State Of Madhya Pradesh vs Balram Mihani &Amp; Ors on 1 February, 2010

      `REPORTABLE'

                    IN THE SUPREME COURT OF INDIA

                   CRIMINAL APPELLATE JURISDICTION

               CRIMINAL APPEAL Nos. 891-893 OF 2007

  State of Madhya Pradesh .... Appellant  Versus

Balram Mihani & Ors. .... Respondents   JUDGMENT

  V.S. SIRPURKAR, J.

1. By our earlier order dated 19.01.2010, we have dismissed the  appeals filed
by the State of Madhya Pradesh. Now, we proceed to give  reasons thereof.



2. The Station House Officer, Itarsi moved applications before the  Judicial
Magistrate, First Class, Itarsi for initiating proceedings against the
respondents herein under Chapter VII-A of the Code of Criminal  Procedure, 1973
(hereinafter referred to as "the Code") for attachment and  forfeiture
of the properties of the respondents. According to the  applications, the said
properties were derived from or used in commission  of offences and were
acquired from the criminal activities. The police 2

 further urged that the respondents were involved in the criminal activities
since long and had accumulated huge wealth derived directly or indirectly  by or
such criminal and unlawful activities. According to the police some of  these
properties were in the names of their relatives which were clearly  traceable to
the respondents herein. The prayer thus was made under  Section 105-D of the
Code for authorization to take all necessary steps to  trace out and identify
such properties and further for the forfeiture and  vesting thereof. Some other
applications were also filed on identical facts  against some other respondents
also. The Trial Court having passed an  order in pursuance of these applications
allowing the same, the  respondents challenged the same by way of a petition
under Section 482  of the Code. Finding that there were divergent opinions on
the tenability of  the applications amongst two learned Single Judges of the
Madhya  Pradesh High Court, the matter was referred to the Division Bench and
the  Division Bench by the impugned order quashed the proceedings holding  that
the provisions of Chapter VII-A were not applicable to such local  offences
complained of. It is this order which is in challenge before us at  the instance
of the State Government in these appeals.

3. Shri Dushyant A. Dave, learned Senior Counsel appearing on behalf  of the
State of Madhya Pradesh very painstakingly took us through 3

 Chapter VII-A containing Sections 105-A to 105-L. It will be useful to see  the
import of some of the Sections.



4. Section 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. Section 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"  Section 105A (d) defines the 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 assts
derived or used in the commission of an offence and includes property obtained
through proceeds of crime."

  Section 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. Section 105C is as  under:

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 "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 sections 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 sections 105D to 105J (both inclusive) or, as
the case may be, any other law for the time being in force."



5. Section 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 Section 105C (1) or on receipt of letter of request  under sub-section (3)
of Section 105-C. Section 105-E empowers the  officer conducting an inquiry or
investigation to make an order of seizure of 5

 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. Section 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.  Section
105G provides for show cause notice before forfeiture. Section  105-H deals with
the forfeiture of the property to Central Government while  Section 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.
Section 105-J takes care of the situation where after  making an order under
sub-section (1) of Section 105-E or the issue of a  notice under Section 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. Section  105-L deals with the applications and
powers in this Chapter.

6. The stress of the learned counsel is particularly on Section 105-D  and the
learned counsel is at pains to point out that Section 105-C and D  can apply to
any property in India which is derived or obtained from the  commission of
offence. Such offence could be even the offence which  does not have
international ramifications. The High Court, has taken stock  of all these
Sections and referred to the heading of the Chapter, the 6

 Statement of Objects and Reasons of the amending Act being Act No.40 of  1993
and the speech of the Hon'ble Minister for Home Affairs Shri S.B.  Chavan (as he
then was). From this the High Court has come to the  conclusion that firstly the
provisions of Chapter VII-A are not the ordinary  law of land and further the
provisions therein would be applicable only to  the offences which have
international ramifications. The High Court has  further reached the conclusion
that the said provisions override the  provisions of Chapter V, VI AND VII of
the Code relating to search and  seizure during investigation. The High Court
has posed following  questions:

 i) What was the law before the making of the amendment?   ii) What was the
mischief and defect for which the law did not  provide?

 iii) What is the remedy that the amendment has provided? And   iv) What is the
reason of the remedy?



7. Answering all these questions and also taking into account the  general
provisions of search and seizure contained in Sections 91 to 101  of the Code,
as also taking into consideration Sections 451, 452 and 457  of the Code dealing
with the custody and disposal of the property involved  in crime, the High Court
ultimately came to the conclusion that the said 7

 provisions of Chapter VII-A would not apply to the cases in question. The  High
Court has also taken into consideration the provisions of Section  41(1)(g) of
the Code, Sections 166-A and 166-B of the Code and has  relied upon three other
cases, namely, Union of India & Anr. v. W.N.  Chadha [1993 Supp. (3) SCC
260], Jayalalitha v. State [(2002) Crl.L.J.  3026] and Bhinka v. Charan Singh
[AIR 1959 SC 90]. It has ultimately  held that Chapter VII-A has been
incorporated with an intention to curb  mischief or completely eliminate the
terrorists activities and international  crimes. According to the High Court,
the provisions of this Chapter are  supplemental to the special provisions
contained in Sections 166-A and  166-B and had nothing to do with the
investigation into offences in general.

8. We have considered the judgment as also the contentions raised by  the
learned counsel. We have also perused the heading of Chapter VII-A  as also the
Statement of Objects and Reasons. After perusing the same  we are of the firm
opinion that the well written judgment of the High Court  is correct and the
High Court has taken a correct view.

9. In the Statement of Objects and Reasons to the Amending Act 40 of  1993 there
is a clear cut reference that the Government of India had  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 8

 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. The statement further goes on to provide the three  objectives, viz.:

 (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.



10. We have even taken into consideration the speech of the then Home  Minister
Shri S.B. Chavan which leaves no doubt that this Chapter is not  meant for the
local offences.



11. When we see the applications as also the order passed by the Trial  Court,
it is clear that it is only and only in respect of the local offences like
gambling and the offences under I.P.C. which are local. Even the  properties are
not shown to be connected with crimes mentioned in the 9

 Objects and Reasons of the amending Act. In fact, no connection is  established
also between crimes mentioned and the properties. Such  properties are clearly
not included in Section 105-C. Though the language  of Section 105-C (1) is
extremely general, its being placed in Chapter VII-A  cannot be lost sight of.
Again there is a clear cut reference in Sub-section  (2) thereof to the
contracting state, the definition of which is to be found in  Section 105-A (a).
It is, therefore, clear that the property envisaged in  Section 105-C (1) cannot
be an ordinary property earned out of ordinary  offences committed in India.
Where the language is extremely general and  not clear, the contextual
background has to be taken into consideration for  arriving at clear
interpretation. Some assistance was tried to be taken from  the language of
Section 105-B(2) which starts with the words  "notwithstanding anything
contained in this Code". However, when the  sub-section is read in
entirety, it is clear that it makes reference to a  person who is in
"contracting State". Therefore, even that reference will  not bring in
any provision within the scope of general law. We again  cannot ignore the
express language of Sections 105-B and 105-C which  starts with the words
"where a court in India". If this chapter was meant for  the general
offences and the properties earned out of those general  offences in India, then
such a phraseology would not have been used by  the Legislature.

                                        10



12. Lastly we see the provisions of Section 105-L which are clear that  the
Central Government may by notification in the official gazette, direct  that the
application of this chapter in relation to a contracting State with  which there
are reciprocal arrangements would be subject to some  conditions, exceptions and
qualifications as would be specified in the said  notification. It is,
therefore, clear that the whole chapter is specific chapter  relating to the
specified offences therein and has nothing to do with the  local offences or the
properties earned out of those.

13. At this juncture, it is pointed out that there are specific other Central
laws wherein the properties earned out of trading of Narcotic Drugs and
Psychotropic Substances or the offences relating to smuggling or financial
offences relating to foreign exchange are liable to be attached, seized and
forfeitured. Chapter VII-A is one such measure to introduce stringent  measures
for attachment and forfeiture of the properties earned by the  offences, by way
of reciprocal arrangement in the contracting countries.  However, if we accept
the State's contention that the provisions of Chapter  VII-A are for all and
sundry offences in India, it would be illogical.

14. If such a construction as claimed by the petitioner is given then it  would
mean that even for the offences which are local in nature and  committed within
the State, still the property connected with those offences 11

 shall be forfeitured to the Central Government. That would obviously be  an
absurd result.



15. Lastly, we cannot ignore the likely misuse of the provisions in  Chapter
VIIA if the whole Chapter is made applicable to the local offences  generally.
Such does not appear to be the intendment of the Legislature in  introducing
Chapter VII A.



16. In view of the above we approve the judgment of the Madhya  Pradesh High
Court and confirm the same. The appeals are dismissed.
..............................................J. (V.S. SIRPURKAR)

  ..............................................J. (SURINDER SINGH NIJJAR)

NEW DELHI;

FEBRUARY 1, 2010

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 Digital Performa

   Case No. : Criminal Appeal Nos. 891-893 Of 2007  Date of Decision : 1.2.2010

Cause Title : State of Madhya Pradesh Versus

                           Balram Mihani & Ors.

Coram : Hon'ble Mr. Justice V.S. Sirpurkar Hon'ble Mr. Justice Surinder Singh
Nijjar

C.A.V. On : 20.01.2010

Judgment

delivered by : Hon'ble Mr. Justice V.S. Sirpurkar  Nature of Judgment :
Reportable