Guest Post: A Battle Between Bail and Silence — Comparing Section 45 PMLA with US Pre-Trial Prosecutorial Discovery

(This is a guest post)

The present post analyses the constitutionality of restrictive bail conditions in the Indian anti money laundering law from the perspective of the right against self-incrimination. Section 45 of the Prevention of Money Laundering Act, 2002 (“PMLA”) imposes twin conditions that an accused must meet to secure bail: (i) satisfy a court that there are “reasonable grounds to believe” that the accused is “not guilty of the offence”, and (ii) that the accused is unlikely to commit any further offences while on bail. By way of background, the Indian Supreme Court dismissed a challenge to Section 45, PMLA in Vijay Madanlal Choudhary v. Union of India. Petitions seeking a review of the judgment are pending). However, neither the original judgment nor grounds taken in the review petition sufficiently discuss the interplay between Section 45, PMLA, and the right against self-incrimination.

This post employs a comparative analysis of case law pertaining to pre-trial prosecutorial discovery rules in criminal cases in the United States to explore the intersection between Section 45, PMLA, and the right against self-incrimination.

Hypothetical Scenario: The Conflict Between Self-Incrimination and Disclosure of Material During a Bail Hearing

Imagine an accused is facing charges of money laundering, with one of the key allegations being that they received the proceeds of a crime from person X at location Y on a specific date. Aware that they must provide prima facie evidence of innocence to secure bail, the accused submits an affidavit to the court asserting that their mobile phone’s GPS data places them far from location Y at the relevant time. In response to this assertion, the prosecution requests the accused’s phone password to verify the accuracy of the GPS data. Apprehensive that failure to comply with this request could result in their bail application being denied, the accused agrees to provide the password to unlock the phone voluntarily.

Upon inspection, the prosecution confirms accuracy of the GPS data, but in the process, examines other files and data on the phone, discovering additional incriminating material that they were not aware of. The prosecution subsequently submits a counter-affidavit, which includes this newly discovered material. In response, the accused argues that this material should not be taken into consideration, asserting that it was obtained through their compelled disclosure and is therefore subject to the protections afforded by the right against self-incrimination. The prosecution argues that the password was provided voluntarily without any court order, and it does not amount to compelled disclosure.

I’ll build on this example and examine the constitutionality of pre-trial disclosures made by an accused during the bail stage.

US Case Law

The Indian guarantee against compelled self-incrimination avowedly borrows from the self-incrimination clause of the Fifth Amendment to the U.S. Constitution. Historically, the values of the American accusatorial system required the state to shoulder the entire burden in a criminal prosecution without any compelled help from the accused and the accused is not required to disclose their defence until the prosecution has presented its case. However, this privilege has been eroded through legislative provisions that require the accused to disclose certain portions of their evidence before trial.

In Williams v. Florida (“Williams”), the rule under challenge required the accused to disclose a list of alibi witnesses before trial. The accused was convicted and appealed against conviction on the ground that compelling him to reveal the name of his alibi witnesses violated his right against self-incrimination. However, the challenge was dismissed by the U.S. Supreme Court. To reach its conclusion, the Court first recognised that the privilege against self-incrimination consists of three elements: (i) compelled disclosure (ii) related to testimonial matter (iii) incriminating nature of the communication. The Court held that two elements, i.e., testimonial communication and ‘tendency to incriminate were present in the rule requiring disclosure of alibi witnesses. However, it concluded that the relevant rule did not compel the accused to disclose alibi witnesses. It reasoned that the defence had intended to present the alibi witnesses at trial regardless, and by providing the prosecution with this information prior to trial, the defence was simply ‘accelerating the timing of the disclosure’, thereby facilitating a more efficient trial process. It was held that even during the trial, the accused would still face the same choice: (i) to remain silent, or (ii) to offer a defence that could potentially lead to self-incrimination through cross-examination.

‘Acceleration of timing’ is an established principle today based on which pre-trial discovery by prosecution has been expanded vastly over the years. It is widely believed that prosecutorial discovery enhances the state’s ability to rebut the accused’s case and effectively cross-examine their witnesses. In light of the analysis of Williams, the issue arises as to whether the prosecution is entitled to seek any and all forms of disclosure under the guise of the ‘acceleration of timing’ principle. The subsequent cases suggest a different interpretation.

There are two ways in which pre-trial discovery from an accused can assist the prosecution. It can either (i) help prosecution in investigating the grounds of defence taken by the accused and consequently, help in preparing rebuttal evidence to the defence of the accused; and (ii) provide leads to the prosecution that can help in building a case-in-chief against the accused.

Various commentators have argued that Williams was only concerned with and envisaged the preparation of rebuttal evidence using pre-trial discovery by an accused. The Court's reasoning supports this argument. Firstly, the court equated the situation of pre-trial discovery with the stage of defence evidence at a trial, where the accused must reveal the identity of their witnesses and submit them to cross-examination, which may furnish the State with leads to incriminating rebuttal evidence. Therefore, the court only intended to confine itself to rebuttal evidence while testing constitutionality of the discovery rule requiring disclosure of alibi defence. 

In this regard, it is further pertinent to recall that in Williams, the Court held that the alibi discovery rule did not amount to a compelled disclosure since the choice between (i) remaining silent and (ii) presenting a defence that might incriminate the accused through cross-examination or provide leads to the state to impeach their witness is ‘inherent in the trial process’. The natural corollary of this reasoning is that choices compelling an accused to make choices not inherent in a trial process amount to a compelled disclosure and, hence, violate the right against self-incrimination. In a case where the accused’s disclosure can be used to build the prosecution’s case-in-chief, the accused’s decision whether or not to disclose requires them to choose between defending by affirmative evidence or defending by failure of government proof. 

In his article on prosecutorial discovery, Prof. Eric Blumenson argues that such a choice is not inherent in the trial process, since at a trial, the accused leads evidence only after the government proves a prima facie case, and hence, the adversarial criminal process protects an accused from aiding the prosecution in building its case in chief. Therefore, if the prosecutorial discovery rule, as approved in Williams, is used by the prosecution to build its case in chief, the said discovery would not pass the ‘acceleration of timing’ principle in Williams and, accordingly, would violate the right against self-incrimination.

Secondly, the fact that the majority opinion’s focus was only on rebuttal evidence can be gauged from the examples it cites in the opinion. The Court gave an example to the effect that if the disclosure rule was not in place, the way alibi testimony would have played out is that the prosecutor would have asked for a continuance / adjournment after the alibi witness’s examination-in-chief and would have found rebuttal testimony to impeach the alibi witness before cross-examining them. The Court concluded that since the said sequence of events would not violate the accused’s right against self-incrimination, neither would the pre-trial discovery rule at issue in Williams. Therefore, the said example makes it evident that the scope of Williams was limited to rebuttal evidence and the judgment did not envisage use of prosecutorial discovery as a tool to build a case-in-chief.

The Scarcity of Jurisprudence on the Use of Pre-Trial Discovery from the Accused to Construct the Prosecution’s Case-in-Chief

There appears to be a dearth of case law addressing whether pre-trial discovery from the accused can be used by prosecution to build its case-in-chief. Before Williams, the California Supreme Court in Prudhomme v. Superior Ct (“Prudhomme”) delineated two important points concerning the right against self-incrimination: (i) the right against self-incrimination is compromised when the disclosure could potentially ease the prosecution’s burden of proving its case in chief and the accused’s disclosure cannot be used for the said purpose; (ii) any disclosure that could serve as a “link in a chain” of evidence establishing the accused’s guilt is prohibited under the principle of right against self-incrimination.

Another Californian case took the same view as Prudhomme. In re Misener (“Misener”), a broader interpretation than Prudhomme was taken when the majority held that Fifth Amendment privilege does not end upon the establishment of a prima facie case by the prosecution and that it barred any prosecutorial discovery that prevented the prosecution from carrying the entire burden of proving the accused guilty beyond a reasonable doubt, whether compelled disclosure might serve to make the prosecution’s case or to unmake the accused’s.

Therefore, in Prudhomme and Misener, the California Supreme Court explicitly recognised that any pre-trial disclosure that lessens the burden of the prosecution in proving its case-in-chief is unconstitutional. However, none of these cases dealt with a scenario in which the prosecution used pre-trial disclosure to build its case-in-chief.

Both Prudhomme and Misener were subsequently overruled in Izazaga v. Superior Court. Here, the California Supreme Court sustained a broad reciprocal disclosure requirement, rejecting the Prudhomme analysis. The California Supreme Court held that under the rationale of Williams, pre-trial discovery does not constitute compelled self-incrimination. Therefore, Prudhomme and Misener were overruled based on the reasoning in Williams, which was itself confined to envisioning pre-trial discovery for the purpose of collecting rebuttal evidence, rather than for building the prosecution’s case-in-chief.

It is pertinent to note that the issue of whether the prosecution can use pre-trial discovery to build its case-in-chief was not answered and has remained unanswered. There is no denying that prosecutorial pre-trial discovery over the years has become broader. For example, trial court rulings, based on the ‘acceleration of timing of disclosure’ laid down in Williams, have accepted a requirement of advance notification of defences, of expert witnesses, and of all other witnesses. Nevertheless, it can be fairly argued that these pre-trial disclosures should serve solely to counter defence witnesses and cannot be utilised by the prosecution to establish its case-in-chief. 

An example of this principle can be found in a trial court judgment in State v. McClaren in which while allowing pre-trial discovery, the court held that “any concerns defendant has concerning the disclosure [itself] potentially being used by the prosecutor in the case-in-chief could be addressed by an in camera review by the circuit court.” Further, even in Izazaga, which overruled Prudhomme and Misener, the concurring opinion by Justice Kennard mentions that there is a limitation on the manner in which the prosecution may use the discovery, and that it would be “impermissible for the prosecution to use, as part of its case-in-chief, evidence gained through discovery of statements of potential defense witnesses.” Therefore, while courts have been liberal in allowing prosecutorial pre-trial discovery based on Williams' acceleration principle, they are cognizant of the possibility of violation of the Fifth Amendment Principle if the said discovery is used for building prosecution’s case-in-chief.

Applying U.S. Pre-Trial Discovery Principles to the Hypothetical Scenario in Bail Proceedings under Section 45, PMLA

The principles discussed in the preceding section regarding pre-trial prosecutorial discovery should be applied in bail proceedings under PMLA. The justification for this is evident: Section 45, PMLA forces the accused to reveal their defence at a pre-trial stage. Consequently, bail proceedings under PMLA mirror the function of pre-trial prosecutorial discovery, insofar as they afford the state early access to key aspects of the accused’s defence before the commencement of trial.

Accordingly, applying these principles in the Indian context, the argument remains that if the prosecution uses the information disclosed by the accused to build the ‘foundational facts’ in its counter-affidavit (or the chargesheet later), the same would violate Article 20 (3) of the Constitution. Currently, the prosecution is not restricted from doing this, and in practice, the prosecution routinely files supplementary reports / complaints based on arguments made by the accused at the bail and charge stage to plug loopholes in its case-in-chief. Accordingly, even as per a broad interpretation of discovery rules under U.S. jurisprudence, the current use of Section 45, PMLA is violative of Article 20 (3) of the Constitution.

In light of the discussion of jurisprudence surrounding pre-trial prosecutorial discovery in the U.S., it can be concluded that Section 45, PMLA directly impacts the right against self-incrimination. The compelled disclosure of the accused’s defence at this stage undermines the privilege against self-incrimination. The argument that such disclosure is voluntary overlooks the coercive nature of the choice between liberty and silence. Courts must adopt a restrictive interpretation of Section 45, PMLA to prevent its misuse by the prosecution as a tool to build its case-in-chief through the accused’s pre-trial disclosures at the bail stage. This approach ensures that bail proceedings do not become a prosecution strategy session.

Justice in Courts of Inquisition? The Delhi High Court on UAPA Remand Extensions

A person should not be condemned without knowing why. One would think that this precept is not a point of debate in the legal system of a constitutional, democratic, republic. After all what personifies the shift from a culture of impunity and subservience to one of justification than the ability of individual citizens to ask questions and demand answers from those in power. This does not stop at the ballot box, but pervades deep into the fabric of how things are done, and ought to be the unshakeable cornerstone of how criminal law with its censure and punitive sanctions is administered. 

Yet, time and again, we are politely reminded to not take anything for granted. Slotting in nicely within this bucket is the recent decision of the Delhi High Court in a batch of appeals concerning the application and interpretation of Section 43D(2)(b) of the Unlawful Activities Prevention Act 1967 [UAPA] [Zeeshan Qamar v. State of NCT Delhi, Crl. Appeal No. 405 / 2021 and other connected petitions, decided on 24.02.2023 ("Zeeshan Qamar")]. 

Time Limits on Investigations and their Consequences

What was the issue? Let's read the provision:

(2) Section 167 of the Code shall apply in relation to a case involving an offence punishable under this Act subject to the modification that in sub-section (2), -- 

(a) the reference to "fifteen days", "ninety days" and "sixty days", wherever they occur, shall be construed as references to "thirty days", "ninety days" and "ninety days" respectively; and

(b) after the proviso, the following provisos shall be inserted, namely:--

"provided further that if it is not possible to complete the investigation within the said period of ninety days, the Court may if it is satisfied with the report of the Public Prosecutor indicating the progress of the investigation and the specific reasons for the detention of the accused beyond the said period of ninety days, extend the said period up to one hundred and eighty days."

[Emphasis mine] 

In a previous post on the blog, we discussed Section 167 of the Criminal Procedure Code 1973 [Cr.P.C.] and its time limits for investigation. The logic behind having these limits was an implicit recognition by Parliament that custodial detention was an integral part of investigations and the status quo allowed for persons to be detained for prolonged periods during an investigation, and bail in non-bailable cases was not easy to get. The time limits were supposed to act as a means to speed up investigations, by sending a message that failure to complete investigations on time would entitle a person to release. The move came with a clear-eyed recognition that giving these time limits may send the wrong signal and suggest that the law treated pre-trial detention of up to sixty (and later also ninety days) as acceptable, and a hope that the police and courts would not get the wrong idea.   

Section 167 was possibly one of the most radical interventions made in the administration of criminal law yet. It was only natural for it to have its detractors. In 1975, the Supreme Court in Natabar Parida [AIR 1975 SC 1465] made its displeasure apparent when it observed that such a law "may be a 'paradise for criminals', but surely it would not be so, as sometimes it is supposed to be, because of the courts. I would be so under the command of the Legislature." Hardly a year later the Gujarat state government had taken steps to increase the time limits, and a few years after that we had Parliament itself amend Section 167 to provide for the ninety day limit for certain crimes. It was no longer obvious as to whether the idea of sixty / ninety days being an acceptable pre-trial detention was a wrong one or not.

The introduction of Section 167 Cr.P.C. and its swift amendment suggests the sense of unease within the state machinery which naturally accompanied such a radical departure from the norm. It was unsurprising for further, and significant departures to be made to Section 167 when Parliament sought to confront armed separatist movements in the 1980s, and suggest to the world that it took its international obligations on enforcing drug laws seriously. Detention up to a year became permissible if it could be shown that the investigation could not be concluded within the time period, and unsurprisingly, it also became the norm as these special laws made getting bail even harder than what was possible in ordinary circumstances. 

The issues and conclusions in Zeeshan Qamar

In this context is how we must view introduction of safeguards for how this extension of the permissible maximum period of pre-trial detention could occur. The law introduced a requirement for a report to be filed by the public prosecutor indicating the progress of the investigation and giving clear reasons why the further custodial detention of an accused was required. 

What was in issue before the Court in Zeeshan Qamar — and not for the first time as such — was whether this report by the public prosecutor ought to be shared with the accused at the time when a court is hearing the request for extending the period of maximum permissible pre-trial detention under Section 43D(2)(b) of the UAPA. The batch of appeals were all filed at separate points of time challenging the extension, and in most of them the accused were denied a copy of the prosecutor's report. This led to them being clubbed together for hearing, and the High Court framing and deciding issues on the process of Section 43D(2)(b) extensions besides deciding on the validity of the extensions in these specific appeals. 

These issues which the High Court framed were as follows (Para 4):

• Whether the prosecutor's report should be shared with the accused at the time of extension of time for a further period beyond 90 days?
• Whether the court "should satisfy three requirements" at the time of extension of remand i.e. (i) what is the progress of investigation, (ii) whether further investigation is required, and (iii) whether continued detention is required for this further investigation?
• Whether the court can extend remand for ninety days in one go, or should it be in a truncated manner to oversee the progress of investigation.

The conclusions that it returned (in serial order) were as follows (Para 13):

• The report is not required to be provided at the stage of extending remand, but the accused should be "informed" about the same to ensure she is not a "silent spectator" and the court must consider the submissions on behalf of the accused. 
• The "essential requirements" to be considered are: (i) reasons for the prosecutor's satisfaction about progress of investigation, (ii) reasons why 90 days are not enough, and (iii) details of what further investigation is required for which further time is sought. These three considerations must be part of the prosecutor's report.
• The court must consider the report carefully and can grant 90 days in one stretch, and if it does not then the agency can re-agitate its demand for the remaining period if need be. 

I will turn to the first conclusion, which is the focus of this post, in the next section. But before that, a word on the other two answers offered. The discussion on issue (ii) suggests that the court did find that the prosecutor's report must also indicate why continued detention is necessary, although the conclusion itself is somehow silent about that aspect. What is perhaps unsurprising is that the High Court offers a rather low threshold of just what must be shown to satisfy a court that the completing the investigation was not possible. On issue (iii), the High Court in its discussion encourages courts to carefully peruse the facts and determine just how long an extension is necessary and not grant blanket extensions for a further 90 day period. This is not captured fully in the conclusion, which merely focuses on it being legally permissible for a court to indeed grant 90 days in one stretch if it feels this is necessary. 

The 'Silent Spectator' Paradox

Which now brings us to the first issue, on sharing a copy of the report. To its credit, the High Court did not try and avoid a discussion but gave its own independent reasoning for why the report ought not to be shared (Paras 6.11 to 6.14). 

This logic is straightforward — the report must necessarily have details about the investigation which if shared with the accused could prejudice the ongoing probe and, in any event, this material would be inextricably linked to material in case diaries that the accused has no right to see in the first place. The main plank for the court's reasoning, therefore, was that an accused "has no right to know the progress in an investigation." 

With due respect, this is deeply flawed at multiple levels. At the most fundamental level, if we assume that India is a constitutional republic recognising and guaranteeing the right to personal liberty (arguably an acceptable assumption) then while a person may not have any independent right to know the progress of an investigation, she certainly has a right to know about it if this investigation is the basis for keeping her in pre-trial custody when she is presumed to be innocent. 

It would be different if my custody was independent of the merits of an investigation. But the very nature of Section 43D(2)(b), UAPA makes it clear that it is only because of the merits that my further custody is being sought. Pre-trial detention is the most obvious and glaring deprivation of personal liberty, and my right to contest it is meaningless if I do not know on what grounds am I being kept behind bars. Being able to question deprivations of liberty and demand justifications cannot be de-linked from being a constitutional republic. Its non-negotiable.  

It is equally flawed at one level removed from this most basic argument. Accused persons are regularly given some kind of update as to the investigation every time police oppose bail applications by way of filing a response during the pendency of the investigation. Similarly, the accused is also given update on the investigation when police seek custodial remands (and not judicial custody). It is nobody's case that the contents of these replies and applications are not derived from case diaries, but this linkage only means that it is incumbent upon the agency to walk that tightrope between securing its sources and giving enough of a clear answer to the accused whose fundamental rights are being deprived with each day in custody. 

If we accept the logic in Zeeshan Qamar, then the nature of remand and bail hearings (where bail is filed during investigation) stands irrevocably and disastrously transformed by taking out the most affected party — the accused in custody — from the equation by which we expect the court to make a fair decision on whether or not custodial detention should be extended further. Remand becomes a fiefdom of the State — one arm (executive) talks to the other (judiciary) to decide what's best and the citizen should sit back and accept her fate as a collateral consequence. 

One senses that the High Court recognised this was a problem when it agreed that an accused cannot become a 'silent spectator' to the process by which her liberty is being decided. But the court answers this problem by tying itself in knots rather than offering any meaningful safeguard, for the only real safeguard had already been denied.  

Facing the Facts

We can view Zeeshan Qamar as an aberration and continue preaching the gospel of India's transformative constitution and its dharma of fairness. Or we can face the facts, that criminal justice was and continues to be deeply entrenched in a feudal mindset where the perceived brightness of the constitution is yet to shine all too brightly. An accused has a qualified right to get a copy of the first information report, does not have the right to a lawyer during questioning, does not have the right to a lawyer even during custody for some kinds of cases (PMLA), and now does not have the right to know the basis upon which the state wants to extend the permissible period for his custodial detention. 

Transformative indeed. 

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. 

Old Wine in New Bottles? — The Judgment in Vijay Madanlal Choudhary (Part Two)

The previous post in this two-part series considered how the Supreme Court's judgment in Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. [SLP Crl. No. 4364 of 2014; Judgment dated 27.07.2022 ("Vijay Madanlal Choudhary") dealt with the offence of money laundering under the Prevention of Money Laundering Act 2002 ["PMLA"]. This post turns its lens to how the judgment understood the procedural facets of that statute. It first recaps the important holdings of the Court, and then turns to a critique. As a result, this post is longer than the previous one.

The Findings on Searches and Arrest

The challenge to powers of search conferred by the PMLA primarily arose due to amendments made to Section 17 of the Act in 2019, whereby a proviso was removed. This proviso was in the nature of a pre-condition that had to be satisfied before a search action under PMLA could be undertaken, and essentially required that an investigation in respect of the scheduled offence ought to have been started. By removing this anchor of the scheduled offence, it was argued that the entire logic of the PMLA had been turned on its head.

For arrests, the argument was much simpler — Section 19 of the PMLA enabled arrests without securing the minimum safeguards that the ordinary criminal procedure under the Criminal Procedure Code  1973 ["Cr.P.C."] allowed, and thus ought to be struck down. Unlike ordinary law, there was no system in the PMLA for an arrested person to know the case against her since no First Information Report was recorded under the PMLA. If Section 19 had to be saved, then the Court ought to declare that the PMLA equivalent — a document called the Enforcement Case Information report or "ECIR" according to Petitioners — ought to be shared with the arrested person. 

The Court did not find any such problem with either the search or the arrest powers. In case of the former, it upheld the amendment and held that it expressed the legislative policy (not to be questioned) of treating money laundering seriously. It made sense to de-link the PMLA process from the scheduled offence to not leave the former hamstrung in cases where there is somehow a lapse in prosecuting the scheduled offence. If anything, this enabled the Enforcement Directorate to take action and then ask the sleepy police to also take action. In respect of safeguards, and here the analysis dovetails with the Court's observations on the arrest powers, it noted that comparing the PMLA with a penal statute was incorrect since it was a sui generis law. Even though the statute had used the word 'investigation' to describe the process of the Enforcement Directorate, it was more appropriate to read it as 'inquiry' instead given the PMLA had many facets besides investigating commission of crime.

With that context, it was of the view that the PMLA had many safeguards which made any worries about abuse were unfounded: the powers could only be exercised by very senior officers, with a necessary requirement of recording reasons in writing and forwarding them to a separate authority, and by a statutory provision penalising vexatious searches or arrests. In case of arrests, the Court held that an ECIR was not a First Information Report but an internal document; anyway, a statutory requirement under Section 19 to share grounds of arrest fulfilled the need to inform a person about the case against her.

On "Section 50" PMLA Statements

Section 50 PMLA enables Enforcement Directorate officials to record statements on oath from any person. It was subjected to a limited, twinfold challenge. Firstly, that clause must be read down in terms of Article 20(3) of the Constitution of India, and secondly, that statements recorded under Section 50 ought to be hit by the bar under Section 25 of the Indian Evidence Act 1872 ["IEA"] rendering confessions to police officers inadmissible, if sought to be used at a subsequent trial.

Since the PMLA was not seen as a penal statute by the Court, and 'investigations' were 'inquiries', it was only logical for the Court to reject submissions on this front as well. The rejection of the Section 25 IEA submission was resounding, with the Court relying upon a line of precedent stretching all the way back to the mid 1960s, where similar powers for officers of other agencies acting under the Customs Act 1962 and other state laws were upheld. The Court noticed the recent judgment in Tofan Singh [(2021) 4 SCC 1] which had extended such guarantees to the Narcotic Drugs & Psychotropic Substances Act 1985 ["NDPS Act"]. As had been argued earlier on this blog, Tofan Singh carefully tailored its findings on the peculiar statutory scheme of the NDPS Act, and the Court in Vijay Madanlal Choudhary relied on this aspect to distinguish it from the PMLA context.

For Article 20(3) of the Constitution, the Court observed that every person summoned to give statements under Section 50 cannot be a person 'accused of an offence', again relying upon precedent which went back to the 1950s concerning powers to record statements conferred under other laws including the Companies Act 1956, the Customs Act, and the Foreign Exchange Regulation Act 1973 ["FERA"]. However, where persons under arrest were questioned, it acknowledged that the clause may apply, leaving that determination open to the peculiar facts of each case.       

On Bail

In 2018, a different bench of the Supreme Court in Nikesh Tarachand Shah [(2018) 11 SCC 1] struck down Section 45 of the PMLA partially, as it then stood. This clause imposed what are popularly known as the 'twin conditions' of bail — restrictive conditions that are found in some laws which require that before granting bail the prosecutor must be heard and a court should be satisfied that (i) the accused was not guilty of the offence, (ii) the accused is not likely to commit any offence while on bail (see here for more). The reasons behind striking down these parts of Section 45, as it had been explained earlier, was not because the court had any problem with the twin conditions, but only because the manner in which the PMLA applied the conditions was found to be arbitrary — it was based on the kind of scheduled offence allegations involved, and since the legislature had completely eroded any rationality in the scheme of the schedule this made application of Section 45, in turn, arbitrary. 

In 2018, Parliament sought to solve this problem by doing away with this classification based application of Section 45 altogether — now, it would apply to all cases under PMLA. This amendment to the law was challenged as unconstitutional. The Court disagreed. Firstly, it explained how nothing prevented a future legislature from remedying a defect identified in Section 45 by Nikesh Tarachand Shah. Secondly, it held that the manner in which Parliament had chosen to remedy this defect — by abandoning the classification altogether — was not unconstitutional as money laundering is exactly the kind of offence which warrants such restrictive bail conditions. At the same time, the Court noted that the twin conditions would not apply in cases of being granted bail for delays in investigation [Section 167(2) Cr.P.C.] or prosecution [Section 436A Cr.P.C.]  

Critiquing the Findings on Investigative Aspects 

Section 17 — The Tail Wags the Dog

Recall that the very definition of money laundering under the PMLA is intrinsically linked to a scheduled offence. It is that property which is derived or obtained by engaging in acts relating to scheduled offences which become proceeds of crime, which are the heart and soul of the PMLA. Seen from this perspective, a statutory limit on the agency concerned with money laundering to hold its hands till there was at least a suspicion of there having been a scheduled offence makes sense. At the same time, it also makes sense to not ask agencies to wait till that investigation is over to do something. This is the balance that was struck by Section 17, through a proviso which required an investigation into the scheduled offence to have begun before the Enforcement Directorate undertook searches etc.

The Court, in trusting legislative policy, has now approved a state of affairs where the tail shall wag the dog. It is justified, the Court tells us, to allow the Enforcement Directorate to proceed to ensure the system can be cleansed of money laundering. All that is rhetoric, not reasoning. No matter which you look at it, in the current scheme of things where the existence of a scheduled offence is necessary for the PMLA, letting the PMLA process begin even before anyone has alleged the commission of a scheduled offence does not stand to reason. In effect, it makes the judgment of the Directorate also determinative for deciding whether or not a scheduled offence might have been committed, which is nowhere within its mandate. Considering the plethora of scheduled offences that already exist, one can appreciate the perception that this provision allows the Enforcement Directorate to create money laundering allegations where there might not be any, for which police station will disagree with a letter from the 'very senior officers' telling them to register a case for commission of scheduled offences?

We can keep taking turns at it, but a square peg will not fit in a round hole. 

Non-Existent Safeguards?

Vijay Madanlal Choudhary extols the many safeguards present in the scheme of Sections 17 to 19 of the PMLA to consign worries about abuse of powers into the dustbin. The seniority of the empowered official is supposed to allay fears of misuse, as is the existence of a provision punishing vexatious exercise of power. None of this is new: the same logic was offered when coercive powers granted under other socio-economic laws were challenged in the past. What is, nevertheless, worthy of note is the uncritical, almost loving eye, with which the view is re-affirmed by the Court. The Petitioners made submissions about the biased nature of enforcement under the Act, the inherent limits of provisions punishing abuse of power — it would require internal sanction, which rarely comes — and the paltry rate of conviction to suggest that the threat of abuse and misuse was not mitigated by the purported safeguards. The Court did not so much as blink in the face of this criticism, and its suggestion of trusting the officials would certainly leave some corners bemused, as conservative a view as that may be. 

The Sui Generis Argument is Flawed

The idea that the PMLA is not a penal law but a sui generis law is central to much of the Court's reasoning in Vijay Madanlal Choudhary. This is the justification for holding it unnecessary to bring the PMLA at par with other penal statutes in terms of procedural safeguards conferred upon persons who may get entangled in the PMLA process. 

The previous post explored this argument from the perspective of how the civil and criminal machinery within the PMLA operated while comparing it with other laws. It argued, that the PMLA did not allow for its civil process to live independent of its criminal process; indeed, without a prosecution for the offence, the civil action would die a natural death sooner rather than later. So the idea that PMLA also deals with inquiries ending in civil consequences is a half-baked truth at best.

We need to return to that comparative perspective and now look at the PMLA together with the other kinds of socio-economic offences that have been passed over time, to assess the Court's reasoning when it comes to procedural safeguards regarding questioning persons. It is difficult to take stock of all such laws passed at the state and central levels, but it would suffice if we take note of some primary central ones — the Customs Act 1962 (preceded by the Sea Customs Act of 1878), the Companies Acts of 1956 and 2013, the Foreign Exchange Regulation Act 1973 ["FERA"]. Vijay Madanlal Choudhary draws comparisons between the PMLA and these laws, for which the Supreme Court has repelled legal challenges in the past by holding that the questioning of persons under those laws is for an inquiry unlike criminal investigation, to hold that the PMLA ought to be treated similarly. 

This comparison is flawed, because while the Customs Act, or FERA, or even the Companies Act, allow officers to file a civil action for penalties at the end of an inquiry, there is no such option in the PMLA. So, in case of the former, the idea that powers to question people or even arrest them are not necessary linked to a future prosecution has at least some legs to stand on because that outcome is statutorily possible. Of course, this does not address the problem in deciding whether procedural safeguards that are relevant during an inquiry should apply basis how an inquiry ends, and whether Article 20(3) should not apply to questioning and Section 25 IEA should not apply in the cases where the inquiry does result in a criminal prosecution. For the PMLA, there is no such possibility; a standalone civil action cannot last beyond 180 + 365 days. What's more, the PMLA is linked to the fact of a crime, and thus any inquiry where persons accused of that prior offence are called, are already placed very differently from individuals suspected of customs duty evasion. 

The theoretical sophistry that the Court had been able to rely upon in the past with FERA or the Customs Act is simply not available to it when it comes to the PMLA, where without the criminal action nothing survives. Yet, somehow, this distinction has escaped the Court's attention, and it applied judgments decided in context of other laws.

The few grains that the Court does throw towards procedural safeguards, it fails to flesh out. Imagine that earlier judgments on Article 20(3) and statements to officers under socio-economic laws did not clearly say that an arrested person ought to be treated differently. Vijay Madanlal Choudhary does this much, at least, but in a rather half-hearted manner. Secondly, in refusing to share the ECIR with an arrested person, the Court finds that the clause requiring sharing grounds of arrest would do the job. It would have helped if the Court could stress upon the manner of sufficiency required in these grounds if it was treating them as a substitute for being supplied a copy of the ECIR itself. In practice, it is all too common for the agency to simply state that a person is arrested for committing a Section 3 PMLA offence, nothing more and nothing less. By fleshing out the nature of grounds, the Court could have prevented this from continuing. Now, it would fall upon the High Courts to, hopefully, breathe some life into this clause. 

A point, also, about Tofan Singh would be in order. The Court has held that the judgment was unique to the NDPS Act context and could not be extended to the PMLA. This is, undoubtedly, correct. As had been noted at the time, Tofan Singh was unlikely to provide any succour beyond the NDPS Act because of how the Court went about examining the issue then. Still, the manner in which Vijay Madanlal Choudhary suppresses the points of similarity between the NDPS Act and PMLA is rather striking. For instance, it is nowhere mentioned how the NDPS Act also has confiscation mechanisms in place, much like the PMLA.  

Assessing the Revival of Section 45 Twin Conditions

Nikesh Tarachand Shah, much like Tofan Singh, dealt with the form of a problem rather than its substance (both were authored by the same judge, incidentally). Here, that problem was the twin conditions of bail. 

The problem with Section 45, according to Nikesh Tarachand Shah, was that it imposed the restrictive bail conditions by creating an illogical classification between kinds of cases. It accepted that such conditions are legal and necessary where compelling state interests exist, but recognised that not every case of money laundering would be the same, and adopting a monetary threshold to gauge seriousness made sense. This logic of the threshold had been done away with, while at the same time multiplying the total number of scheduled offences manifold. This was a problem because the underlying offences were very different and since money laundering necessarily turned to the scheduled offence, the nature of that offence was not an altogether irrelevant factor for consideration.

Parliament's answer to this in the 2018 amendment was not to repair the classification, but to do away with it altogether. In Vijay Madanlal Choudhary, the Court correctly notes that its earlier judgment had pointed out an error with the form and not substance of the twin conditions, but it failed to identify exactly what that error was while upholding the legislative response to the perceived problem. In concluding that the legislature could remedy defects and restore the twin conditions to PMLA, Vijay Madanlal Choudhary is right. But here, the manner of resolving the defect was to completely undermine the logic of the judgment in Nikesh, which the Court chose not to appreciate. Instead, the Court endorsed, whole-heartedly, the abandoning of a classification-based approach and the application of twin conditions to all PMLA cases. For, we are reminded again, money laundering is a very serious offence. 

There is an obvious problem with that assertion, though, because unlike other crimes, at a basic level money laundering derives its seriousness from the seriousness of the underlying scheduled offence and what kind of proceeds of crime were generated there. Yes, terrorists and drug cartels might engage in money laundering and should not get bail easily is a plausible view, but the law as it works today paints these persons with the same brush as any copyright or trademark violators who may 'derive or obtain' any property by way of their violation. Such petty offences are not rendering the financial foundations and the economic integrity of the country unstable, with all due respect. To contend that these are hypotheticals unworthy of attention because the Enforcement Directorate will not waste time on such cases is not a good enough response, because a court is required to deal with the law and not how an agency may or may not choose to enforce it in its wisdom. 

This is an odious conclusion, no matter which way we look at it.

Conclusions

There are many serious problems in how the Court has justified the refusal to treat the PMLA at par with other penal laws when it comes to procedural safeguards. Vijay Madanlal Choudhary has glossed over distinctions between contexts that are gaping chasms, acting under the illusion that these are minor cracks in the edifice of its immaculate reasoning. The conclusions, at many points, are starkly incorrect on law. 

At the outset of this series, it was observed that Vijay Madanlal Choudhary is a conservative decision, inasmuch as the Supreme Court has simply remained faithful to its inglorious past of taking away all semblance of safeguards to personal liberty and property when it comes to socio-economic offences. Restrictive bail conditions in independent India first came for the essential supplies law before they became famous for anti-terror laws; reverse burdens were held good in 1964 when it came to gold smuggling; the guarantee of Article 20(3) was held inapplicable till customs officials or those from the registrar of companies concluded their inquiry given the theoretical possibility that such inquiries might, till that stage, not end in prosecution. More recently, it was okay for the accused in the 2G Scam and Coal Block cases to be denied a right of appeal.

Over time, not many people have had a problem with this growing body of law developing right under our eyes, because these were confined to specific areas of activity. Even for those with left-leaning inclinations, such laws were in fact lauded because of the detrimental impact that white-collar criminals and smugglers posed to the country. 

What the PMLA does, is that it weaves together all the restrictive, rights-effacing clauses from this illustrious past in one fine blanket, and it then goes a step further. It is not restricted to just the smuggler or hoarder, but to practically anyone. It is not old wine in a new bottle, contrary to what the title might suggest. In its reach and deleterious impact on basic freedoms, the PMLA is truly a sui generis law unlike any other. The judgment in Vijay Madanlal Choudhary was an opportunity to trim it down to size and prevent it from becoming another MISA from the 1970s; instead, the Court has, for now, green-lit that very outcome.         

Indefinite Incarceration of Approvers — In Need of Necessary Amendments

Prologue: The Budget Leaks of 1956

Aschara Lal Mehra was, presumably, one of many Sales Managers in Bombay's Mercury Paints and Varnishes Ltd.; a pre-independence firm which continues to exist today. Perhaps Mehra was dissatisfied with the income Mercury Paints gave him, because when he was introduced to one Davinder Pal Chadha from Delhi in February of 1955, he agreed to help him in a little money-spinning scheme that Chadha had devised. After working him for months, Chadha had managed to coax one of the officers involved in printing of the Budget to leak some inputs regarding the impending changes to taxation regimes. Mehra agreed to help Chadha sell this information, for a cut of the profits. 

Mehra helped Chadha make contact with one of his former employers Hira Lal Kothari, a stockbroker. Kothari promised "suitable compensation" if he made profits on the information. Mehra also setup a meeting with Nand Lal More, who said it was too late to fully use the information, but he would still share his profits if there were any. When the Budget was announced the next day, February 28, 1955, Chadha's inputs were proved correct, and both he and Mehra made good money from their escapade. While giving them Rs.500, Nand Lal More told them to try and bring the information earlier next year. Which is exactly what they did. In 1956, Chadha managed to sneak a copy of the entire Budget proposals out almost a week prior to it being tabled. He took a first class train to Bombay on February 21, taking with him two copies of the Budget. Mehra did one better and made notes on the proposals, and together they met various persons to sell these secrets. Chadha left before the Budget was announced on February 29, where his information was proven accurate yet again. 

This time, though, there was a problem. Persons to whom they sold information, and persons to whom this was probably relayed ahead, had been too obvious in their movements that it quickly became apparent in the news that something was amiss. A newspaper had reported on February 29 itself that the conduct of Mill-owners in Ahmedabad suggested they knew that excise duty on cloth would be increased. A big hue and cry followed in Parliament where on Saturday, March 3, a formal motion for adjournment was moved citing the alleged leak of budget proposals in Bombay. Understandably, Mehra was agitated when Chadha told him about taking his cut from the money Messrs Kothari and More had paid. Mehra's instincts were to be proven correct this time. Upon reaching Delhi on March 8, Davinder Pal Chadha was arrested from the railway station, and two days after that the police landed up at Mehra' door. They searched his house, found the notes he had made of the Budget proposals, and placed him under arrest.

Mehra decided to turn his back on Chadha and the rest: He sought to be made an Approver in the case, and on March 23 the Additional District Magistrate granted him a pardon under Section 337 of the Code of Criminal Procedure 1898, on the condition of him making a full and true disclosure regarding the whole circumstances pertaining to the case. Upon being granted a pardon Mehra was sent to jail. The reason was a legal mandate, prescribed in Section 337(3) of the old Code, which corresponds with Section 306(4) of the present Criminal Procedure Code of 1973. It says that every person accepting pardon "shall, unless he is already on bail, be detained in custody till the termination of trial" This mandate is the subject of this post.

The Logic: It is for your own Good

Why must the law require that an approver should be detained in custody till the termination of trial? For their own good, primarily, and as a result for the good of the case. The 'turncoat' approver was not just another witness. Rather, he was seen as being at high risk of being accosted by his former confederates, thereby rendering jail a safer place. In the words of the Court of the Judicial Commissioner for Sind, the approver needed to be in custody because "not only is he likely to abscond and not appear when he is wanted, but there is every fear of his being tampered with and of his tampering with other prosecution evidence." [Abdul Majid v. Emperor, AIR 1927 Sind 173]. The Madras High Court put it more eloquently in 1952 when it compared the need for this provision akin to the need to keep a sealed will locked up in a will forgery case, and justified the need for detention until conclusion of the trial by reminding us that “Truth at the trial, in the case of an approver, does not mean sticking to the very statement given by him before the District Magistrate in the committal court, but speaking to the true facts as they occurred, for Truth is one, and not two.” (emphasis in original)

There can be no qualms with this logic. But does it warrant the legal regime put in place by Section 337(3), and now by Section 306(4), is the question. Two things stand out: firstly, that necessary custodial detention is only specified for one sub-class of approvers but not all of them, which does not make sense as approvers already out on bail would equally be susceptible to pressures leading them to resile from their version. Secondly, more importantly for this post, is the absolute nature of this mandate — a person shall be detained. Is not a total ban on release arguably contrary to the logic of saving the approver for the case, for what if the approver falls sick, or what if undue delay in proceeding with the trial leads the approver to change his mind, especially if his former friends are out on bail as accused persons? 

Which brings us back to the case of Aschara Lal Mehra, the approver. Granted pardon on March 23,  1956, Mehra would have undoubtedly been wooed by the police with promises of a speedy trial to offset any reservations he and his lawyers might have had given the mandate of Section 337(3). This was not to be, as Mehra suffered the entire Delhi summer in custody, while waiting for the investigation to conclude and trial to begin. Moreover, throughout this period, his (presumably) former friends were all enjoying life out on bail. When the police finally filed a report in July of that year, Mehra's counsel presumably saw an opportunity to get his client out of custody. He argued that Mehra had been pardoned for offences under, amongst others, the Prevention of Corruption Act 1947, but the police had filed a report alleging offences punishable under the Official Secrets Act. This meant that he was just another accused, and ought to be granted bail on parity with the other accused persons. He could not convince the trial court, but won in a revision before the Sessions Court, and got his client out in one case. 

But Mehra could not be released because the main case, where was indeed an approver, was at a standstill.  There was no alternative but move a petition before the High Court of Punjab and Haryana (which, at that time, held jurisdiction over Delhi as well), which gave its decision on June 25, 1957.  

Carving out scope for Judicial Discretion

Mehra's counsel argued that it was a "strange irony of fate" that while the accused were out on bail, his client continued to languish in custody. "If a murder can be released on bail" he argued, then "why a person who had been granted pardon should not be accorded a similar facility?" The answer for the High Court was simple — because Section 337(3) said the same facility could not. At some length, the Court in A.L. Mehra v. State discussed the provision, and concluded that: (i) there was no power left with a court to release the approver, and asking for "bail" was inaccurate as anyway we were dealing with a witness; (ii) a court did not have inherent powers to grant release either, and; (iii) the "shall" was mandatory, and the best a Court could do if faced with a situation of mounting delays was to direct an expeditious hearing. Indeed the High Court observed it would be a "travesty" if Mehra remained confined as "it could not have been the intention of the legislature that a person who has been granted pardon should be kept in confinement for an indefinite period." 

Curiously, after handing down these findings, the order took a very different turn. The High Court noted that the clause referred to termination of a trial. This had to imply that "there is a trial in progress and its object is to secure the evidence of the approver". In the facts of this case, it appeared that the prosecution had not made its mind up about whether the accused would even be prosecuted for all the offences. In such a situation, where "there is no trial and no likelihood of trial" then the inherent powers of the High Court would allow directing release. Which is what was finally ordered — Mehra was released. He went on to fulfil the conditions of his pardon at the trial which ended up in convictions for all accused [Two of whom, Messrs. Kothari and More, overturned their convictions in appeal, which provided the facts which I have extensively used thus far].   

New Code, Same Woes

As we already know, the enactment of a new Criminal Procedure Code in 1973 did not change the position in respect of allowing release of approvers already in custody at the time they were granted pardons. This was in spite of the Law Commission taking note of the difficulty this clause could pose in its 41st Report, especially given a gradual decline in how quickly trials proceeded. The Commission was of the opinion that the powers of High Courts to grant release in appropriate cases would prove sufficient to remedy any injustices, hinting at an approval of the stance taken by the High Court in A.L. Mehra which we discussed above.

This view was crystallised by two Full Bench decisions, one from the Delhi High Court and another from the Rajasthan High Court, delivered around a decade after the new Code was passed. Both Courts agreed that Section 306(4)(b), as it now stood, could not be read as erecting an absolute prohibition on releasing approvers. Besides general considerations of common sense, these Courts found support in the new life breathed into the fundamental right to life and personal liberty after Maneka Gandhi. A law that eschewed all judicial discretion and mandated custodial detention surely could not withstand scrutiny under the "just, fair, and reasonable" standard now espoused by the Constitution. Accordingly, both these Courts read into Section 306(4)(b) a measure of judicial discretion which allowed the High Court to exercise its inherent powers and release approvers in appropriate cases. That these verdicts were also guided by a vein of practicality is made apparent in the order of the Single Judge which referred the matter to a Full Bench of the Delhi High Court, where specific remarks were made about the increasing delays in trials and the demoralising effect that a mandatory custodial detention would have on getting accused persons to turn approvers.    

In the years since, this view has been followed consistently by the Delhi and Rajasthan High Courts. It has also been adopted by the High Courts of Kerala, Madras, Bombay, and Chhattisgarh (in various cases, of which only one is referred to here). Importantly, more than one High Court has doubted the validity of Section 306(4)(b) shorn of the necessary judicial discretion that has been read in. The Supreme Court, till now, has not issued any opinion engaging with the issue. 

There has also been a degree of consistency in the circumstances in which these courts have been compelled to order release of approvers. For instance, in almost all of the cases, the approver's testimony had been recorded in court. Another circumstance which compelled courts to order release was delay in the case, departing slightly from the view in A.L. Mehra by granting relief even if trials had begun but looked unlikely to finish anytime soon (especially if some of the accused persons were absconding).

Solution? A Necessary Amendment 

It is arguable that the status quo does enough to remedy any injustice resulting from Section 306(4)(b); in line with how the Law Commission viewed the situation in 1969. I would argue that it is not. Rather, what we have is a near-perfect case where the law ought to be amended. Why is the current position inadequate to remedy injustice? Primarily, because the High Court as a site of litigation is necessarily exclusive, to the detriment of many potential litigants in the criminal process. Funnily enough, the Law Commission noticed this in the same 41st Report in another context — anticipatory bail — which is why it granted Sessions Courts concurrent jurisdiction with High Courts.      

A wholesome change would go ahead and reconsider the distinction between persons already on bail and those in custody at the time of being granted a pardon and confer powers on courts to detain any approver in custody where it is in the interests of justice. This would do away with a classification that many High Courts have found troubling, viewing it as somewhat contrary to the overall object of protecting approvers for the trial. It is understandable that a legislature which is concerned with more serious matters such as curbing voter fraud through privacy infringing measures may not be able to do this. Which is why I would suggest a more simple amendment to concretise what multiple High Courts have desired, while expanding the reach of remedies for those less privileged and unable to access these High Courts. Bring us back to how Section 209 of the Code dealt with the issue in 1861: Remove the "shall", replace it with a "may", to once again allow a Sessions Court to release witnesses who have no business being behind bars.