M.P. Vs. Balram Mihani & Ors.  INSC 81 (1 February 2010)
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
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
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.
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.
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:
"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"
105A (d) defines the property as under:
"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."
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:
"105C. Assistance in relation to orders of attachment or forfeiture of
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).
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.
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
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.
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.
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.
(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:
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?
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 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
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.
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.:
transfer of persons between the contracting States including persons in custody
for the purpose of assisting in investigation or giving evidence in
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
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.
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.
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.
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.
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.
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
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.
In view of the above we approve the judgment of the Madhya Pradesh
High Court and confirm the same. The appeals are dismissed.
FEBRUARY 1, 2010
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