DEALING WITH THE PROCEEDS OF CRIME
The parliament by Act 40 of 1993 amended the code of Criminal Procedure 1973 by adding chapter VII-A to the code. It deals with reciprocal arrangements for assistance in certain matters and procedure for attachment and forfeiture of property. The circumstances under which chapter VII-A was introduced in the code is explained in the statement of objects and reasons of the Amendment Act of 1993. The amendment is proposed to provide for a) the transfer of person between contracting states including persons in custody for the purpose of assisting in investigation or giving evidence in proceeding; b) attachment and forfeiture of properties obtained or derived from the commission of an offence that may have been or has been committed in any other country; and c) enforcement and attachment of forfeiture orders issues by a court in the other country.
The government of India has signed an agreement with United Kingdom of Great Britain and Northern Ireland for extending assistance in the investigation and prosecution of crime and the tracing, restraint, and confiscation of the proceeds of crime (including crimes involving currency-transfer) and terrorist funds. The amendment was introduced for the purpose of giving full effect to the agreement between the countries.
The then Minister of Home Affairs Sri. S.B. Chauhan, while moving the bill to amend the Code, spoke as follows:
“I beg to move: That the Bill further to amend the Code of Criminal Procedure, 1973, as passed by Rajya Sabha, be taken into consideration. There is an increasing realization all over the world that acts of crime and terrorism are fast acquiring international complexion. This trend has been substantially facilitated by the rapid strides made in recent years in the field of transportation and communication. The nexus across countries between the perpetrators and supporters of crime and terrorism can be destroyed and guilty brought to book only if widest measure of cooperation is established between the actions of law enforcing agencies of different countries. As a first step in this direction, an agreement between the Government of India and the Government of United Kingdom of Great Britain and Northern Ireland was signed in London on 22nd September 1992 to cooperate mutually in the investigation and prosecution of crime and the tracing, restraint and confiscation of the proceeds and instruments of crime and terrorist funds. The agreement between contracting States provides inter alia for search, attachment and forfeiture of property derived from the commission of an offence, assistance in search and transfer of persons wanted for criminal activity, assistance in investigation and furnishing of evidence, etc. In order to implement this agreement, it has become necessary to amend the Criminal Procedure Code. “
The Government of India, following the introduction of chapter VII-A has entered into a similar agreement with several countries. Currently India has reciprocal arrangements with 42 countries[1].
PROCEEDS OF CRIME UNDER CHAPTER VII-A OF THE CODE
'Proceeds of crime' means any property derived or obtained directly or indirectly, by any person as a result of a criminal activity (including crime involving currency transfer) or the value of any such property.[2] The ‘property‘ means property and assets of every description whether corporal or in corporal, 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 property obtained through proceeds of crime.
APPLICATION OF THE CHAPTER VII-A OF THE CODE
A notification by the central government in the official gazette directing the application of the chapter in relation to a contracting state with which reciprocal arrangements have been made is an essential precondition for the application of this chapter.[3] The central government may make suitable exemptions or qualifications regarding the application of the chapter in the said notification. 'A Contracting State' means any country or place outside India in respect of which arrangements have been made by the central government with the government of such countries through a treaty or otherwise.[4]
ASSISTANCE IN RELATION TO ORDERS OF ATTACHMENT OR FORFEITURE OF PROPERTY
A court in India having reasonable grounds to believe that any property obtained by any person is derived or obtained, directly or indirectly from the commission of an offence, it may make an order of attachment or forfeiture of the property[5]. Where a letter of request is received by the Central Government from a Court or Authority in a Contracting State, requesting attachment or forfeiture of 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 a letter of request to a court in India for execution of such request for attachment and forfeiture of the property in India[6].
Evidently, there are two methods by which assistance for attachment and forfeiture of property derived by any person from the commission of an offence, in a contracting State under this chapter. In either case, the Court shall direct any police officer not below the rank of Sub Inspector of police to take all steps necessary for tracing and identifying such property[7]. 'Tracing ‘ means determining the nature, source, disposition, movement, title or ownership of property,[8] while ‘identifying‘ includes establishment of a proof that the property was derived from, or used in the commission of an offence.[9] The steps that the police officer may take for tracing and identifying proceeds of crime, may include any inquiry, investigation or survey in respect of any person, place, property, assets, documents, books of account in any Bank of financial institutions or any other relevant matters.
When a court in India has made an order for attachment or forfeiture of any property suspected to be in a contacting state, the court may issue a letter or request to a court or an authority in the contracting state for execution of such order[10].
SEIZURE OR ATTACHMENT OF PROPERTY WHILE TRACING AND IDENTIFYING PROCEEDS OF CRIME
The police officer conducting an enquiry or investigation may make an order for ceasing any property or attaching the same, if he has reasons to believe that the property in relation to which such query or investigation is being conducted is likely to be concealed, transferred or disposed. By the order of seizure or attachment, the officer may direct that such properties shall not be transferred or dealt with expect with his prior permission. He is obligated to serve a copy of such order to the person concerned[11]. The order passed by the officer shall not have any effect unless the order is confirmed by an order of the court within 30 days of its being made[12].
PROCEDURE FOR FORFEITURE OF PROPERTY
As a result of the enquiry, investigation or survey by the officer, the court has reasons to believe that all or any of the properties are proceeds of crime, it may serve a notice upon such person calling upon him within a period of 30 days, to indicate the source of income, earnings, or assets, out of which he acquired such property. He will be called upon to show cause why all or any such properties should not be declared to be proceeds of crime and forfeited to the Central Government[13]. Such notice can be issued to any other person who owns the property on behalf of the other[14].
The Court shall record a finding whether all or any of the properties in question are proceeds of crime after considering the explanation to the show cause notices issued, the available materials and after giving a reasonable opportunity of being heard to the affected person[15]. The Court is competent to record its finding, ex parte, when no explanation is offered to the show cause notice[16]. Where the court is satisfied that some of the properties are referred in the show cause notice are proceeds of crime, but it is not possible to identify specifically such properties, then the court shall specify the properties, to the best of its judgment, as proceeds of crime and record a finding accordingly[17]. The properties recorded by the court as proceeds of crime shall stand forfeited to the Central Government free from all encumbrances. The court is also competent to forfeit any shares in the company which are recorded as proceeds of crime[18]. When shares in the Company are forfeited, the Central Government shall be registered, as transferee of such shares.
FINE IN LIEU OF FORFEITURE
Where the court makes a declaration that any property stands forfeited to the Central Government, the affected party has an option to pay in lieu of forfeiture, a fine equivalent to the market value of the property, where he could not satisfy the court to have been acquired through an independent source of income[19]. The court may revoke the declaration of forfeiture on payment of such fine[20]. All transfers made after attachment of the property under this chapter or after issue of show cause notice following inquiry and investigation by the officer shall be null and void[21].
CONCLUSION
The reciprocal arrangements for assistance in the matter or attachment and forfeiture of property is not intended for recovery of amounts from a person accused of any offences, or from transferees of any property which is declared as proceeds of crime by the court. It shall not apply to local offences, as its application is limited to offences with international ramification and with reference to any contracting state.
The properties attached and forfeited shall, however, remain with the Central Government and the law does not provide for transfer of proceeds of crime to the contracting state or for its distribution in among the victims of the crime. However, a reading of the chapter gives a clear indication that any person, who is in possession of proceeds of crime can be proceeded against by tracing and identifying the proceeds of crime and thereafter by its attachment and forfeiture to the Central Government.
[1] Australia, Azerbaijan, Bahrain, Bangladesh, Belarus, Bosnia & Herzegovina, Bulgaria, Cambodia, Canada, Egypt, France, Hong Kong, Iran, Indonesia, Israel, Kazakhstan, Kyrgyzstan, Kuwait, Malaysia, Maldives, Mauritius, Mexico, Mongolia, Morocco, Myanmar, Russia, Singapore, South Africa, South Korea, Spain, Sri Lanka, Switzerland, Sultanate of Oman, Tajikistan, Thailand, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Vietnam.
[2] Section 105A (c) of the Code.
[3] Section 105(l) of the Code.
[4] Section 105 A(a) of the Code.
[5] Section 105 C (1)
[6] Section 105 C (3)
[7] Section 105 D (1)
[8] Section 105 A (e)
[9] Section 105 A (b)
[10] Section 105 C (2)
[11] Section 105 E (1)
[12] Section 105 E (2)
[13] Section 105 G (1)
[14] Section 105 G (2)
[15] Section 105 H (1)
[16] Proviso to Section 105 H (1)
[17] Section 105 H (2)
[18] Section 105 H (4)
[19] Section 105 I (1)
[20] Section 105 I (3)
[21] Section 105 J
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