Tariq Saleem Sheikh, J. - On 17.10.2022, the Federal Investigation Agency (FIA) received Complaint No.3424/22 against the Petitioner, alleging that he was involved in a financial crime and had unlawfully received various sums of money into his Account No.1003771971001192, which he maintains with MCB Bank Limited (the "Bank"). Following initial verifications, the FIA registered Enquiry No. 35/2023, which was assigned to Respondent No.3. The latter sought records from the Bank under section 25(1) of the Anti-Money Laundering Act 2010 ("AMLA") and instructed it to debit- block the Petitioner's aforementioned account. Subsequently, Respondent No. 3 issued a notice to the Petitioner, requiring an explanation for the allegations against him. Through this petition under Article 199 of the Constitution of the Islamic Republic of Pakistan 1973 (the "Constitution"), the Petitioner challenges the FIA's jurisdiction to restrict his bank account.
2. Mr. Muhammad Osama Asif, Advocate, contends that the Federal Investigation Agency Act 1974 (the "FIA Act") distinguishes between "inquiry" and "investigation". FIA has no lawful authority to freeze or otherwise restrict the operation of any bank account at the inquiry stage. Under section 5(5) of the FIA Act, such power can only be exercised during the investigation. According to him, since the proceedings against the Petitioner are at the inquiry stage, the FIA's action is without jurisdiction. In support of his contention, he has relied upon Najib Rahim v. Federation of Pakistan through Secretary, Ministry of Interior and others (PLD 2017 Sindh 53), Muhammad Sohail Shaikh v. The State and others (PLD 2021 Lahore 612), Uzma Adil Khan and others v. Federal Investigation Agency through Director General, and others (2023 CLD 599), and Hamza Khalid v.
The State and another (2023 LHC 7628).
3. On the factual aspect, Mr. Asif submits that the Petitioner has been employed as a worker in the factory of Millat Tractor Company Limited situated at Begum Kot, Lahore, for the past five years at a monthly salary of approximately Rs.25,000/- per month. The account mentioned above is his salary account. The Petitioner is not involved in any offence, and the allegations against him are baseless. He appeared before Respondent No.3 in response to his notice and explained his position.
He also filed an affidavit to support his defence plea. Mr. Asif maintains that the restriction on the Petitioner's bank account is unjustified.
4. Mr. Asad Ali Bajwa, Deputy Attorney General, contends that Mr. Asif's contention that the FIA can only freeze a bank account during the investigation phase of a case, and not when it is at the inquiry stage, is misconceived. He asserts that he has overlooked section 5(1) of the FIA Act which is very clear in this respect. As regards the present case, Mr. Bajwa submits that the FIA has credible evidence that the Petitioner is involved in money laundering. Therefore, Respondent No.3 has proceeded against him under section 5(5) of the FIA Act, read with section 8 of the AMLA, and debit-blocked his account by exercising authority. According to him, the action against the Petitioner is lawful and justified.
Opinion
5. Parliament has established FIA through the Federal Investigation Agency Act of 1974 for inquiry and investigation of certain offences committed in connection with matters concerning the Federal Government.[1] Section 3 of the Act, read with the Schedule thereto, lists those offences and adds that it would include an attempt or conspiracy to commit any such offence and the abetment thereof. In Munir Ahmad Bhatti v. Director FIA Cyber Crime Wing, Lahore, and others (PLD 2022 Lahore 664), after analyzing various provisions of the FIA Act and legal precedents,[2] this Court held that FIA falls within the category of police authorities".
6. Section 5 of the FIA Act describes the powers of the members of the FIA. It is reproduced below for ease of reference:
5. Powers of the members of the Agency.- (1) Subject to any order which the Federal Government may make in this behalf, the members of the Agency shall, for the purpose of an inquiry or investigation under this Act, have throughout Pakistan such powers, including powers relating to search, arrest of persons and seizure of property, and such duties, privileges and liabilities as the officers of a Provincial Police have in relation to the investigation of offences under the Code [of Criminal Procedure 1898] or any other law for the time being in force.
(2) Subject to rules, if any, a member of the Agency not below the rank of a Sub-Inspector may, for the purposes of any inquiry or investigation under this Act, exercise any of the powers of an officer- in- charge of a police- station in any area in which he is for the time being and, when so exercising such powers, shall be deemed to be an officer-in-charge of a police-station discharging his functions as such within the limits of his station.
(3) Without prejudice to the generality of the provisions of sub section (1) and sub-section (2), any member of the Agency not below the rank of a Sub-Inspector authorized by the Director-General in this behalf may arrest without warrant any person who has committed, or against whom a reasonable suspicion exists that he has committed, any of the offences referred to in sub-section
(1) of section 3.
(4) For the purpose of the exercise by the members of the Agency of the powers of an officer in charge of a police station. Police Station" includes any place declared, generally or specially, by the Federal Government to be a police station within the meaning of the Code.
(5) If, in the opinion of a member of the Agency conducting an investigation, any property which is the subject matter of the investigation is likely to be removed, transferred or otherwise disposed of before an order of the appropriate authority for its seizure is obtained, such member may, by order in writing, direct the owner or any person who is, for the time being, in possession thereof not to remove, transfer or otherwise dispose of such property in any manner except with the previous permission of that member and such order shall be subject to any order made by the court having jurisdiction in the matter.
(6) .......
7. The legislature has used two terms in section 5 of the FIA Act, "inquiry" and "investigation", without providing specific definitions. While these terms are commonly considered interchangeable, they carry distinct meanings in the legal context. The Black's Law Dictionary defines "inquiry" as "(a) a question someone asks to elicit information; (b) the act or process of posing questions to elicit information."[3] On the other hand, it describes "investigation" as "the activity of trying to find out the truth about something, such as a crime, accident, or historical issue; esp., either an authoritative inquiry into certain facts, as by a legislative committee, or a systematic examination of some intellectual problem or empirical question, as by mathematical treatment or use of the scientific method."[4] According to the Oxford Advanced Learner's Dictionary, "inquiry" signifies "a solicitation for information", while "investigate" denotes "the comprehensive exploration and scrutiny of all facts surrounding a particular event, such as a crime or an accident, with the objective of ascertaining the truth."[5]Merriam-Webster defines "inquiry" as "a solicitation for information or an official endeavour to amass and scrutinize data concerning a subject."
According to it, "investigate" refers to "the process of seeking out facts pertaining to an incident, such as a crime or an accident, to determine the circumstances, perpetrators, etc."
8. The Code of Criminal Procedure 1898 (hereinafter referred to as the "Code" or "Cr.P.C.") defines the two terms in section 4(1) as follows:
(k) "Inquiry". "Inquiry" includes every inquiry other than a trial conducted under this Code by a Magistrate or Court.
(l) "Investigation".- "Investigation" includes all the proceedings under this Code for the collection of evidence conducted by a police officer or by any person (other than a Magistrate) who is authorized by a Magistrate in this behalf.
9. Legal precedents also acknowledge the distinction between inquiry and investigation. In Adamjee Insurance Company Ltd. v. Assistant Director, Economic Enquiry Wing (1989 PCr.LJ 1921), a Division Bench of the Sindh High Court stated: "We may also point out that sub-section (1) of section 5 [of the FIA Act] refers to two terms, i.e. `inquiry' or `investigation'. The use of these two terms in the above sub-section indicates that they connote two different meanings. In our view, inquiry can be termed as the first step towards investigation."
10. In summary, "inquiry" and "investigation" are distinct processes within legal proceedings, each serving specific purposes. An inquiry refers to a preliminary examination or fact-finding process conducted by a designated authority or agency to gather information regarding a particular matter. It aims to assess the situation and determine whether further legal action is warranted.
Inquiries vary in scope and formality, ranging from informal discussions to formal hearings. On the other hand, an investigation involves a detailed examination of a specific matter or allegation to gather evidence and determine its truth or validity. Investigations are conducted by law enforcement agencies or authorized entities to collect evidence, identify suspects, and gather information for legal proceedings. Although both procedures entail scrutinizing facts and evidence, inquiries are preliminary, primarily focusing on information gathering. In contrast, investigations are more thorough and structured, geared explicitly towards accumulating evidence to support legal action.
11. In interpreting section 5(5) of the FIA Act, the courts have taken into account the distinction between "inquiry" and "investigation". Consequently, in the cases mentioned in paragraph 2 above, they concluded that the FIA is only authorized to exercise search and seizure powers under section 5(5) during investigations, not inquiries. The Deputy Attorney General contends that these cases did not consider section 5(1) of the FIA Act, an independent provision covering both inquiries and investigations. It stipulates that subject to any orders from the Federal Government, the members of the FIA possess the same authority as provincial police officers regarding search, arrest, and property seizure during inquiries or investigations under the Act, albeit applicable nationwide. I am inclined to concur with his stance.
12. Although the FIA Act serves as the primary legislation governing the FIA, various statutes assign it the responsibility of investigating offences committed under them. In such instances, the specific provisions of those laws regarding arrest, search, and property seizure would take precedence and must be complied with.
13. Section 550 Cr.P.C. is an integral part of the legal framework to combat crime. It aims to facilitate the immediate and lawful seizure of suspicious property by police officers, ensuring that potential evidence is secured for further inquiry/investigation and legal proceedings. It reads:
550. Powers to police to seize property suspected to be stolen. - Any police officer may seize any property which may be alleged or suspected to have been stolen, or which may be found under circumstances which create suspicion of the commission of any offence. Such police officer, if subordinate to the officer in charge of a police station, shall forthwith report the seizure to that officer.
14. Section 550 Cr.P.C. employs expansive language, yet its applicability hinges on two conditions: firstly, the subject must qualify as "property", and secondly, there must be suspicion of the commission of an offence.
15. The term "property" is not explicitly defined in either the Pakistan Penal Code or the Code of Criminal Procedure. However, various legal sources offer some guidance. Section 22 PPC states: "The words `moveable property' are intended to include corporeal property of every description, except land and thing attached to the earth or permanently fastened to anything which is attached to the earth." Article 2 (1) (xxi) of Police Order 2002 describes "property" as under: " `Property' means any moveable property, money or valuable security". Section 3(34) of the General Clauses Act, 1897, says that "movable property shall mean property of every description, except immovable property." In Nevada Properties Private Limited v. State of Maharashtra and another [(2019) 20 SC 119], while interpreting sub-sections (1) and (2) of sections 102 of India's Code of Criminal Procedure 1973 (the "Indian Code of 1973"), which are analogous to Pakistan's 550 Cr.P.C., the Indian Supreme Court clarified that "any property" mentioned in the law does not include immovable property. It underscored that immovable property cannot, in its strict sense, be seized - though documents of title, etc., relating to it can be seized, taken into custody, and produced.
Immovable property can be attached, locked, or sealed, but seizure, in the legal sense, entails dispossessing the occupant, which seldom occurs. The language of the relevant section does not confer upon police officers the power to dispossess occupants and seize immovable property.
Therefore, such powers cannot be inferred or deemed implicit in the power to effect seizure without explicit legislative authorization.
16. "Suspicion" implies a belief or opinion based upon facts or circumstances that do not constitute proof. In a legal context, "suspicion" refers to a belief or perception held by an individual, particularly a law enforcement officer or legal authority, that someone may be involved in criminal activity. It is a subjective assessm ent based on circumstantial evidence, observed behaviour, or received information that suggests the possibility of wrongdoing. Suspicion does not require concrete evidence or proof of guilt but rather signifies a preliminary inclination or doubt regarding a person's involvement in unlawful behaviour. In Nevada, supra, the Indian Supreme Court held that the word "suspicion" is a weaker and broader expression than "reasonable belief" or "satisfaction".
17. In a nub, section 550 Cr.P.C. empowers law enforcement to seize property suspected of being stolen or connected to criminal activities. Notably, there is no requirement to prove the commission of any offence before invoking this provision. They can act based on suspicion alone. This highlights the proactive role of law enforcement in preventing crime and preserving evidence.
However, it is essential to emphasize that while section 550 Cr.P.C. enables police officers to seize property, it does not grant them the authority to administer justice or return the same to rightful owners. Such power is reserved solely for the courts.
18. The term "any offence" in section 550 Cr.P.C. demonstrates the legislature's intention to cover offences under any statute, implying a broad application of the provisions. It connotes that even in cases involving non-cognizable offences, where the police cannot arrest without a warrant and the investigation requires a court order, they still have the authority to seize property found under suspicious circumstances.
19. As adumbrated, sub-sections (2) and (4) of section 5 of the FIA Act empower a member of the FIA, not below the rank of a Sub-Inspector, to exercise the powers of an officer-in-charge of a police station to conduct inquiries or investigations under the FIA Act, subject to any applicable rules. This authority extends to any area where the member is currently stationed, effectively conferring upon them the status of an officer-in-charge of a police station within that jurisdiction.
Here, the term "police station" encompasses any place designated by the Federal Government, whether generally or specifically, as a police station within the meaning of the Code. Consequently, the FIA is competent to exercise powers under section 550 Cr.P.C.
20. This takes us to the question of whether the bank account of an accused or his relation can be considered "property" within the meaning of section 550 Cr.P.C. and whether an investigating officer has the authority to seize it or issue a prohibitory order restraining its operation. In State of Maharashtra v. Tapas D. Neogy [(1999) 7 SCC 685], the Indian Supreme Court answered this question in the affirmative while considering sub-sections (1) and (2) of section 102 of the Indian Code of 1973, which mirror Pakistan's section 550 Cr.P.C., as mentioned above. It held that the legislature's choice of phrasing, specifically "any property" and "any offence", indicates an intention to encompass violations under all statutes, implying a broad application of the provisions. There is no justification for narrowly interpreting them. The Supreme Court reasoned: "It is well known that corruption in public offices has become so rampant that it has become difficult to cope with the same. Then again, the time consumed by the courts in concluding the trials is another factor which should be borne in mind in interpreting the provisions of section 102 of [the Indian] Criminal Procedure Code and the underlying object engrafted therein, inasmuch as if there can be no order of seizure of the bank account of the accused then the entire money deposited in a bank which is ultimately held in the trial to be the outcome of the illegal gratification, could be withdrawn by the accused and the courts would be powerless to get the said money which has any direct link with the commission of the offence committed by the accused as a public officer. We are, therefore, persuaded to take the view that the bank account of the accused or any of his relation is property' within the meaning of section 102 of the Criminal Procedure Code and a police officer in the course of investigation can seize or prohibit the operation of the said account if such assets have direct links with the commission of the offence for which the police officer is investigating into."
21. The Supreme Court of India reaffirmed the above view in Teesta Atul Setalvad v. The State of Gujarat (AIR 2018 SC 27). The Investigating Officer had materials pointing out circumstances that created suspicion of the commission of the offence under investigation and seized the appellant's bank accounts while exercising powers under section 102(1) of the Indian Code of 1973. The Supreme Court upheld this action because the Investigating Officer had followed the procedure prescribed in sub-sections (2) and (3) of the same provision. After issuing instructions to seize the mentioned bank accounts, he submitted a report to the concerned Magistrate.
22. In view of the above, the phrase any property in section 550 Cr.P.C. encompasses bank accounts. Since the FIA is competent to exercise powers under section 550 Cr.P.C., as discussed above, it holds the authority to freeze bank accounts or restrict their operation under section 5(1) of the FIA Act, regardless of whether the matter is in the inquiry or investigation stage. However, this would be subject to the condition that there should be some nexus with the alleged offence or that circumstances create suspicion of the commission of any offence.
23. The freezing of accounts affects the right to privacy and the reputation of the account holder.
The FIA cannot arbitrarily freeze bank accounts or keep them frozen indefinitely. Such actions would violate the account holder's constitutional and legal rights. However, these individual rights must be balanced with the duty of the State to combat crime and punish offenders. In Adamjee Insurance Company Ltd. v. Assistant Director, Economic Enquiry Wing (1989 PCr.LJ 1921), a Division Bench of the Sindh High Court recognized the formidable challenges faced by the FIA in white-collar crimes. It acknowledged the inherent difficulty in obtaining concrete evidence at the initial stages of an inquiry or investigation due to the complex nature of such offences. However, the High Court emphasized the importance of preventing unwarranted interference in business operations, which are crucial for national economic growth. It stressed that unfounded inquiries into the criminal involvement of companies or businessmen could result in significant financial losses and harassm ent. Consequently, it held that initiating inquiries or investigations must be based on substantive allegations. Generally, courts should not interfere in the investigative process.
Nevertheless, the High Court may intervene under Article 199 of the Constitution where inquiries or investigations infringe upon constitutional rights, violate other laws, or are motivated by malicious intent.
24. The Code stands as a bulwark against the abuse of power by police and law enforcement agencies, providing a comprehensive mechanism to ensure accountability and transparency in their actions. Section 523(1) Cr.P.C. mandates that the seizure by any police officer of property taken under section 51, or alleged or suspected to have been stolen, or found under circumstances suggestive of criminal activity shall be forthwith reported to a Magistrate who shall make such order as he thinks fit respecting the disposal of such property or the delivery of such property to the person entitled to the possession thereof, or if such person cannot be ascertained, respecting the custody and production of such property. Therefore, whenever the FIA issues a directive restricting an individual's bank account, whether during an inquiry or investigation, it must promptly notify the relevant Magistrate or court, which would then issue an order in accordance with the law appropriate to the situation and circumstances. Should the FIA fail in this duty, the aggrieved person may approach the Magistrate or the court concerned for redress. This recourse ensures that individuals are not left unprotected in the face of potential abuses of power by the FIA. The following excerpt from Suraj Mohan Babu Mishra vs State of Gujarat (AIR 1967 Guj 126), a case from the Gujarat High Court, is instructive: In my opinion, it would be perfectly open to the learned Magistrate to take note of the fact about any such truck having been seized by the police officer and while he may not act upon it at once, it would be his duty to inquire from the police officer and have his report obtained if the police officer so desires to send. It is possible that the police officer may have forgotten to send such a report, and on an intimation from the Magistrate on any such information received from the owner of the property involved, the police officer may send a report. The Magistrate would then be justified in passing the order as he thinks fit with regard to the disposal of any such property or the delivery of such property to the person entitled to the possession thereof under S. 528 of the Code. If however, the police officer does not choose to send in spite of an intimation sent to him, the party claiming the property cannot be made helpless, having no remedy by reason of the fault or default on the part of a police officer in making a report which he was bound to make forthwith on seizing the property under section 523 of the Criminal Procedure Code. If the Magistrate was powerless to do so as is sought to be urged, it may well happen that the police would retain it till, at any rate, the charge sheet happens to be sent in the particular case to the court of the Magistrate, and thereby cause considerable hardship to the rightful claimant, and even the property would suffer damage by remaining unused for an indefinite time. The police officer has no power or authority to deal with it in any manner, and it is, therefore, that the legislature required him to report to the Magistrate, so that suitable orders can be passed by the Magistrate under S. 523(1) of the Code. The learned Magistrate had thus failed to exercise the jurisdiction and the authority he had when it was known to him that this property was seized and when he found that no report, as was required to be sent by the police officer forthwith, was received by him.[6]25. In the case at hand, the FIA is investigating the Petitioner for the offence of money laundering under section 3 of the AMLA. While the FIA Act serves as the primary legislation governing the FIA, in the present case, AMLA would apply, prevailing over the FIA Act and the Code if there is any inconsistency.[7] Even if the FIA were not conducting proceedings under the AMLA or any other special law with specific provisions, and only the FIA Act applied, the FIA could still legally freeze the Petitioner's bank account under section 5(1) of the FIA Act, subject to the protections outlined in section 523(1) Cr.P.C.
26. Section 8(1) of the AMLA stipulates that an investigating officer may, on the basis of a report from the concerned investigating or prosecuting agency, with the prior permission of the Session Court having the jurisdiction, provisionally attach such property which he reasonably believes to be the property involved in money laundering for a period not exceeding 180 days from the date of the order. However, the Session Court may grant a further extension for up to 180 days. Section 8(2) states that the investigating officer shall, within forty-eight hours immediately after the attachment, forward a copy of the order and the investigating or prosecuting agency's report to the head of the concerned investigating agency in a sealed envelope. Section 8(3) specifies that every order of attachment made under section 8(1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of the finding made under section 9(2), whichever is earlier. Section 8(5) mandates that the investigating officer who provisionally attaches any property under section 8(1) shall submit a monthly progress report to the Session Court regarding the investigation.
27. Section 9(1) of the AMLA ordains that upon attachment or seizure of property, the investigating officer shall, within seven days, serve a notice of at least 30 days on the person concerned. The said notice shall require the individual to indicate the sources of his income or means by which he acquired the attached property and to show cause why all or any of such properties should not be declared to be the properties involved in money laundering and forfeited to the Federal Government. If the notice specifies any property as being held by a person on behalf of any other person, a copy thereof shall also be served upon that person. Section 9(2) mandates that after reviewing the reply, the evidence presented, and hearing the aggrieved person, the investigating officer shall record a finding as to whether the properties in question are indeed linked to money laundering. Where the investigating officer determines that the property is so involved, he shall apply to the Session Court for an order confirming the attachment of the property. After giving an opportunity of hearing to the persons concerned, the court may pass an order confirming the attachment or, as the case may be, the release of the property. When the provisional attachment order made under section 8(1) is confirmed, the property is dealt with under sub-sections (4) to (7) of section 9 of the AMLA.
28. AMLA does not contemplate an inquiry like the FIA Act or the Federal Investigation Agency (Inquiries and Investigations) Rules, 2002. According to section 21 of AMLA, every offence punishable under the Act is cognizable[8] and non-bailable. In the present case, Respondent No.3 has debit- blocked the Petitioner's account by exercising the authority under section 5(5) of the FIA Act read with section 8 of the AMLA. The fact that Respondent No.3 did not register an FIR upon receiving a complaint alleging the commission of a cognizable offence does not hinder the initiation of the investigation. In Emperor v. Khwaja Nazir Ahmad (AIR 1945 PC 18), the Privy Council held that an investigation could commence even without recording FIR. Courts in Pakistan have consistently followed this ruling after the Partition.[9] Consequently, Mr. Asif's objection to the FIA's jurisdiction to impose restrictions on the Petitioner's account is misconceived.
29. A perusal of the record shows that Respondent No.3 has blatantly disregarded sections 8 and 9 of the AMLA in the present case. He did not obtain permission from the competent court before issuing directives to the Bank concerning the Petitioner's account. Next, he did not render findings under section 9(2) of the AMLA or apply to the court for an order under section 9(3) thereof. Lastly, he did not submit a monthly progress report of the investigation to the court.
30. In view of the above, this petition is accepted, and the limitation placed on the Petitioner's MCB Bank Account No. 1003771971001192 by Respondent No.3 is annulled.
1. Preamble of the Federal Investigation Agency Act, 1974.
2. Ch. Abdur Rehman v. Deputy Director, FIA, Faisalabad and 19 others (2010 MLD 1346); Mushtaq Hussain Shah v. Additional Sessions Judge, Islamabad and 6 others (PLD 2013 Islamabad 26) and National Bank of Pakistan and another v. The State and 4 others (PLD 2021 Lahore 670).
3. Black's Law Dictionary, 11th Edn., p. 946
4. ibid, p. 989.
5. Oxford Advanced Learner's Dictionary, Fifth Edn.
6. Also see: Ramlal Hazarimal v. Hiralal Ramlal and another (AIR 1953 MB 241); M.V. Ramankutty v. State (AIR 1970 Kerala 191).
[7]Section 39 of the Anti-Money Laundering Act 2010 provides:
39. Act to have overriding effect.--(1) Subject to sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force. (2) The provisions of this Act shall be in addition to, and not in derogation of, the Anti Narcotics Force Act, 1997 (III of 1997), the Control of Narcotics Substances Act, 1997 (XXV of 1997), the Anti-terrorism Act, 1997 (XXVII of 1997) and the National Accountability Ordinance, 1999 (XVIII of 1999) and any other law relating to predicate offences.
A further reference may be made to section 22(1) of the AMLA which stipulates that the provisions of the Code of Criminal Procedure, 1898 (Act V of 1898) shall, in so far as they are not inconsistent with the provisions of this Act, apply to arrest, bail, bonds, search, seizure, attachment, forfeiture, confiscation, investigation, prosecution and all other proceedings under this Act.
8. Section 12, Anti-Money Laundering (Second Amendment) Act, 2020 (Act No. XXX of 2020).
Official Gazette Notification No. F.22(50)/2020-Legis dated 24 Sep 2020.
9. See for example: Khadim Ali and another v. The State (1996 SCMR 1855); Umair Ishtiaq v.
Station House Officer and others (2023 PCr.LJ 340).