‘REPORTABLE’

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL Nos. 891-893 OF 2007

State of Madhya Pradesh …. Appellant

Versus

Balram Mihani & Ors. …. Respondents

J U D G M E N T

V.S. SIRPURKAR, J.

1. By  our  earlier  order  dated  19.01.2010,  we  have  dismissed  the  

appeals filed by the State of Madhya Pradesh.  Now, we proceed to give  

reasons thereof.

2. The  Station  House  Officer,  Itarsi  moved  applications  before  the  

Judicial Magistrate, First Class, Itarsi for initiating proceedings against the  

respondents  herein  under  Chapter  VII-A  of  the  Code  of  Criminal  

Procedure, 1973 (hereinafter referred to as “the Code”) for attachment and  

forfeiture  of  the  properties  of  the  respondents.   According  to  the  

applications, the said properties were derived from or used in commission  

of  offences  and were  acquired  from the  criminal  activities.   The police  

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further urged that the respondents were involved in the criminal activities  

since long and had accumulated huge wealth derived directly or indirectly  

by or such criminal and unlawful activities.  According to the police some of  

these properties were in the names of their relatives which were clearly  

traceable to the respondents herein.  The prayer thus was made under  

Section 105-D of the Code for authorization to take all necessary steps to  

trace out  and identify  such properties and further  for  the forfeiture and  

vesting thereof.  Some other applications were also filed on identical facts  

against some other respondents also.  The Trial Court having passed an  

order  in  pursuance  of  these  applications  allowing  the  same,  the  

respondents challenged the same by way of a petition under Section 482  

of the Code.  Finding that there were divergent opinions on the tenability of  

the  applications  amongst  two  learned  Single  Judges  of  the  Madhya  

Pradesh High Court, the matter was referred to the Division Bench and the  

Division Bench by the impugned order quashed the proceedings holding  

that  the  provisions  of  Chapter  VII-A  were  not  applicable  to  such  local  

offences complained of.  It is this order which is in challenge before us at  

the instance of the State Government in these appeals.

3. Shri Dushyant A. Dave, learned Senior Counsel appearing on behalf  

of  the  State  of  Madhya  Pradesh  very  painstakingly  took  us  through  

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Chapter VII-A containing Sections 105-A to 105-L.  It will be useful to see  

the import of some of the Sections.

4. Section  105A(a)  defines  “contracting  State”  and  refers  to  any  

country or place outside India in respect of which arrangements have been  

made by the Central  Government with the Government of  such country  

through a treaty or otherwise. Section 105A (c) defines proceeds of crime  

as under:

“(c) “proceeds  of  crime”  means  any  property  derived  or  obtained directly or indirectly, by any person as a result  of  criminal  activity  (including  crime involving  currency  transfers) or the value of any such property”

Section 105A (d) defines the property as under:

“(d) ”property”  means  property  and  assets  of  every  description whether  corporeal  or  incorporeal,  movable  or  immovable,  tangible  or  intangible  and  deeds  and  instruments  evidencing  title  to,  or  interest  in,  such  property or assts derived or used in the commission of  an  offence  and  includes  property  obtained  through  proceeds of crime.”

Section 105-B deals with assistance in securing arrest of persons on  

request from contracting states or the arrest in the contracting states.  Sub-

Section (1) thereof starts with the words “Where a Court in India”.  So also  

Sub-Section (3) starts with the aforementioned words.  Section 105C is as  

under:

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“105C. Assistance in relation to orders of attachment or  forfeiture of property.

(1) Where  a  court  in  India  has  reasonable  grounds  to  believe  that  any  property  obtained  by  any  person  is  derived  or  obtained,  directly  or  indirectly,  by  such  person from the commission of an offence, it may make  an order of attachment or forfeiture of such property, as  it may deem fit under the provisions of sections 105D to  105J (both inclusive).

(2) Where the Court has made an order for attachment or  forfeiture  of  any  property  under  sub-section  (1),  and  such property is suspected to be in a contracting State,  the court may issue a letter of request to a court or an  authority in the contracting State for execution of such  order.

(3) Where  a  letter  of  request  is  received  by  the  Central  Government from a court or an authority in a contracting  State requesting attachment or forfeiture of the property  in  India,  derived or  obtained,  directly  or  indirectly,  by  any  person  from  the  commission  of  an  offence  committed  in  that  contracting  State,  the  Central  Government may forward such letter of request to the  court, as it  thinks fit,  for execution in accordance with  the provisions of sections 105D to 105J (both inclusive)  or, as the case may be, any other law for the time being  in force.”

5. Section 105-D empowers the court to direct any police officer not  

below the rank of Sub-Inspector to take steps for tracing and identifying  

such property under Section 105C (1) or  on receipt  of  letter of  request  

under  sub-section  (3)  of  Section  105-C.   Section  105-E empowers  the  

officer conducting an inquiry or investigation to make an order of seizure of  

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such property, if he has a reason to believe that such property is likely to  

be concealed, transferred or dealt with in any manner which will result in  

disposal of the property.  Section 105-F relates to the power of court to  

appoint District Magistrate of any area or his nominee where the property  

situated  to  perform  the  functions  of  an  administrator  of  such  property.  

Section 105G provides for show cause notice before forfeiture.  Section  

105-H deals with the forfeiture of the property to Central Government while  

Section 105-I empowers the Court giving an option to the owner of such  

property to pay, in lieu of forfeiture, the fine equal to the market value of  

such  property.   Section  105-J  takes  care  of  the  situation  where  after  

making an order under sub-section (1) of Section 105-E or the issue of a  

notice under Section 105-G, the property stands transferred by any mode  

whatsoever and further provides that  such transfer shall be ignored and  

also that such transfer of property shall be deemed null and void.  Section  

105-L deals with the applications and powers in this Chapter.   

6. The stress of the learned counsel is particularly on Section 105-D  

and the learned counsel is at pains to point out that Section 105-C and D  

can apply to any property in India which is derived or obtained from the  

commission of offence.  Such offence could be even the offence which  

does not have international ramifications. The High Court, has taken stock  

of  all  these  Sections  and  referred  to  the  heading  of  the  Chapter,  the  

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Statement of Objects and Reasons of the amending Act being Act No.40 of  

1993 and the speech of the Hon’ble Minister for Home Affairs Shri S.B.  

Chavan (as he then was).   From this  the High Court  has come to the  

conclusion that firstly the provisions of Chapter VII-A are not the ordinary  

law of land and further the provisions therein would be applicable only to  

the offences which have international ramifications.  The High Court has  

further  reached  the  conclusion  that  the  said  provisions  override  the  

provisions of Chapter V, VI AND VII of the Code relating to search and  

seizure  during  investigation.   The  High  Court  has  posed  following  

questions:

i) What was the law before the making of the amendment?

ii) What was the mischief and defect for which the law did not  

provide?

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

iv) What is the reason of the remedy?

7. Answering  all  these  questions  and  also  taking  into  account  the  

general provisions of search and seizure contained in Sections 91 to 101  

of the Code, as also taking into consideration Sections 451, 452 and 457  

of the Code dealing with the custody and disposal of the property involved  

in crime, the High Court ultimately came to the conclusion that the said  

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provisions of Chapter VII-A would not apply to the cases in question.  The  

High  Court  has  also  taken  into  consideration  the  provisions  of  Section  

41(1)(g)  of  the Code,  Sections 166-A and 166-B of  the Code and has  

relied upon three other cases, namely,  Union of India & Anr. v.  W.N.  

Chadha [1993 Supp. (3) SCC 260], Jayalalitha v.  State [(2002) Crl.L.J.  

3026] and Bhinka v.  Charan Singh [AIR 1959 SC 90].  It has ultimately  

held that Chapter VII-A has been incorporated with an intention to curb  

mischief or completely eliminate the terrorists activities and international  

crimes.  According to the High Court, the provisions of this Chapter are  

supplemental to the special provisions contained in Sections 166-A and  

166-B and had nothing to do with the investigation into offences in general.  

8. We have considered the judgment as also the contentions raised by  

the learned counsel.  We have also perused the heading of Chapter VII-A  

as also the Statement of Objects and Reasons.  After perusing the same  

we are of the firm opinion that the well written judgment of the High Court  

is correct and the High Court has taken a correct view.   

9. In the Statement of Objects and Reasons to the Amending Act 40 of  

1993  there  is  a  clear  cut  reference  that  the  Government  of  India  had  

signed an agreement with the Government of  United Kingdom of Great  

Britain and Northern Ireland for extending assistance in the investigation  

and prosecution of crime and the tracing, restraint and confiscation of the  

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proceeds  of  crime  (including  crimes  involving  currency  transfer)  and  

terrorist funds, with a view to check the terrorist activities in India and the  

United  Kingdom.   The  statement  further  goes  on  to  provide  the  three  

objectives, viz.:

(a) the  transfer  of  persons  between  the  contracting  States  

including persons in custody for the purpose of assisting in  

investigation or giving evidence in proceedings;

(b) attachment  and  forfeiture  of  properties  obtained  or  derived  

from the commission of an offence that may have been or has  

been committed in the other country; and  

(c) enforcement of attachment and forfeiture orders issued by a  

court in the other country.

10. We have even taken into consideration the speech of the then Home  

Minister Shri S.B. Chavan which leaves no doubt that this Chapter is not  

meant for the local offences.  

11. When we see the applications as also the order passed by the Trial  

Court, it is clear that it is only and only in respect of the local offences like  

gambling  and  the  offences  under  I.P.C.  which  are  local.   Even  the  

properties are not shown to be connected with crimes mentioned in the  

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Objects  and  Reasons  of  the  amending  Act.   In  fact,  no  connection  is  

established  also  between  crimes  mentioned  and  the  properties.   Such  

properties are clearly not included in Section 105-C.  Though the language  

of Section 105-C (1) is extremely general, its being placed in Chapter VII-A  

cannot be lost sight of.  Again there is a clear cut reference in Sub-section  

(2) thereof to the contracting state, the definition of which is to be found in  

Section 105-A (a).   It  is,  therefore,  clear that the property envisaged in  

Section 105-C (1) cannot be an ordinary property earned out of ordinary  

offences committed in India.  Where the language is extremely general and  

not clear, the contextual background has to be taken into consideration for  

arriving at clear interpretation.  Some assistance was tried to be taken from  

the  language  of  Section  105-B(2)  which  starts  with  the  words  

“notwithstanding anything contained in this  Code”.   However,  when the  

sub-section  is  read  in  entirety,  it  is  clear  that  it  makes  reference  to  a  

person who is in “contracting State”.  Therefore, even that reference will  

not  bring  in  any  provision  within  the  scope  of  general  law.   We again  

cannot ignore the express language of Sections 105-B and 105-C which  

starts with the words “where a court in India”.  If this chapter was meant for  

the  general  offences  and  the  properties  earned  out  of  those  general  

offences in India, then such a phraseology would not have been used by  

the Legislature.

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12. Lastly we see the provisions of Section 105-L which are clear that  

the Central Government may by notification in the official gazette, direct  

that the application of this chapter in relation to a contracting State with  

which  there  are  reciprocal  arrangements  would  be  subject  to  some  

conditions, exceptions and qualifications as would be specified in the said  

notification.  It is, therefore, clear that the whole chapter is specific chapter  

relating to the specified offences therein and has nothing to do with the  

local offences or the properties earned out of those.

13. At this juncture, it is pointed out that there are specific other Central  

laws wherein the properties earned out of trading of Narcotic Drugs and  

Psychotropic Substances or the offences relating to smuggling or financial  

offences relating to foreign exchange are liable to be attached, seized and  

forfeitured.   Chapter  VII-A  is  one  such  measure  to  introduce  stringent  

measures for  attachment  and forfeiture  of  the properties earned by the  

offences, by way of reciprocal arrangement in the contracting countries.  

However, if we accept the State’s contention that the provisions of Chapter  

VII-A are for all and sundry offences in India, it would be illogical.

14. If such a construction as claimed by the petitioner is given then it  

would  mean  that  even  for  the  offences  which  are  local  in  nature  and  

committed within the State, still the property connected with those offences  

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shall be forfeitured to the Central Government.  That would obviously be  

an absurd result.

15. Lastly,  we  cannot  ignore  the  likely  misuse  of  the  provisions  in  

Chapter VIIA if the whole Chapter is made applicable to the local offences  

generally.  Such does not appear to be the intendment of the Legislature in  

introducing Chapter VII A.

16. In  view  of  the  above  we  approve  the  judgment  of  the  Madhya  

Pradesh High Court and confirm the same.  The appeals are dismissed.

……………………………………….J. (V.S. SIRPURKAR)

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

NEW DELHI; FEBRUARY 1, 2010

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Digital  Performa

Case No.  : Criminal Appeal Nos. 891-893 Of 2007

Date of Decision : 1.2.2010

Cause Title :  State of Madhya Pradesh Versus

Balram Mihani & Ors.

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

C.A.V. On : 20.01.2010

Judgment  delivered by :  Hon’ble Mr. Justice V.S. Sirpurkar

Nature of Judgment : Reportable

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