Regard being had to the above, we declare Section 45(1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India. All the matters before us in which bail has been denied, because of the presence of the twin conditions contained in Section 45, will now go back to the respective Courts which denied bail. All such orders are set aside, and the cases remanded to the respective Courts to be heard on merits, without application of the twin conditions contained in Section 45 of the 2002 Act.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL ORIGINAL/APPELLATE JURISDICTION
WRIT PETITION (CRIMINAL) NO. 67 OF 2017
NIKESH TARACHAND SHAH …PETITIONER
VERSUS
UNION OF INDIA & ANR. …RESPONDENTS
WITH
WRIT PETITION (CRIMINAL) NO.103 OF 2017
WITH
WRIT PETITION (CRIMINAL) NO.144 OF 2017
WITH
WRIT PETITION (CRIMINAL) NO.152 OF 2017
WITH
CRIMINAL APPEAL NO. 2012 OF 2017
(ARISING OUT OF SLP (CRL) NO.7326 OF 2017)
WITH
CRIMINAL APPEAL NO. 2013 OF 2017
(ARISING OUT OF SLP (CRL) NO.7786 OF 2017)
WITH
CRIMINAL APPEAL NO. 2014 OF 2017
(ARISING OUT OF SLP (CRL) NO.7789 OF 2017)
2
J U D G M E N T
R.F. Nariman, J.
1. Leave granted.
2. The present writ petitions and appeals raise the question
of the constitutional validity of Section 45 of the Prevention of
Money Laundering Act, 2002. Section 45(1) imposes two
conditions for grant of bail where an offence punishable for a
term of imprisonment of more than 3 years under Part A of the
Schedule to the Act is involved. The conditions are that the
Public Prosecutor must be given an opportunity to oppose any
application for release on bail and the Court must be satisfied,
where the Public Prosecutor opposes the application, that there
are reasonable grounds for believing that the accused is not
guilty of such offence, and that he is not likely to commit any
offence while on bail.
3. The Prevention of Money Laundering Act, 2002 was
introduced, as its Statement of Objects and Reasons mentions,
to make money laundering an offence, and to attach property
3
involved in money laundering, so that this serious threat to the
financial system of India is adequately dealt with. It is worth
setting out the Statement of Objects and Reasons of the Act in
full.
“STATEMENT OF OBJECTS AND REASONS
It is being realised, world over, that moneylaundering
poses a serious threat not only to the
financial systems of countries, but also to their
integrity and sovereignty. Some of the initiatives
taken by the international community to obviate
such threats are outlined below:—
(a) the United Nations Convention Against Illicit
Traffic in Narcotic Drugs and Psychotropic
Substances, to which India is a party, calls for
prevention of laundering of proceeds of drug crimes
and other connected activities and confiscation of
proceeds derived from such offence.
(b) the Basle Statement of Principles, enunciated in
1989, outlined basic policies and procedures that
banks should follow in order to assist the law
enforcement agencies in tackling the problem of
money-laundering.
(c) the Financial Action Task Force established at
the summit of seven major industrial nations, held in
Paris from 14th to 16th July, 1989, to examine the
problem of money-laundering has made forty
recommendations, which provide the foundation
material for comprehensive legislation to combat the
problem of money-laundering. The
recommendations were classified under various
heads. Some of the important heads are—
4
(i) declaration of laundering of monies
carried through serious crimes a
criminal offence;
(ii) to work out modalities of disclosure
by financial institutions regarding
reportable transactions;
(iii) confiscation of the proceeds of
crime;
(iv) declaring money-laundering to be an
extraditable offence; and
(v) promoting international co-operation
in investigation of money-laundering.
(d) the Political Declaration and Global Programme
of Action adopted by United Nations General
Assembly by its Resolution No. S-17/2 of 23rd
February, 1990, inter alia, calls upon the member
States to develop mechanism to prevent financial
institutions from being used for laundering of drug
related money and enactment of legislation to
prevent such laundering.
(e) the United Nations in the Special Session on
Countering World Drug Problem Together
concluded on the 8th to the 10th June, 1998 has
made another declaration regarding the need to
combat money-laundering. India is a signatory to
this declaration.
2. In view of an urgent need for the enactment or a
comprehensive legislation inter alia for preventing
money-laundering and connected activities
confiscation of proceeds of crime, setting up of
agencies and mechanisms for coordinating
measures for combating money-laundering, etc., the
Prevention of Money-Laundering Bill, 1998 was
introduced in the Lok Sabha on the 4th August,
1998. The Bill was referred to the Standing
5
Committee on Finance, which presented its report
on the 4th March, 1999 to the Lok Sabha. The
recommendations of the Standing Committee
accepted by the Central Government are that (a)
the expressions “banking company” and “person”
may be defined; (b) in Part I of the Schedule under
Indian Penal Code the word offence under section
477A relating to falsification of accounts should be
omitted; (c) ‘knowingly’ be inserted in clause 3(b)
relating to the definition of money-laundering; (d)
the banking companies, financial institutions and
intermediaries should be required to furnish
information of transactions to the Director instead of
Commissioner of Income-tax (e) the banking
companies should also be brought within the ambit
of clause II relating to obligations of financial
institutions and intermediaries; (f) a definite timelimit
of 24 hours should be provided for producing a
person about to be searched or arrested person
before the Gazetted Officer or Magistrate; (g) the
words “unless otherwise proved to the satisfaction
of the authority concerned” may be inserted in
clause 22 relating to presumption on interconnected
transactions; (h) vacancy in the office of
the Chairperson of an Appellate Tribunal, by reason
of his death, resignation or otherwise, the seniormost
member shall act as the Chairperson till the
date on which a new Chairperson appointed in
accordance with the provisions of this Act to fill the
vacancy, enters upon his office; (i) the appellant
before the Appellate Tribunal may be authorised to
engage any authorised representative as defined
under section 288 of the Income-tax Act, 1961, (j)
the punishment for vexatious search and for false
information may be enhanced from three months
imprisonment to two years imprisonment, or fine of
rupees ten thousand to fine of rupees fifty thousand
or both; (k) the word ‘good faith’ may be
incorporated in the clause relating to Bar of legal
proceedings. The Central Government have broadly
6
accepted the above recommendations and made
provisions of the said recommendations in the Bill.
3. In addition to above recommendations of the
standing committee the Central Government
proposes to (a) relax the conditions prescribed for
grant of bail so that the Court may grant bail to a
person who is below sixteen years of age, or
woman, or sick or infirm, (b) levy of fine for default
of non-compliance of the issue of summons, etc. (c)
make provisions for having reciprocal arrangement
for assistance in certain matters and procedure for
attachment and confiscation of property so as to
facilitate the transfer of funds involved in moneylaundering
kept outside the country and extradition
of the accused persons from abroad.
4. The Bill seeks to achieve the above objects.”
4. Though the Act was passed by Parliament in the year
2002, it was brought into force only on 1.7.2005. Some of the
important provisions, with which we are directly concerned, are
set out hereinbelow:
“Section 2. Definitions.—(1) In this Act, unless the
context otherwise requires,—
(p) “money-laundering” has the meaning assigned
to it in section 3;
(u) “proceeds of crime” means any property derived
or obtained, directly or indirectly, by any person as a
result of criminal activity relating to a scheduled
offence or the value of any such property or where
such property is taken or held outside the country,
7
then the property equivalent in value held within the
country;
(x) “Schedule” means the Schedule to this Act;
(y) “scheduled offence” means—
(i) the offences specified under Part A of the
Schedule; or
(ii) the offences specified under Part B of the
Schedule if the total value involved in such offences
is one crore rupees or more; or
(iii) the offences specified under Part C of the
Schedule.
Section 3. Offence of money-laundering.—
Whosoever directly or indirectly attempts to indulge
or knowingly assists or knowingly is a party or is
actually involved in any process or activity
connected with proceeds of crime including its
concealment, possession, acquisition or use and
projecting or claiming it as untainted property shall
be guilty of offence of money-laundering.
Section 4. Punishment for money-laundering.—
Whoever commits the offence of money-laundering
shall be punishable with rigorous imprisonment for a
term which shall not be less than three years but
which may extend to seven years and shall also be
liable to fine: Provided that where the proceeds of
crime involved in money-laundering relates to any
offence specified under paragraph 2 of Part A of the
Schedule, the provisions of this section shall have
effect as if for the words “which may extend to
seven years”, the words “which may extend to ten
years” had been substituted.
Section 5. Attachment of property involved in
money-laundering.
8
(1) Where the Director or any other officer not below
the rank of Deputy Director authorised by the
Director for the purposes of this section, has reason
to believe (the reason for such belief to be recorded
in writing), on the basis of material in his
possession, that—
(a) any person is in possession of any proceeds of
crime; and
(b) such proceeds of crime are likely to be
concealed, transferred or dealt with in any manner
which may result in frustrating any proceedings
relating to confiscation of such proceeds of crime
under this Chapter, he may, by order in writing,
provisionally attach such property for a period not
exceeding one hundred and eighty days from the
date of the order, in such manner as may be
prescribed:
Provided that no such order of attachment shall be
made unless, in relation to the scheduled offence, a
report has been forwarded to a Magistrate under
section 173 of the Code of Criminal Procedure,
1973 (2 of 1974), or a complaint has been filed by a
person authorised to investigate the offence
mentioned in that Schedule, before a Magistrate or
court for taking cognizance of the scheduled
offence, as the case may be, or a similar report or
complaint has been made or filed under the
corresponding law of any other country:
Provided further that, notwithstanding anything
contained in first proviso, any property of any
person may be attached under this section if the
Director or any other officer not below the rank of
Deputy Director authorised by him for the purposes
of this section has reason to believe (the reasons
for such belief to be recorded in writing), on the
basis of material in his possession, that if such
property involved in money-laundering is not
9
attached immediately under this Chapter, the nonattachment
of the property is likely to frustrate any
proceeding under this Act.
(2) The Director, or any other officer not below the
rank of Deputy Director, shall, immediately after
attachment under sub-section (1), forward a copy of
the order, along with the material in his possession,
referred to in that sub-section, to the Adjudicating
Authority, in a sealed envelope, in the manner as
may be prescribed and such Adjudicating Authority
shall keep such order and material for such period
as may be prescribed.
(3) Every order of attachment made under subsection
(1) shall cease to have effect after the expiry
of the period specified in that sub-section or on the
date of an order made under sub-section (2) of
section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person
interested in the enjoyment of the immovable
property attached under sub-section (1) from such
enjoyment.
Explanation.— For the purposes of this sub-section,
“person interested”, in relation to any immovable
property, includes all persons claiming or entitled to
claim any interest in the property.
(5) The Director or any other officer who
provisionally attaches any property under subsection
(1) shall, within a period of thirty days from
such attachment, file a complaint stating the facts of
such attachment before the Adjudicating Authority.
xxx xxx xxx
Section 43. Special Courts.—
(1) The Central Government, in consultation with
the Chief Justice of the High Court, shall, for trial of
offence punishable under section 4, by notification,
10
designate one or more Courts of Session as Special
Court or Special Courts or such area or areas or for
such case or class or group of cases as may be
specified in the notification.
Explanation.— In this sub-section, “High Court”
means the High Court of the State in which a
Sessions Court designated as Special Court was
functioning immediately before such designation.
(2) While trying an offence under this Act, a Special
Court shall also try an offence, other than an
offence referred to in sub-section (1), with which the
accused may, under the Code of Criminal
Procedure, 1973 (2 of 1974), be charged at the
same trial.
Section 44. Offences triable by Special Courts.—
(1) Notwithstanding anything contained in the Code
of Criminal Procedure, 1973 (2 of 1974),—
(a) an offence punishable under section 4 and any
scheduled offence connected to the offence under
that section shall be triable by the Special Court
constituted for the area in which the offence has
been committed: Provided that the Special Court,
trying a scheduled offence before the
commencement of this Act, shall continue to try
such scheduled offence; or
(b) a Special Court may, upon perusal of police
report of the facts which constitute an offence under
this Act or upon a complaint made by an authority
authorised in this behalf under this Act take
cognizance of offence under section 3, without the
accused being committed to it for trial;
(c) if the court which has taken cognizance of the
scheduled offence is other than the Special Court
which has taken cognizance of the complaint of the
offence of money-laundering under sub-clause (b),
11
it shall, on an application by the authority authorised
to file a complaint under this Act, commit the case
relating to the scheduled offence to the Special
Court and the Special Court shall, on receipt of such
case proceed to deal with it from the stage at which
it is committed.
(d) a Special Court while trying the scheduled
offence or the offence of money-laundering shall
hold trial in accordance with the provisions of the
Code of Criminal Procedure, 1973 (2 of 1974) as it
applies to a trial before a Court of Session.
(2) Nothing contained in this section shall be
deemed to affect the special powers of the High
Court regarding bail under section 439 of the Code
of Criminal Procedure, 1973 (2 of 1974) and the
High Court may exercise such powers including the
power under clause (b) of sub-section (1) of that
section as if the reference to “Magistrate” in that
section includes also a reference to a “Special
Court” designated under section 43.
Section 45. Offences to be cognizable and nonbailable.—
(1) Notwithstanding anything contained in the Code
of Criminal Procedure, 1973 (2 of 1974), no person
accused of an offence punishable for a term of
imprisonment of more than three years under Part A
of the Schedule shall be released on bail or on his
own bond unless—
(i) the Public Prosecutor has been given a
opportunity to oppose the application for such
release; and
(ii) where the Public Prosecutor opposes the
application, the court is satisfied that there are
reasonable grounds for believing that he is not guilty
of such offence and that he is not likely to commit
any offence while on bail: Provided that a person,
12
who, is under the age of sixteen years, or is a
woman or is sick or infirm, may be released on bail,
if the Special Court so directs: Provided further that
the Special Court shall not take cognizance of any
offence punishable under section 4 except upon a
complaint in writing made by—
(i) the Director; or
(ii) any officer of the Central Government or a State
Government authorised in writing in this behalf by
the Central Government by a general or special
order made in this behalf by that Government.
(1A) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974), or
any other provision of this Act, no police officer shall
investigate into an offence under this Act unless
specifically authorised, by the Central Government
by a general or special order, and, subject to such
conditions as may be prescribed.
(2) The limitation on granting of bail specified in
sub-section (1) is in addition to the limitations under
the Code of Criminal Procedure, 1973 (2 of 1974) or
any other law for the time being in force on granting
of bail.
Section 46. Application of Code of Criminal
Procedure, 1973 to proceedings before Special
Court.—
(1) Save as otherwise provided in this Act, the
provisions of the Code of Criminal Procedure, 1973
(2 of 1974) (including the provisions as to bails or
bonds), shall apply to the proceedings before a
Special Court and for the purposes of the said
provisions, the Special Court shall be deemed to be
a Court of Session and the persons conducting the
prosecution before the Special Court, shall be
deemed to be a Public Prosecutor: Provided that
the Central Government may also appoint for any
13
case or class or group of cases a Special Public
Prosecutor.
(2) A person shall not be qualified to be appointed
as a Public Prosecutor or a Special Public
Prosecutor under this section unless he has been in
practice as an advocate for not less than seven
years, under the Union or a State, requiring special
knowledge of law.
(3) Every person appointed as a Public Prosecutor
or a Special Public Prosecutor under this section
shall be deemed to be a Public Prosecutor within
the meaning of clause (u) of section 2 of the Code
of Criminal Procedure, 1973 (2 of 1974) and the
provisions of that Code shall have effect
accordingly.
xxx xxx xxx
Section 65. Code of Criminal Procedure, 1973 to
apply.— The provisions of the Code of Criminal
Procedure, 1973 (2 of 1974) shall apply, in so far as
they are not inconsistent with the provisions of this
Act, to arrest, search and seizure, attachment,
confiscation investigation, prosecution and all other
proceedings under this Act.
xxx xxx xxx
Section 71. Act to have overriding effect.—The
provisions of this Act shall have effect
notwithstanding anything inconsistent therewith
contained in any other law for the time being in
force.”
5. Shri Mukul Rohatgi, learned senior advocate appearing
on behalf of the petitioners, has argued before us that Section
45 of the said Act, when it imposes two further conditions
14
before grant of bail is manifestly arbitrary, discriminatory and
violative of the petitioner’s fundamental rights under Article 14
read with Article 21 of the Constitution. According to learned
senior counsel, at the stage that the said Act was a Bill (which
was referred to a Standing Committee on Finance of the
Parliament, and which presented its report on 4.3.1999 to the
Lok Sabha), the Central Government broadly accepted the
recommendations of the Standing Committee, which were then
incorporated in the said Bill along with some other changes. At
this stage, argued Shri Rohatgi, it is interesting to note that
Clauses 43 and 44 of the Bill, which correspond to Sections 44
and 45 of the present Act, were very differently worded and
dealt only with offences under the 2002 Act. The twin
conditions laid down as additional conditions for grant of bail
were, at this stage, only qua offences under the 2002 Act.
When Parliament enacted the 2002 Act, this scheme was
completely changed in that Section 45 of the Act now spoke
only of the predicate/scheduled offence and not the offence
under the 2002 Act. In the present Act, a scheduled offence,
which is an offence under other penal laws contained in Part A
15
of the Schedule, that is tried with offences under the Act, bail
would be granted only after satisfying the twin conditions laid
down in the Section. Also, when the Act was originally enacted,
according to learned senior counsel, part A of the Schedule
was very sparsely populated, in that it comprised of two
paragraphs only consisting of two offences under the Indian
Penal Code, 1860 and 9 offences under the Narcotic Drugs and
Psychotropic Substances Act, 1985. These offences were
considered extremely heinous by the legislature and were,
therefore, classified apart from offences under Part B, which
dealt with certain other offences under the Indian Penal Code
and offences under the Arms Act 1959, Wildlife (Protection) Act
1972, Immoral Traffic (Prevention) Act, 1956 and the
Prevention of Corruption Act, 1988. According to learned
senior counsel, this classification was maintained right until the
Amendment Act of 2012, which then incorporated Part B
offences into Part A of the Schedule, resulting in offences under
26 Acts, together with many more offences under the Indian
Penal Code, all being put under Part A. This, according to
learned senior counsel, was done because the definition of
16
“scheduled offence” in Section 2(y) of the Act made it clear that,
if offences are specified under Part B of the Schedule at the
relevant time, the total value involved for such offences should
be Rs.30 lakhs or more. The idea behind the 2012 Amendment,
as the Statement of Objects of the said Amendment discloses,
is that this limit of Rs.30 lakhs be removed, which is why the
entire Part B of the Schedule was subsumed in Part A. He
further argued that the object was not to deny bail to those
charged with offences under the erstwhile Part B, and that
putting Part B offences together with heinous offences in Part A
would amount to treating unequals equally and would be
discriminatory and violative of Article 14 of the Constitution. In
addition, such lumping together of disparate offences would
have no rational relation to the object sought to be achieved by
the Amendment Act of 2012, that is to obviate the Rs.30 lakh
limit qua Part B offences, and it would violate Article 14 on this
ground as well. According to learned senior counsel, the
change from the original scheme of the Bill to introducing
offences outside the 2002 Act dependent upon which bail would
be granted, with the twin conditions as aforestated first having
17
to be satisfied, is itself manifestly arbitrary, in that the predicate
offence, which is the scheduled offence, and the classification
of such offence as being punishable with three years or more
would again be wholly irrelevant and would have absolutely no
rational relation to the object of granting bail insofar as offences
under the 2002 Act are concerned. Learned senior counsel
also referred to Article 21 of the Constitution and stated that the
aforesaid procedure would be unfair, unjust and would fall foul
of Article 21 inasmuch as it would certainly fall foul of the US
Constitution’s Eighth Amendment which interdicts excessive
bails. Since this Court has recognized that this feature of the
Eighth Amendment would fall within Article 21, it would be a
direct infraction thereof. He also argued that a person will be
punished for an offence contained under the 2002 Act, but will
be denied bail because of a predicate offence which is
contained in Part A of the Schedule, which would again render
Section 45(1) as manifestly arbitrary and unreasonable. He
referred to Nikesh Tarachand Shah’s case, which is Writ
Petition (criminal) No.67 of 2017, in which the scheduled
offences were Sections 120B, 409, 420, 471 and 477A of the
18
Indian Penal Code read with Section 13 of the Prevention of
Corruption Act. These offences were being investigated by the
CBI in CBI Special Case No.91/2009 in which the petitioner
was granted bail by the Sessions Court by an order dated
10.12.2015. When the offence under the 2002 Act was added
to the aforesaid offences, thanks to the applicability of the twin
conditions in Section 45(1), he was denied bail with effect from
27.11.2015, which itself shows that Section 45(1) is being used
in an extremely manifestly arbitrary fashion to deny bail for
offences which extend only to seven years under the 2002 Act,
as opposed to predicate offences which may extend even to life
imprisonment. Also, according to learned senior counsel, the
threshold of three years and above contained in Section 45 of
the 2002 Act is itself manifestly arbitrary in that it has no
reference to the offence of money laundering under the 2002
Act, but only to three years and more of the predicate offence.
There is no condition, so far as the 2002 Act is concerned, of
classification based on the amount of money that is laundered,
which perhaps may be a valid basis for classification. Also,
according to learned senior counsel, if the twin conditions of
19
Section 45(1) are to be satisfied at the stage of bail, the
defendants will have to disclose their defence at a point in time
when they are unable to do so, having been arrested and not
being granted bail at the inception itself. Another conundrum
raised by Section 45 is the fact that, there being no interdict
against anticipatory bail in the 2002 Act, and the Code of
Criminal Procedure applying to offences under the 2002 Act, it
would be clear that anticipatory bail could be granted for both
offences under the 2002 Act and predicate offences. This being
so, unlike the Terrorist and Disruptive Activities (Prevention) Act
1987, where anticipatory bail expressly cannot be granted, the
twin conditions of Section 45 would not apply at the anticipatory
bail stage, which would mean that a person charged of money
laundering and a predicate offence could continue on
anticipatory bail throughout the trial without satisfying any of the
twin conditions, as opposed to a person who applies for regular
bail, who would have to satisfy the twin conditions, which in
practice would mean denial of bail. For all these reasons,
according to learned senior counsel, Section 45 needs to be
struck down. Also, according to learned senior counsel, it is not
20
possible to read down the provision to make it constitutional as
the very scheme of Section 45 is manifestly arbitrary and
irrational. Shri Rohatgi cited various judgments to buttress his
submissions which will be referred to by us in the course of this
judgment.
6. On the other hand, the learned Attorney General Shri K.K.
Venugopal impressed upon us the fact that the Parliamentary
legislation qua money laundering is an attempt by Parliament to
get back money which has been siphoned off from the
economy. According to the learned Attorney General,
scheduled offences and offences under Sections 3 and 4 of the
2002 Act have to be read together and the said Act, therefore,
forms a complete code which must be looked at by itself.
According to the learned Attorney General, it is well settled that
classification which is punishment centric has been upheld by a
catena of judgments and so have the twin conditions been
upheld by various decisions which were referred to by him.
According to him, the expression “any offence” in Section
45(1)(ii) would mean offence of a like nature and not any
offence, which would include a traffic offence as well. According
21
to the learned Attorney General, Section 45 can easily be read
down to make it constitutional in two ways. First, the
expression “there are reasonable grounds for believing that he
is not guilty of such offence” must be read as the making of a
prima facie assessment by the Court of reasonable guilt.
Secondly, according to the learned Attorney General, in any
case the conditions contained in Section 45(1)(ii) are there in a
different form when bail is granted ordinarily insofar as offences
generally are concerned and he referred to State of U.P.
through C.B.I. v. Amarmani Tripathi, (2005) 8 SCC 21 for this
purpose. According to the learned Attorney General, if
harmoniously construed with the rest of the Act, Section 45 is
unassailable. He relied upon Section 24 of the Act, which
inverts the burden of proof, and strongly relied upon Gautam
Kundu v. Directorate of Enforcement (Prevention of MoneyLaundering
Act), (2015) 16 SCC 1 and Rohit Tandon
v. The Enforcement Directorate, Criminal Appeal Nos.1878–
1879 Of 2017 decided on 10th November, 2017. In answer to
Shri Rohatgi’s argument on the object of the 2012 Amendment
Act, according to the learned Attorney General, it is well settled
22
that where the language of the Act is plain, no recourse can be
taken to the object of the Act and he cited a number of
judgments for this proposition. He referred us to Section 106 of
the Indian Evidence Act, 1872 and argued that when read with
Section 24 of the 2002 Act, it would be clear that the twin
conditions contained in Section 45 are only in furtherance of the
object of unearthing black money and that we should, therefore,
be very slow to set at liberty persons who are alleged offenders
of the cancer of money laundering. Ultimately, according to the
learned Attorney General, Section 45 being part of a complete
code must be upheld in order that the 2002 Act work, so that
money that is laundered comes back into the economy and
persons responsible for the same are brought to book.
7. Having heard learned counsel for both sides, it is
important to first understand what constitutes the offence of
money laundering. Under Section 3 of the Act, the kind of
persons responsible for money laundering is extremely wide.
Words such as “whosoever”, “directly or indirectly” and
“attempts to indulge” would show that all persons who are even
remotely involved in this offence are sought to be roped in. An
23
important ingredient of the offence is that these persons must
be knowingly or actually involved in any process or activity
connected with proceeds of crime and “proceeds of crime” is
defined under the Act, by Section 2 (u) thereof, to mean any
property derived or obtained directly or indirectly, by any person
as a result of criminal activity relating to a scheduled offence
(which is referred to in our judgment as the predicate offence).
Thus, whosever is involved as aforesaid, in a process or activity
connected with “proceeds of crime” as defined, which would
include concealing, possessing, acquiring or using such
property, would be guilty of the offence, provided such persons
also project or claim such property as untainted property.
Section 3, therefore, contains all the aforesaid ingredients, and
before somebody can be adjudged as guilty under the said
provision, the said person must not only be involved in any
process or activity connected with proceeds of crime, but must
also project or claim it as being untainted property. Under
Section 4 of the Act, the offence of money laundering is
punishable with rigorous imprisonment for a minimum period of
three years which may extend to 7 years and fine. Also, under
24
the proviso, where the proceeds of crime involved in money
laundering relate to a predicate offence under paragraph 2 of
Part A of the Schedule, the sentence then gets extended from 7
years to 10 years.
8. Under Section 5 of the Act, attachment of such property
takes place so that such property may be brought back into the
economy. Coming now to Chapter VII of the Act with which we
are really concerned, Section 43 lays down that Special Courts
to try offences under the Act are to be designated for such area
or areas or for such case or class or group of cases as may be
specified by notification. Section 44 is very important in that the
Section provides for the trial of a scheduled offence and the
offence of money laundering together by the same Special
Court, which is to try such offences under the Code of Criminal
Procedure as if it were a court of sessions. Under Section 46,
read with Section 65 of the Act, the provisions of the Code of
Criminal Procedure apply to proceedings before the Special
Court and for the purpose of the said provisions, the Special
Court shall be deemed to be a court of sessions.
25
9. When the Prevention of Money Laundering Bill, 1999 was
tabled before Parliament, Section 44, which corresponds to
Section 45 of the present Act, provided that several offences
punishable under “this Act” are to be cognizable, and the twin
conditions for release on bail would apply only insofar as the
offences under the Act itself are concerned. When the Act was
finally enacted in 2002 and notified in 2005, this scheme
changed radically. Now, both the offence of money laundering
and the predicate offence were to be tried by the Special Court,
and bail is granted only if the twin conditions under Section
45(1) are met, where the term of imprisonment is more than
three years for the predicate offence. It is important to note that
Clause 44 of the Bill referred only to offences under Sections 3
and 4 of the Bill, whereas Section 45 of the Act does not refer
to offences under Sections 3 and 4 of the Act at all. Reference
is made only to offences under Part A of the Schedule, which
are offences outside the 2002 Act. This fundamental difference
between the Bill and the Act has a great bearing on the
constitutional validity of Section 45(1) with which we are directly
and immediately concerned.
26
10. The provision for bail goes back to Magna Carta itself.
Clause 39, which was, at that time, written in Latin, is translated
as follows:
“No free man shall be seized or imprisoned or
stripped of his rights or possessions, or outlawed or
exiled, or deprived of his standing in any other way,
nor will we proceed with force against him, or send
others to do so, except by the lawful judgment of his
equals or by the law of the land.”
It is well known that Magna Carta, which was wrung out of King
John by the barons on the 15th of June, 1215, was annulled by
Pope Innocent III in August of that very year. King John died
one year later, leaving the throne to his 9 year old son, Henry
III. It is in the reign of this pious King and his son, Edward I, that
Magna Carta was recognized by kingly authority. In fact, by the
statutes of Westminster of 1275, King Edward I repeated the
injunction contained in clause 39 of Magna Carta. However,
when it came to the reign of the Stuarts, who believed that they
were kings on earth as a matter of divine right, a struggle
ensued between Parliament and King Charles I. This led to
another great milestone in the history of England called the
Petition of Right of 1628. Moved by the hostility to the Duke of
Buckingham, the House of Commons denied King Charles I the
27
means to conduct military operations abroad. The King was
unwilling to give up his military ambition and resorted to the
expedient of a forced loan to finance it. A number of those
subject to the imposition declined to pay, and some were
imprisoned; among them were those who became famous as
“the Five Knights”. Each of them sought a writ of habeas corpus
to secure his release. One of the Knights, Sir Thomas Darnel,
gave up the fight, but the other four fought on. The King’s
Bench, headed by the Chief Justice, made an order sending the
knights back to prison. The Chief Justice’s order was, in fact, a
provisional refusal of bail. Parliament being displeased with
this, invoked Magna Carta and the statutes of Westminster, and
thus it came about that the Petition of Right was presented and
adopted by the Lords and a reluctant King. Charles I reluctantly
accepted this Petition of Right stating, “let right be done as is
desired by the petition”. Among other things, the Petition had
prayed that no free man should be imprisoned or detained,
except by authority of law.
11. In Bushel’s case, decided in 1670, Chief Justice Sir John
Vaughan was able to state that, “the writ of habeas corpus is
28
now the most usual remedy by which a man is restored again to
his liberty, if he have been against law deprived of it.” Despite
this statement of the law, one Jenkes was arrested and
imprisoned for inciting persons to riot in a speech, asking that
King Charles II be petitioned to call a new Parliament. Jenkes
went from pillar to post in order to be admitted to bail. The Lord
Chief Justice sent him to the Lord Chancellor, who, in turn, sent
him to the Lord Treasurer, who sent him to the King himself,
who, “immediately commanded that the laws should have their
due course.” (See Jenke’s case, 6 How. St. Tr. 1189 at 1207,
1208 (1676)). It is cases like these that led to the next great
milestone of English history, namely the Habeas Corpus Act of
1679. This Act recited that many of the King’s subjects have
been long detained in prison in cases where, by law, they
should have been set free on bail. The Act provided for a
habeas corpus procedure which plugged legal loopholes and
even made the King’s Bench Judges subject to penalties for
non-compliance.
12. The next great milestone in English history is the Bill of
Rights of 1689, which was accepted by the only Dutch monarch
29
that England ever had, King William III, who reigned jointly with
his wife Queen Mary II. It is in this document that the
expression “excessive bail ought not to be required….” first
appears in Chapter 2, clause 10.
13. What is important to learn from this history is that clause
39 of Magna Carta was subsequently extended to pre-trial
imprisonment, so that persons could be enlarged on bail to
secure their attendance for the ensuing trial. It may only be
added that one century after the Bill of Rights, the US
Constitution borrowed the language of the Bill of Rights when
the principle of habeas corpus found its way into Article 1
Section 9 of the US Constitution, followed by the Eighth
Amendment to the Constitution which expressly states that,
“excessive bail shall not be required, nor excessive fines
imposed, nor cruel and unusual punishments inflicted”. We may
only add that the Eighth Amendment has been read into Article
21 by a Division Bench of this Court in Rajesh Kumar v. State
through Government of NCT of Delhi (2011) 13 SCC 706, at
paragraphs 60 and 61.
30
14. In Gurbaksh Singh Sibbia v. State of Punjab, (1980) 2
SCC 565 at 586-588, the purpose of granting bail is set out with
great felicity as follows:-
“27. It is not necessary to refer to decisions which
deal with the right to ordinary bail because that right
does not furnish an exact parallel to the right to
anticipatory bail. It is, however, interesting that as
long back as in 1924 it was held by the High Court
of Calcutta in Nagendra v. King-Emperor [AIR 1924
Cal 476, 479, 480 : 25 Cri LJ 732] that the object of
bail is to secure the attendance of the accused at
the trial, that the proper test to be applied in the
solution of the question whether bail should be
granted or refused is whether it is probable that the
party will appear to take his trial and that it is
indisputable that bail is not to be withheld as a
punishment. In two other cases which, significantly,
are the ‘Meerut Conspiracy cases’ observations are
to be found regarding the right to bail which deserve
a special mention. In K.N. Joglekar v. Emperor [AIR
1931 All 504 : 33 Cri LJ 94] it was observed, while
dealing with Section 498 which corresponds to the
present Section 439 of the Code, that it conferred
upon the Sessions Judge or the High Court wide
powers to grant bail which were not handicapped by
the restrictions in the preceding Section 497 which
corresponds to the present Section 437. It was
observed by the court that there was no hard and
fast rule and no inflexible principle governing the
exercise of the discretion conferred by Section 498
and that the only principle which was established
was that the discretion should be exercised
judiciously. In Emperor v. Hutchinson [AIR 1931 All
356, 358 : 32 Cri LJ 1271] it was said that it was
very unwise to make an attempt to lay down any
particular rules which will bind the High Court,
31
having regard to the fact that the legislature itself
left the discretion of the court unfettered. According
to the High Court, the variety of cases that may
arise from time to time cannot be safely classified
and it is dangerous to make an attempt to classify
the cases and to say that in particular classes a bail
may be granted but not in other classes. It was
observed that the principle to be deduced from the
various sections in the Criminal Procedure Code
was that grant of bail is the rule and refusal is the
exception. An accused person who enjoys freedom
is in a much better position to look after his case
and to properly defend himself than if he were in
custody. As a presumably innocent person he is
therefore entitled to freedom and every opportunity
to look after his own case. A presumably innocent
person must have his freedom to enable him to
establish his innocence.
28. Coming nearer home, it was observed by
Krishna Iyer, J., in Gudikanti Narasimhulu v. Public
Prosecutor [(1978) 1 SCC 240 : 1978 SCC (Cri)
115] that: (SCC p. 242, para 1)
“… the issue of bail is one of liberty,
justice, public safety and burden of the
public treasury, all of which insist that a
developed jurisprudence of bail is
integral to a socially sensitized judicial
process. . . . After all, personal liberty of
an accused or convict is fundamental,
suffering lawful eclipse only in terms of
procedure established by law. The last
four words of Article 21 are the life of
that human right.”
29. In Gurcharan Singh v. State (Delhi
Administration) [(1978) 1 SCC 118 : 1978 SCC (Cri)
41] it was observed by Goswami, J., who spoke for
the court, that: (SCC p. 129, para 29)
32
“There cannot be an inexorable formula
in the matter of granting bail. The facts
and circumstances of each case will
govern the exercise of judicial discretion
in granting or cancelling bail.”
30. In AMERICAN JURISPRUDENCE (2d, Volume 8, p.
806, para 39), it is stated:
“Where the granting of bail lies within
the discretion of the court, the granting
or denial is regulated, to a large extent,
by the facts and circumstances of each
particular case. Since the object of the
detention or imprisonment of the
accused is to secure his appearance
and submission to the jurisdiction and
the judgment of the court, the primary
inquiry is whether a recognizance or
bond would effect that end.”
It is thus clear that the question whether to grant
bail or not depends for its answer upon a variety of
circumstances, the cumulative effect of which must
enter into the judicial verdict. Any one single
circumstance cannot be treated as of universal
validity or as necessarily justifying the grant or
refusal of bail.”
15. The stage is now set for an examination of the
constitutional validity of Section 45 of the 2002 Act.
16. At this stage, it is important to advert to the tests for the
violation of Article 14, both in its discriminatory aspect and its
“manifestly arbitrary” aspect. It is settled by a catena of cases
33
that Article 14 permits classification, provided such
classification bears a rational relation to the object sought to be
achieved. In an early judgment of this Court, State of Bombay
and Anr. v. F.N. Balsara (1951) SCR 682 at 708, Fazl Ali, J.
summarized the law as follows:
“(1) The presumption is always in favour of the
constitutionality of an enactment, since it must be
assumed that the legislature understands and
correctly appreciates the needs of its own people,
that its laws are directed to problems made manifest
by experience and its discriminations are based on
adequate grounds.
(2) The presumption may be rebutted in certain
cases by showing that on the face of the statute,
there is no classification at all and no difference
peculiar to any individual or class and not applicable
to any other individual or class, and yet the law hits
only a particular individual or class.
(3) The principle of equality does not mean that
every law must have universal application for all
persons who are not by nature, attainment or
circumstances in the same position, and the varying
needs of different classes of persons often require
separate treatment.
(4) The principle does not take away from the State
the power of classifying persons for legitimate
purposes.
(5) Every classification is in some degree likely to
produce some inequality, and mere production of
inequality is not enough.
(6) If a law deals equally with members of a welldefined
class, it is not obnoxious and it is not open
to the charge of denial of equal protection on the
ground that it has no application to other persons.
34
(7) While reasonable classification is permissible,
such classification must be based upon some real
and substantial distinction bearing a reasonable and
just relation to the object sought to be attained, and
the classification cannot be made arbitrarily and
without any substantial basis.”
Proposition 7 is important for the present purpose. Also, it is
well settled that Article 14 condemns discrimination not only by
substantive law, but also by procedural law. (See Budhan
Choudhry v. State of Bihar, (1955) 1 SCR 1045 at 1049).
17. After adverting to these judgments, Bhagwati J., in
Asgarali Nazarali Singaporawalla v. The State of Bombay,
1957 SCR 678 at 690-692 held:
“The first question which we have to address to
ourselves is whether there is in the impugned Act a
reasonable classification for the purposes of
legislation. If we look to the provisions of the
impugned Act closely it would appear that the
legislature classified the offences punishable under
Sections 161, 165 or 165-A of the Indian Penal
Code or sub-section (2) of Section 5 of the
Prevention of Corruption Act, 1947 in one group or
category. They were offences relating to bribery or
corruption by public servants and were thus
appropriately classified in one group or category.
The classification was founded on an intelligible
differentia which distinguished the offenders thus
grouped together from those left out of the group.
The persons who committed these offences of
bribery or corruption would form a class by
themselves quite distinct from those offenders who
35
could be dealt with by the normal provisions
contained in the Indian Penal Code or the Code of
Criminal Procedure, 1898 and if the offenders falling
within this group or category were thus singled out
for special treatment, there would be no question of
any discriminatory treatment being meted out to
them as compared with other offenders who did not
fall within the same group or category and who
continued to be treated under the normal procedure.
The next question to consider is whether this
differentia had a rational relation to the object
sought to be achieved by the impugned Act. The
preamble of the Act showed that it was enacted for
providing a more speedy trial of certain offences. An
argument was however addressed before us based
on certain observations of Mahajan, J. (as he then
was) at p. 314, and Mukherjea, J. (as he then was)
at p. 328 in Anwar Ali Sarkar’s case [(1952) SCR
284] ) quoted at p. 43 by Patanjali Sastri, C.J. in the
case of Kedar Nath Bajoria v. State of West
Bengal [(1954) SCR 30] that the speedier trial of
offences could not afford a reasonable basis for
such classification. Standing by themselves these
passages might lend support to the contention
urged before us by the learned counsel for the
appellant. It must be noted, however, that this ratio
was not held to be conclusive by this Court in Kedar
Nath Bajoria’s case [(1954) SCR 30] where this
Court held:
“(1) That when a law like the present
one is impugned on the ground that it
contravenes Article 14 of the
Constitution the real issue to be decided
is whether, having regard to the
underlying purpose and policy of the Act
as disclosed by its title, preamble and
provisions, the classification of the
offences for the trial of which the Special
Court is set up and a special procedure
36
is laid down can be said to be
unreasonable or arbitrary and therefore
violative of the equal protection clause;
(2) having regard to the fact that the
types of offences specified in the
Schedule to the Act were very common
and widely prevalent during the post war
period and had to be checked effectively
and speedily tried, the legislation in
question must be regarded as having
been based on a perfectly intelligent
principle of classification, having a clear
and reasonable relation to the object
sought to be achieved, and it did not in
any way contravene Article 14 of the
Constitution.”
In the instant case, bribery and corruption having
been rampant and the need for weeding them out
having been urgently felt, it was necessary to enact
measures for the purpose of eliminating all possible
delay in bringing the offenders to book. It was with
that end in view that provisions were enacted in the
impugned Act for speedier trial of the said offences
by the appointment of Special Judges who were
invested with exclusive jurisdiction to try the same
and were also empowered to take cognizance
thereof without the accused being committed to
them for trial, and follow the procedure prescribed
for the trial of warrant cases by Magistrates. The
proceedings before the Special Judges were thus
assimilated to those before the courts of sessions
for trying cases without a jury or without the aid of
assessors and the powers of appeal and revision
invested in the High Court were also similarly
circumscribed. All these provisions had the
necessary effect of bringing about a speedier trial of
these offences and it cannot be denied that this
intelligible differentia had rational relation to the
object sought to be achieved by the impugned Act.
37
Both these conditions were thus fulfilled and it could
not be urged that the provisions of the impugned
Act were in any manner violative of Article 14 of the
Constitution.”
18. In so far as “manifest arbitrariness” is concerned, it is
important to advert to the majority judgment of this Court in
Shayara Bano v. Union of India and others, (2017) 9 SCC 1.
The majority, in an exhaustive review of case law under Article
14, which dealt with legislation being struck down on the ground
that it is manifestly arbitrary, has observed:
“87. The thread of reasonableness runs through the
entire fundamental rights chapter. What is
manifestly arbitrary is obviously unreasonable and
being contrary to the rule of law, would violate
Article 14. Further, there is an apparent
contradiction in the three-Judge Bench decision
in McDowell [State of A.P. v. McDowell and Co.,
(1996) 3 SCC 709] when it is said that a
constitutional challenge can succeed on the ground
that a law is “disproportionate, excessive or
unreasonable”, yet such challenge would fail on the
very ground of the law being “unreasonable,
38
unnecessary or unwarranted”. The arbitrariness
doctrine when applied to legislation obviously would
not involve the latter challenge but would only
involve a law being disproportionate, excessive or
otherwise being manifestly unreasonable. All the
aforesaid grounds, therefore, do not seek to
differentiate between State action in its various
forms, all of which are interdicted if they fall foul of
the fundamental rights guaranteed to persons and
citizens in Part III of the Constitution.
xxx xxx xxx
101. It will be noticed that a Constitution Bench of
this Court in Indian Express Newspapers (Bombay)
(P) Ltd. v. Union of India [Indian Express
Newspapers (Bombay) (P) Ltd. v. Union of India,
(1985) 1 SCC 641 : 1985 SCC (Tax) 121] stated
that it was settled law that subordinate legislation
can be challenged on any of the grounds available
for challenge against plenary legislation. This being
the case, there is no rational distinction between the
two types of legislation when it comes to this ground
of challenge under Article 14. The test of manifest
arbitrariness, therefore, as laid down in the
aforesaid judgments would apply to invalidate
legislation as well as subordinate legislation under
Article 14. Manifest arbitrariness, therefore, must be
something done by the legislature capriciously,
irrationally and/or without adequate determining
principle. Also, when something is done which is
excessive and disproportionate, such legislation
would be manifestly arbitrary. We are, therefore, of
the view that arbitrariness in the sense of manifest
arbitrariness as pointed out by us above would
apply to negate legislation as well under Article 14.”
39
This view of the law by two learned Judges of this Court was
concurred with by Kurian, J. in paragraph 5 of his judgment.
19. Article 21 is the Ark of the Covenant so far as the
Fundamental Rights chapter of the Constitution is concerned. It
deals with nothing less sacrosanct than the rights of life and
personal liberty of the citizens of India and other persons. It is
the only article in the Fundamental Rights chapter (along with
Article 20) that cannot be suspended even in an emergency
(See Article 359(1) of the Constitution). At present, Article 21
is the repository of a vast number of substantive and procedural
rights post Maneka Gandhi v. Union of India (1978) 1 SCC
248. Thus, in Rajesh Kumar (supra) at 724-726, this Court
held:
“56. Article 21 as enacted in our Constitution reads
as under:
“21. Protection of life and personal liberty.—No
person shall be deprived of his life or personal
liberty except according to procedure established by
law.”
57. But this Court in Bachan Singh [(1980) 2 SCC
684 : 1980 SCC (Cri) 580] held that in view of the
expanded interpretation of Article 21 in Maneka
Gandhi [(1978) 1 SCC 248], it should read as
follows: (Bachan Singh case [(1980) 2 SCC 684 :
1980 SCC (Cri) 580] , SCC p. 730, para 136)
40
“136. … ‘No person shall be deprived of his life or
personal liberty except according to fair, just and
reasonable procedure established by valid law.’
In the converse positive form, the expanded article
will read as below:
‘A person may be deprived of his life or personal
liberty in accordance with fair, just and reasonable
procedure established by valid law.’”
58. This epoch-making decision in Maneka Gandhi
[(1978) 1 SCC 248] has substantially infused the
concept of due process in our constitutional
jurisprudence whenever the court has to deal with a
question affecting life and liberty of citizens or even
a person. Krishna Iyer, J. giving a concurring
opinion in Maneka Gandhi [(1978) 1 SCC 248]
elaborated, in his inimitable style, the transition from
the phase of the rule of law to due process of law.
The relevant statement of law given by the learned
Judge is quoted below: (SCC p. 337, para 81)
“81. … ‘Procedure established by law’, with its lethal
potentiality, will reduce life and liberty to a
precarious plaything if we do not ex
necessitate import into those weighty words an
adjectival rule of law, civilised in its soul, fair in its
heart and fixing those imperatives of procedural
protection absent which the processual tail will wag
the substantive head. Can the sacred essence of
the human right to secure which the struggle for
liberation, with ‘do or die’ patriotism, was launched
be sapped by formalistic and pharisaic
prescriptions, regardless of essential standards? An
enacted apparition is a constitutional, illusion.
Processual justice is writ patently on Article 21. It is
too grave to be circumvented by a black letter ritual
processed through the legislature.”
59. Immediately after the decision in Maneka
Gandhi [(1978) 1 SCC 248] another Constitution
Bench of this Court rendered decision in Sunil
41
Batra v. Delhi Admn. [(1978) 4 SCC 494 : 1979
SCC (Cri) 155] specifically acknowledged that even
though a clause like the Eighth Amendment of the
United States Constitution and concept of “due
process” of the American Constitution is not
enacted in our Constitution text, but after the
decision of this Court in Rustom Cavasjee
Cooper [(1970) 1 SCC 248] and Maneka
Gandhi [(1978) 1 SCC 248] the consequences are
the same. The Constitution Bench of this Court
in Sunil Batra [(1978) 4 SCC 494 : 1979 SCC (Cri)
155] speaking through Krishna Iyer, J. held: (Sunil
Batra case [(1978) 4 SCC 494 : 1979 SCC (Cri)
155] , SCC p. 518, para 52)
“52. True, our Constitution has no ‘due process’
clause or the Eighth Amendment; but, in this branch
of law, after Cooper [(1970) 1 SCC 248]
and Maneka Gandhi [(1978) 1 SCC 248], the
consequence is the same.”
60. The Eighth Amendment (1791) to the
Constitution of the United States virtually emanated
from the English Bill of Rights (1689). The text of
the Eighth Amendment reads, “Excessive bail shall
not be required, nor excessive fines imposed, nor
cruel and unusual punishments inflicted”. The
English Bill of Rights drafted a century ago
postulates, “That excessive bail ought not to be
required, nor excessive fines imposed, nor cruel
and unusual punishments inflicted”.
61. Our Constitution does not have a similar
provision but after the decision of this Court
in Maneka Gandhi case [(1978) 1 SCC 248]
jurisprudentially the position is virtually the same
and the fundamental respect for human dignity
underlying the Eighth Amendment has been read
into our jurisprudence.
62. Until the decision was rendered in Maneka
Gandhi [(1978) 1 SCC 248], Article 21 was viewed
42
by this Court as rarely embodying the Diceyian
concept of the rule of law that no one can be
deprived of his personal liberty by an executive
action unsupported by law. If there was a law which
provided some sort of a procedure it was enough to
deprive a person of his life or personal liberty. In this
connection, if we refer to the example given by S.R.
Das, J. in his judgment in A.K. Gopalan [AIR 1950
SC 27 : (1950) 51 Cri LJ 1383] that if the law
provided the Bishop of Rochester “be boiled in oil” it
would be valid under Article 21. But after the
decision in Maneka Gandhi [(1978) 1 SCC 248]
which marks a watershed in the development of
constitutional law in our country, this Court, for the
first time, took the view that Article 21 affords
protection not only against the executive action but
also against the legislation which deprives a person
of his life and personal liberty unless the law for
deprivation is reasonable, just and fair. And it was
held that the concept of reasonableness runs like a
golden thread through the entire fabric of the
Constitution and it is not enough for the law to
provide some semblance of a procedure. The
procedure for depriving a person of his life and
personal liberty must be eminently just, reasonable
and fair and if challenged before the court it is for
the court to determine whether such procedure is
reasonable, just and fair and if the court finds that it
is not so, the court will strike down the same.
63. Therefore, “law” as interpreted under Article 21
by this Court is more than mere “lex”. It implies a
due process, both procedurally and substantively.”
20. Given the parameters of judicial review of legislation laid
down in these judgments, we have to see whether Section 45
can pass constitutional muster.
43
21. It is important to first set out the genesis of Section 45 as
it appeared in the Prevention of Money Laundering Bill, 1999.
In its original avatar, the precursor to Section 45, which was
Section 44 of the said Bill, read as follows:-
“44. (1) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973,-
(a) every offence punishable under this Act shall be
cognizable;
(b) no person accused of an offence punishable for
a term of imprisonment of more than three years
under this Act shall be released on bail or on his
own bond unless-
(i) the Public Prosecutor has been given an
opportunity to oppose the application for such
release; and
(ii) where the Public Prosecutor opposes
the application, the court is satisfied that there are
reasonable grounds for believing that he is not guilty
of such offence and that he is not likely to commit
any offence while on bail;
Provided that a person who is under the age of
sixteen years, is a woman or is sick or infirm, may
be released on bail, if the Special Court so directs;
Provided further that the Special Court shall not
take cognizance of any offence punishable under
Section 4 except upon a complaint in writing made
by-
(i) the Director; or
(ii) any officer of the Central Government or State
Government authorized in writing in this behalf
by the Central Government by a general or a
44
special order made in this behalf by that
Government.
(2) The limitation on granting of bail specified in
clause (b) of sub-section (1) is in addition to the
limitations under the Code of Criminal Procedure,
1973 or any other law for the time being in force on
granting of bail.”
At this stage, it is clear that this Section referred only to
offences punishable under the Act itself, in which the twin
conditions for grant of bail were imposed, in addition to
limitations for such grant under the Code of Criminal Procedure.
Somehow, this provision did not translate itself into dealing with
offences under the 2002 Act, but became Section 45 of the
2002 Act, which was brought into force in 2005. This provision
originally read as follows:
“45. Offences to be cognizable and nonbailable.-
(1) Notwithstanding anything contained in the Code
of Criminal Procedure, 1973 (2 of 1974),-
(a) every offence punishable under this Act shall be
cognizable;
(b) no person accused of an offence punishable for
a term of imprisonment of more than three years
under Part A of the Schedule shall be released on
bail or on his own bond unless-
(i) the Public Prosecutor has been given an
opportunity to oppose the application for such
release; and
45
(ii) where the Public Prosecutor opposes the
application, the court is satisfied that there are
reasonable grounds for believing that he is not guilty
of such offence and that he is not likely to commit
any offence while on bail:
Provided that a person, who, is under the age of
sixteen years, or is a woman or is sick or infirm,
may be released on bail, if the Special Court so
directs:
Provided further that the Special Court shall not
take cognizance of any offence punishable under
section 4 except upon a complaint in writing made
by- (i) the Director; or (ii) any officer of the Central
Government or a State Government authorised in
writing in this behalf by the Central Government by
a general or special order made in this behalf by
that Government.
(2) The limitation on granting of bail specified in
clause (b) of sub-section (1) is in addition to the
limitations under the Code of Criminal Procedure,
1973 (2 of 1974) or any other law for the time being
in force on granting of bail.”
The change made by Section 45 is that, for the purpose of
grant of bail, what was now to be looked at was offences that
were punishable for a term of imprisonment of three years or
more under Part A of the Schedule, and not offences under the
2002 Act itself. At this stage, Part A of the Schedule contained
two paragraphs – Para 1 containing Sections 121 and 121A of
the Indian Penal Code, which deal with waging or attempting to
46
wage war or abetting waging of war against the Government of
India, and conspiracy to commit such offences. Paragraph 2
dealt with offences under the Narcotic Drugs and Psychotropic
Substances Act, 1985. Part B of the Schedule, as originally
enacted, referred to certain offences of a heinous nature under
the Indian Penal Code, which included murder, extortion,
kidnapping, forgery and counterfeiting. Paragraphs 2 to 5 of
Part B dealt with certain offences under the Arms Act 1959,
Wildlife (Protection) Act 1972, Immoral Traffic (Prevention) Act,
1956 and the Prevention of Corruption Act, 1988. When the
Act was originally enacted, it was, thus, clear that the twin
conditions applicable under Section 45(1) would only be in
cases involving waging of war against the Government of India
and offences under the Narcotic Drugs and Psychotropic
Substances Act. Even the most heinous offences under the
Indian Penal Code were contained only in Part B, so that if bail
were asked for such offences, the twin conditions imposed by
Section 45(1) would not apply. Incidentally, one of the reasons
for classifying offences in Part A and Part B of the Schedule
was that offences specified under Part B would get attracted
47
only if the total value involved in such offences was Rs.30 lakhs
or more (under Section 2(y) of the Act as it read then).
Thereafter, the Act has been amended several times. The
amendment made in 2005 in Section 45(1) was innocuous and
is not an amendment with which we are directly concerned.
The 2009 Amendment further populated Parts A and B of the
Schedule. In Part A, offences under Sections 489 A and B of
the Indian Penal Code, relating to counterfeiting were added
and offences under the Explosive Substances Act, 1908 and
Unlawful Activities (Prevention) Act, 1967, which dealt with
terrorist activities, were added. In Part B, several other
offences were added from the Indian Penal Code, as were
offences under the Explosives Act 1884, Antiquities and Arts
Treasures Act 1972, Securities and Exchange Board of India
Act 1992, Customs Act 1962, Bonded Labour System
(Abolition) Act 1976, Child Labour (Prohibition and Regulation)
Act 1986, Transplantation of Human Organs Act 1994, Juvenile
Justice (Care and Protection of Children) Act 2000, Emigration
Act 1983, Passports Act 1967, Foreigners Act 1946, Copyright
Act 1957, Trademarks Act 1999, Information Technology Act
48
2000, Biological Diversity Act 2002, Protection of Plant and
Farmers Rights Act 2001, Environmental Protection Act 1986,
Water (Prevention and Control of Pollution Act) 1974, Air
(Prevention and Control of Pollution Act) 1981 and Suppression
of Unlawful Acts Against Safety of Maritime Navigation and
Fixed Platforms of Continental Shelf Act, 2002.
22. By the Amendment Act of 2012, which is Act 2 of 2013, a
very important amendment was made to the Schedule by which
the entire Part B offences were transplanted into Part A. The
object for this amendment, as stated in the Statement of
Objects and Reasons for the amendment in clause 3 (j),
specifically provided:
“(j) putting all the offences listed in Part A and Part
B of the Schedule to the aforesaid Act into Part A of
that Schedule instead of keeping them in two Parts
so that the provision of monetary threshold does not
apply to the offences.”
23. By the Finance Act of 2015, by Section 145, the limit of
Rs.30 lakhs in Section 2(y) was raised to Rs.1 crore and in the
Schedule after Part A, Part B was populated with only one
entry, namely Section 132 of the Customs Act. Certain other
49
amendments were made, by the Finance Act of 2016, to the
2002 Act with which we are not directly concerned.
24. The statutory history of Section 45, read with the
Schedule, would, thus show that in its original avatar, as Clause
44 of the 1999 Bill, the Section dealt only with offences under
the Act itself. Section 44 of the 2002 Act makes it clear that an
offence punishable under Section 4 of the said Act must be
tried with the connected scheduled offence from which money
laundering has taken place. The statutory scheme, as originally
enacted, with Section 45 in its present avatar, would, therefore,
lead to the same offenders in different cases having different
results qua bail depending on whether Section 45 does or does
not apply. The first would be cases where the charge would
only be of money laundering and nothing else, as would be the
case where the scheduled offence in Part A has already been
tried, and persons charged under the scheduled offence have
or have not been enlarged on bail under the Code of Criminal
Procedure and thereafter convicted or acquitted. The proceeds
of crime from such scheduled offence may well be discovered
much later in the hands of Mr. X, who now becomes charged
50
with the crime of money laundering under the 2002 Act. The
predicate or scheduled offence has already been tried and the
accused persons convicted/acquitted in this illustration, and Mr.
X now applies for bail to the Special Court/High Court. The
Special Court/High Court, in this illustration, would grant him
bail under Section 439 of the Code of Criminal Procedure – the
Special Court is deemed to be a Sessions Court – and can,
thus, enlarge Mr. X on bail, with or without conditions, under
Section 439. It is important to note that Mr. X would not have to
satisfy the twin conditions mentioned in Section 45 of the 2002
Act in order to be enlarged on bail, pending trial for an offence
under the 2002 Act.
25. The second illustration would be of Mr. X being charged
with an offence under the 2002 Act together with a predicate
offence contained in Part B of the Schedule. Both these
offences would be tried together. In this case, again, the
Special Court/High Court can enlarge Mr. X on bail, with or
without conditions, under Section 439 of the Code of Criminal
Procedure, as Section 45 of the 2002 Act would not apply. In a
third illustration, Mr. X can be charged under the 2002 Act
51
together with a predicate offence contained in Part A of the
Schedule in which the term for imprisonment would be 3 years
or less than 3 years (this would apply only post the Amendment
Act of 2012 when predicate offences of 3 years and less than 3
years contained in Part B were all lifted into Part A). In this
illustration, again, Mr. X would be liable to be enlarged on bail
under Section 439 of the Code of Criminal Procedure by the
Special Court/High Court, with or without conditions, as Section
45 of the 2002 Act would have no application.
26. The fourth illustration would be an illustration in which Mr.
X is prosecuted for an offence under the 2002 Act and an
offence punishable for a term of imprisonment of more than
three years under Part A of the Schedule. In this illustration, the
Special Court/High Court would enlarge Mr. X on bail only if the
conditions specified in Section 45(1) are satisfied and not
otherwise. In the fourth illustration, Section 45 would apply in a
joint trial of offences under the Act and under Part A of the
Schedule because the only thing that is to be seen for the
purpose of granting bail, under this Section, is the alleged
occurrence of a Part A scheduled offence, which has
52
imprisonment for over three years. The likelihood of Mr. X being
enlarged on bail in the first three illustrations is far greater than
in the fourth illustration, dependant only upon the circumstance
that Mr. X is being prosecuted for a Schedule A offence which
has imprisonment for over 3 years, a circumstance which has
no nexus with the grant of bail for the offence of money
laundering. The mere circumstance that the offence of money
laundering is being tried with the Schedule A offence without
more cannot naturally lead to the grant or denial of bail (by
applying Section 45(1)) for the offence of money laundering and
the predicate offence.
27. Again, it is quite possible that the person prosecuted for
the scheduled offence is different from the person prosecuted
for the offence under the 2002 Act. Mr. X may be a person who
is liable to be prosecuted for an offence, which is contained in
Part A of the Schedule. In perpetrating this offence under Part
A of the Schedule, Mr. X may have been paid a certain amount
of money. This money is ultimately traced to Mr. Y, who is
charged with the same offence under Part A of the Schedule
and is also charged with possession of the proceeds of crime,
53
which he now projects as being untainted. Mr. X applies for bail
to the Special Court/High Court. Despite the fact that Mr. X is
not involved in the money laundering offence, but only in the
scheduled offence, by virtue of the fact that the two sets of
offences are being tried together, Mr. X would be denied bail
because the money laundering offence is being tried along with
the scheduled offence, for which Mr. Y alone is being
prosecuted. This illustration would show that a person who
may have nothing to do with the offence of money laundering
may yet be denied bail, because of the twin conditions that
have to be satisfied under Section 45(1) of the 2002 Act. Also,
Mr. A may well be prosecuted for an offence which falls within
Part A of the Schedule, but which does not involve money
laundering. Such offences would be liable to be tried under the
Code of Criminal Procedure, and despite the fact that it may be
the very same Part A scheduled offence given in the illustration
above, the fact that no prosecution for money laundering along
with the said offence is launched, would enable Mr. A to get bail
without the rigorous conditions contained in Section 45 of the
2002 Act. All these examples show that manifestly arbitrary,
54
discriminatory and unjust results would arise on the application
or non application of Section 45, and would directly violate
Articles 14 and 21, inasmuch as the procedure for bail would
become harsh, burdensome, wrongful and discriminatory
depending upon whether a person is being tried for an offence
which also happens to be an offence under Part A of the
Schedule, or an offence under Part A of the Schedule together
with an offence under the 2002 Act. Obviously, the grant of bail
would depend upon a circumstance which has nothing to do
with the offence of money laundering. On this ground alone,
Section 45 would have to be struck down as being manifestly
arbitrary and providing a procedure which is not fair or just and
would, thus, violate both Articles 14 and 21 of the Constitution.
28. Another interesting feature of Section 45 is that the twin
conditions that need to be satisfied under the said Section are
that there are reasonable grounds for believing that the
accused is not guilty of “such offence” and that he is not likely
to commit any offence while on bail. The expression “such
offence” would be relatable only to an offence in Part A of the
Schedule. Thus, in an application made for bail, where the
55
offence of money laundering is involved, if Section 45 is to be
applied, the Court must be satisfied that there are reasonable
grounds for believing that he is not guilty of the offence under
Part A of the Schedule, which is not the offence of money
laundering, but which is a completely different offence. In
every other Act, where these twin conditions are laid down, be it
the Terrorist and Disruptive Activities (Prevention) Act, 1987 or
the Narcotic Drugs and Psychotropic Substances Act, 1985, the
reasonable grounds for believing that the accused is not guilty
of an offence is in relation to an offence under the very Act in
which such section occurs. (See for example, Section 20(8) of
TADA and Section 37 of the NDPS Act). It is only in the 2002
Act that the twin conditions laid down do not relate to an
offence under the 2002 Act at all, but only to a separate and
distinct offence found under Part A of the Schedule. Obviously,
the twin conditions laid down in Section 45 would have no
nexus whatsoever with a bail application which concerns itself
with the offence of money laundering, for if Section 45 is to
apply, the Court does not apply its mind to whether the person
prosecuted is guilty of the offence of money laundering, but
56
instead applies its mind to whether such person is guilty of the
scheduled or predicate offence. Bail would be denied on
grounds germane to the scheduled or predicate offence,
whereas the person prosecuted would ultimately be punished
for a completely different offence – namely, money laundering.
This, again, is laying down of a condition which has no nexus
with the offence of money laundering at all, and a person who
may prove that there are reasonable grounds for believing that
he is not guilty of the offence of money laundering may yet be
denied bail, because he is unable to prove that there are
reasonable grounds for believing that he is not guilty of the
scheduled or predicate offence. This would again lead to a
manifestly arbitrary, discriminatory and unjust result which
would invalidate the Section.
29. It is important to notice that Section 45 classifies the
predicate offence under Part A of the Schedule on the basis of
sentencing. The learned Attorney General referred to a number
of judgments in which classification on this basis has been
upheld. It is unnecessary to refer to these judgments inasmuch
as the classification of three years or more of offences
57
contained in Part A of the Schedule must have a reasonable
relation to the object sought to be achieved under the 2002 Act.
As has already been pointed out, the 2002 Act was enacted so
that property involved in money laundering may be attached
and brought back into the economy, as also that persons guilty
of the offence of money laundering must be brought to book. It
is interesting to note that even in the recent 2015 amendment,
the Legislature has used the value involved in the offence
contained in Part B of the Schedule as a basis for classification.
If, for example, the basis for classification of offences referred
to and related to offences under the 2002 Act with a monetary
limit beyond which such offences would be made out, such
classification would obviously have a rational relation to the
object sought to be achieved by the Act i.e. to attach properties
and the money involved in money laundering and to bring
persons involved in the offence of money laundering to book.
On the other hand, it is clear that the term of imprisonment of
more than 3 years for a scheduled or predicate offence would
be a manifestly arbitrary and unjust classification, having no
rational relation to the object sought to be achieved by an Act
58
dealing with money laundering. Again a few illustrations would
suffice to prove the point.
30. An extremely heinous offence, such as murder,
punishable with death or life imprisonment, which is now
contained in Part A of the Schedule may yield only Rs.5,000/-
as proceeds of crime. On the other hand, an offence relating to
a false declaration under Section 132 of the Customs Act,
punishable with a sentence of upto 2 years, which is an offence
under Part B of the Schedule, may lead to proceeds of crime in
crores of rupees. In short, a classification based on sentence
of imprisonment of more than three years of an offence
contained in Part A of the Schedule, which is a predicate
offence, would have no rational relation to the object of
attaching and bringing back into the economy large amounts by
way of proceeds of crime. When it comes to Section 45, it is
clear that a classification based on sentencing qua a scheduled
offence would have no rational relation with the grant of bail for
the offence of money laundering, as has been shown in the
preceding paragraphs of this judgment. Even in the judgments
citied by the learned Attorney General, it is clear that a
59
classification is justified only if it is not manifestly arbitrary. For
example, in Special Courts Bill, 1978, In re, (1979) 1 SCC
380, a judgment cited by the learned Attorney General,
proposition 9 contained at page 425 states:
“If the legislative policy is clear and definite and as
an effective method of carrying out that policy a
discretion is vested by the statute upon a body of
administrators or officers to make selective
application of the law to certain classes or groups of
persons, the statute itself cannot be condemned as
a piece of discriminatory legislation. In such cases,
the power given to the executive body would import
a duty on it to classify the subject-matter of
legislation in accordance with the objective
indicated in the statute. If the administrative body
proceeds to classify persons or things on a basis
which has no rational relation to the objective of the
Legislature, its action can be annulled as offending
against the equal protection clause. On the other
hand, if the statute itself does not disclose a definite
policy or objective and it confers authority on
another to make selection at its pleasure, the
statute would be held on the face of it to be
discriminatory, irrespective of the way in which it is
applied.”
It is clear from a reading of this judgment that offences based
on sentencing of the scheduled offence would have no rational
relation to the object of the 2002 Act and to the granting of bail
for offences committed under the Act, and, therefore, have to
be annulled on the basis of the equal protection clause.
60
31. When we go to Part A of the Schedule as it now exists, it
is clear that there are many sections under the Indian Penal
Code punishable with life imprisonment which are not included
in Part A of the Schedule, and which may yet lead to proceeds
of crime. For example, Sections 232 and 238 of the Indian
Penal Code, which deal with counterfeiting of Indian coin and
import or export of counterfeited Indian coin, are punishable
with life imprisonment. These sections are not included in Part
A of the Schedule, and a person who may counterfeit Indian
coin is liable to be tried under the Code of Criminal Procedure
with conditions as to bail under Section 439 being imposed by
the High Court or the Sessions Court. As against this, a
person who counterfeits Government stamps under Section
255 is roped into Part A of the Schedule, which is also
punishable with life imprisonment. If such person is to apply for
bail, the twin conditions contained in Section 45 would apply to
him. Similar is the case with offences where a punishment of
maximum of 10 years is given. Section 240 dealing with
delivery of Indian coin possessed with knowledge that it is
counterfeit; Section 251 dealing with delivery of Indian coin
61
possessed with knowledge that it is altered; Sections 372 and
373 which deal with the selling and buying of minors for the
purpose of prostitution, are all offences which are outside Part
A of the Schedule and are punishable with the maximum of 10
years sentence. Each of these offences may involve money
laundering, but not being in Part A of the Schedule, a person
prosecuted for these offences would be able to obtain bail
under Section 439 of the Code of Criminal Procedure, without
any further conditions attached. On the other hand, if a person
is charged with extortion under Sections 386 or 388, (such
sections being included in Part A of the Schedule) and Section
4 of the 2002 Act, the person prosecuted under these sections
would only be able to obtain bail after meeting the stringent
conditions specified in Section 45. This is yet another
circumstance which makes the application of Section 45 to the
offence of money laundering and the predicate offence
manifestly arbitrary.
32. When we come to paragraph 2 of Part A of the Schedule,
this becomes even more apparent. Sections 19, 24, 27A and
29 of the Narcotic Drugs and Psychotropic Substances Act,
62
1985 are all sections which deal with narcotic drugs and
psychotropic substances where a person is found with, what is
defined as, “commercial quantity” of such substances. In each
of these cases, under Section 37 of the NDPS Act, a person
prosecuted for these offences has to meet the same twin
conditions which are contained in Section 45 of the 2002 Act.
Inasmuch as these Sections attract the twin conditions under
the NDPS Act in any case, it was wholly unnecessary to include
them again in paragraph 2 of Part A of the Schedule, for when
a person is prosecuted for an offence under Sections 19, 24,
27A or 29 of the NDPS Act, together with an offence under
Section 4 of the 2002 Act, Section 37 of the NDPS Act would, in
any case, be attracted when such person is seeking bail for
offences committed under the 2002 Act and the NDPS Act.
33. Also, the classification contained within the NDPS Act is
completely done away with. Unequals are dealt with as if they
are now equals. The offences under the NDPS Act are
classified on the basis of the quantity of narcotic drugs and
psychotropic substances that the accused is found with, which
are categorized as: (1) a small quantity, as defined; (2) a
63
quantity which is above small quantity, but below commercial
quantity, as defined; and (3) above commercial quantity, as
defined. The sentences of these offences vary from 1 year for
a person found with small quantity, to 10 years for a person
found with something between small and commercial quantity,
and a minimum of 10 years upto 20 years when a person is
found with commercial quantity. The twin conditions specified
in Section 37 of the NDPS Act get attracted when bail is asked
for only insofar as persons who have commercial quantities
with them are concerned. A person found with a small quantity
or with a quantity above small quantity, but below commercial
quantity, punishable with a one year sentence or a 10 year
sentence respectively, can apply for bail under Section 439 of
the Code of Criminal Procedure without satisfying the same
twin conditions as are contained in Section 45 of the 2002 Act,
under Section 37 of the NDPS Act. By assimilating all these
three contraventions and bracketing them together, the 2002
Act treats as equal offences which are treated as unequal by
the NDPS Act itself, when it comes to imposition of the further
twin conditions for grant of bail. This is yet another manifestly
64
arbitrary and discriminatory feature of the application of Section
45.
34. A reference to paragraph 23 of Part A of the Schedule
would also show how Section 45 can be used for an offence
under the Biological Diversity Act, 2002. If a person covered
under the Act obtains, without the previous approval of the
National Biodiversity Authority, any biological resources
occurring in India for research or for commercial utilization, he
is liable to be punished for imprisonment for a term which may
extend to 5 years under Section 55 of the Act. A breach of this
provision, when combined with an offence under Section 4 of
the 2002 Act, would lead to bail being obtained only if the twin
conditions in Section 45 of the 2002 Act are satisfied. By no
stretch of imagination can this kind of an offence be considered
as so serious as to lead to the twin conditions in Section 45
having to be satisfied before grant of bail, even assuming that
classification on the basis of sentence has a rational relation to
the grant of bail after complying with Section 45 of the 2002
Act.
65
35. Another conundrum that arises is that, unlike the Terrorist
and Disruptive Activities (Prevention) Act, 1987, there is no
provision in the 2002 Act which excludes grant of anticipatory
bail. Anticipatory bail can be granted in circumstances set out
in Siddharam Satlingappa Mhetre v. State of Maharashtra,
(2011) 1 SCC 694 (See paragraphs 109, 112 and 117). Thus,
anticipatory bail may be granted to a person who is prosecuted
for the offence of money laundering together with an offence
under Part A of the Schedule, which may last throughout the
trial. Obviously for grant of such bail, Section 45 does not need
to be satisfied, as only a person arrested under Section 19 of
the Act can only be released on bail after satisfying the
conditions of Section 45. But insofar as pre-arrest bail is
concerned, Section 45 does not apply on its own terms. This,
again, would lead to an extremely anomalous situation. If prearrest
bail is granted to Mr. X, which enures throughout the trial,
for an offence under Part A of the Schedule and Section 4 of
the 2002 Act, such person will be out on bail without his having
satisfied the twin conditions of Section 45. However, if in an
identical situation, Mr. Y is prosecuted for the same offences,
66
but happens to be arrested, and then applies for bail, the twin
conditions of Section 45 will have first to be met. This again
leads to an extremely anomalous situation showing that Section
45 leads to manifestly arbitrary and unjust results and would,
therefore, violate Articles 14 and 21 of the Constitution.
36. However, the learned Attorney General has argued
before us that we must uphold Section 45 as it is part of a
complete code under the 2002 Act. According to him, Section
45, when read with Sections 3 and 4, would necessarily lead to
the conclusion that the source of the proceeds of crime, being
the scheduled offence, and the money laundering offence,
would have to be tried together, and the nexus that is provided
is because the source of money laundering being as important
as money laundering itself, conditions under Section 45 would
have to be applied. We are afraid that, for all the reasons
given by us earlier in this judgment, we are unable to agree.
The learned Attorney General asked us to read down Section
45 in that when the Court is satisfied that there are reasonable
grounds for believing that a person is not guilty of an offence, it
only meant that the Court must prima facie come to such a
67
conclusion. Secondly, the fact that he is not likely to commit
“any offence” while on bail would only be restricted to any
offence of a like nature. Again, we are afraid that merely
reading down the two conditions would not get rid of the vice of
manifest arbitrariness and discrimination, as has been pointed
out by us hereinabove. Also, we cannot agree with the learned
Attorney General that Section 45 imposes two conditions which
are akin to conditions that are specified for grant of ordinary
bail. For this purpose, he referred us to Amarmani Tripathi
(supra) at para 18, in which it was stated that, for grant of bail,
the Court has to see whether there is prima facie or reasonable
ground to believe that the accused has committed the offence,
and the likelihood of that offence being repeated has also be
seen. It is obvious that the twin conditions set down in Section
45 are a much higher threshold bar than any of the conditions
laid down in paragraph 18 of the aforesaid judgment. In fact,
the presumption of innocence, which is attached to any person
being prosecuted of an offence, is inverted by the conditions
specified in Section 45, whereas for grant of ordinary bail the
presumption of innocence attaches, after which the various
68
factors set out in paragraph 18 of the judgment are to be looked
at. Under Section 45, the Court must be satisfied that there are
reasonable grounds to believe that the person is not guilty of
such offence and that he is not likely to commit any offence
while on bail.
37. In United States v. Anthony Salerno & Vincent Cafaro
481 US 739 (1987), a provision of the Bail Reform Act of 1984,
which allowed a Federal Court to permit pre-trial detention on
the ground that the person arrested is likely to commit future
crimes, had been declared unconstitutional as offending
substantive due process by the United States Court of Appeals
for the Second Circuit. A majority of the US Supreme Court
reversed this judgment with reference to both substantive due
process and to the 8th amendment to the US Constitution. The
majority judgment concluded:
“In our society liberty is the norm, and detention
prior to trial or without trial is the carefully limited
exception. We hold that the provisions for pretrial
detention in the Bail Reform Act of 1984 fall within
that carefully limited exception. The Act authorizes
the detention prior to trial of arrestees charged with
serious felonies who are found after an adversary
hearing to pose a threat to the safety of individuals
or to the community which no condition of release
69
can dispel. The numerous procedural safeguards
detailed above must attend this adversary hearing.
We are unwilling to say that this congressional
determination, based as it is upon that primary
concern of every government—a concern for the
safety and indeed the lives of its citizens—on its
face violates either the Due Process Clause of the
Fifth Amendment or the Excessive Bail Clause of
the Eighth Amendment.”
In a sharply worded minority judgment of Justice Marshall, with
whom Justice Brennan agreed, the minority held that the Bail
Reform Act, which permitted pre-trial detention on the ground
that the person arrested is likely to commit future crimes would
violate substantive due process and the 8th amendment to the
US Constitution. This it did with reference to an earlier
judgment, namely, Stack v. Boyle, 342 US 1, where Chief
Justice Vinson stated that unless pre-trial bail is preserved, the
presumption of innocence secured only after centuries of
struggle would lose its meaning. The dissenting judgment
concluded:
“It is a fair summary of history to say that the
safeguards of liberty have frequently been forged in
controversies involving not very nice people.”
United States v. Rabinowitz, 339 U.S. 56, 69, 70
S.Ct. 430, 436, 94 L.Ed. 653 (1950) (Frankfurter, J.,
dissenting). Honoring the presumption of innocence
is often difficult; sometimes we must pay substantial
social costs as a result of our commitment to the
70
values we espouse. But at the end of the day the
presumption of innocence protects the innocent; the
shortcuts we take with those whom we believe to be
guilty injure only those wrongfully accused and,
ultimately, ourselves.”
Justice Stevens also dissented, agreeing with Justice
Marshall’s analysis.
38. We must not forget that Section 45 is a drastic provision
which turns on its head the presumption of innocence which is
fundamental to a person accused of any offence. Before
application of a section which makes drastic inroads into the
fundamental right of personal liberty guaranteed by Article 21 of
the Constitution of India, we must be doubly sure that such
provision furthers a compelling State interest for tackling
serious crime. Absent any such compelling State interest, the
indiscriminate application of the provisions of Section 45 will
certainly violate Article 21 of the Constitution. Provisions akin to
Section 45 have only been upheld on the ground that there is a
compelling State interest in tackling crimes of an extremely
heinous nature.
71
39. The judgment in Kartar Singh v. State of Punjab, (1994)
3 SCC 569 at 707 is an instance of a similar provision that was
upheld only because it was necessary for the State to deal with
terrorist activities which are a greater menace to modern
society than any other. It needs only to be mentioned that,
unlike Section 45 of the present Act, Section 20(8) of TADA,
which speaks of the same twin conditions to be applied to
offences under TADA, would pass constitutional muster for the
reasons stated in the aforesaid judgment. Ultimately, in
paragraph 349 of the judgment, this Court upheld Section 20(8)
of TADA in the following terms:
“349. The conditions imposed under Section
20(8)(b), as rightly pointed out by the Additional
Solicitor General, are in consonance with the
conditions prescribed under clauses (i) and (ii) of
sub-section (1) of Section 437 and clause (b) of
sub-section (3) of that section. Similar to the
conditions in clause (b) of sub-section (8), there are
provisions in various other enactments — such as
Section 35(1) of Foreign Exchange Regulation Act
and Section 104(1) of the Customs Act to the effect
that any authorised or empowered officer under the
respective Acts, if, has got reason to believe that
any person in India or within the Indian customs
waters has been guilty of an offence punishable
under the respective Acts, may arrest such person.
Therefore, the condition that “there are grounds for
believing that he is not guilty of an offence”, which
72
condition in different form is incorporated in other
Acts such as clause (i) of Section 437(1) of the
Code and Section 35(1) of FERA and 104(1) of the
Customs Act, cannot be said to be an unreasonable
condition infringing the principle of Article 21 of the
Constitution.”
It is clear that this Court upheld such a condition only because
the offence under TADA was a most heinous offence in which
the vice of terrorism is sought to be tackled. Given the heinous
nature of the offence which is punishable by death or life
imprisonment, and given the fact that the Special Court in that
case was a Magistrate and not a Sessions Court, unlike the
present case, Section 20(8) of TADA was upheld as being in
consonance with conditions prescribed under Section 437 of
the Code of Criminal Procedure. In the present case, it is
Section 439 and not Section 437 of the Code of Criminal
Procedure that applies. Also, the offence that is spoken of in
Section 20(8) is an offence under TADA itself and not an
offence under some other Act. For all these reasons, the
judgment in Kartar Singh (supra) cannot apply to Section 45 of
the present Act.
73
40. A similar provision in the Maharashtra Control of
Organised Crime Act, 1999, also dealing with the great menace
of organized crime to society, was upheld somewhat grudgingly
by this Court in Ranjitsing Brahmajeetsing Sharma v. State
of Maharashtra and Anr, (2005) 5 SCC 294 at 317, 318-319
as follows:
“38. We are furthermore of the opinion that the
restrictions on the power of the court to grant bail
should not be pushed too far. If the court, having
regard to the materials brought on record, is
satisfied that in all probability he may not be
ultimately convicted, an order granting bail may be
passed. The satisfaction of the court as regards his
likelihood of not committing an offence while on bail
must be construed to mean an offence under the
Act and not any offence whatsoever be it a minor or
major offence. If such an expansive meaning is
given, even likelihood of commission of an offence
under Section 279 of the Indian Penal Code may
debar the court from releasing the accused on bail.
A statute, it is trite, should not be interpreted in such
a manner as would lead to absurdity. What would
further be necessary on the part of the court is to
see the culpability of the accused and his
involvement in the commission of an organised
crime either directly or indirectly. The court at the
time of considering the application for grant of bail
shall consider the question from the angle as to
whether he was possessed of the requisite mens
rea. Every little omission or commission, negligence
or dereliction may not lead to a possibility of his
having culpability in the matter which is not the sine
qua non for attracting the provisions of MCOCA. A
person in a given situation may not do that which he
74
ought to have done. The court may in a situation of
this nature keep in mind the broad principles of law
that some acts of omission and commission on the
part of a public servant may attract disciplinary
proceedings but may not attract a penal provision.”
The Court then went on to say:
“44. The wording of Section 21(4), in our opinion,
does not lead to the conclusion that the court must
arrive at a positive finding that the applicant for bail
has not committed an offence under the Act. If such
a construction is placed, the court intending to grant
bail must arrive at a finding that the applicant has
not committed such an offence. In such an event, it
will be impossible for the prosecution to obtain a
judgment of conviction of the applicant. Such cannot
be the intention of the legislature. Section 21(4) of
MCOCA, therefore, must be construed reasonably.
It must be so construed that the court is able to
maintain a delicate balance between a judgment of
acquittal and conviction and an order granting bail
much before commencement of trial. Similarly, the
court will be required to record a finding as to the
possibility of his committing a crime after grant of
bail. However, such an offence in futuro must be an
offence under the Act and not any other offence.
Since it is difficult to predict the future conduct of an
accused, the court must necessarily consider this
aspect of the matter having regard to the
antecedents of the accused, his propensities and
the nature and manner in which he is alleged to
have committed the offence.”
41. The learned Attorney General relied heavily on Section 24
of the 2002 Act to show that the burden of proof in any
proceeding relating to proceeds of crime is upon the person
75
charged with the offence of money laundering, and in the case
of any other person i.e. a person not charged with such offence,
the Court may presume that such proceeds are involved in
money laundering. Section 45 of the Act only speaks of the
scheduled offence in Part A of the Schedule, whereas Section
24 speaks of the offence of money laundering, and raises a
presumption against the person prosecuted for the crime of
money laundering. This presumption has no application to the
scheduled offence mentioned in Section 45, and cannot,
therefore, advance the case of the Union of India.
42. The learned Attorney General then relied strongly on
Gautam Kundu (supra) and Rohit Tandon (supra). Gautam
Kundu (supra) is a judgment relating to an offence under the
SEBI Act, which is a scheduled offence, which was followed in
Rohit Tandon (supra). In Rohit Tandon (supra),
Khanwilkar, J., speaking for the Bench, makes it clear that the
judgment does not deal with the constitutional validity of
Section 45 of the 2002 Act. Both these judgments proceed on
the footing that Section 45 is constitutionally valid and then go
on to apply Section 45 on the facts of those cases. These
76
judgments, therefore, are not of much assistance when it
comes to the constitutional validity of Section 45 being
challenged.
43. Shri Rohatgi’s alternate argument, namely, that if Section
45 were not to be struck down, the 2012 Amendment Act
should be read down in the manner indicated in Gorav
Kathuria v. Union of India and Ors., 2017 (348) ELT 24 (P &
H) and having been expressly approved by this Court, must
apply to the facts of these cases.
44. In Gorav Kathuria (supra), the 2012 Amendment Act was
read down having regard to the object sought to be achieved by
the amendment, namely, that Part B of the Schedule is being
made Part A of the Schedule, so that the provision of a
monetary threshold limit does not apply to the offences
contained therein. The High Court concluded:
“12.20 Guided by the aforesaid principles laid down
by the Hon’ble Supreme Court regarding statutory
interpretation and the duty of the Court to secure
the ends of justice, we have no hesitation in holding
that in 2013, Part B of the Schedule was omitted
and the Scheduled Offences falling thereunder were
incorporated in Part A with the sole object to
overcome the monetary threshold limit of Rs. 30
lakhs for invocation of PMLA in respect of the
77
laundering of proceeds of crime involved in those
offences. No substantive amendment was proposed
with express intention to apply limitations on grant
of bail as contained in Section 45(1) in respect of
persons accused of such offences which were
earlier listed in Part B. Therefore, twin limitations in
grant of bail contained in Section 45(1) as it stands
today, are not applicable qua a person accused of
such offences which were earlier listed in Part B.”
The matter came to this Court by a certificate of fitness granted
by the High Court. Sikri, J and Ramana, J., by their order dated
12th August, 2016, stated:
“Though the High Court has granted certificate to
appeal, we have heard the learned counsel for
some time and are of the opinion that the impugned
judgment of the High Court is correct.
This appeal is, accordingly, dismissed.”
The complaint of the learned Attorney General is that this was
done at the very threshold without hearing the Union of India.
Be that as it may, we are of the opinion that, even though the
Punjab High Court judgment appears to be correct, it is
unnecessary for us to go into this aspect any further, in view of
the fact that we have struck down Section 45 of the 2002 Act as
a whole.
78
45. Regard being had to the above, we declare Section 45(1)
of the Prevention of Money Laundering Act, 2002, insofar as it
imposes two further conditions for release on bail, to be
unconstitutional as it violates Articles 14 and 21 of the
Constitution of India. All the matters before us in which bail
has been denied, because of the presence of the twin
conditions contained in Section 45, will now go back to the
respective Courts which denied bail. All such orders are set
aside, and the cases remanded to the respective Courts to be
heard on merits, without application of the twin conditions
contained in Section 45 of the 2002 Act. Considering that
persons are languishing in jail and that personal liberty is
involved, all these matters are to be taken up at the earliest by
the respective Courts for fresh decision. The writ petitions and
the appeals are disposed of accordingly.
………………………………J.
(R.F. Nariman)
………………………………J.
(Sanjay Kishan Kaul)
New Delhi;
November 23, 2017.

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probation of will – “24. Caveat. – Any person intending to oppose the issuing of a grant of probate or letters of administration must either personally or by his Advocate acting on the Original Side file a caveat in the Registry in Form No.12. Notice of the filing of the caveat shall be given by the Registrar to the petitioner or his Advocate acting on the Original Side. (Form No.13). “25. Affidavit in support of caveat.—Where a caveat is entered after an application has been made for a grant of probate or letters of administration with or without the will annexed, the affidavit or affidavits in support shall be filed within eight days of the caveat being lodged, notwithstanding the long vacation. Such affidavit shall state the right and interest of caveator, and the grounds of the objections to the application.” – no hard and fast rule can be laid down. The existence of a caveatable interest would depend upon the fact situation of each case. In the instant case, the High Court found that the Appellant has caveatable interest, but the caveat filed by the Appellant was discharged on the ground that the affidavit filed in support thereof was bereft of an averment doubting the due execution of the Will dated 22.04.2013. For the reasons stated supra, we are satisfied that the affidavit filed in support of the caveat fulfils the condition of Rule 25.

1
Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.19635-19636 of 2017
(Arising out of S.L.P. (Civil ) Nos.28643-28644 of 2017)
YASH VARDHAN MALL
…. Appellant
Versus
TEJASH DOSHI
….Respondent
J U D G M E N T
L. NAGESWARA RAO, J.
Leave granted.
A Will was executed by Smt. Shrutika Doshi on
01.03.2013 by which she appointed her husband, the sole
Respondent herein, as the executor and trustee. Her minor
daughters were made the beneficiaries. It was mentioned in
the Will that in case the Respondent is unable to carry out or
act as the sole executor by giving effect to the Will and
testament, the Appellant shall become the sole executor.
The Will dated 01.03.2013 was registered with the
Sub-Registrar of Assurance at Calcutta on 25.05.2013.
Smt. Shrutika Doshi died on 26.05.2013. Another Will
2
executed by Smt. Shrutika Doshi on 22.04.2013 surfaced
wherein the Respondent was appointed as the sole executor
and in case he is unable to act as the sole executor his
father would replace him. As the Respondent did not apply
for grant of probate of the Will dated 01.03.2013 for two and
half years, the Appellant applied for a probate of the Will.
Thereafter, the Respondent filed P.L.A. No.123 of 2016 for
grant of probate of the Will dated 22.04.2013 before the
High Court at Calcutta. The Appellant filed a caveat on
15.06.2016 and on receipt of a notice of the filing of the
P.L.A. No.123 of 2016, the Appellant filed an affidavit in
support of the caveat on 10.01.2017. The Respondent filed
an application G.A. No.888 of 2017 in P.L.A. No.123 of 2016
for discharge of the Appellant’s caveat.
2. The petition filed by the Appellant for grant of probate
of the Will dated 01.03.2013 was dismissed by the District
Judge, Alipore on 17.04.2017. An appeal has been filed
against the said order which is pending in the High Court at
Calcutta.
3. A learned Single Judge of the High Court at Calcutta
heard G.A. No.888 of 2017 in P.L.A. No.123 of 2016 for
discharge of caveat. By an order dated 28.06.2017, the
3
learned Single Judge allowed the application filed by the
Respondent and discharged the caveat. The appeal filed
against the said order dated 28.06.2017 was disposed of by
a Division Bench of the High Court holding that there was no
reason to interfere with the order of the learned Single
Judge, though the Appellant had a caveatable interest.
Aggrieved thereby the Appellant has approached this Court.
4. The learned Single Judge referred to Chapter XXXV of
the The Rules of The High Court At Calcutta (Original Side),
1914 (hereinafter referred to as the ‘Rules’) to hold that the
affidavit filed in accordance with Rule 26 thereof did not
disclose legal grounds of objection to the grant of probate.
The learned Single Judge further held that the Appellant did
not have caveatable interest and discharged the caveat.
The Division Bench held that an executor of a previous Will
cannot be denied a right to lodge a caveat in respect of a
subsequent Will of the same testator. Even if the executor
is not a legatee under the Will, his obligation is to obtain a
probate of the Will and to administer the estate in
accordance with the terms of the Will. As the execution of
the Will dated 01.03.2013 was not disputed by the
Respondent, the Division Bench held that the Appellant has
4
sufficient interest in the estate and was entitled to lodge a
caveat by virtue of his position as a trustee in respect of the
trust created by the first Will. Having held that the
Appellant has a right to object to the grant of probate of the
Will dated 22.04.2017, the Division Bench refused to
interfere with the order of the learned Single Judge for the
reason that the affidavit filed in support of the caveat did
not disclose any ground to doubt the due execution of the
Will dated 22.04.2013.
5. The Rules relevant for the purpose of adjudication of
the dispute in this case are as follows:
“24. Caveat. – Any person intending to oppose the issuing of a
grant of probate or letters of administration must either
personally or by his Advocate acting on the Original Side file a
caveat in the Registry in Form No.12. Notice of the filing of the
caveat shall be given by the Registrar to the petitioner or his
Advocate acting on the Original Side. (Form No.13).
“25. Affidavit in support of caveat.—Where a caveat is entered
after an application has been made for a grant of probate or
letters of administration with or without the will annexed, the
affidavit or affidavits in support shall be filed within eight days of
the caveat being lodged, notwithstanding the long
vacation. Such affidavit shall state the right and interest of
caveator, and the grounds of the objections to the application.”
“30. Trial of preliminary issue.—The Court may, on the
application of the petitioner by summons to the caveator before
making the order mentioned in Rule 28, direct the trial of an
issue as to the caveator’s interest. Whereupon the trial of such
issue, if it appears that the caveator has no interest, the Court
shall order the caveat to be discharged, and may order the issue
of probate or letters of administration, as the case may be.”
6. An affidavit filed in support of the caveat according to
Rule 25 shall state the right and interest of the caveator and
5
the grounds of the objections to the application. The
affidavit filed in support of the caveat by the Appellant
mentions that Smt.Shrutika Doshi executed her last Will and
testament on 01.03.2013 which was registered on
22.05.2013. There is a reference to the Will dated
22.04.2013 alleged to have been executed by Smt.Shrutika
Doshi as her last Will and testament. It was further
mentioned in the affidavit that the Will dated 01.03.2013
being registered on 22.05.2013 has to be treated as the last
Will and testament of Smt.Shrutika Doshi. The Appellant did
not doubt the execution of the Will dated 22.04.2013, but
asserted that the Will dated 01.03.2013 which was
registered on 22.05.2013 was her last Will.
7. After holding that the Appellant has a caveatable
interest to object to the grant of probate of the Will dated
22.04.2013, the High Court refused to interfere with the
order of the learned Single Judge on the basis that the
affidavit filed in support of the caveat did not doubt the
execution of the Will. As per Rule 25, the right and interest
of the caveator and the grounds for objection to the
application have to be mentioned in the affidavit filed in
support of the caveat. The right and interest of the
6
caveator as the executor of rival Will dated 01.03.2013 have
been mentioned in the affidavit filed in support of the
caveat and the High Court rightly upheld the contention on
behalf of the Appellant that he has caveatable interest. The
grounds for objection to the application for grant of probate
have also been mentioned in the affidavit. On a detailed
scrutiny of the affidavit filed in support of the caveat, we are
satisfied that the Division Bench went wrong in not
permitting the Appellant to contest the proceeding of
probate of the Will dated 22.04.2013, especially after
holding that he has a caveatable interest. It is relevant to
mention that the petition filed by the Appellant for grant of
probate of the Will dated 01.03.2013 was rejected by the
District Judge, Alipore on the ground that the application for
probate of the Will dated 22.04.2013 was pending and that
the Appellant had lodged a caveat in that proceeding. It
was further held in the said order passed by the District
Judge on 17.04.2017 that the Appellant will have sufficient
opportunity to prove his allegations against the Respondent
in the said proceeding.
8. This Court in Krishna Kumar Birla v. Rajendra
Singh Lodha and Ors. (2008) 4 SCC p.300 considered
7
the point of caveatable interest in a detailed manner and
held that no hard and fast rule can be laid down. The
existence of a caveatable interest would depend upon the
fact situation of each case. In the instant case, the High
Court found that the Appellant has caveatable interest, but
the caveat filed by the Appellant was discharged on the
ground that the affidavit filed in support thereof was bereft
of an averment doubting the due execution of the Will dated
22.04.2013. For the reasons stated supra, we are satisfied
that the affidavit filed in support of the caveat fulfils the
condition of Rule 25.

9. The appeals are allowed and the judgment passed by
the Division Bench of the High Court is set aside. No order
as to costs.

………………………………..J.
[ARUN MISHRA]
………………………………..J.
[L. NAGESWARA RAO]
New Delhi,
November 23, 2017.

Posted in Uncategorized

SUIT FOR POSSESSION – DEFENCE AGREEMENT OF SALE – LONG STANDING POSSESSION BY CONSTRUCTING BUILDING- SUIT DISMISSED – 1. SUIT IS HIT BY SOCIETY ACT 2.NON-EXAMINATION OF WITNESS OF SALE DEED 3. ADVERSEPOSSESSION – APPEAL – REVERSED FIRST AND THIRD POINTS BUT DISMISSED ON SECOND POINT – HIGHCOURT – REVERSED THE FINDING OF APPEALLANT COURT ON SECOND POINT ALSO AND DECREED THE SUIT- APEX COURT CONFIRMED THE ORDERS OF HIGH COURT AND HLED THAT WITNESS IS NOT COMPULOSRY TO EXAMINE FOR PROVING SALE DEED- CLAIMED TITLE UNDER AGREEMENT OF SALE – NO BETTER TITLE THAN THE PLAINTIFF – NO ADVERSEPOSSESSION – PLAINTIFF IS ENTITLED FOR POSSESSION examination of witness to prove sale deed is not compulsory – It is for the reasons that, firstly, the execution of the sale deed does not need any attesting witness like the gift deed, which requires at least two attesting witnesses at the time of its execution as per Section 123 of the Transfer of Property Act, 1882; and Secondly, Section 68 of the Evidence Act, 1872, which deals with the examination of the attesting witness to prove the execution of the document, does not apply to sale deed, which is 1 governed by Section 54 of the Transfer of Property Act. It is not in dispute that the appellant (defendant) in this case did not dispute the respondent’s vendor’s (Housing Society) title. On the other hand, she, in clear terms, admitted their title in her written statement. It is also not in dispute that the respondent entered in witness box and proved its execution and further did not raise any objection when the sale deed was being exhibited in evidence and indeed, rightly for want of any legal basis. 22) In the light of these admitted facts, we are of the view that the sale deed dated 29.12.1981 was duly proved by the respondent and was, therefore, rightly relied on by the High Court for passing a decree of possession against the appellant. It was, in our opinion, a clear case where the respondent had a better title of the suit land as against the 1 appellant, who had no title to the suit land. All that the appellant had was a plea of adverse possession which was not held proved.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 19625 OF 2017
(ARISING OUT OF SLP (C) No. 27725/2014)
Smt.Bayanabai Kaware …Appellant(s)
VERSUS
Rajendra S/o Baburao Dhote …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1) Leave granted.
2) This appeal is filed by the defendant against
the final judgment and order dated 11/12.10.2012
passed by the High Court of Judicature at Bombay,
Nagpur Bench, Nagpur in Second Appeal
No.304/1997 whereby the Single Judge of the High
Court allowed the appeal filed by the respondent
herein and reversed the judgment/decree dated
1
26.08.1996 passed by the 3rd Additional District
Judge, Nagpur in Regular Civil Appeal No.152/1989
which arose out of judgment/decree dated
31.01.1989 passed by 3rd Joint Civil Judge, Junior
Division, Nagpur in Regular Civil Suit
No.1210/1985, which had dismissed the
respondent’s civil suit.
3) In order to appreciate the short controversy
involved in the appeal, few relevant facts need
mention hereinbelow.
4) The appellant is the defendant whereas the
respondent is the plaintiff in a civil suit out of which
this appeal arises.
5) The dispute relates to plot No.12 of field
No.13/3, P. H. 44 situated in Mouza Parsodi Tahsil,
District Nagpur admeasuring 1625 sq.ft.
(hereinafter referred to as the “suit land”).
6) The suit land originally belonged to one
Housing Co-Operative Society called – “Subhash
2
Nagar Gruha Nirman Sahakari Sanstha Limited,
Nagpur” (hereinafter referred to as “Society”). The
respondent purchased the suit land from the
Society vide registered sale deed dated 29.12.1981
and was, accordingly, placed in possession of the
suit land by the Society.
7) In March 1985, it was noticed by the
respondent that the appellant had encroached upon
the suit land owned by him and erected a kacha hut
on one portion of the suit land without any
authority. This led the respondent to serve legal
notice dated 22.04.1985 on the appellant asking her
to remove the hut, which was illegally erected by her
on the suit land. Since the appellant did not
remove the hut, the respondent filed a suit being
Civil Suit No.1210/85 in the Court of Civil Judge,
Junior Division, Nagpur against the appellant
claiming possession and mesne profits in relation to
the suit land.
3
8) The suit was founded essentially on the
allegation, inter alia, that the respondent is the
owner of the suit land having purchased the same
from the Society by registered sale deed dated
29.12.1981(Ex.P-31). It was alleged that the
respondent was placed in possession of the suit
land pursuant to the sale deed. It was alleged that
the appellant, in March 1985, un-authorisedly
entered into the suit land and erected one hut on
one portion of the suit land and hence, the suit is
filed by the respondent seeking possession of the
suit land and also claiming the mesne profits from
the appellant.
9) The appellant filed written statement and
denied the respondent’s claim. According to her,
the suit land was allotted to one Dhondiba Lodhi by
the Society, who then constructed his house on the
land and on his death, his wife – Hirabai became its
owner. It was then averred that Hirabai entered
4
into an agreement with the appellant on 22.05.1972
to sell the suit land and pursuant to the agreement,
was placed in possession of the suit land. It was
averred that since then the appellant continued to
remain in possession of the suit land without any
interruption from anyone and has accordingly
acquired ownership of the suit land by virtue of she
being in adverse possession of the suit land. This,
in substance, was her defense.
10) The Trial Court framed the issues and parties
adduced their evidence. By judgment/decree dated
31.01.1989, the Trial Court dismissed the
respondent’s suit. It was held that, firstly, the
respondent failed to prove the sale deed (Ex.P-31)
inasmuch as the sale deed had some kind of
discrepancies and also no attesting witness was
examined; secondly, the appellant was in
possession of the suit land since 1972 and hence
perfected her title over it by adverse possession;
5
thirdly, the dispute, which is the subject-matter of
civil suit, pertained to the business of the Society
and hence covered by Section 91 of the
Maharashtra Cooperative Societies Act (in short “the
Act”) and is, accordingly, barred under Section
163(1) of the Act.
11) The respondent, felt aggrieved by the judgment
of the Trial Court, filed First Appeal before the 3rd
Additional District Judge, Nagpur being Regular
Civil Appeal No.152 of 1989. The Appellate Court,
by judgment dated 26.08.1996, dismissed the
appeal and affirmed the judgment and decree of the
Trial Court. The Appellate Court reversed the two
findings of the Trial Court. One was in relation to
the bar contained in Section 91 of the Act and the
other relating to the plea of adverse possession. In
other words, the Appellate Court reversed the two
findings of the Trial Court and held that, firstly, the
bar contained in Section 91 of the Act does not hit
6
the civil suit and hence maintainable in Civil Court
and secondly, the appellant (defendant) failed to
prove her adverse possession over the suit land and
hence cannot be declared the owner of the suit land
on the strength of her alleged adverse possession
over it. However, since the Appellate Court
confirmed the finding of the Trial Court insofar as it
pertained to not properly proving the sale deed
dated 29.12.1981 (Ex.P-31), the suit was dismissed.
In other words, the Appellate Court also held that
the respondent (plaintiff) was not able to prove the
sale deed dated 29.12.1981 in accordance with law
and hence no decree could be passed in
respondent’s favour in relation to the suit land on
the strength of such unproved sale deed.
12) Felt aggrieved by the judgment of the Appellate
Court, the respondent (plaintiff) filed Second Appeal
under Section 100 of the Code of Civil Procedure
Code,1908 (hereinafter referred to as “the Code”) in
7
the High Court (Nagpur Bench). The High Court
framed the following question of law:
“Whether it is necessary for the plaintiff
appellant to examine his vendor and
attesting witnesses to prove his title to the
suit property in a suit for recovery of
possession against the encroacher when
there is a registered sale deed executed by
his vendor in his favour?”
13) The appellant (defendant), however, did not file
any cross objection under Order 41 Rule 22 of the
Code to challenge the adverse findings recorded by
the First Appellate Court and, therefore, those
findings attained finality.
14) By impugned judgment, the High Court
allowed the Second Appeal and while setting aside
of the judgments/decrees of the two courts below
decreed the appellant’s suit. The High Court held
that the respondent has proved the sale deed as
required in law and, therefore, he was entitled to
claim decree for possession on the basis of the sale
deed (Ex.P-31) as an owner against the appellant.
8
Felt aggrieved, the defendant filed the present
appeal by way of special leave against the judgment
of the High Court before this Court.
15) Heard Mr. Anshuman Singh, learned counsel
for the appellant and Mr. Rahul Chitnis, learned
counsel for the respondent.
16) Having heard the learned counsel for the
parties and on perusal of the record of the case, we
are inclined to dismiss the appeal as, in our
opinion, the High Court is right in its reasoning and
its conclusion.
17) As observed supra, the only question involved
in the appeal before the High Court was whether the
sale deed dated 29.12.1981 (Ex.P-31) in relation to
the suit land was duly proved by the respondent.
18) The Trial Court and the First Appellate Court
held that since the sale deed was not properly
proved, the respondent’s suit was dismissed
whereas the High Court reversed the said finding
9
and held that the sale deed was duly proved as
required in law and accordingly passed the decree
for possession against the appellant in relation to
the suit land.
19) We agree with the reasoning of the High Court.
In our opinion also, the respondent was able to
prove the sale deed and was, therefore, rightly held
entitled to claim decree for possession of the suit
land on the strength of the sale deed dated
29.12.1981 (Ex.P-31) against the appellant.
20) It is for the reasons that, firstly, the execution
of the sale deed does not need any attesting witness
like the gift deed, which requires at least two
attesting witnesses at the time of its execution as
per Section 123 of the Transfer of Property Act,
1882; and Secondly, Section 68 of the Evidence Act,
1872, which deals with the examination of the
attesting witness to prove the execution of the
document, does not apply to sale deed, which is
1
governed by Section 54 of the Transfer of Property
Act.
21) It is not in dispute that the appellant
(defendant) in this case did not dispute the
respondent’s vendor’s (Housing Society) title. On
the other hand, she, in clear terms, admitted their
title in her written statement. It is also not in
dispute that the respondent entered in witness box
and proved its execution and further did not raise
any objection when the sale deed was being
exhibited in evidence and indeed, rightly for want of
any legal basis.
22) In the light of these admitted facts, we are of
the view that the sale deed dated 29.12.1981 was
duly proved by the respondent and was, therefore,
rightly relied on by the High Court for passing a
decree of possession against the appellant. It was,
in our opinion, a clear case where the respondent
had a better title of the suit land as against the
1
appellant, who had no title to the suit land. All that
the appellant had was a plea of adverse possession
which was not held proved.
23) This being the only point involved in the case
and the same having been answered against the
appellant, we find no merit in the appeal. The
appeal thus fails and is accordingly dismissed.
……………………………………..J.
[R.K. AGRAWAL]

……………………………………….J.
[ABHAY MANOHAR SAPRE]
New Delhi;
November 23, 2017
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Posted in Uncategorized

under Rule 126L(2) of the Defence of India Rules, 19621 (hereinafter referred to as “the RULES”). They found 240 kilograms of gold (bars etc.) buried in the house and seized it.= Prior to the GOLD ACT, seizure and confiscation of gold were authorised by the RULES. Though, by virtue of the fiction created under Section 116, the confiscations adjudged under the RULES are deemed to be confiscations adjudged under the GOLD ACT, the Scheme and the limitations of such fiction are already explained earlier in para 29. Therefore, neither Section 73 nor the definition under Section 2(v), in our opinion, would be applicable for the confiscations adjudged under the RULES – pursuant to a seizure that took place before the commencement of the GOLD ACT.-The conclusion of the Tribunal that the fine in lieu of confiscation must be equal to the value of the gold as on the date of its seizure is not based on any principle of law. For the reasons already recorded by us earlier, the High Court rightly came to the conclusion that the fine in lieu of confiscation must represent the value of the gold so confiscated as on the date (9.12.94) the appellant was given an option to pay the fine in lieu of confiscation. Even according to the said order of the Collector, the value of the gold as on that date was Rs.11.04 crores.- We find the submission wholly justified. We, therefore, deem it proper to direct that the appellant would be entitled to redeem the gold by paying not only the fine of Rs.11.04 crores but also the interest thereon calculated @ 10% p.a.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 4711-4712 OF 2011
Gunwantlal Godawat … Appellant
Versus
Union of India & Another … Respondents
J U D G M E N T
Chelameswar, J.
1. On 3rd and 4th June, 1965, the residential premises of the
appellant’s father were searched by the officers of the Government
of India in exercise of the authority conferred upon them under
Rule 126L(2) of the Defence of India Rules, 19621 (hereinafter
referred to as “the RULES”). They found 240 kilograms of gold (bars
etc.) buried in the house and seized it. Proceedings for confiscation

1
Rule 126L. Power of entry, search, seizure, to obtain information and to take samples.— (2) Any person authorised
by the Central Government by writing in this behalf may—
(a) enter and search any premises, not being a refinery or establishment referred to in sub-rule (1), vaults,
lockers or any other place whether above or below ground;
(b) seize any gold in respect of which he suspects that any provision of this Part has been, or is being, or is
about to be contravened, along with the package, covering or receptacle, if any, in which such gold is found
and thereafter take all measures necessary for their safe custody.
2
were initiated. Eventually on 24.9.1966, the Collector of Central
Excise and Customs passed an order2 confiscating the seized gold
in exercise of the power under Rule 126M of the RULES on the
ground that the seized gold was held by the appellant in
contravention of Rule 126-I. A penalty of Rs.25 lakhs under Rule
126L(16) of the RULES was also imposed.
2. Aggrieved by the same, an appeal was carried by the
appellant’s father before the Gold Control Administrator which was
dismissed on 6.3.1972. The matter was carried further in a revision
before the Government of India which was also dismissed on
4.6.1979. The decision of the Government of India was challenged
in a writ petition (No.1215/79) before the Rajasthan High Court.
By a judgment and order dated 9.8.1994, the Rajasthan High Court
allowed the writ petition.
3. It appears from the said judgment that two submissions were
made before the High Court, (i) no personal hearing was given by
the Collector to the appellant’s father before the order of
confiscation was passed though a show cause notice dated

2
““Gold was required to be declared under Rule 126-I of Defence of India Rules, 1962. It was not declared. I
accordingly order absolute confiscation of 240.040 kgs. of gold, under Rule 126M of said Rules. The iron safe in
which gold was secreted is also confiscated under Rule 126M.
I hold that Shri Chhagan Lal Godavat is guilty of contravention of the provisions of the Rule 126-I of the
Defence of India Rules, 1962. He is liable to a penalty under Rule 126-L (16) of the said Rules. Taking into
consideration the gravity of the offence committed by him and in view of the fact that he hoarded a very huge
quantity of undeclared gold I impose upon him a personal penalty of Rs.25,00,000/- (Twenty five lacs).”
3
3.2.1966 was issued proposing confiscation and penalty under
Section 126M and 126L(16) of the RULES respectively, and (ii) An
opportunity to redeem the seized gold was not given.
4. The High Court accepted the submissions and remitted the
matter to the Collector (Central Excise and Customs).
The operative portion of the judgment reads as follows:-
“16. As a sequence the orders passed by the Collector dated
24.9.1966 (Annex.1), the order dated 6.3.1972 passed by the Gold
Control Administrator as well as the order dated 3/4.6.1979
passed by the Special Secretary Finance, Government of India
exercising the power of revision of the Central Government are
quashed and the matter is remitted back to the Collector, Central
Excise and Customs, New Delhi to examine the matter afresh in
the light of the observations made above after affording full
opportunity to the petitioners. The parties are directed to appear
before the Collector, Central Excise and Customs, New Delhi on
1.9.1994 whereafter the Collector shall proceed with the case
afresh and shall dispose of the matter within four months from the
date of receipt of the copy of the order as indicated above. The
matter has already been considerably delayed for over 30 years
and any further delay would amount to denial of justice to the
petitioners. It is further ordered that in the event of the appeal
being filed by the aggrieved party to the Central Excise and Gold
Control Tribunal, the Tribunal shall dispose of the same as
expeditiously as possible preferably within six months from the
date of filing of the appeal.”
5. Pursuant to the remand, by an order dated 9.12.1994, the
Collector once again ordered confiscation of the entire quantity of
(240 kilograms) gold approximately valued at Rs. 11.04 crores with
an option to the legal heirs of the appellant’s father to redeem the
gold by paying a fine of Rs. 2.5 crores.
4
“(i) I order confiscation of the 240.040 Kgs. of gold (1) Sovereigns of
gold 80.776 Kgs. (2) Passas of gold 242 Nos. 75.298.300 Kgs. (3)
Pieces of gold bars 5 Nos. 10.975.845 Kgs. (4) Gold bars of 19127
and 1992 9 nos. 72.990 Kgss.) valued at Rs. 12,50,070.41 at the
time of seizure (present approximate value Rs. 11.04 crores at the
rate of Rs. 4,600 per 10 gms. as on 07.12.1994) along with Iron
Safe used to conceal the gold seized from the house of Late Shri
Chhaganlal Godawat, under the Rule 126-M of the erstwhile
Defence of India Rules, 1962. The impugned gold along with the
Iron Safe will, however, be released and handed over to the legal
heirs of Late Shri Chhaganlal Godawat on payment of redemption
fine of Rs. 2.50 crores (Rupees Two crores fifty lacs only) in lieu of
confiscation under Rule 126-M (8) (a) of the erstwhile Defence of
India Rules, 1962. The option to redeem the same should be
exercised within three months from the date of receipt of this
order.”
The Collector further held that in view of the fact that the person
from whom the gold was seized (Chhaganlal Godawat) expired, the
levy of penalty contemplated under Rule 126L(16) of the RULES is
not called for.
6. Aggrieved by the decision of the Collector, the appellant herein
carried the matter in appeal to the Tribunal.3 The appeal was heard
by a Bench of the Tribunal consisting of two members. There was a
difference of opinion between both the members regarding the
quantum of the redemption fine. In view of the difference of
opinion, the matter was referred to the third Member. The outcome
of the entire process is that the Tribunal by its order dated 30th

3 Appeal No.C/144/95-NRB on the file of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi
against the Order-in-Original No.7/94 dated 9.12.1994 passed by the Collector of Central Excise & Customs, Jaipur.
5
October 1995 finally opined that the redemption fine should be
reduced to Rs.12.5 lacs which represented the value of the gold as
on the date of the seizure. Accordingly, the appeal was allowed.
7. The Collector sought a reference under Section 82-B4 of the
Gold Control Act, 1968 on two questions of law;
“1. Whether in the matter of imposition of redemption fine, the
provisions of Section 73 of erstwhile5 Gold (Control) Act, 1968 will
apply when the gold was neither seized nor confiscated under the
Gold (Control) Act, 1968?
2. Whether the quantum of Redemption fine should be related
to market value of Gold on the date of seizure or the market value
of gold on the date of adjudication by the Commissioner of
Customs & Central Excise, Jaipur?”
8. By an order dated 20.5.1996, the Tribunal referred the matter
to the Rajasthan High Court.
9. In the meanwhile, the Department filed an appeal against that
part of the Order of the Collector dated 9.12.1994 which gave an
option to the appellant to redeem the gold by paying fine of Rs. 2.5

4
Section 82-B of the Gold (Control) Act, 1968
“Section 82-B. Statement of a case to High Court. (1) The Collector of Central Excise or of Customs or the
other party may, within sixty days of the date upon which he is served with notice of an order under sec.81A, by
application in the prescribed form, accompanied, court the application is made by the other party, by a fee of
two hundred rupees require the Appellate Tribunal to refer to the High Court any question of law arising out of
such order and, subject to the other provisions contained in this section, the Appellate Tribunal shall, within one
hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the
High Court:
Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient
cause from presenting the application within the period hereinbefore specified, allow it to be presented within a
further period not exceeding thirty days.
5
By the date of the Reference Application, the Gold (Control) Act, 1968 stood repealed by Act No.10 of 1990 of the
Parliament w.e.f. 6th June 1990.
6
crores in lieu of confiscation. The said appeal was dismissed on
23.5.1996.
10. It appears from the record that the Union of India filed a Writ
Petition being D.B. Civil Writ Petition No. 6295 of 1996 with an
interesting prayer as follows:-
“It is, therefore, most respectfully prayed that:-
(i) By an appropriate writ, order or direction the respondents
may be directed not to take any action with respect to getting
goods from the Petitioner Department in any manner till the
disposal of the reference petition.
(ii) Any other order or direction which the Hon’ble Court may
consider just and proper in the facts and circumstance of
case may also kindly be passed in favour of the petitioner.”
In fact it is stated at para 9(D) of the writ petition as follows:-
“D. That the petitioner department has come before the Hon’ble
Court with a limited prayer that the goods may not be released to
the respondents till the final disposal of the reference petition
which has been referred by the learned CEGAT.”
11. It appears that initially there was an interim stay6 in the said
writ petition on 20th December 1996. By an order dated 28.5.1997,
the interim stay was vacated. The operative portion of the Order
reads as follows:-
“8. We, therefore, vacate the stay Order passed on December 20,
1996 staying that operation of the Order dated October 30, 1995
passed by the CEGAT and instead direct that the petitioner shall
retain only that much quantity of the seized gold which will fetch a
sum of Rs. 2,50,00,000/- (Rupees Two Crores Fifty Lakhs ) @ Rs.

6
The order copy is not available on record
7
4600/- (Rupees Four thousand six hundred) per 10 (ten) gms of
gold and release and hand over possession of the rest of the
quantity of gold to the respondent No. 1 within one month from
today. In case the petitioner succeeds and there is any shortfall in
the recovery because of fall in price of gold, the respondent No. 1
shall make that good and if the petition is dismissed and the order
of the CEGAT is maintained the respondent No. 1 shall be entitled
to return of the gold permitted to be retained under this Order as
per the directions of this Court while finally disposing of the matter
or thereafter.”
12. The Reference came to be answered by the Rajasthan High
Court by the order dated 29.6.2009, which is the subject matter of
the instant appeal. The relevant portion reads as follows:
“19. Undeniably and undisputedly, it is the date of giving option
which is relevant for adjudging the fine and not the date of seizure.
xx xxx xxx xxx
The language of sub-rule 8 of Rule 126-M of ‘Rules, 1962’
categorically envisages that the officer adjudging may give to the
owner of the Gold an option to pay in lieu of confiscation such fine
as the said officer thinks fit. According to Wiktionary, a wiki based
open content dictionary, the meaning of term in lieu of is ‘Instead, in
place of , as a substitute for’. This meaning suggests that the
redemption fine is the substitute for the market value of the Gold.
xxx xxx xxx xxx
………., the market value of the seized Gold has to be taken on that
date when the option is given by the officer adjudging it.
20. It is revealed from the material on record that the Collector
aptly applied the market price of Gold at the rate of Rs.4,600 per
10 gms as on December 7, 1994, the date of adjudicating when the
option was given by him to the respondent and on this basis, the
price of total seized and confiscated Gold 240.040 kgs came to be
11.04 crores and the redemption fine cannot be in any way less
than this.
21. Thus, in the ultimate analysis, it is candidly recorded that
the quantity of redemption fine should be related to the market
value of gold on 7.12.1994 i.e. the date of adjudication when the
officer adjudging gave the owner of the Gold an option to pay fine
in lieu of confiscation. The amount of fine as adjudged to the tune
8
of Rs.2.5 crores was totally arbitrary and irrational as it was not
based on any sound and lawful reasoning.
xxx xxx xxx xxx
23. ……………….. the respondents are entitled to redeem the
confiscated Gold only after paying the redemption fine of Rs.11.040
crores.
24. In view of above, we deem it just and proper to direct the
authorized officer to give an option afresh following above clinching
observations to the owner of the Gold asking him to pay the
redemption fine in lieu of confiscation.”
13. For the sake of completion of the narration of facts, it must be
stated that as a consequence, the tribunal (CESTAT) passed an
order on 30.4.2010 remitting the matter to the adjudicating
Commissioner to determine the appropriate redemption fine and the
Commissioner passed an order on 16.7.2010. The relevant portion
reads:
“4. Under the circumstances, we dispose of the appeal by way of
remand to the Adjudicating Commissioner (authorized officer) to
determine appropriate redemption fine and allow the order of the
gold to redeem the gold on payment of such redemption fine. It
goes without saying that while determining the redemption fine, he
shall follow the cited order of the Hon’ble High Court dated
29.6.2009.”
xxx xxx xxx xxx
(i) An option is given to Shri Gunwant Lal Godawat and legal
heir of late Shri Chhagan Lal Godawat to pay Rs.11.04 crores
(Rupees Eleven crores and four lakhs only) in lieu of confiscation of
the gold weighing 240.040.145 kgs under the erstwhile Defence of
India Rules, 1962 within three months of receipt of this order.
(ii) In case Shri Gunwant Lal Godawat and the legal heir of late
Shri Chhagan Lal Godawat does not exercise the option of
depositing the amount of Rs.11.04 crores in the stipulated time
limit, as given above, Shri Gunwant Lal Godawat and legal heir of
late Shri Chhagan Lal Godawat shall be liable to return to the
Department immediately the gold weighing 185.145 kgs which was
9
returned to them on 2.7.94 in compliance of directions of the
Hon’ble Rajasthan High Court given in the order dated 28.05.97.”
THE HISTORY OF THE GOLD CONTROL REGIME:
14. On 26th October 1962, the President of India made a
proclamation of emergency under Article 352 of the Constitution of
India. On 28th October 1962, the President of India promulgated
the Defence of India Ordinance (4 of 1962). It was amended by
another ordinance (6 of 1962). In exercise of the power conferred
under Section 3 of the Ordinance (4 of 1962), RULES came to be
made in GSR 1465 dated 5th November 1962. By an amendment to
the RULES, Part XIIA came to be introduced by GSR 1525 dated
23rd September, 1963 with the heading ‘Gold Control’.
15. Part XIIA of the RULES contained various provisions regarding
acquisition, possession, sale etc. of gold ornaments and articles by
two defined classes under RULES 126-A(c) and (h), i.e. “dealers”
and “refiners” and persons other than dealers and refiners.
16. Both the Ordinances (4 & 6 of 1962) came to be repealed by
Section 48(2) of the Defence of India Act (51 of 1962)7. Section
48(2) of the Act (51 of 1962) contained a declaration that
notwithstanding the repeal, any Rules made under the repealed

7
Came into force on 15th December 1962
10
ordinance shall be deemed to have been made under the Act 51 of
1962. It contained a further declaration creating a further fiction
that Act 51 of 1962 had commenced on 26th October, 1962.
“Section 48. Repeal and saving. –
(1) The Defence of India Ordinance, 1962(4 of 1962) , and the
Defence of India (Amendment) Ordinance, 1962 (6 of 1962), are
hereby repealed.

(2) Notwithstanding such repeal, any rules made, anything done
or any action taken under the Defence of India Ordinance, 1962(4
of 1962) , as amended by the Defence of India (Amendment)
Ordinance, 1962 (6 of 1962) shall be deemed to have been made,
done or taken under this Act as if this Act had commenced on the
26the October, 1962.”

17. We need not examine the purpose for creating the fiction
under sub-section (2) because no submission in this regard is made
before us by either of the parties. We only take note of the fact that
the RULES must be deemed to have been made under Act 51 of
1962 w.e.f. 26th October 1962 though they were in fact made later
under Ordinance 4 of 1962.
18. The Defence of India Act itself was a temporary enactment.
Section 1(3) of the Act declared as follows:-
“(3). It shall remain in force during the period of operation of the
Proclamation of Emergency issued on the 26th October, 1962, and
for a period of six months thereafter.”
11
The proclamation of emergency ceased to operate on 10th January
1968. Therefore, it follows that the Defence of India Act (5 of 1962)
ceased to be in force by 9th July 1968.
19. In the year 1968, an ordinance titled The Gold (Control)
Ordinance, 1968 (6 of 68) (hereinafter referred to as ‘the
ORDINANCE’) was promulgated on 29th June, 1968.8 Section 117
of the ORDINANCE repealed the RULES. The RULES would have
lapsed on 9th July 1968 because the authority of law for the
sustenance of the RULES ceased on that day with the cessation of
the operation of the Defence of India Act (5 of 1962), but for their
repeal by Section 117 of the ORDINANCE. Since the repeal of any
rules by another statute and the consequences flowing therefrom
are not provided for either in the General Clauses Act 1897 or any
other law, it was declared in Section 117 of the ORDINANCE.
“(1) As from the commencement of this Ordinance, the provisions
of Part XII-A of the Defence of India Rules, 1962 shall stand
repealed and upon such repeal, Section 6 of the General
Clauses Act, 1897, shall apply as if the said Part were a
Central Act;
(2) Notwithstanding the repeal made by sub-section (1) but
without prejudice to the application of Section 6 of the General
Clauses Act, 1897, any notification, order, direction, appointment
or declaration made or any notice, licence or certificate issued or
permission, authorization or exemption granted or any confiscation
adjudged or penalty or fine imposed or any forfeiture ordered or

8
Parliament enacted the Gold (Control) Act, 1965 (18 of 65), which was never brought into force (for reasons not
known nor necessary to be known for the purpose of this case).
12
any other thing done or any other action taken under or in
pursuance of the provisions of Part XII-A of the Defence of India
Rules, 1962, so far as it is not inconsistent with the provisions of
this Ordinance be deemed to have been made, issued, granted,
adjudged, imposed, ordered, done or taken under the
corresponding provisions of this Ordinance.”
20. Thereafter Parliament made the Gold Control Act (45 of 1968)9
(hereinafter referred to as the GOLD ACT). The scheme of the
ORDINANCE and the GOLD ACT is more or less the same (the
details of which are not necessary for our purpose) and is
substantially similar to the scheme of the Part XIIA of the RULES.
Section 116(1) of GOLD ACT inter alia repealed the ORDINANCE.
Section 116(2) of the GOLD ACT:
“116. Repeal and savings. – (1) The Gold (Control) Act, 1965 (18 of
1965), and the Gold (Control) Ordinance, 1968 (6 of 1968), are
hereby repealed.
(2) Notwithstanding such repeal, anything done or any
action taken, including any notification, order or appointment
made, direction given, notice, licence or certificate issued,
permission, authorization or exemption granted, confiscation
adjudged, penalty or fine imposed, or forfeiture ordered whether
under the Gold (Control) Ordinance, 1968 (6 of 1968), or Part XII-A
of the Defence of India Rules, 1962, shall, in so far as it is not
inconsistent with the provisions of this Act, be deemed to have
been done, taken, made, given, issued, granted, adjudged, imposed
or ordered, as the case may be, under the corresponding provision
of this Act as if this Act had commenced on the 29th day of June,
1968.”
It can be seen from the sub-section (2) extracted above that it
creates 2 fictions. The 1st fiction provides that various things done

9 Act 45 of 68 came into force on the 1st September 1968.
13
or actions taken under the ORDINANCE or the RULES are deemed
to be things done or actions taken under the corresponding
provisions of the GOLD ACT. The 2nd fiction is that the GOLD ACT
“had commenced as on 29th June 1968”. But the GOLD ACT does not
contain a provision corresponding to that part of Section 117(1) of
the ORDINANCE dealing with the repeal of the RULES and the
consequences of such repeal.
EFFECT OF THE REPEAL OF THE RULES BY THE ORDINANCE:
21. One of the questions that is required to be examined to decide
the controversy on hand is whether the RULES stood irrevocably
repealed in the absence of a provision in the GOLD ACT similar to
Section 117(1) of the ORDINANCE?
22. The judgment of this Court in T. Venkata Reddy & Others v.
State of Andhra Pradesh10, would be relevant and helpful to
answer the above question. Certain posts of part-time Village
Officers were abolished by Section 3 of an Ordinance of the then
State of Andhra Pradesh. The Legislature never replaced the
ordinance by an enactment. In the litigation that ensued therefrom,
one of the questions before this Court was whether those abolished

10 (1985) 3 SCC 198
14
part-time Village Officer posts would revive on the lapse of the
ordinance. A Constitution bench of this Court held that “the effect of
Section 3 of the Ordinance was irreversible except by express legislation”.
23. The resultant legal position is that the efficacy of the
provisions of an ordinance would not in any way be diminuted or
abrogated unless there is a subsequent countervailing legislation.
The rights and obligations created, the liabilities incurred or
acquired or suffered under an ordinance would be as enduring as
those resulting from a Statute.
24. But Venkata Reddy is declared not to be good law in view of
the law laid down in Krishna Kumar Singh & Another v. State of
Bihar & Others, (2017) 3 SCC 1.11 It was held:
“105.12. The question as to whether rights, privileges,
obligations and liabilities would survive an Ordinance which has
ceased to operate must be determined as a matter of construction.
The appropriate test to be applied is the test of public interest and
constitutional necessity. This would include the issue as to
whether the consequences which have taken place under the
Ordinance have assumed an irreversible character. In a suitable
case, it would be open to the court to mould the relief.”

11 105.10. The theory of enduring rights which has been laid down in the judgment in Bhupendra Kumar Bose [State
of Orissa v. Bhupendra Kumar Bose, 1962 Supp (2) SCR 380 : AIR 1962 SC 945] and followed in T. Venkata
Reddy [T. Venkata Reddy v. State of A.P., (1985) 3 SCC 198 : 1985 SCC (L&S) 632] by the Constitution Bench is
based on the analogy of a temporary enactment. There is a basic difference between an Ordinance and a temporary
enactment. These decisions of the Constitution Bench which have accepted the notion of enduring rights which will
survive an Ordinance which has ceased to operate do not lay down the correct position. The judgments are also no
longer good law in view of the decision in S.R. Bommai [S.R. Bommai v. Union of India, (1994) 3 SCC 1] .
15
25. Krishna Kumar Singh dealt with a case where a series of
Ordinances were issued by the Governor of Bihar.
“13. The Ordinances promulgated by the Governor followed a
consistent pattern. None of the Ordinances was laid before the
legislature. Each one of the Ordinances lapsed by efflux of time, six
weeks after the convening of the session of the Legislative
Assembly. When the previous Ordinance ceased to operate, a fresh
Ordinance was issued when the Legislative Assembly was not in
session. The Legislative Assembly had no occasion to consider
whether any of the Ordinances should be approved or disapproved.
No legislation to enact a law along the lines of the Ordinances was
moved by the Government in the Legislative Assembly. The last of
the Ordinances, like its predecessors, cease to operate as a result
of the constitutional limitation contained in Article 213(2)(a). The
subject was entirely governed by successive Ordinances; yet
another illustration of what was described by this Court as an
Ordinance-Raj barely three years prior to the promulgation of the
first in this chain of Ordinances.”
This Court was examining the issue:
“69. The issue before the Court is of the consequence of an
Ordinance terminating on the expiry of a period of six weeks or,
within that period, on a disapproval by the legislature. … Would
the legal effects created by the Ordinance stand obliterated as a
matter of law upon the lapsing of an Ordinance or passing of a
resolution of disapproval?”
This Court took note of the fact that Venkata Reddy’s case
and two earlier cases12 which laid down the law based on the theory

12 Para 76. The “enduring rights” theory which had been applied in English decisions to temporary statutes,
was thus brought in while construing the effect of an Ordinance which has ceased to operate. In the view of
the Constitution Bench: (Bhupendra Kumar case [State of Orissa v. Bhupendra Kumar Bose, 1962 Supp (2) SCR
380 : AIR 1962 SC 945] , AIR p. 954, para 21)
“21. … Therefore, in considering the effect of the expiration of a temporary statute, it would be unsafe to
lay down any inflexible rule. If the right created by the statute is of an enduring character and has vested
in the person, that right cannot be taken away because the statute by which it was created has expired. If
a penalty had been incurred under the statute and had been imposed upon a person, the imposition of the penalty
would survive the expiration of the statute. That appears to be the true legal position in the matter.”
16
of “enduring rights” propounded by English decisions in the cases
of temporary statutes13
26. This Court in Krishna Kumar Singh opined that “the basis and
foundation of the two Constitution Bench decisions cannot be accepted as
reflecting the true constitutional position” and went on to consider the
issue afresh and finally concluded:
“92. … The enduring rights theory attributes a degree of
permanence to the power to promulgate Ordinances in derogation
of parliamentary control and supremacy. Any such assumption in
regard to the conferment of power would run contrary to the
principles which have been laid down in S.R. Bommai [S.R.
Bommai v. Union of India, (1994) 3 SCC 1] . The judgment in T.
Venkata Reddy [T. Venkata Reddy v. State of A.P., (1985) 3 SCC
198 : 1985 SCC (L&S) 632] essentially follows the same logic but
goes on to hold that if Parliament intends to reverse matters which
have been completed under an Ordinance, it would have to enact a
specific law with retrospective effect. This, in our view, reverses the
constitutional ordering in regard to the exercise of legislative
power.”
It must be remembered that the abovementioned discussion of law
was in the context of an Ordinance which was never tabled before
the Legislature and lapsed by virtue of the efflux of time.
27. In our opinion, the declaration in Krishna Kumar Singh that
Venkata Reddy is no longer good law in view of the judgment in
S.R. Bommai may not make any difference to the present case. In
the case on hand, the ORDINANCES came to be repealed and

13 Wicks v. Director of Public Prosecutions, 1947 AC 362 (HL); Warren v. Windle, 102 ER 576 (KB);
and Steavenson v. Oliver, 151 ER 1024 pp. 1026-27
17
replaced by the GOLD ACT with retrospective effect from 29th June
1968, that is, from the date of promulgation of the ORDINANCE.
THE EFFECT OF THE REPEAL OF THE ORDINANCE BY THE
GOLD ACT:
28. The General Clauses Act is silent in this regard. On the other
hand, Section 3014 of the General Clauses Act deals with a situation
of a Central Act being repealed by an Ordinance. It declares (in
substance) that the same consequences that would follow the repeal
of an earlier enactment by a later enactment would also follow in
the case of repeal of an earlier enactment by a subsequent
Ordinance. The implications of Section 30 were considered by this
Court in State of Punjab v. Mohar Singh, AIR 1955 SC 84. But
the counter position is not provided under the General Clauses Act.
In the circumstances, we are only required to look into the
provisions of the Act which repeals an Ordinance. In the case on
hand, the provisions of the GOLD ACT.
Though the GOLD ACT expressly repealed the ORDINANCE, it
did not make a declaration that the RULES are repealed. But on

14 Section 30. Application of Act to Ordinances.—In this Act the expression Central Act, wherever it occurs, except
in section 5 and the word “Act” in clauses (9), (13), (25), (40), (43), (52) and (54)] of section 3 and in section 25
shall be deemed to include an Ordinance made and promulgated by the Governor General under section 23 of the
Indian Councils Act, 1861 (24 and 25 Vict., c.67) or section 72 of the Government of India Act, 1915, (5 and 6 Geo.
V. c, 61) or section 42 of the Government of India Act, 1935 (26 Geo. V. c. 2) and an Ordinance promulgated by the
President under article 123 of the Constitution.
18
that account, the peremptory nature of the repeal of the RULES by
the ORDINANCE need not be doubted for the following two reasons:
(i) The GOLD ACT while making the declaration that
the ORDINANCE is repealed provided that various
actions taken both under PART XIIA of the RULES
or the ORDINANCE are deemed to be actions taken
under the corresponding provisions of the GOLD
ACT; and
(ii) Unlike Krishan Kumar Singh, the ORDINANCE
was followed up by a legislative action which did not
disapprove the content of the ORDINANCE.
SCHEME AND PURPOSE OF THE 1ST FICTION UNDER SECTION 116:
29. The purpose of creating the 1st fiction under Section 116,
according to us, is to declare that the rights and obligations flowing
from the adjudgment of confiscation would be those specified in the
GOLD ACT. The purpose of the fiction is not to alter the law
applicable to the adjudgment proceedings. One of the examples of
the rights flowing from the adjudgment of confiscation of gold is a
right of appeal against the adjudgment of confiscation. Both the
RULES [Rule 126M(3) and the GOLD ACT (Sections 80 and 81)]
19
provide for appeal. While under the RULES, appeals lay to the
‘Administrator’ irrespective of the forum which adjudged the
confiscation. Under the GOLD ACT, the appellate forum varies
depending on the forum which adjudged the confiscation.
30. The fiction does not deal with the law applicable to pending
proceedings. Such a conclusion is irresistible from the language of
Section 116(2) of the GOLD ACT which says;
“the confiscation adjudged .. under … Part XIIA of the Defence
of India Rules 1962 … shall be deemed to have been adjudged …
under the corresponding provisions of this Act.”
SCHEME OF PART XIIA OF THE RULES:
31. The RULES dealt with various matters. We are only concerned
with Part XIIA titled “Gold Control” (which was inserted by an
Amendment dated 09.01.1963), because the seizure and
confiscation of gold which is the subject matter of these appeals
arose out of the operation of Part XIIA of the RULES.
32. Various Rules in Part XIIA dealt with the regulation of the
activity of three classes of persons (i) dealers, (ii) refiners, and (iii)
others who own or possess gold. The expressions ‘dealer’ and
‘refiner’ are defined expressions under Rule 126-A(c) and (h)
respectively. Chapter V of Part XIIA dealt with the regulation of
20
persons other than dealers and refiners who own gold (hereinafter
referred to as PERSONS for the sake of convenience).
33. Under Rule 126-I, PERSONS were required to make a
declaration within a period stipulated therein. The declaration is
required to contain, the quantity, description and other prescribed
particulars of gold (other than ornaments) owned by a PERSON.
Sub-rule (3) stipulated that PERSONS shall not acquire any gold
other than ornaments except either by succession or in accordance
with a permit granted under the RULES. Sub-rule (4) mandated
that if a PERSON either acquires or parts with any quantity of gold
subsequent to a declaration made by him, such PERSON is
required to make a further declaration giving the particulars
thereof.
34. Rule 126-L(2) provided the authority of law (obviously for the
officers entrusted with responsibility of the enforcement of the
RULES) to enter and search any premises of PERSONS and seize
gold if found therein, if it is suspected that any provision of Part
XIIA “has been or is being or is about to be contravened” with respect to
the gold found.
21
35. Rule 126-M provided for ‘confiscation’ of the gold seized under
Rule 126-L. Rule provided that a confiscation is required to be
‘adjudged’. The expression ‘adjudged’ is not defined but, having
regard to the scheme of the Rules mentioned above, the only
possible meaning that can be ascribed to that word is that
adjudgment is a proceeding by which the liability for confiscation
arising out of the provisions of Part XIIA of the gold seized is
required to be determined. It appears from the scheme, the liability
for confiscation of the gold found in searched premises arises from
the fact that “there has been or is being or is about to be” a
contravention of any provision of Part XIIA. In other words,
adjudgment is nothing but a process of establishing the facts
relevant for arriving at a conclusion that “there has been or is being
or is about to be” a contravention of any one of the Rules contained
in Part XIIA. Goes without saying that adjudgment is a quasi
judicial proceeding.
36. The expression ‘confiscation’ is not defined in the RULES. It
had roots in the latin word Confiscare – to consign to fiscus i.e.
transfer to treasury, as a punishment or in enforcement of law.
Though, the expression is generally understood as having
implications associated with a crime. However, it is now well settled
22
at least by two15 earlier judgments of this Court that the liability for
confiscation of property could be purely civil in nature as a
consequence of the violation of some prescription of law commonly
described as ‘forfeiture’. The words ‘forfeiture’ and ‘confiscation’
have come to be used interchangeably.
The General Clauses Act, 1972 does not employ the word
‘confiscation’. On the other hand, it employs the word ‘forfeiture’ in
Section 6(d)16. Having regard to the long history of the usage of
those two expressions, we are of the opinion that ‘forfeiture’ is an
expression which takes within its sweep ‘confiscation’ also for the
purpose of law17.
37. Rule 126-P provided for penalties. The sub-rules insofar as it
is relevant for the facts of the present case are Rule 126P(1)(i) and
(2)(ii)18, the first of which stipulated that any PERSON either fails or
omits to make any return required under Rule 126-I without any
reasonable cause or makes a false statement in the return filed

15 The State of West Bengal Vs. S.K. Ghosh AIR 1963 SC 255
Biswanath Bhattacharya Vs. Union of India (2014) 4 SCC 392
16 Section 6(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against
any enactment so repealed; or
17 Raja Saliqram Vs. Secretary of State of India in Council, 1874 12 Bengal LR 167, at page 182
18 Rule 126P. Penalties—(1) Whoever,—(i) fails or omits to make any return including a further return as required
by rule 126F or any declaration including a further declaration as required by rule 126I without any reasonable
cause, or makes any statement in such return or declaration which is false and which he either knows or believes to
be false or does not believe to be true, shall be punishable with imprisonment for a term which may extend to one
year or with fine or with both;”.
Rule 126(2) Whoever,— (ii) has in his possession or under his control any quantity of gold in contravention of any
provision of this Part.
23
either with knowledge or belief that such statement is false is
punishable with imprisonment with a term of one year or fine or
both. Sub-rule(2)(ii) stipulates that any person who “has in his
possession or under his control any quantity of gold in
contravention of any provision of this part” shall be punishable with
imprisonment for a term of not less than six months and not more
than two years and also with fine.
38. We have indicated the content of Rule 126-P(1) only for the
limited purpose of understanding the overall scheme of the RULES
and the consequences (other than confiscation of the gold under
Rule 126M) that can visit PERSONS either owning or possessing
gold in contravention of the provisions contained in Part XIIA.
39. It can be seen from the above that possession of undeclared
gold entails two consequences – (i) liability for confiscation of such
gold, and (ii) liability for prosecution and punishment. Both the
consequences are independent though flowing from the same set of
facts.
24
40. Another relevant feature of the RULES (for the purpose of the
case on hand) is that under Rule 126-M(8)19, the officer adjudging
confiscation may give to the “owner of the gold” an option to pay in
lieu of confiscation such fine (popularly known as redemption fine)
as the officer thinks fit.
APPLICATION OF THE LAW TO THE FACTS OF THE CASE:
41. Confiscation of the gold of the appellant under the order (dated
24.09.1966) of adjudgment of confiscation was nothing but a
‘forfeiture’ of gold within the meaning of the expression occurring
under Section 6(d) of the General Clauses Act. The order of
forfeiture necessarily extinguished the title of the appellant in the
confiscated gold and obliged the appellant to part with the gold.
Correspondingly the Union of India acquired title to that gold. In
other words, the appellant incurred a liability to part with or forfeit
the gold. If the original confiscation order (dated 24.09.1966)
remained unchallenged or otherwise and became final, the vesting
of title in the confiscated gold in the Union of India would have been
an accomplished fact under the RULES. But the appellant
questioned the legality of the order of confiscation before the

19 Rule 126M(8) (a) Whenever confiscation of any gold is authorised by this Part, the officer adjudging it may give
to the owner of the gold an option to pay in lieu of confiscation such fine as the said officer thinks fit.
25
‘appellate’ fora and the proceedings were pending even by the date
of the repeal of the RULES.
42. The adjudgment of confiscation was found to be not in
accordance with law by the Rajasthan High Court in Writ Petition
No.1215/79 dated 9th August 1994. The High Court had set aside
the adjudgment order and remitted the matter to the original
authority for fresh adjudgment. The High Court did not hold the
seizure of appellant’s gold was illegal. In other words, the seizure of
the gold under the RULES remained undisturbed thereby requiring
an examination of the question whether the gold is required to be
confiscated. As a result, only the adjudgment of confiscation was
required to be conducted afresh. It is a liability incurred by the
appellant. Necessarily the question arises as to what is the law in
accordance with which such adjudgment is to be made. By the
date of the judgment of the High Court, the RULES stood repealed
by the ORDINANCE which inter alia provided that Section 6 of the
General Clauses Act applies. By virtue of the operation of Section 6
of the General Clauses Act20, the adjudgment of confiscation (legal

20 “Section 6. Effect of repeal.——Where this Act, or any Central Act or Regulation made after the commencement
of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears,
the repeal shall not—
(a) revive anything not in force or existing at the time at which the repeal takes effect; or
(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed;
or
26
proceeding) in respect of the seized gold made under the RULES is
required to be made afresh and appropriate further orders are to be
passed in accordance with the RULES as if the repealing
ORDINANCE had not been passed21.
43. The legal consequences which follow the repeal of the RULES
are specified in Section 117 of the ORDINANCE.
“…upon such repeal, Section 6 of the General Clauses Act, 1897,
shall apply as if the said Part were a Central Act …”
Consequently, the RULES would remain unaffected in respect of the
various legal proceedings, referred to in Section 6 (e) of the General
Clauses Act, either pending or concluded and other appropriate
consequences specified in the RULES would follow.
44. But that does not solve the problem on hand. The
ORDINANCE itself came to be repealed by the GOLD ACT by the
date of the judgment of the Rajasthan High Court.
Such repeal gives rise to two questions – What is the effect of
(i) the repeal of the Ordinance 6 of 1968, and (ii) the declaration
under Section 116(2) of the GOLD ACT?

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment
so repealed; or
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability,
penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be
instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the
repealing Act or Regulation had not been passed.”
21 I.T. Commissioner Vs. Shah Sadiq & Sons, (1987) 3 SCC 516, page 524 para 15
27
45. At the time of the making of the GOLD ACT, Parliament was
conscious of the existence of the RULES and their repeal by the
ORDINANCE and also the fact that various actions authorised
under the provisions of the Part XIIA of the RULES were taken or
pending. The Parliament is also conscious of the fact that the
ORDINANCE while repealing the RULES provided for the application
of Section 6 of the General Clauses Act. Pursuant to the repeal of
the ORDINANCE, the Parliament did not choose by the GOLD ACT
to disapprove such a declaration made under the ORDINANCE.
Therefore, in our opinion, it is more than public interest and
constitutional necessity as opined in Krishan Kumar Singh’s case
to hold that the RULES stood peremptorily repealed by the
ORDINANCE and on such repeal, Section 6 of the General Clauses
Act applied.
Therefore, the RULES stood peremptorily repealed by the
ORDINANCE notwithstanding the fact that the ORDINANCE itself
came to be repealed subsequently by the GOLD ACT. The repeal of
the Ordinance does not revive the RULES.
46. Now we shall deal with Question No.(ii) mentioned above i.e.,
the effect of Section 116(2), insofar as it is relevant for our purpose,
that the confiscation adjudged under Part XII-A of the RULES shall
28
be deemed to have been adjudged under the corresponding
provision22 of the GOLD ACT.
47. The question is no more res integra. This Court in Jayantilal
Amrathlal v. Union of India23 specifically dealt with the issue.
About 24.5 kgs. of gold was seized from the Jayantilal on 17th
December 1964. On 5th June 1965, a show-cause notice was
issued, calling upon Jayantilal to explain why the seized gold
should not be confiscated under Rule 126-M of the RULES. The
said notice was challenged under Article 226 in a writ petition.
During the pendency of the said writ petition, the ORDINANCE
came to be issued followed by the GOLD ACT. It was argued on
behalf of Jayantilal that notice dated 5th June 1965 could not be
enforced because it was a notice issued under the RULES which
had been repealed. The said argument was rejected.
“Para 7. In view of Section 115(2) of the Gold (Control) Act, 1968, it
was urged on behalf of the appellant that the notice issued on
June 5, 1965 can no more be operative because under the Gold
(Control) Act, 1968, there are no provisions for making a
declaration relating to the possession of primary gold. At this stage
it may be noticed that under the “Rules” every person who was in
possession of primary gold, exceeding the prescribed weight was
required to convert the same either into ornaments or sell the
same to the licensed dealers within the time prescribed by the
“Rules”. Possession of primary gold thereafter exceeding the

22 “Section 78. Adjudication. Any confiscation may be adjudged or penalty may be imposed under this Act – (a)
without limit, by a Gold Control Officer not below the rank of a Collector of Central Excise or of Customs;
(b) subject to such limits as may be specified in this behalf, by such other Gold Control Officer, not below the rank
of a Superintendent of Central Excise, as the Central Government may, by notification, authorise in this behalf.”
23 (1972) 4 SCC 174
29
prescribed limit was an offence. That period had expired long
before the Gold (Control) Act, 1968 came into force. Hence the Gold
(Control) Act naturally did not make any provision for a declaration
of the possession of primary gold. In view of that circumstance it
was urged on behalf of the appellant that the provisions in the
“Rules” requiring a declaration to be made in respect of the
possession of primary gold are inconsistent with the provisions of
the Gold (Control) Act and therefore the notice issued under the
“Rules” cannot be considered as being continued under the
provisions of the Gold (Control) Act, 1968.
Para 8. The above contention is untenable. There are no provisions
in the Gold (Control) Act, 1968 which are inconsistent with Rule
126(I)(10) of the “Rules”. That being so, action taken under that
rule must be deemed to be continuing in view of Section 6 of the
General Clauses Act, 1897. It is true that Gold (Control) Act, 1968
does not purport to incorporate into that Act the provisions of
Section 6 of the General Clauses Act. But the provisions therein
are not inconsistent with the provisions in Section 6 of the General
Clauses Act. Hence the provisions of Section 6 of the General
Clauses Act are attracted in view of the repeal of the Gold (Control)
Ordinance, 1968. As the Gold (Control) Act does not exhibit a
different or contrary intention, proceedings initiated under the
repealed law must be held to continue. We must also remember
that by Gold (Control) Ordinance, the “Rules” were deemed as an
act of Parliament. Hence on the repeal of the “Rules” and the Gold
(Control) Ordinance, 1968 the consequences mentioned in Section
6 of the General Clauses Act, follow. For ascertaining whether
there is a contrary intention, one has to look to the provisions of
the Gold (Control) Act, 1968. In order to see whether the rights
and liabilities under the repealed law have been put an end to
by the new enactment, the proper approach is not to enquire if
the new enactment has by its new provisions kept alive the
rights and liabilities under the repealed law but whether it has
taken away those rights and liabilities. The absence of a saving
clause in a new enactment preserving the rights and liabilities
under the repealed law is neither material nor decisive of the
question — see State of Punjab v. Mohar Singh [AIR 1955 SC 84 :
(1955) 1 SCR 893 : 1955 SCJ 25] and T.S. Baliah v. Income Tax
Officer, Central Circle VI, Madras [AIR 1969 SC 701 : (1969) 3 SCR
65 : (1969) 1 SCJ 890 : 72 ITR 787] .”
Therefore, it was held that the confiscation proceedings initiated
under the RULES must be concluded in accordance with the
RULES without any reference to the provisions of the GOLD ACT.
30
48. All the above analysis leads us to the following conclusions:
(1) the adjudgment of confiscation of the appellant’s
gold is required to be made only in accordance with
the RULES but not the GOLD ACT;
(2) the role of the 1st fiction created under Section 116
of GOLD ACT is limited as explained in para 29
(supra).
49. The submissions before us revolved around two questions:
(i) What is the law governing determination of the
amount of fine that could be levied and collected
from the appellant in lieu of the confiscation of gold
seized from him?;
(ii) Whether the High Court applied the correct law in
recording the conclusion that the appellant is liable
to pay an amount of Rs.11.04 crores in lieu of the
confiscation of the Gold if he so chooses?
and issues ancillary thereto.
50. It must be remembered that by order dated 9.12.94, the officer
adjudging the confiscation of gold of the appellant gave an option to
the appellant to pay a fine of Rs.2.5 crores. While deciding that
figure, the officer took note of the fact that the gold was valued at
31
Rs.12.5 lakhs at the time of its seizure and also took note of the fact
that as on 9.12.1994 (the date of adjudgment order), the gold was
valued at Rs.11.04 crores. It must be remembered that Rule 126-
M(8)(a) did not oblige the officer to determine the amount of fine on
the basis of the value of the confiscated gold either with reference to
the date of its seizure or on the date of adjudgment of confiscation.
The rule (text of it at least) conferred an unfettered discretion on the
officer to determine the amount of fine. But an unfettered
discretion and the Rule of Law are contradictions in terms. The
High Court opined at para 18;
“… Now, what shall be the quantum of fine, decision thereof has
been left to the adjudging authority and he may adjudge the fine as
he thinks fit. Of course, this decision is required to be exercised
judiciously in accordance with law or rule as the case may be but
not arbitrarily. The words “an option to pay in lieu of confiscation
such fine” are very significant and the use of the words “in lieu of”
connotes that the fine should be equivalent to the thing or Gold
confiscated by the authority.”
We are in complete agreement with the view of the High Court.
51. While it is true that the discretion conferred upon the
Authority under Rule 128M – (8)(a) is textually unfettered, it does
not lead to the inference that the discretion is absolute and uniform
with reference to the various contraventions of the RULES. The
limitations on the discretion are to be found from the scheme of the
RULES. The various RULES in the Part XIIA of the RULES make
32
various stipulations and the contravention of any one of the
stipulations can lead to the confiscation of gold. The factors which
influence the Authority’s exercise of discretion will necessarily vary
from the nature of the offence which is committed.
For instance, Rule 126–I mandates that certain PERSONS
make a declaration to the Administrator in the prescribed from. The
violation of this would entail a confiscation.
52. But Rule 126–I(2) stipulates that the declaration is required to
be made by PERSONS other than owners of the gold in certain
cases because the owners are either legally incapacitated or
judicial persons who are necessarily required to act through a
human agency. Rule 126–I(2)(a) stipulates that the declaration is to
be made by the guardian. Similarly with gold belonging to an idol24,
the declaration is to be made by the manager. In all these cases, the
declaration is to be made by a third person who is not necessarily
in possession or the owner of gold. In such circumstances, if the
declaration is not filed, the owner could not be held responsible for
the non-declaration. Therefore, the relevant factor for the exercise

24 Rule 126-I-(2)(b) in the case belonging to an idol or a deity, by the manager of such idol or deity, whether known
as shebait or manager or by any other name
(c) in the case of gold belonging to a person whose properties under the management of a Court of wards, by the
manager of such Court
(d) in the case of gold belonging to a person whose properties are under the management of any administrator or
receiver , by such administrator or receiver.
33
of the discretion is the culpability of the owner of the gold and
factors connected therewith.
53. In the same vein Rule 126–I(3)25 enjoins a person from
acquiring gold, subsequent to making a declaration, except in
certain situations contemplated therein. Sub Rule 4 and 5 lay down
the manner in which a declaration is supposed to be made by those
who acquire gold through succession, intestate or testamentary.
PERSONS not filing a declaration at all and PERSONS not filing a
further declaration under sub-Rule (3) cannot be treated on the
same footing.
54. All this just goes to show that the violations committed by
PERSONS falling under different category cannot be treated alike.
If the rule were to be applied to all these categories of PERSONS
uniformly it would result in the violation of Article 14.
55. The appellant’s case does not in our view calls for any
discretion to be exercised in his favor in the light of the totality of

25 Rule 126– I(3) No person who is either a required to make a declaration or a further declaration under this rule or
exempted from making such declaration or further declaration under sub-rule (7) thereof, shall, after the
commencement of this Part, acquire any gold other than ornament except –
(A) By succession, intestate, or testamentary, or
(B) In accordance with a permit granted by the Administrator in this behalf
34
the circumstances. The non-filing of the declaration is established
to be an absolutely calculated violation of law.26
56. Aggrieved by the determination of the fine amount of Rs.2.5
crores, the appellant carried the matter in appeal under Section 81
of the GOLD ACT. Two members of the appellate tribunal were not
able to agree upon the quantum of the fine. While the Member
(Technical – Brahma Deva) opined that the law applicable is only
Rule 126-M(8)(a) of the RULES and the RULES did not make any
reference to the value of the gold for the purpose of determining the
quantum of fine. He, therefore, opined that the quantum is entirely
the discretion of the adjudicating officer. He, however, chose to
substitute his discretion for that of the adjudicating officer by
reducing the fine to Rs.25 lakhs from Rs.2.5 crores. Whereas the

26 The Collector’s order of 24/09/1966 deals with the pleas taken by the Appellant regarding his non-declaration:
“In his Reply, Shri Chhagan Lal Godavat stated that his letters dated 26.09.1920 and 3.3.1921were written by him
when he was a minor. He contended that he did not know how to write account books. He was also not fully aware
of his “good” and “bad”. He did not even recollect which connection these letters were got(sic) written from him. He
could recollect only that these letters were written to check up the balance sheet by his ‘Munim’ Shri Rikhab Dass.
He further stated that the documents were got written under the influence of ‘Bhang’. The late ‘Munim’ Shri
RikhabDass was keeping the gold. It is likely that his mother, Smt. Birju Bai may have told about it. He expressed
his ignorance about this gold till the date of seizure. He did not know where the gold was kept. He, therefore,
submitted that he cannot be proceeded against on the basis of the letters written by him at a time when he was a
minor.
Chhagan Lal Godavat also disclosed that he and his mother had strained relations. She did not disclose the fact of
buried gold to him fearing that he might dispose it off… “
The Superintended after ascertaining the true position of the relationship of Chagganlal found that “The mother
denied there was any quarrel with her son. The house stand in the name of the ancestral firm of which Chagganlal is
the sole proprietor. The statement of the mother was recorded in the presence of Shri Chhagan Lal Godavat was also
signed the same”
35
Member (Judicial – Sankararaman) opined27 that the quantum of
fine must be “in line with Section 73 of the Gold Control Act” and,
therefore, opined that the fine amount should not exceed Rs.12.5
lakhs (the value of the gold at the time of seizure). In view of the
disagreement, the matter was referred to the third member of the
tribunal who agreed with the Member (Technical)’s view.
57. Aggrieved by the same, the respondent sought a reference
under Section 82B of the GOLD ACT to the High Court on two
precise questions, which are already noted at para 7 (supra) and, in
our opinion, the questions were rightly framed.
58. The High Court rightly came to the conclusion that the case of
the appellant is governed only by the RULES and not by Section 73
of the GOLD ACT and recorded at paras 20 and 21 of the impugned
judgment as follows:
“20. It is revealed from the material on record that the Collector
aptly applied the market price of Gold at the rate of Rs.4,600 per
10 gms as on December 7, 1994, the date of adjudicating when the
option was given by him to the respondent and on this basis, the

27 While agreeing with the approach taken by my learned brother Shri Brahma Deva for reduction of the fine amount
in lieu of confiscation, I am, however, of the view that the quantum thereof should be in line with Section 73 of Gold
Control Act after it was amended whereby redemption fine was not to exceed the value of the gold. The term
‘value’ has also been defined in the Act as the marked price on the date of seizure. Applying the said
yardstick the fine in lieu of confiscation should not exceed Rs.12.50 lakhs which was the value of the seized
goods at the time of seizure. In the circumstances, I feel that the proposed reduction of fine from Rs.2.50 crores as
determined by the Collector in the adjudication order passed de novo to a sum of Rs.25 lakhs is apparently based
upon the fact that the law has been changed from the Defence of India Rules to Gold Control Act. In view of the
matter, the subsequent development of the maximum amount of fine under Section 73 of the Gold Control Act being
reduced to the value of goods from twice that amount should also be taken into account. In that event the fine
amount in the present case should not exceed Rs.12.5 lakhs. I am of the view accordingly that the fine should be
reduced to Rs.12.5 lakhs.
36
price of total seized and confiscated Gold 240.040 kgs came to be
11.04 crores and the redemption fine cannot be in any way less
than this.
21. Thus, in the ultimate analysis, it is candidly recorded that
the quantity of redemption fine should be related to the market
value of gold on 7.12.1994 i.e. the date of adjudication when the
officer adjudging gave the owner of the Gold an option to pay fine
in lieu of confiscation. The amount of fine as adjudged to the tune
of Rs.2.5 crores was totally arbitrary and irrational as it was not
based on any sound and lawful reasoning.”
The High Court finally directed –
“24. In view of the above, we deem it just and proper to direct the
authorized officer to give an option afresh following above clinching
observations to the owner of the Gold asking him to pay the
redemption fine in lieu of confiscation.”
59. Pursuant to the order of the High Court dated 29.06.2009,
answering the reference, the tribunal made an order dated
30.04.2010 remitting the matter to the Commissioner:
“4. Under the circumstances, we dispose of the appeal by way of
remand to the Adjudicating Commissioner (authorized officer) to
determine appropriate redemption fine and allow the order of the
gold to redeem the gold on payment of such redemption fine. It
goes without saying that while determining the redemption fine, he
shall follow the cited order of the Hon’ble High Court dated
29.6.2009.”
Thereby, the Commissioner passed an order as follows:
“(i) An option is given to Shri Gunwant Lal Godawat and legal
heir of late Shri Chhagan Lal Godawat to pay Rs.11.04 crores
(Rupees Eleven crores and four lakhs only) in lieu of confiscation of
the gold weighing 240.040.145 kgs under the erstwhile Defence of
India Rules, 1962 within three months of receipt of this order.
(ii) In case Shri Gunwant Lal Godawat and the legal heir of late
Shri Chhagan Lal Godawat does not exercise the option of
depositing the amount of Rs.11.04 crores in the stipulated time
limit, as given above, Shri Gunwant Lal Godawat and legal heir of
late Shri Chhagan Lal Godawat shall be liable to return to the
Department immediately the gold weighing 185.145 kgs which was
37
returned to them on 2.7.94 in compliance of directions of the
Hon’ble Rajasthan High Court given in the order dated 28.05.97.”
It must be remembered that the amount of Rs.11.04 crores was the
value of the gold as on the date (7.12.94) when the appellant was
given the option to pay the fine in lieu of confiscation.
60. However, it is argued before us by the appellant that:
“Once the order of confiscation had been set aside and the matter
remanded back, the issue whether the gold is to be confiscated was
required to be adjudicated afresh. The determination of the law
under the proceedings would continue has to be considered “on the
date of remand by the High Court”… Thus the pending proceedings
under Part XII-A of the DoI Rules, will have to be deemed to be
continue under the Gold (Control) Act.”
28
In other words, the argument advanced is that the law applicable to
the adjudgment proceedings is GOLD ACT – a submission plainly
untenable in light of the reasons given by us in the preceding
paragraphs and the decision of this Court in Jayantilal.
61. A proceeding initiated under the RULES and pending as on the
date of the GOLD ACT will still have to be concluded in accordance
with the RULES in view of Section 116 of the ORDINANCE for the
reasons already noted at para 29.

28 Written submissions of the appellant.
38
62. On the basis of the above-mentioned submission, a further
submission was made:
“The said rule (Ed: Rule 126 M (8)) grants the further discretion to
impose a fine that is less than or more than the market value as on
the date of seizure or of order of confiscation, as the case may be
(however, redemption at a higher value would not make
commercial sense since the buyer will prefer buying from the
market). Section 73 read with Section 2(v) of the Act mandates
that the redemption fine will not exceed the market value of the
gold seized as on the date of seizure.
The Act takes away the discretion available to the officer to
determine the relevant date for valuation by mandating the
relevant date to be the date of seizure, which in any case is one of
the methods available to the officer for calculating the redemption
fine under rule 126M(8). Therefore, the Act only reduces the
discretion available under Rule 126M(8) with respect to the
relevant date for calculation of the redemption fine. The officer
continues to have the discretion to impose a fine lesser than the
market value as on the date of seizure. There is therefore no
inconsistency between the DoI Rules and the Act.”
63. The substance of the submission is that both the RULES and
the GOLD ACT provide for giving an option to the “owner” of the
gold adjudged to be confiscated. While the RULES provide an
unrestricted discretion to the “officer adjudging” to determine the
amount of fine, GOLD ACT restricts the discretion by imposing an
upper limit on the quantum of fine that could be imposed by
declaring that “give to the owner thereof an option to pay in lieu of
confiscation such fine, not exceeding the value”. According to the
petitioner, such value is to be determined with reference to the date
39
of the seizure of the gold because of Section 73 of the GOLD ACT
read with Section 2(v) thereof.
64. At the outset, we must make it clear that there is nothing in
the text of Section 73 of the GOLD ACT which requires the value of
the gold (for the purpose of determining the fine) should be the
value of the gold as on the date of the seizure. But the expression
‘value’ is a defined expression under Section 2(v) of the Act.
“Section 73 – Power to give option to pay fine in lieu of
confiscation- Whenever any confiscation is authorized by this
Act, the officer adjudging it may, subject to such conditions as
may be specified in the order adjudging the confiscation, give to
the owner thereof an option to pay in lieu of confiscation such
fine, not exceeding the value29 of the thing in respect of which
confiscation is authorized, as the said officer thinks fit.”
Section 2(v). ‘value’, in relation to primary gold, article or
ornaments, means,-
(i) when the gold is seized under this Act, the market
price of such gold as on the date of the seizure thereof,
(ii) when the gold is not available for seizure, the market
price of such gold as on the date on which the notice referred
to in section 79 is issued.”
65. The language of Section 73 is clear that it applies only to those
cases wherein confiscation is one which is authorised “by this Act”.
In our opinion, Section 73 would have no application to those cases
of confiscation which are adjudged under the RULES. It would be
applicable only for those cases where the confiscation is authorised

29 This rule originally provided for imposition of a fine not exceeding twice the value of the goods. However, the
word “twice” was omitted by the Gold Control (Amendment) Act, 1971 (21 of 1971), Sec.3.
40
by the GOLD ACT. Section 7130 authorises the confiscation of gold
in respect of which “any provision of this Act or any rule or order made
thereunder has been, or is being, or is attempted to be, contravened”. In
other words, Section 71 authorises the confiscation of gold if there
has been or is or is attempt to contravene the provisions of the
GOLD ACT i.e. only such contravention occur after the
commencement of the GOLD ACT but not contravention of law
which existed anterior thereto (the RULES).
66. There is a distinction between acts done pursuant to the
authorization of a statute and acts done pursuant to the
authorization under a different statute or a statutory instrument
but deemed to have been done under the earlier of the
abovementioned two statutes. When a statute creates a fiction
requiring certain events which took place prior to the
commencement of such a statute to be deemed to have been done
under the statute, such a fiction does not retrospectively authorise
doing of such acts. It only takes note of the existence of certain
state of affairs and creates putative state of affairs by declaring that
such anterior events should be deemed to have taken place under

30 “Section 71. Confiscation of gold. (1) Any gold in respect of which any provision of this Act or any rule or
order made thereunder has been, or is being, or is attempted to be, contravened, together with any package,
covering or receptacle in which such gold is found, shall be liable to confiscation:”
41
the statute which came into existence later. Such fictions could
only have limited consequences.
67. Prior to the GOLD ACT, seizure and confiscation of gold were
authorised by the RULES. Though, by virtue of the fiction created
under Section 116, the confiscations adjudged under the RULES
are deemed to be confiscations adjudged under the GOLD ACT, the
Scheme and the limitations of such fiction are already explained
earlier in para 29. Therefore, neither Section 73 nor the definition
under Section 2(v), in our opinion, would be applicable for the
confiscations adjudged under the RULES – pursuant to a seizure
that took place before the commencement of the GOLD ACT.
68. No doubt that the option to pay fine in lieu of confiscation is
one of the consequences flowing from the adjudgment of
confiscation. Therefore, in view of the fiction under Section 116,
Section 73 of the GOLD ACT would have been applicable if
consequence of applying such fiction to the confiscations adjudged
under the RULES is not inconsistent with the GOLD ACT. In view
of the language of Section 73 – “confiscation authorised by this Act”
limits the operation of Section 73 only to the confiscations adjudged
under the GOLD ACT. Hence, there is an inconsistency. We are of
42
the opinion that the High Court rightly held that Section 73 would
not come into play at all in the case on hand. Therefore, the fine
amount cannot be determined on the basis of the value of the gold.
69. On the other hand, as rightly opined by the High Court, the
market value of the gold as on the date of the exercise of the option
by the owner of the gold to pay fine in lieu of the confiscation would
be the legally appropriate amount of fine. Because it is a fine in
lieu of confiscation. Confiscation would result in the loss of the
entire property in the confiscated gold resulting in a financial loss of
the value of gold to the owner. Hence, the value of the gold is to be
determined with reference to the date on which the owner exercises
the option to pay the fine in lieu of the confiscation.
70. One of the ancillary submissions made on behalf of the
appellant is that in view of the fact that the order of the Collector
dated 9.12.94 gave an option to the appellant to redeem the gold by
paying a fine of Rs.2.5 crores in lieu of confiscation which had
become final in view of the dismissal of the appeal of the
department on 23.5.1996. Therefore, it was not open to the High
Court to hold that the appellant is liable to pay a redemption fine of
Rs.11.04 crores in a reference under Section 82-B of the GOLD
43
ACT. The High Court could not sit in appeal on the judgment of the
Tribunal and substitute its opinion regarding the amount of fine to
be collected from the appellant in view of the confiscation of his
gold.
71. The submission of the appellant is required to be rejected for
the simple reason that the determination of the amount of fine
made by the tribunal was without any basis. The conclusion of the
Tribunal that the fine in lieu of confiscation must be equal to the
value of the gold as on the date of its seizure is not based on any
principle of law. The correctness of the said conclusion was the
subject matter of the reference before the High Court. The High
Court was completely justified in examining the correctness of the
legal basis on which the figure of Rs.12.5 lakhs was arrived at. For
the reasons already recorded by us earlier, the High Court rightly
came to the conclusion that the fine in lieu of confiscation must
represent the value of the gold so confiscated as on the date
(9.12.94) the appellant was given an option to pay the fine in lieu of
confiscation. Even according to the said order of the Collector, the
value of the gold as on that date was Rs.11.04 crores. Therefore,
the High Court was right in its direction.
44
72. We are only left with one submission made on behalf of the
Union of India, i.e., in view of the enormous delay which took place
in the confiscation proceedings (50+ years), the appellant must be
made to pay the interest on the amount of fine of Rs.11.04 crores.
Otherwise, it would have the effect of permitting the appellant to
profit by litigation as according to the Attorney General if the
appellant is permitted to take back the entire quantity of 240.040
kgs. of gold the current market value would be Rs. 72 crores
(approx.). We find the submission wholly justified. We, therefore,
deem it proper to direct that the appellant would be entitled to
redeem the gold by paying not only the fine of Rs.11.04 crores but
also the interest thereon calculated @ 10% p.a.
73. The appeals are disposed of as indicated above.
………………………………….J.
(J. CHELAMESWAR)
…….……………………………J.
(S. ABDUL NAZEER)
New Delhi
November 22, 2017

Posted in Uncategorized

without pleadings, no evidence or no arguments can be considered = First, the respondent (defendant) had not raised such plea in his written statement. In other words, the respondent did not set up such defense in the written statement. Second, the Trial Court, therefore, had no occasion to frame any issue on such plea for want of any factual foundation in the written statement. Third, the Trial Court and First Appellate Court, in these circumstances, had no occasion to record any finding on this plea either way. Fourth, in the light of these three reasonings, the High Court ought to have seen that such plea really did not arise for consideration because in 11 order that any question is involved in the case, the party concerned should lay its factual foundation in the pleading and invite finding on such plea. Fifth, the High Court failed to see the case set up by the respondent in his written statement. As mentioned above, the defense of the respondent was that he had denied the appellant’s title over the suit shop and then set up a plea of adverse possession contending that he has become the owner of the suit shop by virtue of adverse possession, which according to him, was from time immemorial. we are of the considered view that the Trial Court and First Appellate Court were justified in holding the appellant to be the owner of the suit shop, having purchased the same vide registered sale deed dated 20.09.1997 from its previous owner. It was also rightly held that the respondent was in possession 15 of the suit shop as an encroacher and failed to prove his adverse possession over the suit shop. These findings being concurrent findings of fact were binding on the High Court and, therefore, the second appeal should have been dismissed in limine as involving no substantial question of law.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 19421 OF 2017
(ARISING OUT OF SLP (C) No.22894/2014)
Sri Shivaji Balaram Haibatti ….Appellant(s)
VERSUS
Sri Avinash Maruthi Pawar …Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1. Leave granted.
2. This appeal is filed by the plaintiff against the
final judgment and order dated 04.04.2014 passed
by the High Court of Karnataka, Bench at Dharwad
in Regular Second Appeal No.213/2007(INJ.)
whereby the High Court allowed the appeal filed by
the respondent herein and set aside the judgments
and decrees of the Trial Court and First Appellate
Court.
1
3. In order to appreciate the issues involved in
the appeal, it is necessary to state few relevant
facts.
4. The appellant is the plaintiff whereas the
respondent is the defendant in the civil suit out of
which this appeal arises.
5. The dispute involved in the appeal relates to a
shop measuring 9 ft. 9 inch North and 5 ft. East
West situated out of land bearing CTS 1590/A-4 in
the City of Belgaum (as detailed in plaint)
(hereinafter referred to as “suit shop”).
6. One Vithal Dhopeshwarkar was the owner of
the suit shop along with the land over which the
suit shop is built and some adjoining land. He sold
the land and the suit shop to the appellant vide
registered sale deed dated 20.09.1997 (Annexure
P-6). The respondent (defendant) was in possession
of the suit shop even prior to its purchase by the
appellant from Vithal Dhopeshwarkar.
2
7. On 08.06.1999, the appellant filed a civil suit
being O.S. No.115/1999 against the respondent in
the Court of Civil Judge, Sr Division, Belgaum
claiming possession of the suit shop from the
respondent. The suit was founded on the
allegations, inter alia, that the appellant is the
owner of the suit shop having purchased the same
vide registered sale deed dated 20.09.1997 from
Vithal Dhopeshwarkar. It was alleged that the
respondent was in possession of the suit shop
without any right, title and interest of any nature.
8. In other words, according to the appellant, the
respondent, since inception, was in illegal
possession of the suit shop. The appellant, on
purchase of the suit shop, therefore, requested the
respondent to vacate the suit shop but he failed to
vacate and hence the appellant became entitled to
claim possession of the suit shop from the
respondent on the strength of his ownership over
3
the suit shop. A relief of mesne profits at the rate of
Rs.2500/- per month was also claimed.
9. The respondent filed written statement. He
denied the appellant’s title and claimed that he has
been in possession of the suit shop since “time
immemorial” and much prior to the appellant’s
purchasing the suit shop. The respondent also
raised a plea that he has perfected his title by virtue
of adverse possession over the suit shop against the
predecessor-in-title of the appellant and the
appellant.
10. The Trial Court framed the issues. Parties led
evidence. By judgment/decree dated 03.11.2003 in
O.S. No.115 of 2003, the Trial Court decreed the
appellant’s suit. The Trial Court held that the
appellant is the owner of the suit shop, that the
respondent failed to prove his adverse possession
over the suit shop, that the respondent has been in
illegal possession of the suit shop and that the
appellant is entitled to claim eviction of the
4
respondent from the suit shop and also entitled to
claim mesne profits at the rate of Rs.2000/- p.m. for
a period of three years and the cost of Rs.5000/-.
The Trial Court accordingly passed decree for
possession and mesne profits against the
respondent.
11. The respondent, felt aggrieved, filed first
appeal before the Ist Additional District Judge,
Belgaum being Regular Appeal No.58/2003. By
judgment/decree dated 11.12.2006, the First
Appellate Court dismissed the appeal and affirmed
the judgment/decree of the Trial Court.
12. The respondent, felt aggrieved, filed Second
Appeal in the High Court of Karnataka (Dharwad
Bench) being S.A. No. 213/2007 under Section 100
of the Code of Civil Procedure, 1908 (hereinafter
referred to as “the Code”). The High Court, by
impugned judgment, allowed the Second Appeal and
while setting aside of the judgments and decrees of
two Courts below dismissed the appellant’s suit.
5
The High Court held that the respondent was in
possession of the suit shop as tenant and, therefore,
the remedy of the appellant lies in filing the suit
under the Rent Laws and the Transfer of Property
Act for claiming possession of the suit shop. It was
held that the present suit is, therefore, not
maintainable for passing a decree for possession
against the respondent in respect of suit shop.
13. Felt aggrieved, the plaintiff (appellant herein)
has filed the present appeal by way of special leave
before this Court.
14. Heard Mr. R.S. Hegde, learned counsel for the
appellant and Mr. Charuditta Mahindrakar, learned
counsel for the respondent.
15. Having heard the learned counsel for the
parties and on perusal of the record of the case, we
are constrained to allow the appeal and while
setting aside of the impugned judgment of the High
Court restore that of the Trial Court and First
Appellate Court, which had rightly decreed the
6
appellant’s suit against the respondent in relation to
the suit shop.
16. In our considered opinion, the approach of the
High Court in deciding the second appeal, which
resulted in allowing the respondent’s appeal, is
wholly perverse and against the well settled
principle of law applicable to second appeals and to
the factual controversy involved in the case as
would be clear from our reasons set out
hereinbelow.
17. Section 100 of the Code deals with second
appeals. Sub-section (4) says that where the High
Court is satisfied that a substantial question of law
is involved in the case, it shall formulate that
question. Sub-section (5) says that the appeal shall
be heard on the question “so formulated”. It further
provides that the respondent is allowed to raise an
objection at the time of hearing of the appeal that
the question which has been framed does not
involve in the case or in other words, is not a
7
“substantial question of law” and, therefore, the
appeal is liable to be dismissed as involving no
substantial question of law within the meaning of
Section 100 of the Code.
18. The proviso to sub-section (5), however,
recognizes the power of the High Court to frame any
other substantial question of law which was not
initially framed but in the opinion of the Court does
arise in the case. The Court can frame such
question by assigning reasons.
19. Reading of sub-sections (4) and (5) of Section
100 of the Code, in clear terms, shows that, first,
the High Court can hear the second appeal only on
the question so formulated; second, it has
jurisdiction to dismiss the second appeal if the
respondent raises an objection at the time of
hearing that the question so formulated does not
arise in the case or is not a substantial question of
law; and third, it can hear the appeal on any other
question not initially framed provided such question
8
arises in the case and is a substantial question of
law. Such question can then be framed by
assigning the reasons.
20. Now coming to the facts of the case, we find
that the High Court had admitted the second appeal
by framing the following question of law:
“Whether the Courts below have committed
an error in the manner of considering the
pleadings as well as the evidence available on
record and as to whether the same is
contrary to the recitals in the documents at
Exhibit P.15?”
21. Reading of the aforementioned question shows
that the only question, which the High Court was
required to consider in the appeal, was whether the
Trial Court and First appellate Court decided the
case contrary to the pleadings and evidence and
especially contrary to the recitals of EX-P.15.
22. The High Court, however, did not frame any
other question of law to examine the legality and
correctness of any specific finding recorded by the
Courts below on the issues framed.
9
23. In the absence of any question of law framed
on any of the adverse findings recorded by the two
Courts below against the respondent, those findings
attained finality. In other words, since no error was
noticed in any of the findings of the two Courts
below, the High Court did not frame any substantial
question in relation to such findings, which became
final for want of any challenge.
24. The High Court, however, framed one general
question of law as to whether the findings of the two
Courts below were contrary to the pleadings and
evidence and especially to Ex-P-15 and held, by
placing reliance on Ex.P-15, that the respondent
was occupying the suit shop as tenant and,
therefore, the remedy of the appellant was in filing a
tenancy suit against the respondent and to claim
his eviction from the suit shop under the State
tenancy laws or/and Transfer of Property Act in
such suit but not in the present suit which is based
on the strength of his title. The High Court, with
10
this finding, accordingly allowed the appeal and
dismissed the appellant’s suit as being
misconceived.
25. In our considered opinion, the aforesaid
finding of the High Court is wholly illegal and
unsustainable in law besides being against the
pleading and evidence. This we say for following
reasons:
26. First, the respondent (defendant) had not
raised such plea in his written statement. In other
words, the respondent did not set up such defense
in the written statement. Second, the Trial Court,
therefore, had no occasion to frame any issue on
such plea for want of any factual foundation in the
written statement. Third, the Trial Court and First
Appellate Court, in these circumstances, had no
occasion to record any finding on this plea either
way. Fourth, in the light of these three reasonings,
the High Court ought to have seen that such plea
really did not arise for consideration because in
11
order that any question is involved in the case, the
party concerned should lay its factual foundation in
the pleading and invite finding on such plea. Fifth,
the High Court failed to see the case set up by the
respondent in his written statement. As mentioned
above, the defense of the respondent was that he
had denied the appellant’s title over the suit shop
and then set up a plea of adverse possession
contending that he has become the owner of the
suit shop by virtue of adverse possession, which
according to him, was from time immemorial.
27. It was clear that the respondent never claimed
that he was in possession of the suit shop as tenant
of the appellant’s predecessor-in-title. On the other
hand, the respondent had asserted his ownership
right over the suit shop on the strength of his long
adverse possession.
28. It is these issues, which were gone into by the
two Courts and were concurrently decided by them
against the respondent. These issues, in our
12
opinion, should have been examined by the High
Court with a view to find out as to whether these
findings contain any legal error so as to call for any
interference in second appeal. The High Court,
however, did not undertake this exercise and rather
affirmed these findings when it did not consider it
proper to frame any substantial question of law. It
is a settled principle of law that the parties to the
suit cannot travel beyond the pleadings so also the
Court cannot record any finding on the issues
which are not part of pleadings. In other words, the
Court has to record the findings only on the issues
which are part of the pleadings on which parties are
contesting the case. Any finding recorded on an
issue de hors the pleadings is without jurisdiction.
Such is the case here.
29. That apart, even if we examine the question
framed by the High Court as arising in the case, we
are of the considered opinion that the question has
to be answered against the respondent (appellant
13
before the High Court) and in favour of the
appellant herein for more than one reason
mentioned below.
30. First, the respondent did not adduce any
evidence to prove that he was in possession of the
suit shop as tenant of the appellant’s predecessorin-title.
In order to prove the tenancy between the
respondent and the appellant’s predecessor-in-title
(Vithal Dhopeshwarkar), it was necessary for the
respondent to have filed rent receipts/lease deed
etc. and also to have examined his landlord who,
according to him, had inducted him as tenant in the
suit shop. It was not done.
31. Second, Ex.P-15, which is sale deed of the
suit shop nowhere recites that the respondent was
in possession of the suit shop as tenant. All that it
recites is that the respondent has been in
possession of the suit shop. Such recitals, in our
opinion, no way confer the status of a tenant on the
respondent in the absence of any independent
14
evidence adduced by him to prove the creation of
tenancy. No benefit of Ex.P-15 could thus be taken
by the respondent to claim the status of a tenant.
32. In the light of aforementioned reasons, we are
of the considered opinion, that the High Court was
not right in holding that the respondent was in
occupation of the suit shop as tenant and that the
remedy of the appellant was to file a civil suit to
claim eviction under the Rent Laws. This finding, in
our view, is contrary to the pleadings and evidence.
It is also otherwise not legally sustainable for want
of any evidence adduced by the respondent in
support thereof.
33. In view of foregoing discussion, we are of the
considered view that the Trial Court and First
Appellate Court were justified in holding the
appellant to be the owner of the suit shop, having
purchased the same vide registered sale deed dated
20.09.1997 from its previous owner. It was also
rightly held that the respondent was in possession
15
of the suit shop as an encroacher and failed to
prove his adverse possession over the suit shop.
These findings being concurrent findings of fact
were binding on the High Court and, therefore, the
second appeal should have been dismissed in limine
as involving no substantial question of law.
34. In the light of foregoing discussion, the appeal
succeeds and is allowed. Impugned judgment of the
High Court is set aside and as a consequence, the
judgments of the First Appellate Court and Trial
Court are restored.

……………………………………..J.
[R.K. AGRAWAL]

 

……………………………………….J.
[ABHAY MANOHAR SAPRE]
New Delhi;
November 20, 2017
16

Posted in Uncategorized

Six FIRs were registered in different Police Stations in the State of Gujarat against six different Co-Operative Housing Societies for commission of various offences alleged to have been committed by the President, Office Bearers and other persons of the six Societies under Sections 406, 409, 420, 465, 467, 468, 471,120-B and 477-A of the Indian Penal 2 Code, 1908 (hereinafter referred to as “IPC”) = Needless to say that when all the six cases are filed in the concerned Courts, they would be clubbed together and tried by one competent Court in accordance with law. = The parties are at liberty, at an appropriate stage, to move to the High Court with a prayer to club and then transfer all the six cases to one competent Court.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL Nos.1947-1956 OF 2017
(ARISING OUT OF SLP (Crl) Nos.1218-1227/2014)
Chirag M. Pathak & Ors.
Etc.Etc. ….Appellant(s)

VERSUS
Dollyben Kantilal & Ors. ….Respondent(s)
With
Special Leave Petition (Crl.) Nos.869-878 of 2014
J U D G M E N T
Abhay Manohar Sapre, J.
1) Leave granted.
2) These appeals are filed by appellants against
the common judgment dated 17.10.2013 passed by
the High Court of Gujarat at Ahmedabad in Special
Criminal Application Nos.1265, 1266, 1267, 1268,
1
1269, 2930, 2931, 2932, 2933 and 2934 of 2013
whereby the High Court allowed the applications
filed by the respondents herein under Section 482 of
Code of Criminal Procedure Code, 1973 (hereinafter
referred to as “the Code”) and quashed the five First
Information Report (in short “the FIR”)
Nos.50/2013, 51/2013, 52/2013, 53/2013 and
54/2013 dated 19th February, 2013.
3) Facts of the case and the issues involved in
these appeals are short. They, however, need
mention hereinbelow to appreciate the controversy.
4) Six FIRs were registered in different Police
Stations in the State of Gujarat against six different
Co-Operative Housing Societies for commission of
various offences alleged to have been committed by
the President, Office Bearers and other persons of
the six Societies under Sections 406, 409, 420, 465,
467, 468, 471,120-B and 477-A of the Indian Penal
2
Code, 1908 (hereinafter referred to as “IPC”). The
details of these six FIRs are as under:
Sr.
No
.
Date
& FIR
No.
Name &
Regn. of
Society
Survey
No. &
Village
Period &
Place of
offence
Name of
accused
Name of
victims
1 CR
1-5/2
012
dated
21.5.2
012
registe
red
with
Gandh
i
Nagar
CID
Crime
PS
Balasinor
Society –
Plot
No.A/71
GH-11136
S.
No.320,
320/1,
329,
332
Village –
Pipaliya
Since
1984 to
till
21.5.12
Kantilal
Ambalal
Patel,
Dollyben
Kantilal
Patel,
Ashok
Desaibhai
Patel,
Sachin
Rajendra
Patel,
Haresh
Shashikant
Patel,
Jashbhai
Shanker-b
hai Patel
Ranjitrai
Joshi
2 C.R.I-
50/20
13
dated
19.2.2
013
registe
red
with
Makar
pura
P.S.
Vadod
ara
Balasinor
Society
GH-11136
S.No.320,
320/1,
329, 332
Village-Pi
paliya
Area– 1,
14, 426,
sq. mt.
20.7.11
to
28.9.11
at 60,
Vimal
Society,
Makar-p
ura
Kantilal
Ambalal
Patel,
Dollyben
Kantilal
Patel,
Haresh
Shashikant
Patel, Vikas
Ramesh-m
ore
Chandu-bh
ai,
Jashbhai
Shanker-b
hai Patel
Kanchan-la
l Bhatt,
Arvind
Kanchan-la
l Bhatt,
Vasant R.
Chavda,
Indiraben
Ratilal
Adhiya,
Manjula-be
n Arvind
kumar
Shah,
Nainaben
Suresh
Kumar
Parikh,
Jasvant-bh
ai Kodarlal
Parikh,
Usnas
3
Navin
Chandra
Kacheriya
Ravjibhai
A. Patel,
Bipin
Chandra A.
Patel,
Parixit
Ambalal
Patel,
Naresh
kumar C.
Patel,
Kanubhai
A. Vyas,
Ratilal A.
Patel, Sunil
kumar
Prem
kumar
Jethmal-an
i, Rekha S.
Patel
3 C.R.I-
51/20
13 dt.
19.2.1 3
registe
red
with
Makar
pura
P.S.
Vadod
ara
Valkesh-w
ar Society
GH-11133
S.No.45
& 47
Village
Kamla-p
ura
Area-49,
979 sq.
mt.
15.7.11
to
29.9.11
at 60,
Vimal
Society,
Makar-p
ura
Kantilal
Ambalal
Patel,
Dollyben
Kantilal
Patel,
Sachin
Rajendra
Anuben,
Chandu-b
hai,
Jashbhai
Shankerbhai
Patel
Dhananjay
Vallabh-b
hai Patel,
Jayaben
A. Patel,
Mayank
N. Patel,
Nikhilharsukhray
Bhatt,
Dipa
Koradiya,
Jayvanti-b
en
Sevantilal
Vaan
Hansaben
Ratilal
Shah,
Jayshree
Suresh
Chandra
Shah,
Amita
Piyush-bh
ai Parikh, 4
Pragna-be n
Manoj-bh
ai Mehta,
Bachub-b
hai A.
Patel,
Haresh B.
Brahm-bh
att,
Mukesh,
C Patel,
Kokila A.
Patel,
Rajesh M.
Patel,
Babu-bhai
S. Patel,
Arvind-bh
ai P.Amin,
Prakash-b
hai
Ishwar-bh
ai Patel,
Bipin-cha
ndra
Ambalal
Patel
4 C.R.I-
52/20
13 dt.
19.2.1 3
registe
red
with
Makar
pura
P.S.
Vadod
ara
Parla
Society
GH-11134
S.No.54
Village
Kamla-p
ura
Area-69,
706 sq.
mt.
13.7.11
to
29.9.11
at 60,
Vimal
Society,
Makar-p
ura
Kantilal
Ambalal
Patel,
Dollyben
Kantilal
Patel,
Jitendra
Shashi-ka
nt Patel
Bhanu-be
n Kantilal
Patel
Jashbhai
Shankarbhai
Patel
Prem
kumar
Jagtram
Jeth-mala
ni,
Hansaben
V.
Thakkar,
Vidyaben
N. Patel,
Champa-b
en S.
Patel,
Suresh-bh
ai A. Vyas
Suman-b
hai A.
Patel,
Balkrushna
M.
Pandya,
Narmadaben
M. 5
Patel,
Sarojben
C Patel,
Arvind-bh
ai M.
Shah
5 C.R.I-
53/20
13 dt.
19.2.1 3
registe
red
with
Makar
pura
P.S.
Vadod
ara
Alkapuri
Society
GH-11135
S.No.46,
48 & 49
Village
Kamla-p
ura
Area-94,
900 sq.
mt.
11.7.11
to
29.9.11
at 60,
Vimal
Society,
Makar-p
ura
Kantilal
Ambalal
Patel,
Dollyben
Kantilal
Patel,
Ashok-bh
ai
Desaibhai
Patel,
Bhartiben
Ashok-bh
ai Patel,
Jashbhai
Shankerbhai
Patel,
Chandu-b
hai
Kokila
Sirish
Modi,
Ketan
Dinesh
Bhansali,
Jagdish J.
Kapadia,
Vinodini
Kapadia,
Gautam
Kapadia,
Anjana
Kapadia,
Bhariben
Bhansali,
Girish
Doshi,
Asish
Shah,
Suresh
Kantilal
Shah,
Arvind-bh
ai,
Vallabh-b
hai Patel,
Vallabh-b
hai
Tribhuvan
-bhai
Patel,
Vinubhai
B. Patel,
Kanchanbhai
Patel,
Jashbhai
Ravji-bhai
Patel,
Chandu-b
hai B.
Patel,
Rashmi-b
en S. 6
Patel,
Chandrakant
S.
Patel,
Kastur-bh
ai
Lallubhai
Patel
6 C.R.I-
54/20
13 dt.
19.2.1 3
registe
red
with
Makar
pura
P.S.
Vadod
ara
Kheta-wa
di Society
GH-11486
S.No.50,
51, 52A,
52B
Village
Kamla-p
ura
Area-96,
519 sq.
mt.
25.7.11
to
29.9.11
at 60,
Vimal
Society,
Makar-p
ura
Kantilal
Ambalal
Patel,
Dollyben
Kantilal
Patel,
Kishore N
Bhatt,
Dilip
Manibhai
Patel,
Jashbhai
Shankerbhai
Patel
Rita C
Kapadia,
Vana
Kulin
Ghatalia,
Vaishali
Ghatalia,
Kundan
Doshi,
Jaimit
Doshi,
Upendra
Ashabhai
Patel,
Bipinbhai
Chotabhai
Patel,
Dahya-bh
ai B.
Patel,
Kiranbhai
J. Parikh,
Arvind-bh
ai
Chotabhai
Patel,
Manubhai
Chotabhai
Patel,
Ramesh-b
hai
Shana-bh
ai,
Harshadbhai
Mudji-bha
i,
Shakunt-l
aben
Jesan-bha i7
5) The accused (respondent Nos.1, 2 and 3
herein, who are members of one family), felt
aggrieved by the registration of above-mentioned
five FIRs (item 2 to 6) which had implicated them for
commission of several offences, filed Criminal
Applications under Section 482 of the Code in the
High Court of Gujarat and sought quashing of the
above-mentioned five FIRs.
6) The challenge was essentially founded on the
ground that filing of the first FIR(1Cr. No.5/2012
dated 21.05.2012) appearing at S.No.1 above takes
care of remaining five FIRs and, therefore, the
remaining five FIRs are wholly uncalled for and
should not have been registered inasmuch as the
five FIRs are nothing but repetition of the first FIR
and hence all the five FIRs deserve to be quashed.
7) In other words, the contention of the accused
persons before the High Court was that the
8
subsequent registration of five FIRs after
registration of first one was nothing but repetition of
first FIR inasmuch as all the five FIRs are founded
on the same allegations, which are part of the first
FIR and, therefore, accused persons cannot be
subjected to suffer five more prosecution cases in
relation to the same offences on the strength of five
FIRs once they are made to suffer the prosecution in
relation to offences on the strength of first FIR.
8) It was urged that once the investigation in
respect of first FIR is over and charge-sheet
pursuant thereto is filed in the concerned Court, it
would take care of remaining five FIRs and it is for
this reason the remaining five FIRs are wholly
uncalled for.
9) The State opposed the Criminal Applications. It
was, inter alia, contended that having regard to the
nature of allegations made in each FIR in relation to
9
the commission of the several offences, no case is
made out to quash any FIR out of five and,
therefore, all the six FIRs must be allowed to be
investigated independently of one another. After
completion of the investigation, charge-sheets are
allowed to be filed in each case against all the
accused persons involved in the scam in accordance
with law so that each case is brought to its logical
end in the Court of law against all the accused
persons.
10) The High Court found merit in the contention
of the accused persons and, by impugned judgment,
allowed their Criminal Applications and while
quashing the five FIRs passed the following
directions in the impugned order:
“In the light of the above discussion, the
petitions succeed and are accordingly
allowed. The first information reports
registered vide Makarpura Police Station
1-CR.No.50/2013, 51/2013, 52/2013,
10
53/2013 and 54/2013 dated 19th February,
2013 are hereby quashed and set aside. As a
consequence thereof, the investigation
carried out pursuant to the second first
information reports, shall be treated as part
of the investigation carried out in respect of
the 1st first information report and the entire
record of the subsequent first information
reports shall be forwarded to the
Investigating Officer of the 1st first
information report, who shall consider the
same and carry out investigation in respect
of the detailed allegations made therein.
Rule is made absolute accordingly.”
11) The appellants herein are the members of
these Societies. They claim to be the victims of
several illegal activities alleged to have been
committed by the accused persons (respondents
herein) in the affairs of the Societies and,
particularly, those committed in relation to sale of
the lands belonging to the Societies, siphoning off
the funds of the Societies, falsification of the
accounts of the Societies etc.
12) The appellants, felt aggrieved of the impugned
judgment, which resulted in quashing of 5 FIRs,
11
have filed these appeals by way of special leave
before this Court.
13) Heard Mr. Huzefa Ahmadi, learned senior
counsel for the appellants and Mr. Mohit
Choudhary, learned counsel for the respondents.
14) Having heard the learned counsel for the
parties and on perusal of the record of the case, we
are constrained to allow the appeals, set aside the
impugned judgment and dismiss the Criminal
Applications filed by the accused persons
(respondents herein) under Section 482 of the Code
out of which these appeals arise.
15) The short question which arises for
consideration in these appeals is whether the High
Court was justified in quashing the five FIRs
appearing at S.Nos. 2 to 6 extracted above.
16) We have perused all the six FIRs with a view to
find out as to whether the grievance urged by the
12
accused persons is made out on facts or not. Having
perused, we find ourselves unable to agree with the
reasoning and the conclusion arrived at by the High
Court, which led to quashing of the five FIRs.
17) We, however, do not consider it proper to give
our detailed reasoning as it may cause prejudice to
all parties concerned because the investigation is
not yet complete and the trial in the first FIR has
not yet started except to observe that there
appeared no justifiable reason for the High Court to
quash the five FIRs by taking recourse to the
inherent powers under Section 482 of the Code.
18) We find that the High Court had labored hard
when it devoted 46 pages in examining the factual
issues involved in six cases, appreciated the
allegations of FIRs like an Appellate Court to some
extent and then reached to a conclusion that all the
six FIRs were based on identical facts and the
13
allegations contained therein overlap and, therefore,
the first FIR alone will survive for investigation
whereas remaining five FIRs would not survive and
merge in the first FIR.
19) We do not agree with the manner, reasoning
and the conclusion arrived at by the High Court in
the impugned judgment.
20) We find that all the six Co-Operative Societies
against whom the afore-mentioned FIRs were
registered are different, their members are different,
their area of operation is different, the lands which
were sold/transferred are also situated in different
areas, the lands were also sold/transferred to
different parties on different dates for different
sums, the accounting books are different, the
persons involved in the falsification of the accounts
of every Society are different etc. etc.
14
21) In short, having regard to the totality of the
factual allegations made for constituting the
commission of several offences in relation to every
Co-Operative Society, it is not possible to hold that
all the FIRs are overlapping on one another and that
first FIR alone will be sufficient to take care of the
remaining five FIRs.
22) There may be some overlapping allegations in
the FIRs but that is due to myriad reasons and one
reason could be that all the Co-operative Societies
were engaged in the same business of
sale/purchase of housing and the plots of land
which were sold to different persons in different
areas by same accused persons due to their
involvement in the affairs of all Co-Operative
Societies. However, these facts were not by
themselves sufficient to quash the five FIRs at the
stage of investigation itself.
15
23) In our view, such issues and many more,
namely, the nature and manner of conspiracy,
whether it was confined to each Society or there was
one or larger conspiracy, how and in what manner it
was accomplished, who were parties to it, who were
those persons who secured financial benefits, what
was the modus operandi for mis-appropriation of the
funds of each Society and how the funds were
siphoned off from each Society etc., need detailed
investigation with respect to each Cooperative
Society. Once the investigation is complete in
relation to each Society, the same would form part
of the separate charge-sheet for being proved with
the aid of evidence in a competent Court against
each Society and persons involved in the scam. It is
for the Court to examine the factual issues arising
in every case by appreciating the evidence once
16
adduced in support thereof and pass appropriate
orders in accordance with law.
24) The High Court, in exercise of its powers under
Section 482 of the Code, cannot undertake a
detailed examination of the facts contained in the
FIRs by acting as an Appellate Court and draws its
own conclusion. It is more so when investigation in
other Societies is not yet complete.
25) In our considered opinion, it is only when on
reading the FIR, a sheer absurdity in the allegations
is noticed and when no prima facie cognizable case
is made out on its mere reading due to absurdity in
the allegations or when facts disclose prima facie
cognizable case and also disclose remarkable
identity between the two FIRs as if the first FIR is
filed second time with no change in allegations then
the Court may, in appropriate case, consider it
17
proper to quash the second FIR. Such is not the
case here.
26) Indeed, in our view, few distinguishing factual
allegations mentioned above are enough to repel the
challenge made by the accused persons to the
impugned FIRs and the same should have been
made basis to dismiss the Criminal Applications of
the accused persons.
27) We may, at this stage, apposite to mention a
Three Judge Bench decision of this Court in State
of West Bengal & Ors. vs. Swapan Kumar Guha &
Ors. (AIR 1982 SC 949) wherein this Court
examined somewhat a similar question in the
context of the powers of the Court.
28) The learned Chief Justice, Y.V Chandrachud
and Justice A.N. Sen, speaking for the Bench in
their concurring opinion held as under:
“Whether an offence has been disclosed or
not must necessarily depend on the facts and
18
circumstances of each particular case. If on
a consideration of the relevant materials, the
Court is satisfied that an offence is disclosed,
the Court will normally not interfere with the
investigation into the offence and will
generally allow the investigation in the
offence to be completed for collecting
materials for proving the offence.
The condition precedent to the
commencement of investigation under S.157
of the Code is that the F.I.R. must disclose,
prima facie, that a cognizable offence has
been committed. It is wrong to suppose that
the police have an unfettered discretion to
commence investigation under S.157 of the
Code. Their right of inquiry is conditioned
by the existence of reason to suspect the
commission of a cognizable offence and they
cannot, reasonably, have reason so to suspect
unless the F.I.R., prima facie, discloses the
commission of such offence. If that
condition is satisfied, the investigation must
go on. The Court has then no power to stop
the investigation, for to do so would be to
trench upon the lawful power of the police to
investigate into cognizable offences.”
29) We apply the aforesaid principle which, in our
opinion, applies to the facts of the case on hand and
accordingly decline to quash the impugned FIRs.
30) Learned counsel for the respondents (accused)
however, vehemently tried to support the impugned
judgment and took us through the entire factual
19
allegations of all six FIRs. It was his submission
that on perusal of the impugned FIRs, there does
exist overlapping of the offences in the FIRs on
identical allegations with no change in any of the six
FIRs except repetition of the words and hence the
High Court was right in quashing the five FIRs.
31) We are afraid to accept this submission of
learned counsel for the respondents (accused).
Having noticed few significant distinguishing
features in six FIRs mentioned above, the
submission has no merit.
32) In view of foregoing discussion, we cannot
concur with the reasoning and the conclusion
arrived at by the High Court in the impugned
judgment. The appeals thus succeed and are
allowed. The impugned judgment is set aside.
33) It is held that all the six FIRs filed against the
respondents (accused persons) are legal and proper
20
and each have to be given effect for making proper
and full investigation in relation to the offences
alleged in each FIR. The Investigating Officer would
now speed up the investigation in relation to the
affairs of each Co-operative Society and on its
completion file charge-sheet in each case in
accordance with law in a competent Court.
34) Needless to say that when all the six cases are
filed in the concerned Courts, they would be
clubbed together and tried by one competent Court
in accordance with law.
35) The parties are at liberty, at an appropriate
stage, to move to the High Court with a prayer to
club and then transfer all the six cases to one
competent Court. The High Court would accordingly
pass appropriate orders of clubbing and transferring
all the six cases to one Court as it may deem fit and
21
proper to enable the said Court to dispose of all the
six cases in accordance with law.
Special Leave Petition (Crl.) Nos.869-878 of 2014
In view of the above judgment rendered in
appeals arising out of S.L.P.(Crl.)Nos.1218-1227 of
2014, these special leave petitions are disposed of.

……………………………………..J.
[R.K. AGRAWAL]

 

……………………………………….J.
[ABHAY MANOHAR SAPRE]
New Delhi;
November 15, 2017
22

Posted in Uncategorized

. The selection of District & Sessions Judges in the Kerala Higher Judicial Service in the year 2015- Tej Prakash Pathak and others v. Rajesthan High Court and others2 has, however, specifically doubted the correctness of Manjusree (supra) on the point whether “….changing the rules of the game after the game was 2 (2013) 4 SCC 540 4 played…. is clearly impermissible” and has made a Reference to a larger Bench for an authoritative pronouncement. It is also relevant in this context to note that Salam Samarjeet Singh v. High Court of Manipur At Imphal and Anr.3 which dealt with almost a similar issue was heard by a three Judge Bench in view of the difference of opinion and it has also since been posted along with Tej Prakash (supra) by order dated 10.08.2017. Hence, it is only appropriate to refer this matter also to the larger bench to be heard along with Tej Prakash (supra). Ordered accordingly.

IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION (CIVIL) NO. 229 OF 2017
Sivanandan C.T. & Ors. … Petitioner (s)
Versus
High Court of Kerala & Ors. … Respondent (s)
WITH
WRIT PETITION (CIVIL) NO. 232 OF 2017,
WRIT PETITION (CIVIL) NO. 379 OF 2017,
AND
WRIT PETITION (CIVIL) NO. 618 OF 2017
O R D E R
1. The selection of District & Sessions Judges in the Kerala
Higher Judicial Service in the year 2015 has given rise to this
litigation. As per the Notification dated 30.9.2015 the selection
was to be conducted by written examination and viva-voce. The
written examination of two papers carried 300 marks (150
marks for each paper). The viva-voce was for 50 marks. It was
1
REPORTABLE
stipulated that those general and OBC candidates who secured
50 per cent in the written examination without any separate
minimum and SC/ST who secured 40 per cent were qualified to
participate in the viva-voce.
2. In terms of the Resolution of the Full Court dated
13.12.2012, there should be no minimum cut-off marks for the
interview. The final merit list was to be prepared in the
following manner:-
“..The merit list of successful candidates will
be prepared on the basis of the total marks
obtained in the written examination and
viva-voce.”
As a matter of fact, two selections were held in the years 2013
and 2014 without cut-off marks for the viva-voce. As per the
Resolution dated 13.12.2012, after publishing the result of the
examination, the candidates were interviewed by the Selection
Committee. However, after the viva-voce, the Administrative
Committee (consisting of the same members as the Selection
Committee) resolved to draw up a list of successful candidates
on the basis of same separate minimum percentage of marks
in the viva-voce as in the written examination. According to the
Administrative Committee, the fixing of the minimum marks for
2
the viva-voce was not a deviation from the approved scheme
since “it was never the intention of the Full Court to select
persons who do not attain the minimum required bench mark
for such a responsible post”. The merit list thus drawn by the
Administrative Committee on the basis of the minimum marks
in the viva-voce was approved by the Full Court and those
candidates were appointed accordingly. That selection is
challenged in these cases.
3. The main contention is that the rules of the game could
not have been changed after the game is played and the result
of the game is known to the selectors.
4. Though several other contentions are raised by both
sides, we find that the decision in K. Manjusree v. State of
Andhra Pradesh and another1
, squarely applies to the facts
of this case. In Manjusree (supra), 75 marks were allotted for
the written examination and 25 marks for the interview. The
aggregate governed the merit. However, the written
examination was conducted for 100 marks. When the Full Court
noticed this, a sub-committee was appointed to make the
arithmetical correction to scale down the marks in the written
1
(2008) 3 SCC 512
3
examination to 75 instead of 100. The sub-committee did two
things – (1) it made the arithmetical correction (2) it introduced
the same cut-off percentage for the interview as in the written
examination and thus revised the merit list, which was
approved by the Full Court. In the process, a few candidates
were removed from the original merit list including Manjusree.
A Bench of three Judges of this Court held that “introduction of
the requirement of the minimum marks for interview, after the
entire selection process (consisting of written examination and
interview) was completed, would amount to changing the rules
of the game after the game was played which is clearly
impermissible”. The Bench specifically noted that the
Resolution of the Full Court to not specifically stipulate
minimum marks for viva-voce was still in force. Yet, when the
sub-committee introduced the change, the same was approved
by the Full Court.
5. Tej Prakash Pathak and others v. Rajesthan High
Court and others2
has, however, specifically doubted the
correctness of Manjusree (supra) on the point whether
“….changing the rules of the game after the game was
2
(2013) 4 SCC 540
4
played…. is clearly impermissible” and has made a Reference
to a larger Bench for an authoritative pronouncement. It is also
relevant in this context to note that Salam Samarjeet Singh
v. High Court of Manipur At Imphal and Anr.3
which dealt
with almost a similar issue was heard by a three Judge Bench in
view of the difference of opinion and it has also since been
posted along with Tej Prakash (supra) by order dated
10.08.2017. Hence, it is only appropriate to refer this matter
also to the larger bench to be heard along with Tej Prakash
(supra). Ordered accordingly.
..……………………J.
(KURIAN JOSEPH)
..…….…..…………J.
(R. BANUMATHI)
New Delhi;
November 14, 2017.
3
(2016) 10 SCC 484
5

Posted in Uncategorized