fundamental freedoms certainly changed the nature of the debate — wrongful or improper use of this power was no longer a mere statutory breach, but a violation of the fundamental rights constitutionally secured to all citizens. However, the history of Section 144 had confirmed just how resilient it was to court cases. Litigation unfolded at a leisurely pace which meant that the prohibitory orders had often expired by the time an order was passed. Only time would tell whether these practical realities would also change in the new climate of independence.

The next post will look more closely at the first decade of independence and its impact on Section 144. It will discuss some interesting legislative developments that took place, as well the first constitutional challenges levelled against the provision in court. 

Guest Post: Suspension of Sentence and the NDPS Act — An Unhappy State of Affairs

(I am delighted to present a guest post by Nipun Arora, an advocate practising in Delhi, and Shivkrit Rai, a law researcher at the Delhi High Court)

The Code of Criminal Procedure (Cr.P.C.) provides for securing liberty of persons in custody at various stages: individuals named as an accused in cases where the trial is pending can seek bail in terms of Sections 437 & 439 (Regular Bail); and convicts can seek a stay on execution of sentence under Section 389 (Suspension of Sentence). Jurisprudentially, there has been a difference between the two and the factors that the court must consider while deciding upon either of these. However, for the Narcotic Drugs and Psychotropic Substances Act (NDPS Act), the situation is different. This post discusses how the distinction becomes diluted in cases under NDPS Act and leads to serious trouble.

Understanding the two stages of liberty for an accused. Bail v. Suspension of Sentence

During the trial, an accused person can seek bail. For a bailable offence, this can be availed as a matter of right, whereas in a non-bailable offence, bail depends on the discretion of the court after considering various factors such as the possibility of fleeing, chances of tampering the evidence, gravity of the offence, etc.

If found guilty, the convict can make an appeal before the appellate court, and during the pendency of this appeal, the convict can seek suspension of the sentence imposed by the trial court. The logic is similar as that of bail: if there is a possibility that the person might not have committed the offence, it would not be proper to confine them in custody.

However, the factors to be considered for suspension of sentence are different from that of bail. At this stage, the trial is over, evidence has been recorded, and a competent court has found the person guilty after application of judicial mind. The factors such as possibility of tampering evidence do not exist anymore. The decision to suspend the sentence or not has to be based on different factors: primarily on how long it would take for the court to decide the appeal. For instance, it would not be proper to suspend the sentence if the appeal is to be heard next week; whereas it would be desirable for the sentence to be suspended if the appeal might not come up for several years. The Supreme Court has reiterated these principles several times [Bhagwan Rama Shinde Gosai v. State of Gujarat, AIR 1999 SC 1859; Kashmira Singh v. State of Punjab, (1977) 4 SCC 291].

The distinction between bail and suspension of sentence has also been recognised by courts multiple times in Anil Ari v. State of WB [AIR 2009 SC 1564]; Atul Tripathi v. State of UP [(2014) 9 SCC 177]; Jagdip Beldar v. State of Bihar [Crl. App. (SJ) 2319/2017 (Patna HC)]. The logic is the same as discussed above: the trial has ended, a competent court has found the person guilty, the presumption of innocence does not exist anymore. The situation at pre-conviction and post-conviction stage is thus different.

Bail & suspension of sentence under NDPS Act

In cases under certain special statutes, the standard principles of bail as discussed above do not apply. These are the offences that are considered “grave” such as those under the Narcotic Drugs and Psychotropic Substances Act (NDPS Act), the Maharashtra Control of Organised Crime Act (MCOCA), the Unlawful Activities (Prevention) Act (UAPA), etc. Under the NDPS Act, bail can only be granted if “the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail” (Section 37, NDPS Act). The embargo is problematic and has been discussed earlier on this blog. In brief, it requires the court to adjudge the guilt of the accused even before the trial has commenced and mostly without adequate material before it.

Besides the strict threshold for bail, the legislature also tried to place a blanket prohibition on suspension of sentence. By an amendment in 1989, Section 32A was inserted in the NDPS Act which took away the power of the court to suspend the sentences awarded under this law. This provision was challenged before the Supreme Court in Dadu @ Tulsidas v. State of Maharashtra [(2000) 8 SCC 437]. The full-bench of the Supreme Court held that the restriction on the power to suspend sentences is unconstitutional as contrary to Articles 14 and 21. The Court approved the judgement of Allahabad High Court in Ram Charan v. Union of India [AIR 1990 All 1480] that taking away the possibility of suspension of sentence renders the right to appeal meaningless.

While holding the provision unconstitutional, however, the Supreme Court noted that it would not automatically entitle an appellant to have the sentence suspended. It observed:

Holding Section 32A as void in so far as it takes away the right of the courts to suspend the sentence awarded to a convict under the Act, would neither entitle such convicts to ask for suspension of the sentence as a matter of right in all cases nor would it absolve the courts of their legal obligations to exercise the power of suspension of sentence within the parameters prescribed under Section 37 of the Act.

The Court then misquotes a division-bench judgement of the Supreme Court in Union of India v. Ram Samujh [(1999) 9 SCC 429] to apparently substantiate the position that restrictions of Section 37 would apply to suspension of sentence as well, though that judgement related to regular bails and did not deal with suspension of sentence at all. Regardless of the misquote, the law as it stands is that the threshold required in regular bail needs to be met for suspension of sentence as well. This makes things peculiar.

The Problematic Misinterpretation of the Court in Dadu @ Tulsidas

In theory, the extension of restrictions of Section 37 would make suspension of sentence impossible and could lead to certain illogical conclusions. For starters, the threshold for bail as per Section 37 requires the court to be of the opinion that the person “is not guilty of such offence”. The same threshold cannot be applied in a case of suspension of sentence, as the person has already been convicted by a competent court. Thus, the moment an order for suspension of sentence is passed, which matches the threshold of bail i.e. “not guilty of such offence”, the entire appeal will have to be allowed. This is because a conviction can only stand if the guilt is proved beyond reasonable doubt, and if there could be any opinion that the convict is not guilty (as required under Section 37), there clearly exists a reasonable doubt (or perhaps much more than a mere reasonable doubt).

It is absurd that a person can be said to be reasonably not guilty (in the order for suspension) but be a convict (in the final order) at the same time from the assessment of the same material by the same court. The extension of Section 37 to suspension of sentences makes the issues of the interim order so connected with the issues of the final judgement, that they cannot possibly be separated.

This paradox does not exist (or is not as apparent) at the stage of trial, perhaps because of the distinction in factors under consideration as discussed earlier: The trial court has to make a prima facie determination before or during the trial, and there is a possibility of adequate material emerging showing the guilt of the accused. However, that is not the case at the appellate stage – once it can be concluded in the interim order that there are grounds to believe that the accused is innocent, that view ought to be extended even at the final stage.

Even besides the resultant illogic, restrictions of Section 37 were not supposed to apply to suspension of sentence. It states that “no person accused of an offence” shall be released unless the conditions are satisfied – the subject of the section here is an accused, not a convict. The scope of the section is clearly limited by the words of the legislature. The legislature has not laid down any additional requirement for suspension of sentence. By extending the scope of Section 37 to apply to suspension of sentences as well, the paradoxical situation has emerged.

Conclusion

There has been a distinction in regular bail and suspension of sentence, and the factors relevant to both. However, the Supreme Court in Dadu @ Tulsidas appears to have overlooked this distinction and artificially created further restrictions which should not have applied otherwise. There was no especial requirement for the Supreme Court to have engaged in the unnecessary academic exercise of whether the restrictions of Section 37 would apply or not, when the scope of the challenge before it was limited precisely to the constitutionality of Section 32-A. Dadu @ Tulsidas, thus, appears to have been decided incorrectly to this extent and needs to be reconsidered. The embargo of Section 37 should not apply to cases of suspension of sentence.

The Constitution Bench Reference in Sushila Aggarwal v. State

A Constitution Bench of the Supreme Court decided a reference made in Sushila Aggarwal & Ors. v. State (NCT of Delhi) & Anr. [SLP (Crl.) 7281-82/2017, decided on 29.01.2020], where two questions had been posed for consideration:

(1) Whether the protection granted to a person under Section 438 Cr.P.C. should be limited to a fixed period so as to enable the person to surrender before the Trial Court and seek regular bail.

(2) Whether the life of an anticipatory bail should end at the time and stage when the accused is summoned by the court. [Para 1, Shah, J.]

Two separate opinions, and 133 pages later, we find that the five Justices unanimously answered the Reference (which is, frankly, just one question broken up into two) as follows: There is no statutory time limit on the protection of "Anticipatory Bail" given under Section 438 Cr.P.C., and nor does this protection automatically expire when an accused is summoned to Court. Such a limit can be imposed by the Court if it thinks fit, but should not be normally done. The Bench also went beyond the Reference, and "clarified" the law and practice on Section  438 Cr.P.C., by issuing 12 pointers for all courts to consider [See the section bearing signatures of the entire Bench].     

What led to the Reference?

The Reference made in Sushila Aggarwal seems to have been the result of two conflicting streams of opinion in past precedent. One line of cases, symbolised by the decision in Mhetre [(2011) 1 SCC 694] had held that there can be no limit as to the time duration of an order granting Anticipatory Bail. The second line of cases, symbolised by Salauddin [(1996) 1 SCC 667], had instead held that any order passed under Section 438 Cr.P.C. must be of a limited duration. And, at the heart of it all, was an old decision in Gurbaksh Singh Sibbia [(1980) 2 SCC 565], which had been interpreted and relied upon in both lines of cases [See Para 7.4 (Shah, J.)].

The Reference — Reaffirming Judicial Discretion in S. 438

It is a shame that the concise manner in which the issues were framed for the Reference (Yes, I am taking a dig here), did not contribute to a similarly concise set of opinions. Both opinions, of Shah, J. & Bhat, J., carry lengthy extracts from statutory provisions and prior precedent which unnecessarily burdens the reader. 

On cutting through the prolixity, one finds that both opinions are premised on the same logic — ensuring that judges have near-total room for discretion in considering any requests for Anticipatory Bail under Section 438 Cr.P.C [Para 7.5 (Shah, J.); Paras 68, 76 (Bhat, J.)]. While the opinion of Shah, J. answers both questions on this basis alone, Bhat, J. also offers independent bases to refute arguments to limit anticipatory bail simply because the investigation was over. As he observes, that an investigation stands complete is, by itself, a factor towards granting bail and not taking persons into custody [Paras 70, 76]. 

Both opinions view the conflicting decisions as having incorrectly interpreted Sibbia, insofar as they sought to create mandatory rules for courts in the realm of Anticipatory Bail. This discussion goes beyond rules imposing time limits, to also mention opinions suggesting that entire categories of offences should be outside the ambit of Section 438 [Paras 65, 68 (Bhat, J.)]. Through the opinions, we are repeatedly reminded that the sole basis for limiting judicial discretion in this realm of bail is an express provision in statute — anything less is, at best, a point of guidance for judges to help them exercise the weighty discretion that they wield [Para 56, 59, 62, 64, 68, 80 (Bhat, J.)]. 

Thus, at the end, it is confirmed that there is nothing warranting an outright refusal to consider an application under Section 438 Cr.P.C., except what may be specifically provided for in statute. Everything else, be it the nature of the offence, or the particular needs of the investigation, is part of the factors that courts must consider while deciding the fate of an application.

Appraisal — The Perennial Victory of Standards over Rules 

As discussed, at the heart of the Reference in Sushila Aggarwal is the Supreme Court's affirmation of standards over rules — enabling judicial discretion rather than curtailing it in any manner at all. If we look at the issue with this lens, then the choice appears almost like a foregone conclusion. Take up any branch of criminal procedure law in India, and it will show that similar conflicts between having strict rules versus malleable standards always end in victory for the standards. After all, since having standards implies more power for judges, who have more discretion, it is counterintuitive to expect a ruling that clamps this discretion in favour of bright line rules. 

But the problem is that in criminal procedure, sometimes clear rules are actually more useful than broad standards, and I fear that the Supreme Court in Sushila Aggarwal may just have compounded the pre-existing vagaries that cripple the practice of bail cases across most parts of India. Even though rules curtail wriggle-room for doing justice in exceptional situations, they provide a measure of certainty, consistency, and predictability that remains elusive when dealing with standards. And, at some level, this choice between rules and standards must also be cognizant of the system in which the choice is being made. Enhancing discretion implies a degree of trust in the ability and capability of the officers entrusted with that discretion, while rules ensure that the fate of an individual does not disproportionately hinge upon the peculiar attributes of any judge. 

It is unsurprising to read that the Supreme Court trusts judicial officers with discretion. But, can it be said that the trial courts across India, criminally overburdened as they are, have the capability to sit and consider the umpteen number of factors that the Court in Sushila Aggarwal suggests should be looked at while considering applications under Section 438 Cr.P.C.? I am not so sure.

Preventive Detention: Article Update

(This is an article update for new scholarship and not a substantive post. The paper is available here)

Since August 5, the rest of India has been cut-off from the happenings in the (erstwhile) State of Jammu and Kashmir, except when the happenings are released at the convenience of those in power. Thus, today, we find ourselves in the remarkable situation, that even after almost 45 days, the rest of India remains unaware of the legal basis for the untrammelled show of executive discretion currently on display in various parts of Kashmir. A situation which the Supreme Court is aware of, and yet, has taken no steps to remedy either.

The eerie silence around Kashmir has also, reportedly, been brought about through widespread arrests and detentions — again, the basis for which has not been made public to the rest of us. It is probable, that a large number of these arrests have been carried out by the police using powers of what is called "Preventive Detention". But it would be a misnomer to continue calling it this, considering that it is rarely only used for preventive purposes. So I'll call it by another name by which it is known in other parts of the world: Executive Detention.

What, then, is Executive Detention? As the name suggests, this is a denial of liberty carried out by the Executive, and only the Executive, without any worthwhile judicial supervision. A Commissioner of Police can order the arrest of any person on suspicion of doing acts prejudicial to "public order" or other vague / strange grounds, without giving any reasons upon arrest, and detain persons for upto ninety days without judicial scrutiny. The law allows police to arrest first and seek approval for this detention, which only involves scrutiny by senior executive officers. Of course, the person can make a representation against this arrest and detention, but she is denied the right to counsel. And, if a non-judicial body approves, the detention can also last upto one year or more.

There is the regular outrage when Executive Detention is used by governments for, seemingly, jailing political opponents or trampling upon civil liberties. But, amidst all this, there is surprisingly little critique about the set of legal regulations that primarily governs all legislation on the subject of Executive Detention in India: Article 22 of the Constitution itself. Through Articles 22(3) to (7), the Constitution prescribes a set of do's and don'ts that the Executive Detention laws must comply with. And my description of such laws in the preceding paragraph is fully constitutional. 

The shortcomings of the legal minima prescribed by the Constitution are many. Not only were these baselines extremely generous to the Executive when compared with other existing legal positions in 1950 itself, but over time, the continuance of these baselines has created a strange duality in the law. While the judiciary has expanded the protections for individual liberty in most spheres of law, it has not been able to do so in the sphere that requires these protections the most. All of which has led to a reality where, over the years, successive governments have gradually turned the supposedly extreme measure of Executive Detention into just another law enforcement tool, by passing laws that only barely pass the already low-lying constitutional threshold. 

If that strikes your conscience, even the tiniest bit, then ask yourself: Why do we persist with this set of legal standards that maximise executive discretion to ensure public safety but by nullifying individual liberty to absurd levels? Can we not reconfigure the attempts at striking a balance between these apparently conflicting interests that the framers of the Constitution made? If we have done this for many other parts of the Constitution, noting that times change, then why not this part which  goes to the root of the Constitutions' ambition of creating a legal order that safeguards individual liberty?

In a short paper, I've tried to initiate this conversation around Article 22 of the Constitution. I strongly think that the persistence of these clauses is a blot upon the Constitution, in more ways than one, and it is no answer to say that we must live with the status quo  simply because the Constituent Assembly had brought this Article to life. This ritualising goes against the very idea of a social contract between Citizen and State, which imagines that future generations are not bound by the choices of their predecessors. It is high time we begin the discussion to reconsider the choices made by the Framers of the Constitution to place the "interests of the state" high above the "exigency of liberty of the individual". 

P.S.: I must not be mistaken to say that the choices of the past can be thrust aside by the tyranny of a majority or executive supremacy. Discussion, not imposition, is the means towards a new set of laws in a democratic republic.  

Restrictive Bail Conditions in Indian Criminal Procedure: Lessons From History

The law on bail in India has often been discussed on the Blog. Most recently, we analysed the Indian Supreme Court's decision in Zahoor Watali, which revolved around Section 43-D of the Unlawful Activities Prevention Act 1967 [UAPA]; the provision which imposes conditions upon grant of bail in UAPA cases that go beyond the set of conditions laid out in Section 437 of the Criminal Procedure Code of 1973 [Cr.P.C.].

Section 43-D of the UAPA is far from the only example of Parliament creating a law that makes it more difficult to get bail. Indeed, on an earlier occasion, the Blog had offered an indicative list of the statutes carrying such provisions. But a lot was left out in that earlier post in the interests of brevity. Since the preference for such provisions is only increasing with each passing year, it's worthwhile to revisit the subject of restrictive bail conditions in Indian criminal procedure. 

This post takes a look at the first instance of such a provision being used in independent India, when it was added to the Essential Supplies (Temporary Powers) Act of 1946 [ESA] by an amendment in 1950 by the Provisional Parliament. 

Context: Scarcity in Independent India  

It is an undeniable fact that the overall quality of life has seen an increase for a majority of people in India since independence. Keeping that in mind, it is not easy for many of us to imagine the drastic scarcity in essential supplies, such as food and fuel, that India faced in the first two decades after independence. In an effort to manage the limited amount of these essential supplies, the Government chose to continue with a War-time measure of controls that entailed a system of intense state control over both production and distribution (Rohit De offers a window into this world in a chapter of his recent book). The ESA was one of those War-time measures that had been allowed to continue even after independence. 

But each passing month suggested that managing such a vast network of controls was proving too difficult. Thus, rather than curb prices and ensure fair distribution, the intense state control ended up contributing to a thriving black market. Here, supplies would be sold to the highest bidder and so profit would be much higher than what the trader would stand to get by selling material at artificially reduced prices. And this "blackmarketeering" happened by hoarding your supplies; telling customers that there isn't anything left when in fact a certain quantity of supplies was held back to be sold in the black market.

Basically, it became profitable to flout the law. But the costs of this were felt by everyone except the limited minority who could afford to spend large sums of money on the black market. This, naturally, meant that a large majority of the citizens of independent India were increasingly disaffected with the government that promised fair prices for goods and supplies. What was the point of independence, if it meant staying without food? This background helps understand the severity of the problem in the eyes of Parliament, and why it was felt necessary to amend the ESA in 1950 to introduce a stricter penal regime for those flouting the law (among other things).

ESA Debates in the Provisional Parliament: A "War" Against Hoarders

The ESA Amendment Bill was introduced and debated in the Provisional Parliament on August 14, 1950 (Page 1013, Left Column). The Minister for Food and Agriculture was K.M. Munshi, a lawyer who had played an important role through the drafting of the Constitution. 

After reading the different administrative aspects of the Bill, Munshi turned to the penal regime. Besides introducing a new offence with stringent punishment, the Bill also sought to make two changes to prevent persons from taking "advantage of the provisions of the Criminal Procedure Code" and drag out trials. One method was day-to-day trials for ESA crimes. The other, and the one that concerns this post, was introducing Section 13-A and a stricter regime on bail. He acknowledged that the Defence of India Rules were the inspiration for this provision, under which "bail cannot be given unless the prosecutor is heard and the Magistrate is satisfied that there are reasonable grounds for believing that [the accused] is not guilty." He further acknowledged, that "this puts the burden on the other side", but justified the measure as being an "emergency legislation" of some importance and this being a tool to deter people from hoarding. (Page 1020, Right Column).

The proposal did not go uncontested. Jaspat Roy Kapoor — who famously said that the Chapter on Fundamental Rights should have been renamed "Fundamental Rights and Limitations Thereon" — moved a motion to amend the clause which he argued was "against all elementary principles of law and equity" (Page 1097, Left Column). His changes to proposed Section 13-A were twofold:

• Rather than requiring that the prosecution be heard before granting bail, he suggested that the clause only require that the prosecution be given an opportunity to be heard. 
• Rather than require a court be satisfied that the accused is not guilty of the crime before to grant bail, he suggested that the clause should require that a court be satisfied that the accused was guilty of the crime.

The proposed changes were small but of substantial import. By requiring that the prosecution only be given an opportunity of being heard, rather than actually be heard, Kapoor sought to prevent cases where a wily prosecutor might create unnecessary delays to extend incarceration. Similarly, by asking that the court be satisfied about an accused person's guilt before granting bail, rather than be satisfied about her innocence, Kapoor sought to ensure that the clause was in harmony with the presumption of innocence:

It is for the prosecution to make out a prima facie case and not for the arrested person to establish his innocence when nothing has been made out against him. That is — I again submit at the risk of repetition — something astounding and offends against our sense of justice and jurisprudence. You may have a hard law, but let it not be a lawless law. Let it not appear to be ridiculous. After all that is not the way in which legislation should be enacted in a highly democratic Parliament. (Page 1100, Right Column).

The eminent lawyer Thakur Das Bhargava, another veteran of India's Constitutional journey, rose in support of this suggestion and condemned the proposed Section 13-A as "against all canons of justice and law" (Page 1101, Left Column). Naziruddin Ahmad also rose to support the attack on proposed Section 13-A, though, he was not troubled by the negation of the presumption of innocence as much as he was troubled by a fear of selective enforcement of this harsh tool (Page 1104, Right Column). 

The government response was telling. The Minister argued that the measure was hardly against all canons of jurisprudence as it had been part of Emergency legislation in India for a number of years. Removing this stringent bail provision, he argued, would weaken the whole legal apparatus (Page 1103, Right Column). When reminded that the Emergency legislation had been passed in times of War, Munshi boldly replied that "This is a war against hoarders" (Page 1104, Right Column).

Ultimately, Jaspat Roy Kapoor withdrew his amendment, stating that it was "sacred" to him and he sought to "spare it from defeat" (Page 1105, Left Column). Still, the suggested change with respect to giving prosecutors an opportunity to be heard was amended, as was a minor modification suggested by Bhargava on the degree to which a Court must be satisfied of innocence for granting bail. As a result, Section 13-A was brought on the ESA in the following form:

Notwithstanding anything contained in the Code of Criminal Procedure 1898, no person accused or convicted of a contravention of any order under Section 3 relating to food-grains which is punishable under the proviso to Sub-Section (2) of Section 7 shall if in custody, be released on bail or on his own bond unless

(a) the prosecution has been given an opportunity to oppose the application for such release, and 

(b) where the prosecution opposes the application it appears to the Court that there are reasonable grounds for believing that he is not guilty of such contravention. 

The Lasting Legacy of Section 13-A

K.M. Munshi was a supporter of expansive fundamental rights in the Indian Constitution. He was a proponent of having a "Due Process" clause, and when the phrase was culled from the text by the Drafting Committee, he was instrumental in securing its re-introduction through what is today Article 22 of the Indian Constitution. He was part of a group of persons which displayed tremendous ability to imagine an India different from the one they had inherited. One of the key features of this vision, was reducing the scope for individual oppression at the hands of government, by way of guaranteeing fundamental rights. 

At the same time, when faced with a problem of hoarding and food scarcity — which Government policy had partly created — Munshi and the other members leaders of an independent, democratic, republic of India displayed a telling lack of imagination and turned to the War-time measures of a colonial regime that simply invested greater powers with executive officers, while at the same time reducing the potential for checking abuses at the hands of such officers. 

This contradiction between legislative deeds and constitutional vision has continued to repeat itself often in Indian history, and especially if we choose to narrowly focus on the creation of new criminal statutes. Provisions with restrictive conditions on bail are one such example. Again and again, India seems to find itself in an "emergency" situation that needs a harsh procedure to prevent persons from getting bail too easily. Sadly, the government never comes around to telling us just how useful the "lawless laws" were in achieving any of the stated objectives.