Saturday, November 25, 2017

Bail Provisions of Section 45 PMLA Struck Down - Some Hits and Misses

Two days ago, a Two Judges' Bench of the Indian Supreme Court decided a batch of writ petitions led by Writ Petition (Crl) No. 67 of 2017 titled Nikesh Tarachand Shah v. Union of India & Anr. [Nikesh Shah] in which it struck down the parts of Section 45 of the Prevention of Money Laundering Act 2002 [PMLA] which concerned the grant of bail. The Court held that these parts violated Articles 14 and 21 of the Constitution - guaranteeing a right to equality, and protection against deprivation of the right to life and personal liberty by a procedure not established by law. The effect of this judgment is that bail petitions earlier subject to a stringent standard under Section 45 PMLA will now be tested on the less taxing standards of Sections 439 and 437 of the Criminal Procedure Code 1973 [Cr.P.C.]. This post has four parts - (i) explaining how money laundering and the PMLA work (which I'd urge you to skim through even if you're a lawyer, because at times the judgment reflects some lack of knowledge on the Court's part), (ii) charting out how the Court did what it did, (iii) showing where the Court goes wrong, and finally (iv) what this judgment might mean for the many other statutes with similar clauses that have not been examined by the Court yet. 

What is the PMLA, What are the Schedules, and What does Section 45 do?
The PMLA is India's answer to its global commitment to tackle money laundering, which (at the cost of oversimplification) means representing assets obtained through illegal acts as untainted. In line with global standards, the PMLA covers all kinds of conduct connected with this process of representing black as white (doing, aiding, abetting, attempting etc), as long as one knowingly did so [Sections 3 and 4]. The PMLA not only makes this is an offence but also triggers connected civil actions of attaching and confiscating the tainted assets themselves [Sections 5-8]. 

Notice how the entire idea of money laundering is linked to some underlying illegal act which results in generating some proceeds - cash or kind. While some countries don't require that illegal act to be a crime, India does, and the PMLA calls it a 'Scheduled Offence' [Section 2(y)] i.e. offences that are part of the Schedules to the PMLA. There are three Schedules - A, B, and C - and Schedule A contains the bulk of offences and Schedule C is basically the same thing applied in a transnational context. Schedule B contains only one offence - Section 132 of the Customs Act 1962 which criminalises making false declarations before customs officers. Importantly, when the underlying offence is one from Schedule B, the PMLA will only apply if the allegations involve a value of at least one crore rupees. There is no such minimum monetary limit for cases with Schedule A offences. It wasn't always like this, and the history behind these Schedules became quite important in Nikesh Shah which requires me to discuss it here.

When the PMLA came into force in 2005, Schedule A only had two paragraphs carrying offences punishable under the Indian Penal Code 1860 [IPC] for waging war against India and nine offences from the Narcotics, Drugs and Psychotropic Substances Act 1985 [NDPS Act]. Schedule B contained the bulk of offences, along with a lower minimum threshold of thirty lakhs for the value of allegations. Then around 2010 India wanted to join the Financial Action Task Force [FATF] as a member. The FATF is a global body created by the G-8 for money laundering and membership is a big deal [India is the only South Asian member state till today]. When the FATF conducted its evaluation of Indian money laundering laws, it heavily criticised the monetary limit for the cases in Schedule B [paragraph 167 of the linked report]. The logic was that the limit would allow money laundering to escape under the radar as people would just deal in smaller tranches over a slightly elongated period of time. So the FATF recommended the limit be abolished [paragraph 175]. The government sought to do this by simply moving all Schedule B offences to Schedule A, which was done through the 2013 Amendment, leaving Schedule B empty for the time being.

In all this moving around offences, nobody thought fit to look at what impact it would have on the rest of the PMLA - specifically, on Section 45 which spoke about bail. Since the money laundering offence was tied to the Scheduled Offence, Section 45(1) looked at that underlying offence and this decided how difficult it would be to get bail. If it was a Schedule A offence with a sentence of more than three years, the law placed two additional conditions for getting bail: (i) the public prosecutor had to be given a chance to oppose bail, and if the prosecutor chose to oppose bail, then (ii) the court had to satisfy itself that the defendant was "not guilty of such offence" and was not likely to commit any offence on bail, and the burden fell on the defendant to satisfy the court. For all other Schedule A offences, and all Schedule B offences, the regular bail clauses from the Cr.P.C. continued to apply. You can see how the 2013 amendments to the Schedules completely changed the look of Section 45 - the exceptional process became the norm. This new normal was under challenge before the Supreme Court in Nikesh Shah.

SC on Section 45 - Violates Articles 14 and 21
Petitioners argued that the constitutional protections of Articles 14 and 21 were violated by Section 45 PMLA, and the Court agreed to both contentions. Rather than address arguments first and then move to the Court's appreciation, I discuss both together for brevity.

Article 14
The Petitioners argued that linking the stringent bail clauses to offences in Schedule A that carried at least a three year maximum sentence was creating several irrational and arbitrary classifications which the Court encapsulated through examples [Paragraphs 24-27, and 35]. The Court found no basis to differentiate the harsh treatment meted out under Section 45 from the following hypothetical cases which according to the Court did not attract Section 45:
  • When there is only the PMLA charge as the trial for the Scheduled offence was complete;
  • When the PMLA allegation is based on a Schedule B offence;
  • When the PMLA allegation is based on a Schedule A offence carrying a maximum sentence below three years;
  • When a person is tried for a Part A offence with at least a three year term (versus a joint trial where the same person is tried together with the person with PMLA charges);
  • When the person is released on Anticipatory Bail under Section 438 Cr.P.C. for allegations of the Scheduled Offence, before the PMLA charge was brought in. 
The Court was of the view that the seriousness of money laundering cases depended on the amount of money involved [Paragraphs 29-30]. Since Schedule A had no monetary limits, the Court concluded that the likelihood of being granted bail was being significantly affected under Section 45 by factors that had nothing to do with allegations of money laundering [Paragraphs 26-27]. When the Attorney General attempted to defend the scheme by painting the classification as a punishment-based one, the Court easily rebuffed his argument. First, the Court suggested there was no such scheme, but noted that even then, the idea should have something to do with the object of the PMLA. The Court showed how Schedule A had many offences that didn't seem related to money laundering [taking particular objection in Paragraph 34 to offences under the National Biodiversity Act being there], leaving out others that might have more rational connections to money laundering such as counterfeiting currency [Paragraphs 29-30]. The Court also adversely commented on how Schedule A had lumped different NDPS offences together, at the cost of ignoring how the parent Act treated those offences differently [Paragraph 32-33].

The Court noted also that Section 45 of the PMLA was different from other laws that carried similar requirements such as Section 20(8) of the Terrorism and Disruptive Activities (Prevention) Act 1987 [TADA]. The 'such offence' in TADA required a court to be satisfied that the defendant was not guilty of the TADA offence in question before granting bail. But in the PMLA, 'such' offence referred to the Scheduled Offence instead of the PMLA offence. So, the restrictions imposed by Section 45 PMLA were held to have no connection to the objects of the PMLA itself and thus the rational classification, if any, violated Article 14 [Paragraph 28].

Article 21
The Petitioners argued that requiring defendants to satisfy the court that they were not guilty of 'such' offence violated Article 21 by reversing the presumption of innocence and required the defendant to disclose her defence at the outset of the case. In the judgment the Court doesn't really address Article 21 independently - instead the Court suggest that because the provision violates Article 14 it cannot be 'procedure established by law' and therefore violated Article 21. Towards the end of the decision the Court begins discussing the argument though. It labels Section 45 a "drastic provision which turns on its head the presumption of innocence which is fundamental to a person accused of any offence." [Paragraph 38]. In the same paragraph it goes on to observe that "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 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."  

Hits and Misses
There are two questions that were at stake here: (i) did any part of Section 45 offend the Constitution, and if so, (ii) did the Court have no other option but to strike down the provision. Reading the decision, it seems like the Court felt there was so much wrong in the PMLA scheme it decided to throw the kitchen sink at one point rather than explain the issues. The Court answered both affirmatively but never explained to us whether any argument dispositive, or does every case need this sort of broad argumentation to succeed.

Classification and Article 14 first. After reading the legislative history behind the 2013 amendments and the FATF argument, do you think that the Court is right in concluding that higher the monetary allegations, more serious the PMLA case? I'm not so sure. Nor do I think there is much to be gained by placing emphasis (like the Court does) on how Schedule B today has a higher limit than the initial thirty lakhs to suggest that this is in fact the case. It is far more plausible that the one crore limit was placed keeping in mind the underlying offence (false declarations to customs officials in an enquiry) and the concerns of the export industry, which is already subject to Schedule A through Section 135 of the Customs Act 1962 (evading customs duty). Rather than attempt at answering what might be the basis for such a classification for the PMLA (and indirectly giving hints to the government on what might pass muster), the Court would have done well by restricting itself to answering whether the present classification between (i) PMLA allegations based on a type of Schedule A offences versus (ii) all other PMLA cases was intelligible and connected to the objects of the PMLA. As there was enough to show that the original intent (if any) behind Section 45 had not kept apace with the subsequent amendments to the Schedules in 2013, the Court could strike down this classification. But did that require striking down the whole clause?

This brings us to the other part of what did that classification achieve. If it sought to serve as a filter for PMLA cases when it came to administering a strict bail clause, we are left with no filter. Does that mean no PMLA case is serious enough to warrant an application of the clause, or will the clause apply to every PMLA case? Deciding this would need the Court to decide whether clauses such as Section 45 that required a court to find defendants 'not guilty' at the bail stage were constitutional. Rather than directly address this, the Court turned to how the text of Section 45 was flawed, as it referred back to the Scheduled Offence on deciding bail petitions. Since the scheduled classification had been struck down, there was nothing to refer to, and so the clause had to go. While there is little to fault this approach, I remain unconvinced that the Court had no option but to strike down the clause because of the text. The Court has performed far greater feats of legislative reconstruction than being asked to read 'such offence' in Section 45 PMLA as referring to the PMLA allegations rather than only the Scheduled Offence. After all, it stands to reason that a bail provision in the PMLA would want a PMLA special court to consider the PMLA allegations. In fact, many High Court decisions show this is how they were doing it. Heck, this is how the Court itself was doing it in Rohit Tandon at the start of November [Paragraphs 21-23 of the link]. I think this course was adopted as it helped secure two objectives. Not only did this take care of the PMLA clause which this bench of the Court clearly did not like much, it also helped to protect other statutes with similar clauses which the Court held met a 'compelling state interest' test.

This brings me to one last bit about Article 21 and the Eighth Amendment of the U.S. Constitution. The Court cites a previous decision in Rajesh Kumar v. State (NCT) of Delhi [(2011) 13 SCC 706] for the proposition that Article 21 of the Indian Constitution has incorporated the Eighth Amendment and its protection against excessive bail [Paragraphs 13, 19 of Nikesh Shah]. The Court also cites two American decisions [Paragraph 37] on bail for good measure. This is, unfortunately, wrong. Rajesh Kumar cited previous precedent in Sunil Batra to suggest that even though India did not have the Eighth Amendment or the 'Due Process' clause, the consequences were the same to prevent cruel and unusual punishment. Not only did both those decisions not mention the excessive bail clause, the references to the cruel and unusual punishment clause itself are highly contentious as an earlier bench of the Supreme Court had held it couldn't be pressed in India, and that decision continues to be cited

Conclusion
The slapdash manner in which the PMLA Schedules were amended in 2013 to appease the FATF had already caused some High Courts to address this issue of Section 45. The closest it came to striking down the clause was the Punjab & Haryana High Court's decision in Gorav Kathuria v. Union of India & Anr. where it held the bail provisions would not apply retrospectively to offences previously in Schedule B [Paragraphs 43-45 of Nikesh Shah]. When the Court declined to hear an appeal against the High Court order in Kathuria I thought that it had indirectly affirmed the validity of Section 45. The judgment in Nikesh Shah comes as a surprise, and marks the first occasion when the Court has looked at any part of the PMLA through a constitutional lens. There are other parts that are equally problematic - the asset forfeiture scheme and the compulsion on witnesses to make truthful declarations, for instance - that litigants may take to the Court being encouraged by this judgment.

As for the future impact of Nikesh Shah on other statutes that carry the same 'drastic provision', the stage is set for some litigation on that front as well. The Supreme Court has only approved of the TADA and the MCOCA provisions in the past, leaving the many others open to scrutiny on this new test of whether the provision furthers a 'compelling state interest'. The Court never answered that for the PMLA context while deciding the petitions in Nikesh Shah. Do you think it might conclude that the PMLA does not meet the test? What about the other statutes? I've re-pasted my list of statutes containing the clauses below after accounting for the ones that are not relevant anymore. Comments, as always, are welcome.
  1. Section 437(1), Cr.P.C. (in cases of death and life imprisonment).
  2. Section 12AA (inserted in 1981), of the Essential Commodities Act, 1955.
  3. States of Punjab and Tripura inserted this provision as Section 439-A to the Cr.P.C. so applicable within their territory, in 1983 and 1993 respectively. This restricted bail to persons accused of certain offences, inter alia Section 121, 124-A IPC.
  4. Section 37 (amended in 1989) of the Narcotic Drugs and Psychotropic Substances Act 1985 [NDPS].
  5. Section 7A (inserted in 1994) of the Anti-Hijacking Act, 1982. 
  6. Section 6A (inserted in 1994) of the Suppression of Unlawful Acts against Safety of Civil Aviation Act 1982. 
  7. Section 8 of the Suppression of Unlawful Acts against Safety of Maritime Navigation and Fixed Platforms on Continental Shelf Act 2002.
  8. Section 51A (inserted in 2002) of the Wildlife Protection Act, 1972.
  9. Section 43D (inserted in 2008) of the Unlawful Activities Prevention Act, 1967 [UAPA] (nearly identical).
  10. Section 36AC (inserted in 2008) of the Drugs and Cosmetics Act, 1940.

Thursday, November 23, 2017

Flash - Supreme Court declares PMLA bail provisions unconstitutional

The Supreme Court has today held that Section 45 of the Prevention of Money Laundering Act, 2002, is unconstitutional. While the decision is not yet out here is an excerpt from the news:
A bench led by Justice Rohinton F Nariman struck down Section 45 in the PMLA to the extent that it refuses bail to the accused on the basis of twin conditions. 
The first condition says that no bail can be given without giving the public prosecutor an opportunity to oppose the bail plea. The second condition stipulated that the bail can be given only when the concerned court is prima facie satisfied that the accused is not guilty of the offence alleged against him. 
These two conditions made grant of bail virtually impossible in money laundering cases and the maxim tend to be shifted from “bail is rule and jail an exception” to “jail is rule and bail an exception”.
If the Supreme Court has really done as the news suggests, this is potentially a ground-breaking decision. This Blog had discussed in an earlier series of posts how such reverse-onus clauses in bail provisions are littered across various statutes. The Blog had also argued how their operation renders bail an illusion while drastically curbing the presumption of innocence (for those posts, see herehere, and here). More to follow once the judgment comes out. In the meanwhile, I've copied the list of statutes here that can potentially be affected:
  1. Section 437(1), Cr.P.C. (in cases of death and life imprisonment).
  2. Rule 184 of the erstwhile Defence of India Rules supplementing the Defence of India Act 1971. 
  3. Section 12AA (inserted in 1981), of the Essential Commodities Act, 1955.
  4. States of Punjab and Tripura inserted this provision as Section 439-A to the Cr.P.C. so applicable within their territory, in 1983 and 1993 respectively. This restricted bail to persons accused of certain offences, inter alia Section 121, 124-A IPC.
  5. Section 20(8) of the Terrorist and Disruptive Activities (Prevention) Act, 1987 [TADA].
  6. Section 37 (amended in 1989) of the Narcotic Drugs and Psychotropic Substances Act 1985 [NDPS].
  7. Section 7A (inserted in 1994) of the Anti-Hijacking Act, 1982. 
  8. Section 6A (inserted in 1994) of the Suppression of Unlawful Acts against Safety of Civil Aviation Act 1982. 
  9. Section 21(4) of the Maharashtra Control of Organised Crime Act, 1999.
  10. Section 8 of the Suppression of Unlawful Acts against Safety of Maritime Navigation and Fixed Platforms on Continental Shelf Act 2002.
  11. Section 45 of the Prevention of Money Laundering Act, 2002.
  12. Section 51A (inserted in 2002) of the Wildlife Protection Act, 1972.
  13. Section 49(7) of the Prevention of Terrorism Act, 2002 (nearly identical). 
  14. Section 43D (inserted in 2008) of the Unlawful Activities Prevention Act, 1967 [UAPA] (nearly identical).
  15. Section 36AC (inserted in 2008) of the Drugs and Cosmetics Act, 1940.

Thursday, November 9, 2017

The Rajasthan Ordinance, and Seeking Sanction to Prosecute and Investigate Public Servants in India

In September 2017, the Rajasthan government issued an ordinance that sought to (i) make it necessary for investigating authorities to first get sanction from the government before pursuing allegations against a public servant, giving the government up to six months to consider, and (ii) bar any person from disclosing any details about the concerned official until this permission had been granted. The Government has since moved a bill in the legislature to make the law permanent, while the ordinance itself has been challenged before the Rajasthan High Court which is yet to decide the case. News media has seen few supporters barring a Junior Law Minister in the Union government supposedly considers the ordinance 'perfect and balanced'. Most others are challenging it for stifling investigations and illegally curbing the constitutionally protected freedom of speech.  

Are there any merits to, if not all, then some parts, of the Ordinance? Might we see more such ordinances across states in the near future if Rajasthan's version passes judicial muster? I have been thinking about these questions, and here, I try and understand them through this post. Understanding needs context, which is often absent from discussions of sanction in India. This post begins with a brief historical introduction to the 'sanction to prosecute', flagging the recent constitutional problems surrounding the concept. I then try and suggest that the Rajasthan ordinance is the logical aftermath of the judicial treatment of sanction. This means, unfortunately, that this is a rather long post. I hope it isn't long and pointless.

The Imperial Lineage of Sanction to Prosecute
Most legal systems recognise the right of an individual to pursue legal remedies when her rights are violated. If you beat me up, I have the right to pursue a case in court against you. In India, this can happen by either approaching the police who might take the case to court after investigation, or by going to court yourself. Now, it is easy to imagine the possibility of this (or any) right being abused - I might bring a false case to harass my opponent. We address this through preventing or punishing such conduct. The idea of seeking permissions to bring lawsuits fits in the former, which is basically what seeking 'sanction to prosecute' is. An administrative superior acts as a filter to ensure frivolous cases are not brought in court against public officials. The Criminal Procedure Code 1973 [Cr.P.C.] carries this filter in Section 197, which requires prior sanction to 'prosecute' (this is important) public servants (both serving and retired ones) only when allegations concern things they did actually in the course of duty, or purporting to be so.      

But why public officials, you might ask. An educated guess is India's colonial context informed this decision to protect those associated with government. The colonial regime introduced sanction in its first comprehensive criminal procedure code of 1861 [Section 167, at page 186 of the link], and kept it in the 1872 Code [Section 466, at page 509]. The modern version of this which I referred to above came in the 1898 Code [also Section 197, at page 141]. Broad protections shielded those working for the government who, to put it mildly, did not hesitate to step beyond the bounds of law while discharging their duties. A harsh terrain mandated harsh methods, and to allow prosecutions would stifle the governance project (opening for potential historical research examining if native and British persons were treated differently when it came to granting sanction!). Though speculative, I think this idea fits better than the arguments floated in London to defend similar restrictions to prosecute (the link is for debates in 1934, but the law remained the same even before). English law focused more on the nature of the offence rather than the offender - sedition, corruption and other potentially sensitive allegations could only be pursued with the Attorney General's consent, while the Indian version focused on the identity of the defendant and covered every person under the pay of the government

Over time it seems this justification changes, as seen from debates in the House on the Government of India Act 1935, which gave constitutional bases to protections for public servants from suits and prosecutions [Sections 270-71, at page 105. Fascinating, showing the crown was concerned about soon-to-be-elected local governments possibly changing the law on this front]. The legislature spent more time discussing civil suits, but the debates are useful for the criminal prosecution issue nonetheless. Mr. Thorp (column 54) spoke of how it was 'introducing a dangerous principle'  to India and could hurt genuine cases, while the Duchess of Atholl (column 55) spoke of apprehensions that the clause 'falls short of what civil servants feel to be necessary'. This largely mirrors the divide that we see today. Bureaucrats consider it necessary to have these protections to perform their duties while aggrieved persons consider them as impediments of entitlement. 

Independent India and the Opportunity Doctrine 
What became of the requirement of sanction in independent India? Well, it was quickly subjected to a constitutional challenge. In Matajog Dobey [AIR 1956 SC 44] the petitioner argued that Section 197 violated the equal protection clause by giving public servants protections from legal proceedings that others did not have. The Court swatted this aside by holding that public officials 'have to be protected from harassment in the discharge of official duties' while ordinary citizens did not. The vast category of public servants under the pay of the government - both union and state - was thus recognised as a class separate from all others, a distinction that has not been displaced. 

This did not mean the judiciary was not concerned with the debates that I highlighted above. In fact, the concern was palpable. High Courts before independence, and later the Supreme Court too, were acutely aware of the tightrope being tread - read the requirement too narrowly and you render the protection illusory, but read it to cover everything a public servant does and you make accountability a mirage. The judicial device created to navigate this problem was what I will call the 'Opportunity Doctrine' - if public office merely gave an opportunity to commit crime, then there was no need to get sanction. But where the alleged criminal acts were inseparable from the office and were 'integrally connected' to official duty, sanction was a must. So, if a public official misuses the privileges of office (goes on a joyride with government sponsored fuel) then prosecuting that offence should not require sanction. But if a municipal authority colludes with one real-estate developer to allot land at cheap rates, then we may need prior sanction to prosecute.          

The malleability of the Opportunity Doctrine should not go unnoticed - beyond the obvious cases it left a huge middle ground to be navigated with little more than gut instinct. For instance - what about the bank official who pilfers funds for his own use? Did his job merely grant an opportunity, or was it integral to the crime? The judicial grappling with sanction had a significant impact on the text itself. For starters, the test ignored that Section 197 never required an integral connection with duty: it's needs were met even if the acts were purportedly in discharge of duty. Since sanction was a tool to filter cases at the outset, it naturally required this broad scope. Considering whether sanction was needed in post-conviction review (appeals) by courts slowly dislocated it from its preventive roots. After all, how willing would a judge be to reverse a conviction arrived at after a lengthy trial on the technicality of there being no sanction to prosecute an official? This version undoubtedly tapers over the cracks but it would be difficult to argue that the broad shifts are not as I suggest.  

The Intra-Branch Dialogue and Sanctions to Investigate 
Thus we see how courts assumed control of the sanction to prosecute after having refused to strike it down as unconstitutional. Did this happen in a vacuum? Or did the legislature and executive - consisting several public servants protected by sanction - react? They did, and pretty quickly. In 1969 the government passed directions to the Central Bureau of Investigation that prevented it from starting any investigations against high-ranking public servants before getting permission. This was the 'Single Directive'. The thinking is clear - courts are applying a hindsight test which does not filter well, so lets go further back in time and filter at the institution of criminal cases. While doing this, the government impliedly admitted that the sanction protections are too broad to justify the rationale of their protecting public decision-making. Of course decision-makers must be treated differently from the ordinary rank-and-file bureaucrats, and so the latter would not be granted these protections.    

The Supreme Court did not agree that the public servants could be segregated like this. When the Supreme Court held this arrangement illegal, the government responded by re-introducing it almost immediately. When the Court slapped on the government's knuckles it retreated and withdrew the proposed change. But in 2003, it went ahead and amended the law to give it firm footing. While India's major political parties often don't look eye to eye, these moves were made both by the Congress and BJP led governments, showing a fairly clear indication of legislative will. What happens next? This statutory provision [Section 6-A of the Delhi Special Police Establishment Act 1946] was also struck down as invalid by the Court in 2014. On both occasions when the court struck down this protection, it did not overturn the Matajog decision to find sanction requirements were bad for creating an invidious classification between persons. Instead, the Court held that protecting only a class of bureaucrats was bad. How do you read this? Is the Court saying sanction should be limited to instituting prosecutions as done in the CrPC? Or is it saying that some public servants are not more equal than others, but all public servants are more equal than the rest of us. The second is a fair reading, and it was something the Court had agreed to in MK Aiyappa while handling sanction requirements under the Prevention of Corruption Act 1988 (a blistering commentary on the case can be read here). If the court reads the law this way, does it come as a surprise that others, such as the Rajasthan and Maharashtra governments, are doing the same? 

Past, Present, but what of the Future?
Maybe it is just me, but I can't help but notice patterns in how the law on sanctions to prosecute has been developing over time. There is a constant back and forth between the court and government - the court restricts its scope, the government expands it again. All of this was happening within the bounds of the constitution until the Supreme Court upped the ante and held the Single Directive to be unconstitutional in 1998. The government had been running the initiative for nearly thirty years to ensure lax sanction rules did not affect decision-makers, and the Court decided it didn't matter in the language which it could use - the Constitution. Was it inopportune? Perhaps. If the Court had a problem with having a sanction requirement then it should have said it outright. If it didn't, then there were better methods of dealing with the situation than refusing to acknowledge the few merits in the Single Directive scheme and starting a power tussle with the government. Today, because of how the Court avoided the forest for the trees, I think it will be hard for the Rajasthan High Court to hold that needing permission to start an investigation against public servants is unconstitutional. That might just convince the remaining BJP led states to pass similar laws, eventually bringing us back to the Supreme Court. Might the Court finally reconsider its position on all public servants being a separate class from the public?  

Tuesday, October 10, 2017

Prosecuting Public Officials for their Mistakes

(This post first appeared on the Global Anticorruption Blog and has been cross-posted with permission)


In July 2011, Yingluck Shinawatra became Prime Minister of Thailand after her party (founded by her brother, former Prime Minister Thaksin Shinawatra) won a decisive electoral victory. One of her principal campaign promises was to establish a program to purchase rice from farmers at above-market prices then store the rice to reduce supply. The hope was that doing so would increase world prices—because of Thailand’s position as the leading global rice exporter—ultimately allowing the government to sell at a profit. Shortly after the election, Yingluck’s government implemented this program, and it worked well for a few months—until other global players increased their supply of rice, causing Thailand to lose billions of dollars in the process. This economic debacle was entirely predictable—and indeed was predicted by many experts. And the program itself was beset by allegations of fraud and corruption in its implementation.
But should the failure of the rice-buying program be the basis of a criminal charge of corruption and a prison sentence against Yingluck herself, in the absence of evidence that she was directly involved in any embezzlement, bribery, or other more conventional forms of graft? Section 157 of Thailand’s Penal Code allows for just such a prosecution, as this section makes it a crime for a public official to either dishonestly or “wrongfully discharge or omit to discharge a duty so as to expose any person to injury.” And last month, the Thai Supreme Court found Yingluck (out of power since she was deposed by a military coup in 2014) guilty and sentenced her to five years in prison. She fled the country before the verdict.
Thailand is not alone in adopting anticorruption laws that criminalize not only dishonest conduct (bribery, embezzlement, conflict of interest, etc.), but also negligence or incompetence. When India updated its anticorruption law in 1988, it added a new provision that makes it a criminal offense for a public official to “obtain for any person any valuable thing or pecuniary advantage without any public interest.” This broad offense was interpreted by a state High Court to not require any proof of dishonesty or criminal intent, and the Central Bureau of Investigation (India’s premier anticorruption agency) has routinely employed the provision in grand corruption cases to avoid the problem of having to prove corrupt intent. In perhaps the most high-profile such prosecution, the agency went after an ex-Prime Minister, Dr. Manmohan Singh. Dr. Singh was the Minister of Coal at a time when the Government decided to liberalize allocation of coal-blocks and to sell mining rights to private parties. In 2014, the Comptroller and Auditor General’s office reported the policy had caused losses worth billions of dollars because the rights had been sold for too little, through a process that was too ad hoc to be considered legal. Dr. Singh was subsequently charged under India’s broad law, though his trial has currently been stayed while his challenge to the constitutionality the law is pending before India’s Supreme Court. (There are clearly concerns in other quarters about the breadth of this statute: In 2016 a Select Committee of the Upper House of India’s Parliament submitted a report that suggested India eliminate this offense. Parliament hasn’t yet acted on this recommendation, but there are signs that it has some support.)
Is it appropriate to enact broad anticorruption laws that allow government officials to be convicted for dereliction of duty, acting in a manner contrary to the public interest, and the like? Anticorruption activists and prosecutors may find such statutes appealing: It is easier to secure convictions of elected officials who are suspected of corruption, but where it is too difficult to prove the specific intent necessary for traditional corruption offenses. But in fact these broad laws are likely to do more harm than good, and countries like Thailand and India would be better off without them. There are three main reasons for this:
  • First, criminal prosecutions carry immense expressive value and signal to society that certain acts ought to be condemned. The message sent to society, when a court convicts a senior official for a policy failure absent any showing of dishonesty, is not likely to be that the government will not tolerate corruption, but rather that prosecutors and judges have broad power to jail leaders that they don’t like. This is only worsened by the inherently subjective nature of the crime in question. These prosecutions also blur the lines between genuinely dishonest conduct and policy mistakes, undermining the special condemnation that ought to be reserved for the former. On balance, even if prosecutions for dereliction of duty might enable prosecutors to convict leaders suspected of actual but unprovable graft, in the long term such prosecutions will only worsen the respect for rule of law in societies troubled by corruption in governance.
  • Second, and connected to the first point, such broad offenses raise the very real risk of politically motivated prosecutions. In countries where voters are angry about corruption, politicians often stress increased anticorruption prosecutions to show their commitment to reform. What better way to show such commitment then by attacking the alleged corruption of the previous regime? And this is much easier to do when the prosecutors (influenced by the new government) need not actually prove dishonesty, but need only find some alleged failure to fulfill a duty, or some act not in the “public interest.” Not only are partisan witch-hunts contrary to the rule of law, they also don’t always make for sound cases, and can ultimately dilute both the strength of using the courts as an anticorruption force and the faith of the public in the integrity of the institutions of justice.
  • Third, broad anticorruption laws that effectively criminalize negligence are likely to have an undesirable chilling effect on decision-making by public officials. When elected officials take bold moves they already run a risk of alienating their electorate and losing a re-election. Add to that the specter of eventual criminal liability once they’re out of office, and it officials are likely to become too timid to try anything even slightly bold or controversial. This fear of risk trickles down to any official tasked with implementing government policy.
To be sure, elected officials owe a duty to the citizenry to act in the public interest. If they fail to do so, and the failure can be proven to be due to dishonesty or greed, then more narrowly-drawn laws against bribery, embezzlement, and conflict of interest would apply. For serious errors that are made in good faith – or even in those cases where there’s suspicion of wrongdoing but it can’t be proved – there’s an alternative remedy already in place: elections. The political process is of course imperfect. Many Thais were likely frustrated that Yingluck didn’t seem to pay a serious political cost for the failure of the rice-buying scheme, and may have been relieved both by the coup that removed her from power and by her eventual conviction for dereliction of duty. But in the long term, the democratic process offers a better safeguard than allowing for politicians to be sent to jail for mistakes.

Saturday, September 30, 2017

Guest Post: In Defence of Sonu v State of Haryana

(I am happy to host a Guest Post by Mr. Lakshya Gupta, who is a 2017 graduate of the National Law University, Delhi, and is currently practising criminal law in Delhi

As has already been discussed on this blog, Anvar P.V. v. P.K. Basheer [(2014) 10 SCC 473, 'Anvar'] held that the only way to make electronic records admissible by way of secondary evidence is by adducing a certificate under Section 65-B of the Indian Evidence Act 1872. This blog has argued that:

a)   As per Anvar, the certification under Section 65-B is the only mode of proof for secondary evidence of electronic records;
b)  Sonu @ Amar v. State of Haryana [AIR 2017 SC 3441, 'Sonu'] made a distinction between ‘inherent admissibility’ of evidence and its ‘mode of proof’ and held that the requirement of certification under Section 65-B pertained to the latter and not the former;
c)  Ruling in Anvar must be interpreted to mean that absent a certificate under Section 65-B, secondary evidence of electronic record is rendered inherently inadmissible;
d)   Since Sonu which is a two-judge bench, ruled contrary to point c), it is at fault in not applying the law laid down by Anvar, which was decided by a higher bench of three judges.   

I am in agreement with points a) and b). I, however, contest point c) and consequently d). Further, I argue that Sonu applies Anvar retrospectively and decides a different issue than the one determined by Anvar.

The ruling in Sonu

Sonu relies on a two-judge bench decision of the Supreme Court in R.V.E. Venkatachala Gounder Vs. Arulmigu Viswesaraswami and V.P. Temple and Anr. [(2003) 8 SCC 752, 'Venkatachala'] wherein a distinction was been made between admissibility of a document in itself (inherent admissibility) and the manner or mode through which it is sought to be made admissible. The Court in Venkatachala held that objections with respect to the former could be raised for the first time even at the appellate stage while objections with respect to the latter could not be raised once evidence had been tendered. According to Venkatachala (SCC version, paragraph 20), the:

“… crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular ...”

Viewed in light of the reasoning behind Venkatachala, the ruling in Sonu is that since the objection to admissibility (absence of certificate under Section 65-B Evidence Act) of the electronic record (paper printouts comprising Call Detail Records – secondary evidence of their contents) dealt with the mode of proof, such an objection could not be entertained at the appellate stage, if the same was not raised at the time when the electronic record was submitted in evidence at the stage of trial. This is because had an objection been raised at the trial stage, that would have presented an opportunity to the prosecution to cure the defect as to the admissibility at that stage itself. Since no occasion would be available to cure the defect at the appellate stage, it would be unfair to the prosecution if the evidence on record at the time of trial and not objected to then, was omitted from being considered at the appellate stage.

The ruling in Anvar cannot be interpreted to mean that absence of certificate under Section 65-B renders secondary evidence of electronic record inherently inadmissible

From a close reading of Venkatachala and Sonu, it appears that the question of inherent admissibility concerns the nature of the evidence (electronic record) and is separate from the question in what way this evidence may be made admissible in court (as either primary or secondary evidence). So the question that whether printouts comprising Call Detail Records (electronic record in Sonu) or a CD with recorded files (electronic record in Anvar), is something that can be admitted in evidence, decides the inherent admissibility of such CDR or CD. Anvar does not deal with this question, but addresses whether these electronic records can be read in evidence without a certificate under Section 65-B of the Evidence Act. Anvar, as correctly pointed out by this blog, unequivocally answers this question in the negative.

The holding that this is the only manner in which an electronic record by way of secondary evidence may be read in evidence cannot be interpreted as a comment on the nature or inherent admissibility of the electronic record. While a certificate under Section 65-B certainly has a bearing on the authenticity of the electronic record, it does not in any manner, alter or affect the contents of such CD or CDR. Whether or not a certificate under Section 65-B is supplied, the nature of the CD or the CDR remains unchanged. The question of how you establish its authenticity is different – and while State (NCT of Delhi) v. Navjot Sandhu @ Afsan Guru [(2005) 11 SCC 600] provided the option of establishing authenticity with or without a certificate, Anvar held that authenticity can be established only through certification under Section 65-B. This question of establishing the authenticity relates to the mode of proof, the only issue discussed in Anvar. Therefore, contrary to what was argued by this blog, I submit the judgment in Anvar does not deliberate on the issue of inherent admissibility or the nature of an electronic record.  

I must also counter a possible response. An argument may be made that since Section 65-B is a deeming provision, an electronic record can be deemed to be a document only if conditions under Section 65-B are satisfied. If the electronic record fails to meet these conditions, it does not qualify as a document and hence becomes inherently inadmissible in evidence. However, as was held in Anvar itself, the deeming of an electronic record as a document depends only on conditions under Section 65-B(2) and not on the certificate under Section 65-B(4). It must be noted here that conditions under Section 65-B(2) relate to the circumstances of the ‘computer’ and the manner of production of the ‘electronic record’ by such ‘computer’. If these circumstances and manner of production exist, then only the electronic record can be deemed to be a document as per Anvar. Now, the question of inherent admissibility of the electronic record would depend on the existence of these circumstances, and not on the manner in which they can be proved before the Court. Even if the only manner in which they can be proved to exist is through a certificate, as was probably held by Anvar, their existence itself determines the inherent admissibility of the record and not the manner in which their existence is proved. It must also be noted that Anvar nowhere expressly observes that an electronic record cannot be deemed to be a document absent a certificate under Section 65-B.  

Sonu applies Anvar retrospectively and decides a different issue that the one determined by Anvar

Sonu recognises that since the law laid down by Anvar applies retrospectively, requirement of a certificate under Section 65-B was necessary to make secondary evidence of electronic records admissible – and that must be deemed to have been the position of law from the introduction of Section 65-B in the Evidence Act. Since this was the position of law, the objection as to admissibility (failure to submit certificate under Section 65-B) should have been raised at the stage of tendering of evidence. Since the objection had not been raised during trial at the stage of evidence, it could not be entertained at the appellate stage.

So basically, the Court is telling the accused/appellant that – we agree that the position of law is what Anvar held, and so you ought to have argued it at the time when evidence was being lead during trial, and you cannot argue it now, at the appellate stage if you didn’t raise the argument during trial. Hence, the Court in Sonu in fact realises it was bound by in Anvar and reaffirms it.  

In Anvar, there is no doubt that the plea of non-admissibility of electronic record has been accepted by the Supreme Court at the appellate stage. It is crucial here to note that the reasoning of Sonu does not preclude the Court from entertaining objection as to admissibility of the electronic record at the appellate stage, but it bars the defence from raising that objection at the appellate stage when this was not taken at the time of tendering of evidence. Now, this would be a legitimate course of action available to the Bench in Sonu if it can be established that Anvar did not consider the issue determined by Sonu, which is - whether a plea regarding non-admissibility of electronic records (due to absence of certification under 65-B) could be taken at the appellate stage if the same had not been raised when evidence was being tendered during the trial. A look at the High Court decision in the Anvar case (Election Petition No. 3 of 2011 in High Court of Kerala) shows that the plea regarding non-admissibility of CD’s was raised by the petitioner even in the High Court.[1] 

Sonu also notes that Venkatchala was a civil case, and also places reliance on the three-judge bench decision in PC Purshothama Reddiar v. S. Perumal [(1972) 1 SCC 9, 'Reddiar'] which pertained to admissibility of police reports in a criminal trial. The defence in Reddiar had objected to the admissibility of police reports (marked in evidence without any objection during trial stage) on the ground that the police officials who had covered those meetings had not been examined. The Court held it was not open to the accused to raise an objection about the admissibility of the police reports when no such objection was taken at the time when evidence was being lead during trial. While Reddiar did not make a distinction between inherent admissibility and mode of proof, it is clear that the Court was unwilling to entertain objections pertaining to admissibility when they had not been raised during trial. Hence, it was legitimate for Sonu to decide an issue which was not considered in Anvar and the determination of which is in consonance with a bench co-ordinate to Anvar.

As has been correctly identified on this blog, Sonu is concerned that retrospective application of Anvar is ‘not in the interests of administration of justice’ for a large number of criminal cases that have already become ‘final’. However, I disagree that Sonu was a misstep, and submit it stands on firm legal footing.    


[1] The argument in the High Court was that since the CD’s were secondary evidence of the content of the recordings contained therein and since primary evidence of this content (recordings created and stored on mobile phones, digital camera or the computers to which they were transferred) was not submitted in court, the secondary evidence (CD’s) was not admissible since it could not be relied upon as an authentic source.

Wednesday, September 27, 2017

Mahmood Farooqui's Appeal and a Problem of Labels

On 25 September 2017, a single judge of the Delhi High Court allowed an appeal filed by Mahmood Farooqui challenging his conviction under Section 376 for rape, where he was sentenced to undergo seven years rigorous imprisonment and pay a fine of Rs. 50,000/-. It comes in the wake of the Punjab and Haryana High Court suspending the sentence of three students convicted of gang-rape in another case that attracted significant media attention. The decision has garnered mostly negative criticism from what I gather (see here, and here), and I am certain more scrutiny of the opinion will come during the week. At the outset, while the fast pace of the proceedings must be applauded (the appeal has been decided around two years after filing of the complaint itself), it only reminds us of the other side of that coin which is, unfortunately, the only one that 'have-nots' unfortunate enough to be stuck in the Indian criminal justice shall ever see. How many regular hearings from past years suffered so that Mr. Farooqui's case could be heard, we shall never know.   

To have my two cents worth as a lawyer, I think the decision is questionable and there is a good case in appeal. I certainly do hope that an appeal will be filed soon by either the the State / Victim before the Supreme Court. The High Court decision does not, with certainty, tell us why the conviction is overturned beyond telling us that the prosecution case was not proved beyond reasonable doubt. What I mean is, that the Court does not fully commit to either saying that it (i) the entire allegation of sexual acts was not proven, or (ii) only the non-consensual nature of the sexual acts was not proven. Given the amount of time spent by the decision in explaining the idea of consent, one may think it is the latter. The Court has said in paragraph 102: "But, it remains in doubt as to whether such an incident, as has been narrated by the prosecutrix [victim], took place and if at all it had taken place, it was without the consent / will of the prosecutrix and if it was without the consent of the prosecutrix, whether the appellant could discern / understand the same.

Because of this (and because I know that a lot will be said about this aspect by more competent commentators) I refrain from discussing in detail the lengthy discussion on consent that the High Court engages in. Suffice to say that everyone thought we had moved past a time when courts would tell us that "instances of woman behaviour are not unknown that a feeble 'no' may mean a 'yes'" [see paragraph 78]. Such inferences are precisely what the 2013 amendments to the Indian Penal Code sought to exclude when it added an explanation to state that 'consent' for the Penal Code required an unequivocal agreement. The court, instead, offers us another idea and suggests the consent definition may be flipped to requiring proof that there was not an unequivocal disagreement, in situations depending on various factors such as whether the parties are persons 'of letters' and 'not conservative'. 

All this should convince readers that the decision is very muddled and will make for good arguments in the Supreme Court. That appeal will not raise any discussion on what are, I think, deeper problems that this case highlights: a problem of labels and criminal conduct. Rape, Murder, Robbery, Extortion - all these are labels that have carried on in language to describe certain kinds of acts. Legislatures have the authority to change their meaning but don't do so easily, because they acknowledge the connotations of these labels. For instance, if a corporation dumps toxins polluting rivers which leads to death, calling it murder may not cut it, so you make a different label for that kind of act. The Indian legislature decided to change the meaning rape and expanded the kinds of acts amounting to rape in 2013 to include non-consensual oral sex. It could have done so differently, i.e., by adopting different labels for different kinds of acts (treat penetrative and non-penetrative acts differently, for instance). It could have also shed the label of rape altogether, as has been done in other countries. But it decided to stick to the old label, and in doing so it hoped that the condemnation the law had reserved for particular kinds of acts by labelling them as rape for a hundred years could be extended to other acts. It also hoped that judges who had been trained to not think of certain acts as rape, would change their minds simply because the law said that they had to now. I think Mr. Farooqui's appeal shows us that this experiment is not working, at least not yet with judges where (on an average) they seem to have distinctly different social mores than the parties. It might not have been the best idea to adopt an aggregator term and not adopt a more granular approach for sexual offences. The judgment conveys to me that faced with the binary choice between holding a person guilty of rape or not, the judge could not do it because of how serious the accusation is. Was that illegal? Perhaps. But do judges simply apply the law? Of course not, and pretending otherwise will not help. Judges have biases, and smarter laws should account for them. If we assume as a base position that most judges in India are male and hold gender biases (implicit or explicit), then why create an architecture that only gives them two options and stiffens how the bias operates? A better architecture would factor in that bias, and probably avoid decisions like this one.

(this post was updated on 27 September, 2017. The reference to Section 114-A Evidence Act earlier was erroneous, and has been corrected.)