Muhammed Hasheer Poolakkal vs The United Arab Bank
2022 Latest Caselaw 4064 Ker

                                                             C.R.
             IN THE HIGH COURT OF KERALA AT ERNAKULAM
                             PRESENT
           THE HONOURABLE MR.JUSTICE ZIYAD RAHMAN A.A.
     THURSDAY, THE 7TH DAY OF APRIL 2022 / 17TH CHAITHRA, 1944
                     CRL.MC NO. 3679 OF 2021
  AGAINST THE ORDER DATED 15.02.2021 IN CMP 50/2021 OF JUDICIAL
              MAGISTRATE OF FIRST CLASS -V,KOZHIKODE
PETITIONER/RESPONDENT:

          MUHAMMED HASHEER POOLAKKAL
          AGED 46 YEARS
          S/O. ALI MUHAMMED P., AL-RUBY PARUTHIPARA,
          FAROOK COLLEGE, KOZHIKODE, PIN-673 632

          BY ADV NIREESH MATHEW


RESPONDENTS/PETITIONER & STATE:

    1     THE UNITED ARAB BANK
          P.J.S.C (UAB), UAB TOWER BRANCH,
          HEAD OFFICE AL-BUHAIRA CORNICHE,
          P.O.BOX 25033, SHARJAH, UAE,
          REPRESENTED BY ITS POWER OF ATTORNEY HOLDER,
          PRINCE SUBRAMANIAN, PROPRIETOR, XTREAM INTERNATIONAL
          MANAGEMENT CONSULTANCY, GROUND FLOOR, ANNA ARCADE,
          ST.ALBERT LANE, ERNAKULAM, PIN-682 018

    2     STATE OF KERALA,
          REP BY PUBLIC PROSECUTOR,
          HIGH COURT OF KERALA, ERNAKULAM, KOCHI-682 031

          BY ADVS.

          JOHNSON GOMEZ
          SANJAY JOHNSON
          SREEDEVI S.
          JOHN GOMEZ
          MOHAMED SHEHARAN
          SRI.RANJIT GEORGE - SR.PUBLIC PROSECUTOR

     THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON

08.02.2022, THE COURT ON 07.04.2022 PASSED THE FOLLOWING:
 CRL.MC NO. 3679 OF 2021
                                   2


                                                                C.R.
                               ORDER

The petitioner herein is the respondent in C.M.P. No.50/2021

on the file of the Judicial First Class Magistrate Court - V,

Kozhikode. The aforesaid C.M.P. was filed by the 1st respondent

herein invoking the powers of the court under Chapter VIIA of the

Code of Criminal Procedure, wherein the prayer sought was to

initiate the proceedings for attachment of the properties of the

petitioner herein. The crucial question that arises here is whether

the powers of the court under the provisions of the said Chapter can

be invoked based on an application submitted by an

individual/establishment or is it necessary to submit a request in this

regard by the Central Government.

2. The facts leading to the filing of this Crl. M.C. is as

follows: The 1st respondent is a banking financial institution in

Sharjah, U.A.E. The petitioner herein had availed a credit facility

from the said bank for the purpose of his business in U.A.E. to the

tune of AED 4,698,243.42. Subsequently, the petitioner defaulted

repayment of the loan amount and certain cheques issued by the CRL.MC NO. 3679 OF 2021

petitioner towards repayment of the loan were also dishonoured.

Accordingly, a criminal prosecution was launched before the U.A.E.

court, at the instance of the 1 st respondent herein and it culminated

in Annexure D order. As per Annexure D, the petitioner herein was

found guilty, and he was sentenced to undergo imprisonment for

three years.

3. On the strength of Annexure D judgment passed by the

court in U.A.E., the 1st respondent herein submitted Annexure A

application before the Judicial First Class Magistrate Court - VII,

Kozhikode for initiating proceedings against the petitioner herein,

as contemplated under Sections 105C to 105J of Code of Criminal

Procedure, 1973. After considering the aforesaid petition, Annexure

B order was passed, and a direction was issued by the learned

Magistrate to the Station House Officer, Feroke Police Station, to

take all necessary steps for tracing and identifying the properties of

the respondent which were derived as proceeds of crime, as

contemplated under section 105C. This Crl. M.C. is filed by the

petitioner challenging the Annexure B order. CRL.MC NO. 3679 OF 2021

4. Heard Sri.Nireesh Mathew, learned counsel appearing

for the petitioner, Sri. Johnson Gomez, learned counsel appearing

for the 1st respondent and Sri. Ranjit George, learned counsel

appearing for the State.

5. As mentioned above, the question that arises is whether

the learned Magistrate is empowered to pass an order like Annexure

B on an application in this regard submitted by the 1 st respondent

herein. The provisions in Chapter VII A were incorporated in the

statute by way of Code of Criminal Procedure (Amendment) Act,

1993 (Act No.40 of 1993), and it came into force with effect from

20.07.1994. The aforesaid Chapter deals with the powers of the

court and the procedure to be adopted for the reciprocal

arrangement for assistance in matters relating to attachment and

forfeiture of property. The relevant provisions which apply to this

case are Sections 105C to 105E.

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 CRL.MC NO. 3679 OF 2021

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.

105D. Identifying unlawfully acquired property.-- (1) The Court shall, under sub-section (1), or on receipt of a letter of request under sub-section (3) of section 105C, direct any police officer not below the rank of Sub-Inspector of Police to take all steps necessary for tracing and identifying such property.

(2) The steps referred to in sub-section (1) may include any inquiry, investigation or survey in respect of any person, place, property, assets, documents, books of account in any bank or public financial institutions or any other relevant matters.

(3) Any inquiry, investigation or survey referred to in sub- section (2) shall be carried out by an officer mentioned in sub-section (1) in accordance with such directions issued by the said Court in this behalf.

105E. Seizure or attachment of property.--

(1) Where any officer conducting an inquiry or investigation under section 105D has a reason to believe that any property in relation to which such inquiry or investigation is being conducted is likely to be concealed, transferred or dealt with in any manner which will result in disposal of such property, he may take an order for seizing such property and where it is not practicable to seize such property, he may make an order of attachment directing CRL.MC NO. 3679 OF 2021

that such property shall not be transferred or otherwise dealt with, except with the prior permission of the officer making such order, and a copy of such order shall be served on the person concerned.

(2) Any order made under sub-section (1) shall have no effect unless the said order is confirmed by an order of the said Court, within a period of thirty days of its being made.

Section 105C(1) enables a court in India to make an order of

attachment or forfeiture of any property obtained by any person

from the commission of an offence, by invoking the provisions

under Section 105D to 105J. Section 105C(3) contemplates that, if

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, the said request may be

forwarded to court by the Government. Section 105D(1) provides

that the court shall direct the Police Officer for tracing and

identifying the property by invoking powers under Sub Section (1)

of Section 105C or on receipt of a letter of request under Sub

Section (3) of Section 105C.

6. The contention of the learned counsel for the petitioner

is that none of the provisions stipulated above, authorise any

individual or an institution to approach the court in India directly by CRL.MC NO. 3679 OF 2021

submitting an application for invoking the aforesaid powers.

Learned counsel brought my attention to the Guidelines on Mutual

Legal Assistance in Criminal Matters, issued by the Ministry of

Home Affairs, Government of India, by virtue of order bearing F

No.25016/52/2019-LC dated 04.12.2019. It is contended by the

learned counsel that the said guidelines prescribe certain procedures

and the matters to be considered when the Government processes

such a request. In the light of the above, any individual, whether he

is a citizen of India or not, cannot directly approach the court for

invoking the said powers, as the same would amount to bypassing

the procedure contemplated by the Government and the safeguards

to be applied while considering such request.

7. On the other hand, the contention of the learned counsel

appearing for the 1st respondent is that the stipulation in 105D(1) is

to the effect that, in addition to the power to act on a letter of

request under Sub Section (3) of Section 105C, the court is given

the power to act upon a petition of any person by invoking its

powers under Sub Section (1) of Section 105C of Cr.P.C. It is CRL.MC NO. 3679 OF 2021

pointed out that, for initiation of proceedings, Section 105D

contemplates two sources. The first one is by invoking Sub Section

(1) of Section 105C of Cr.P.C., which empowers the court to initiate

the proceedings if it is satisfied that there exist reasonable grounds

to believe that the property is obtained by the person concerned

from the commission of an offence. Another source of power is

derived from Sub Section (3) of the said provision, which

contemplates for initiation of proceedings acting upon a request

being forwarded to the court by the Central Government that the

Government received from a court or an authority in a contracting

State. Since both the above sources are separate, there is no

sustainability in the argument put forward by the learned counsel

for the petitioner, contends the learned counsel for the respondents.

8. It is true that Section 105C(1) enables the court to

invoke the powers upon satisfaction of the existence of reasonable

grounds that the property was obtained from the commission of a

crime and Section 105C(3) empower the court to act, on the receipt

of a letter of request from the Central Government. But when the CRL.MC NO. 3679 OF 2021

purpose of Chapter VIIA as a whole is considered, the provisions

stipulated in Sub Section (1) of Section 105C cannot be read in

isolation. It is true that while considering 105C(1) along with

Section 105D(1), it may create an impression that the court can act

upon the application of any person, being satisfied with the

existence of reasonable grounds for the same. However, the crucial

aspect to be noticed in this regard is that, even in Sub Section (1)

Section 105C, it is contemplated that the powers to be invoked are,

as provided under Section 105D to 105J. This would indicate that,

while considering the scope of the power of the courts, all the

stipulations contained in Chapter VIIA as a whole are to be taken

into consideration.

9. The guidelines stipulated by the Government on

04.12.2019 vide F.N0.25016/52/2019-LC issued by the Ministry of

Home Affairs, in this regard, is also a document of crucial importance.

Clause H of the said guidelines specifically mentions the types of

requests the Government can entertain. Sub Clause 1.13, which

comes under Clause H of the aforesaid guidelines, deals with the CRL.MC NO. 3679 OF 2021

same and Sub Clause (vii) thereof deals with matters relating to

taking measures to identify, locate, attach, freeze, restrain,

confiscate or forfeit the proceeds and instrumentality of crime. This

is the provision that is specifically applicable to this case. Clause

(I) of the said guidelines deals with the grounds for refusal or

postponement of a request for assistance. The relevant clause in

this regard comes under sub-clause 1.14 of clause (I). Sub Clause

(i) thereof contemplates that a request for assistance shall be refused

if the execution of the request would impair the sovereignty,

security, public order and essential public interest of India or a

foreign country. Several other factors are also stated in the other

Sub Clauses, providing the circumstances under which the request

for assistance can be refused. For easy reference clause (I) of the

said guidelines are extracted hereunder.

"(I) Grounds for Refusal or Postponement of Request for Assistance 1.14 The request for assistance is generally refused if:

(i) the execution of the request would impair sovereignty, security, public order and essential public interest of India or foreign country.

(ii) the request for assistance has been made for the purpose of investigating and prosecuting a person on account of that person's sex, race, religion, CRL.MC NO. 3679 OF 2021

nationality, origin or political opinions or that person's position may be prejudiced for any of those reasons.

(iii) the request is made for conduct or offence which is is an offence under military law but not an offfence under ordinary criminal law in India or foreign country.

(iv) the request relates to an offence in respect of which the accused person has been finally acquitted or pardoned.

(v) de minimis request is made i.e. the request is trivial or disproportionate in nature.

(vi) the request seeking restraint, forfeiture or confiscation of proceeds and instrumentalities of crime or seizure of property is in respect of conduct/activity which cannot be made the basis for such restraint, forfeiture, confiscation or seizure in the Contracting States.

1.15 The execution of request may be postponed if it would interfere with an ongoing criminal investigation, prosecution or proceedings in the Contracting States. Such request may be executed subject to conditions determined necessary after consultations with the Central Authority of the Requesting Country.

1.16 The execution of request shall not be refused solely on the ground of the bank secrecy or because the request for assistance does not include all the information if it can otherwise be executed in accordance with the laws of Contracting State."

When all the aforesaid aspects are considered, providing assistance

for attachment and forfeiture of property as contemplated under

Chapter VIIA of Cr.P.C. is to be exercised only regarding certain

matters and upon satisfying certain conditions. It is also a relevant

factor to notice that Sub Section (1) of Section 105C does not CRL.MC NO. 3679 OF 2021

specifically mention about submission of an application by an

individual or an institution for invoking the powers contemplated

under the said Chapter. Therefore, whether such a petition can be

maintained at the instance of an individual or institution, in the

absence of specific authorisation in this regard, is the crucial

question that arises. In my view, the aforesaid question can be

decided only if the actual purpose behind the incorporation of

Chapter VIIA in Cr. P.C is ascertained.

10. To understand the real purpose behind the introduction

of Chapter VIIA in the statute book, a perusal of objects and reasons

for the same is also relevant which reads as follows:

"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 CRL.MC NO. 3679 OF 2021

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."

11. The honourable Supreme Court in State of Madhya

Pradesh v. Balram Mihani and Others [(2010) 2 SCC 602]

considered the scope of the provisions of the aforesaid Chapter. It

was concluded that the said provision is applicable only for offences

having international ramifications or related to terrorist activities.

The honourable Supreme court while taking this view, considered

the intention of legislature in enacting the same and cleared the

confusion that arose from the fact that there is no specific provision

in the said Chapter excluding the other offences with no

international ramifications or offences not related to terrorist

activities, from the purview of the same.

12. In such circumstances, while interpreting the provisions

contained in Chapter VIIA for understanding the power of the

courts to initiate the proceedings under section 105C also, the

purpose behind the enactment thereof and the intention of the CRL.MC NO. 3679 OF 2021

legislature while bringing the said amendment into force is to be

taken into consideration. While interpreting the stipulations

contained in Chapter VIIA, particularly the provisions in 105C(1) as

well as 105D(1), I am of the view that the intention of the

legislature is to enable the court to initiate proceedings for

attachment and forfeiture of the properties which are proceeds of

crime only based on a request or application being made by the

Government or any other competent authorities in this regard. This

is mainly because, from the objects and reasons of the enactment, it

is evident that the provisions in this Chapter have been introduced

based on international treaties. The guidelines formulated by the

Government as per F.No.25016/52/2019-LC dated 04.12.2019

contemplates specific circumstances and conditions upon which the

request made in this regard are to be processed and allowed.

Therefore, entertaining any request in this regard by the courts in

India directly from any parties without conducting the exercise as

contemplated under the above guidelines would defeat the object

behind the enactment. This view is fortified because, the guidelines CRL.MC NO. 3679 OF 2021

prescribed in this regard also contain the right of the Central

Government to refuse the request on the ground of sovereignty,

security, public order and essential public interest of India or a

foreign country in this regard. In my view, the competent authority

to examine the question as to whether the request made has an

impact on the matters such as sovereignty, security, public order,

and essential public interest of India or a foreign country and such

other matters incidental to it, can only be the Central Government

or the authorities specifically authorised by the Central Government

in this regard. In such circumstances, allowing any individual or any

institution to approach the court directly by way of an application

would be against the interest of the State. This is because, in case of

allowing an application directly to the court, the question whether

the matter requested has an impact on the sovereignty, security,

public order, and essential public interest of India or a foreign

country will have to be decided by the court, which may not have

the relevant inputs necessary for adjudicating the same. The absence

of specific words in Section 105C(1) to entertain an application to CRL.MC NO. 3679 OF 2021

invoke the powers, at the instance of any individual or institution is

also a crucial aspect to be taken into consideration for

understanding the true purport behind the same. If the legislature

intended to empower the court to initiate such proceedings at the

instance of any individual or establishment, the same would have

been mentioned explicitly in the provision itself. In the absence of

such a specific enabling provision, I am of the view that permitting

any individual or establishment to file such an application would

amount to reading into the said provision something which was

never intended to be contemplated therein. This is especially when

the objects and reasons of the enactment clearly indicate that the

introduction of the said Chapter was based on international

agreements with certain countries. There can be no dispute that such

agreements are in the exclusive domain of the Central Government.

13. In such circumstances, I am of the view that Annexure A

petition was not maintainable before the Judicial First Class

Magistrate Court VII, Kozhikode, as the same was filed by an

institution, namely a banking company, without the same being CRL.MC NO. 3679 OF 2021

forwarded by the Central Government or any other authorities in

this regard. The unavoidable consequence of such finding is that

the order passed by the learned Magistrate in C.M.P. No.50/2021

dated 15.02.2021, marked as Annexure B herein, is without

jurisdiction and therefore liable to be set aside.

Accordingly, this Crl. M.C. is allowed and Annexure B order

is hereby set aside. However, it is made clear that this will not

preclude the 1st respondent from approaching the Central

Government or any appropriate authority for invoking the

provisions in Chapter VIIA after complying with the procedure

contemplated in this regard.

Sd/-

ZIYAD RAHMAN A.A.

JUDGE SCS CRL.MC NO. 3679 OF 2021

APPENDIX OF CRL.MC 3679/2021

PETITIONER ANNEXURES Annexure A CERTIFIED COPY OF THE PETITION, C.M.P.NO.50/2021 FILED BY THE 1ST RESPONDENT BEFORE THE JUDL.FIRST CLASS MAGISTRATE COURT-V, KOZHIKODE Annexure B CERTIFIED COPY OF THE ORDER DATED 15.02.2021, PASSED BY THE JUDL.FIRST CLASS MAGISTRATE COURT-V, KOZHIKODE Annexure C CERTIFIED COPY OF THE DIARY EXTRACT IN CMP NO.50/2021 ON THE OF THE JUDL.FIRST CLASS MAGISTRATE COURT-V, KOZHIKODE Annexure D CERTIFIED COPY OF THE JUDGMENT PASSED BY THE SHARJAH COURT OF FIRST INSTANCE ALONG WITH ITS TRANSLATION