Criminal Procedure Code, 1973 – Ss. 105(C) & (E) – Attachment of Property – Assistance in relation to orders of attachment or forfeiture of property – Property derived or obtained directly or indirectly, by any person as a result of criminal activity – derived or used in the commission of an offence – the Chapter was not meant for local offenses or property earned out of local offenses. By Chapter VII A of the Code, the Courts have been given power and jurisdiction to monitor and control investigation with regard to properties which might have been derived or obtained directly or indirectly by any person as a result of Criminal Activities which includes crimes involving currency transfers. The provisions have been incorporated with an intent to curb mischief or completely eliminate terrorist activities and international crimes.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
RAJA VIJAYARAGHAVAN, V., J.
Crl.M.C. No. 2055 of 2016
Dated this the 19 th day of August, 2016
CRL.MP 1204/2015 OF JUDICIAL FIRST CLASS MAGISTRATE COURT-I, KOLLAM DATED 27-10-2015 CRIME NO. 49/2011 OF KILIKOLLOOR POLICE STATION, CBCID CRIME 14/CR/EOW-I/KLM/11, KOLLAM
PETITIONER(S)/ACCUSED NOS.1 & 2
SHINE VIJAYAN AND ANOTHER, KOLLAM
BY ADVS.SRI.C.RAJENDRAN SRI.JOHNSON GOMEZ SRI.S.BIJU (KIZHAKKANELA)
THE STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, REPRESENTING THE DEPUTY SUPERINTENDENT OF POLICE, (EOW)CB CID, OFFICE OF THE SUPERINTENDENT OF POLICE, CRIME BRANCH, ASRAMOM, KOLLAM DISTRICT.
BY PUBLIC PROSECUTOR SRI.AMJAD ALI
O R D E R
1. The petitioners herein, who are husband and wife, are the accused Nos. 1 and 2 in Crime No.49 of 2011 of Kilikolloor Police Station. They are accused of having committed offence punishable under Section 420 read with 34 of the IPC.
2. In this petition filed under
# Section 482 of the Code of Criminal Procedure
(hereinafter referred to as the Code for brevity), the petitioners challenge Annexure-A9 order passed by the learned Magistrate under section 105(C) & (E) of the Code confirming the attachment of an item of property identified to have been derived from the proceeds of a crime.
3. In view of the nature of contentions raised, it is apposite to have a brief look at the allegation based on which the above crime was registered.
(a) The petitioners own separate Audio – Visual Companies abroad and in the course of their business, they purchased electronic items worth more than Rs 2 Crores from Al Mazhar Electronics Company LLC. The business transaction had taken place in the UAE. Towards the value of the said products, separate cheques were issued by the petitioners to their creditor, which were dishonored on presentation. It appears that certain proceeding was initiated in Abu Dhabi, but no such details are forthcoming.
(b) However, a person by name A.K. Masood, apparently the Director of Al Mazhar Electronics, filed a petition before the Superintendent of Police, Kollam requesting for immediate action. The petition was immediately forwarded to the Sub Inspector of Police, Kilikolloor Police Station, who duly registered Crime No.49 of 2011 inter alia under Section 420 read with Section 34 of the IPC.
4. As the alleged fraud involved large sums of money, the case was transferred to the CBCID, Kollam. The Crime was re-registered as Crime No.14/CR/EOW1/KLM/11 and the case was handed over to the Kollam, EOW1 for further investigation.
5. On investigation it was revealed that the petitioners had defrauded several others which included Sayal Afsal Shan, Mahad and Syam Sasidharan and had made wrongful gain to the tune of Crores of rupees.
6. Though the petitioners had made themselves scarce after registration of the Crime, they in course of time surrendered before the learned Magistrate was enlarged on bail.
7. When it appeared from the statement of Syed Afsal Shan that the petitioners were hastily taking steps to dispose of their immovable properties, an application was filed before the learned Magistrate praying for attaching their properties. The learned Magistrate by Annexure 6 order, ordered attachment over all the immovable properties.
8. Aggrieved by the fact that the said order was issued without hearing the petitioners herein, they challenged the same and by Annexure-A8 order the same was set aside by this Court with specific direction to the learned Magistrate to consider the matter afresh after affording the petitioners an opportunity of being heard.
9. It is also borne out from the records that on the failure of the Investigating officer to secure confirmation from the court within a period of 30 days as provided under Section 105 E (1) of the Code, all the other items except an item of property having an extent of 9.55 cents was released. In respect of the above item of property, the learned Magistrate confirmed the order of attachment by Annexure-A9 order which is under challenge in this petition.
10. The learned Counsel appearing for the petitioner and the learned public prosecutor was heard in extenso.
11. It is submitted by the learned Counsel advanced the following contentions.
(a) On facts there was no question of invoking Chapter VII A of the Code as this was a pure commercial dispute between the parties pursuant to the dishonor of two cheques. No request has been obtained from any court or other competent authority to the Central Government so as to invoke the provisions of Chapter VII A of the Code.
(b) Materials before Court revealed that the property was acquired by the petitioner using his own funds in the year 2005 and 2006. The transaction between the parties which allegedly led to the registration of the Crime admittedly were entered into in the year 2010. The cheques were allegedly handed over was pursuant to the said transaction. In view of the above there was no justification in attaching the properties under the premise that the same was derived from the proceeds of a crime.
(c) The mandatory minimum requirement of invocation of Chapter VII A of the Code, is that the property was derived out of “proceeds of crime” as defined under Section 105 A (c) of the Act.
(d) the Court below confirmed the order of attachment on the premise that certain witnesses who were questioned by the police pursuant to the registration of the Crime gave statements that they were also defrauded by the petitioners prior to the year 2005. These statements were relied on to conclude that the property was derived out of proceeds out of Crime. However, the said persons had approached this Court and by Annexure-A6 judgment, this Court has recorded the submission of the said persons that disputes no longer existed and the proceedings were closed.
12. The learned Public prosecutor on the other hand submitted that the property was initially seized and later attached as there was prima facie material to conclude that the same was derived out of proceeds from the Crime. It is further contended that the Investigation is in full swing and request has been made to the overseas authorities to obtain certain materials relevant for the investigation.
13. I have considered the rival submissions.
14. It is evident that the learned Magistrate has relied on the provisions contained in Chapter VII A of the Code of Criminal Procedure while passing Annexure A 9. Chapter VII-A containing Sections 105A to 105L has been inserted in the Code by the Code of Criminal Procedure (Amendment) Act, 1993 (Act No. 40 of 1993), which has come into force w.e.f. 20-7-1993.
15. The statement of objects and reasons for bringing the Chapter VII-A of the Code into statute book are mentioned herein below:
The Government of India has signed an agreement with the Government of United Kingdom of Great Britain and Northern Ireland for extending assistance in the investigation and prosecution of crime and the tracing, restraint and confiscation of the proceeds of crime (including crimes involving currency -transfer) and terrorist funds, with a view to check the terrorist activities in India and the United Kingdom. For giving full effect to this agreement, it is proposed to amend the Code of Criminal, 1973 to provide for-
(a) the transfer of persons between the contracting States including persons in custody for the purpose of assisting in investigation or giving evidence in proceedings;
b) attachment and forfeiture of properties obtained or derived from the commission of an offence that may have been or has been committed in the other country; and
(c) enforcement of attachment and forfeiture orders issued by a Court in the other country.
(2) The Bill seeks to achieve the above object.
16. It will be apposite to briefly refer to the relevant provisions which confer extraordinary powers to the Investigating officer to seize and attach properties.
17. Section 105A deals with definitions.
S.105A(a) defines ‘contracting State’ and refers to any country or place outside India in respect of which arrangements have been made by the Central Government with the Government of such country through a treaty or otherwise. S.105A(c) defines proceeds of crime as under:
‘(c)’proceeds of crime‘ means any property derived or obtained directly or indirectly, by any person as a result of criminal activity (including crime involving currency transfers) or the value of any such property’.
(emphasis supplied )
S.105A(d) defines property as under:
‘(d) ‘property‘ means property and assets of every description whether corporeal or incorporeal, movable or immovable, tangible or intangible and deeds and instruments evidencing title to, or interest in, such property or assets derived or used in the commission of an offence and includes property obtained through proceeds of crime.’
(emphasis supplied )
S.105 – B deals with assistance in securing arrest of persons on request from contracting states or the arrest in the contracting states. Sub-section (1) thereof starts with the words ‘Where a Court in India’. So also sub-section (3) starts with the aforementioned words.
# 105C. Assistance in relation to orders of attachment or forfeiture of property
(1) Where a Court in India has reasonable grounds to believe that any property obtained by any person is derived or obtained, directly or indirectly, by such person from the commission of an offence, it may make an order of attachment or forfeiture of such property, as it may deem fit under the provisions of S.105D to 105J (both inclusive).
(2) Where the Court has made an order for attachment or forfeiture of any property under sub-section (1), and such property is suspected to be in a contracting State, the Court may issue a letter of request to a Court or an authority in the contracting State for execution of such order.
(3) Where a letter of request is received by the Central Government from a Court or an authority in a contracting State requesting attachment or forfeiture of the property in India, derived or obtained, directly or indirectly, by any person from the commission of an offence committed in that contracting State, the Central Government may forward such letter of request to the Court, as it thinks fit, for execution in accordance with the provisions of S.105D to 105J (both inclusive) or, as the case may be, any other law for the time being in force.’
S.105 – D empowers the Court to direct any police officer not below the rank of Sub-Inspector to take steps for tracing and identifying such property under S.105C(1) or on receipt of letter of request under sub-section (3) of S.105 – C.
S.105 – E empowers the officer conducting an inquiry or investigation to make an order of seizure of such property, if he has a reason to believe that such property is likely to be concealed, transferred or dealt with in any manner which will result in disposal of the property.
S.105 – F relates to the power of Court to appoint District Magistrate of any area or his nominee where the property situated to perform the functions of an administrator of such property.
S.105 – G provides for show cause notice before forfeiture.
S.105 – H deals with the forfeiture of the property to Central Government while S.105 – I empowers the Court giving an option to the owner of such property to pay, in lieu of forfeiture, the fine equal to the market value of such property.
S.105 – J takes care of the situation where after making an order under sub-section (1) of S.105 – E or the issue of a notice under S.105 – G, the property stands transferred by any mode whatsoever and further provides that such transfer shall be ignored and also that such transfer of property shall be deemed null and void.
S.105 – L deals with the applications and powers in this Chapter. It confines application of this Chapter in relation to a contracting States with which reciprocal arrangements have been made subject to such conditions, exceptions or qualifications as are specified in the said notification.
18. It is relevant to note that these provisions, as now contained in Chapter VII-A of the Code, are prefixed by the heading “RECIPROCAL ARRANGEMENTS FOR ASSISTANCE IN CERTAIN MATTERS AND PROCEDURE FOR ATTACHMENT AND FORFEITURE OF PROPERTY”.
# State of M.P. v. Balram Mihani and Others, (2010) 2 SCC 602
the Apex Court had occasion to hold that
21. After analyzing the provisions and the purpose for which the statute has been enacted, I am of the view that the Annexure-A9 order cannot be sustained for more than one reason.
22. Admittedly the transaction in this Case had occurred in a foreign country. No request was made by any Court or any competent authority to the Central Government requesting for proceeding under the Act. It is based on a complaint filed by the de facto complainant before the Superintendent of Police that the Crime was registered. The transaction is admittedly of the year 2010. It is specifically alleged that the petitioners had purchased goods during the period from 24.08.2010 to 1.12.2010. The cheques issued in discharge of the debt were dishonored later. The property attached were admittedly purchased by the petitioners in the year 2005 and 2006 as is evidenced by Annexures-A12 to A14. A 12 sale deed is seen executed on 8.3.2006, A 13 sale deed on 7.10.2005 andA 14 is seen executed on 7.10.2005. Those properties cannot obviously be “property” as defined under Section 105A(d). It cannot also be concluded therefore that the said property was purchased using the proceeds from the crime which was registered on the basis of Annexure A 1.
23. In order to legitimize the attachment, the learned Magistrate has taken note of certain other transactions between the petitioner and certain others, which was revealed during the investigation stage. It appears from the order that complaints were received from Shyam Sasidharan, Syed Afsal Shan and Mahad that they were also victims of fraud committed by the petitioners. However from Annexure-A4 order passed by this Court in W.P.(C) No.5612 of 2016, filed by the aforesaid Shyam Sasidharan, Syed Afsal Shan and Mahad it is pellucid that those persons have no subsisting grievance against the petitioners.
24. The leaned Magistrate has relied on the 161 statements of these witnesses whose claims were settled by the petitioners to hold that the petitioners had engaged in business in Abu Dhabi and had secured a sum of Rs 10 Crores by cheating innocent persons. The learned Magistrate has proceeded on the premise that the properties were purchased in the year 2005-2006 after the commission of the alleged offence and that the proceeds from the aforesaid crimes have been used to purchase the same. That cannot be said to be correct in view of the incontrovertible evidence .
25. After meticulously perusing the documents produced as well as the report of the investigating officer and also Annexure-A9 order of the learned Magistrate, I am of the view that Annexure-A9 order cannot be sustained under law. The property is not liable to be seized or attached invoking Chapter VII A of the Code. Annexure-A9 is quashed and the property shall stand released of all attachments.
The petition is allowed as above.