STATE OF MADHYA PRADESHversusBALRAM MIHANI & ORS.

                     [2010) 2 S.C.R. 209


               STATE OF MADHYA PRADESH                             A
                               v.
                 BALRAM MIHANI & ORS.
          (Criminal Appeal Nos. 891-893 of 2007)
                     FEBRUARY 1, 2010
                                                                   B
       [V.S. SIRPURKAR AND SURINDER SINGH
                    NIJJAR, JJ.]

     Code of Criminal Procedure, 1973:
                                                                   c
     Chapter VII-A - ss. 105-A to 105-C - Reciprocal
arrangement for assistance in certain matters and procedure
for attachment and forfeiture of property - Application by
Police for initiating proceedings in respect of properties used
in commission of offences or acquired from criminal activities     D
- HELD: Provisions of Chapter VII-A would be applicable only
to offences which have international ramifications and not to
local offences generally and the properties earned out of such
offences.

     Interpretation of Statutes:                                   E

      Contextual background - Statement of Object and
Reasons - Held: Has to be taken into consideration for
arriving at clear interpretation where the language is extremely
general and not clear.                                             F
     Police filed an application before the Judicial
Magistrate for initiating proceedings against certain
properties belonging to the respondents stated to have
bee_n ~!ed in commission of offences ·or acquired from             G
criminal activities. The application was allowed by the
Judicial Magistrate. However, the High Court in the
petitions filed by the respondents uls 482 Cr.PC, quashed
the proceedings holding that the provisions of Chapter
                              209                                  H
    210     SUPREME COURT REPORTS              [2010] 2 S.C.R.


A VII of the Code were not applicable to local offences
  complained of. Aggrieved, the State filed the appeal. The
  Court by its order dated 19.1.2010 dismissed the appeal
  observing that reasons for the order would follow.

8      Giving the reasons for the order dated 19.1.2010, the
    Court

        HELD: 1.1. The High Court has rightly held that the
   provisions of Chapter VII-A of the Code of Criminal
   Procedure, 1973 are not the ordinary law of land and
C would be applicable only to the offences which have
   international ramifications. Chapter VII-A of the Code has
   introduced stringent measures for attachment and
   forfeiture of t,he properties earned by the offences by way
   of recipr-oC'al arrangement in the contracting countries.
D The whole chapter is the specific one relating to the
   specified offences indicated therein and has nothing to
  /do with the local offences or the properties earned out
   of them. [Para 6, 12 and 13] [218-G-H; 218-F-G; 219~A-Bl

E       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 - referred to.

       1.2. In the Statement of Objects and Reasons to the
  Amending Act 40 of 1993 there is a clear cut reference that
F 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 proceeds of crime
G (including crimes involving currency transfer) and
  terrorist funds, with a view to check the terroristactivities
  in India and the United Kingdom. [Para 9]-frf7-A-C]

        1.3. In the instant case, the applications filed by the
H · Police as also the order passed by the trial court are only
 STATE OF MADHYA PRADESH v. BALRAM MIHANI                211
                  & ORS.
and only in respect of the offences like gambling and the       A
offences under l.P .C. which are local. Even the properties
are not shown to be connected with crimes mentioned
in the Objects and Reasons of the amending Act. Such
properties are clearly not included in s.105-C of the Code.
(Para 11] [217-G-H]                                             B

    1.4. Though the language of s.105-C (1) is extremely
general, its being placed in Chapter VII-A cannot be lost
sight of. Where the language is extremely general and not
clear, the contextual background has to be taken into
consideration for arriving at clear interpretation. [Para 11]   C
[218-A; 218-B-C]

     1.5. The plea that sub-section (2) of s.105-B starts
with the words "notwithstanding anything contained in
this Code" is. of no avail, as the sub-section, when read       D
in entirety, makes reference to a person who is in
"contracting State". Beside, ss.105-B and 105-C, which
start with the words "Where a court in India", in their
express language indicate that the Chapter was not
meant for the general offences and the properties earned        E
out of those general offences in India. Further, the Court
cannot ignore the likely misuse of the provisions in
Chapter VllA if it is made applicable to the local offences
generally. [Para 11 and 15] [218-C-D; 219-C-D]
                    Case Law Reference:                         F
    1993 Supp. (3) SCC 260 referred to             para 7
    (2002) Crl.L.J. 3026     referred to          para 7
    AIR 1959 SC 90           referred to          para 7        G
    CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
Nos. 891-893 of 2007.

    From the Judgment & Order dated 11.10.2006 of the High
                                                                H
    212      SUPREME COURT REPORTS                 [2010] 2 S.C.R.


A   Court of Judicature of M.P. at Jabalpur in Misc. Criminal Case
    Nos. 10496, 10497, 10538 of 2005.

          D.A. Dave and Vibha Datta Makhija for the Appellant.

      Ashiesh Kumar, Jagat Singh, P.O. Sharma for the
B Respondents.

          The Judgment of the Court was delivered by

      V.S. SIRPURKAR, J. 1. By our earlier order dated
  19.01.2010, we have dismissed the appeals filed by the State
C of Madhya Pradesh. Now, we proceed to give reasons thereof.

          2. The Station House Officer, ltarsi moved applications
     before the Judicial Magistrate, First Class, ltarsi for initiating
     proceedings against the respondents herein under Chapter VII-·
D   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 further
E    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 poiice some of these properties were in the
     names of their relatives which were clearly traceable to the ·
F    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
G    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 applicatjp)ls amongst two learned Single
    Judges of the Madhya Pradesh High Court, the matter was
H
 STATE OF MADHYA PRADESH v. BALRAM MIHANI                      213
          & ORS. [V.S. SIRPURKAR, J.]
referred to the Division Bench and the Division Bench by the          A
impugned order quashed the proceedings holding that the
provisions of Chapter VI I-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.                                                              B

     3. Shri Dushyant A. Dave, learned Senior Counsel
appearing on behalf of the State of Madhya Pradesh very
painstakingly to.ok us through Chapter VII-A containing Sections
105-A to 105-L. It will be useful to see the import of some of        C
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.         D
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   E
             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            F
             description whether corporeal or incorporeal,
             movable or immovable, tangible or intangible and
             deeds and instruments evidencing title to, or
             interest in, such property or assets derived or used
             in the commission of an offence and includes             G
             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
                                                                      I'.
    214         SUPREME COURT REPORTS                  [201 O] 2 S.C.R.


A   "Where a Court in India". So also Sub-Section (3) starts with
    the aforementioned words. Section 105C is as under:

          "105C.    Assistance in relation to orders of attachment
               or forfeiture of property.
8         (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
c                 property, as it may deem fit under the provisions of
                  sections 1050 to 105J (both inclusive).

          (2)     Where the Court has made an order for attachment
                  or forfeiture of any property under sub-section (1 ),
0                 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
E                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
F                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 1050 to 105J (both
                 inclusive) or, as the case may be, any other law for
G                the time being in force."

       5. Section 105-0 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)
H or on receipt of letter of request under sub-section (3) of Section
  STATE OF MADHYA PRAD~SH v. BALRAM MIHANI                     215
           & ORS. [VS. SIRPURKAR, J.]
 105-C. Section 105-E empowers the officer conducting an               A
 inquiry or investigation to make an order of seizure of 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       B
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 105-1 empowers the Court giving an option to the         c
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              D
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         E
  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       F
 all these Sections and referred to the heading of the Chapter,
 the Statement of Objects and Reasons of the amending Act
 being Act No.40of1993 and the speech of the Hon'ble Minister
ior Home Affairs Shri S.B. Chavan (as he then was). From this
 the High Court has come to the conclusion that firstly the            G
 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          H
    216         SUPREME COURT REPORTS               [2010] 2 S.C.R.


A   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?
B         (ii)    What was the mischief and defect for which the law
                  did not provide?

          (iii)   What is the rem.edy that the amendment has
                  provided? And
c         (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
D   consideration Sections 451, 452 and 457 of the Code dealing
    with the custody and disposal of the property involved in crime,
    the High Court ultimately came to the conclusion that the said
    provisions of Chapter VII-A would not apply to the cases in
    question. The High Court has also taken into consideration the
E   provisions of Section 41 ( 1)(g) of the Code, Sections 166-A and
    166-B of the Code and ha~ 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
F   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
G   nothing to do with the investigation into offences in ge'neraL

        8. We have considered the judgment as also the
  contentions raised by the learned counsel. We have also
  perused the heading of Chapter VI I-A as also the Statement
  of Objects and Reasons. After perusing the same we are of
H the firm opinion that the well written judgment of the High Court
 STATE OF MADHYA PRADESH v, BALRAM MIHANI 217
          & ORS. [V.S. SIRPURKAR, J.]
is correct and the High Court has taken a correct view.              A

       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           8
I rel and for extending assistance in the investigation and
prosecution of crime and the tracing, restraint and confiscation
of the proceeds of crime (including crimes involving currency
transfer) and terrorist funds, with a view to check the terrorist
activities in India and the United Kingdom. The statement further    C
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;                                             D

      (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                                             E

      (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.S. Chavan which leaves no              F
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         G
under l.P.C. which are local. Even the properties are not shown
to be connected with crimes mentioned in the 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.
                                                                     H
    218      SUPREME COURT REPORTS                   [2010] 2 S.C.R.


A 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
B 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
c from the language of Section 105-8(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
0
  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 net
  have been used by the Legislature.
E
         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
F 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.
G
        13. At this juncture, it is pointed out that there are spec1t1c
  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
H exchange are liable to be attached, seized and forfeitured.
STATE OF MADHYA PRADESH v. BALRAM MIHANI 219
         & ORS. [V.S. SIRPURKAR, J.]
Chapter VII-A is one such measure to introduce stringent             A
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 o.ffences in India, it would be illogical.                    B

       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 shall be forfeitured to the Central
Government. That would obviously be an absurd result.                C

       15. Lastly, we cannot ignore the likely misuse of the
provisions in Chapter VllA 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       D
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.
                                                                     E
R.P.                          Reasons for dismissing appeals.