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Rajan Salvi (Lawyer)     31 March 2010

Chapter VII A of Criminal Procedure Code.

Chapter VII A of Criminal Procedure Code not applicable to local offences generally.

‘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

J U D G M E N T

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

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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

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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

descripttion 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

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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

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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

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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

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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

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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.

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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

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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

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Learning

 3 Replies

Swami Sadashiva Brahmendra Sar (Nil)     31 March 2010

Thanks for providing land mark judgment.

Rajan Salvi (Lawyer)     31 March 2010

You're Welcome SIr. In fact i thank you for your presence at this site. At least thro this medium we get to know such persons like you.

A. A. JOSE (LAWYER; LEGAL ADVISER/CONSULTANT& TRAINER)     05 June 2010

This is indeed a good contribution. Thanks a lot.


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