2014 (7) TMI 1221 - HC - Money Laundering

Validity of summons issued - production of the documents - Held that - It is seen that the criminal case was registered pursuant to a complaint giving by one Mr. Mahesh who was the intervenor in the anticipatory bail application filed by the petitioners and the said proceedings are independent proceedings wherein the offences alleged are under the provisions of I.P.C which are said to have been committed by the petitioners.Therefore, the petitioners have to defend themselves in that proceedings independently So far, the documents (b) and (c) mentioned in the summons they are pertaining to bank details with the transcripts of the petitioners and the family members and their Companies and other relate to the immovable properties held by the petitioners in India and by their family members, Companies namely viz., M/s. Chivas Trading Corporation. Thus all the documents called for clearly fall within the ambit of sub-sections (a) to (e) of Section 12(1) of the Act. In such circumstances the summons issued to the petitioners cannot be quashed at the very threshold. In any event, the summons is for production of the documents for the purpose of conducting an investigation under the Act. The petitioners apprehend harassment in the hands of the respondent/designated authority when they are appear for enquiry pursuant to the summons. While rejecting the prayer sought for by the petitioners, there will be a direction to the petitioners to appear before the respondent on 18.07.2014 and produce the documents sought for and the respondent/designated authority shall investigate the matter strictly in accordance with law under the provisions of the Act, without giving any room for any complaint.

Summary

Issues:
Challenge to summons issued by Directorate of Enforcement - Compliance with Section 50 of Prevention of Money-Laundering Act, 2002 - Legality of summons - Relevance of documents requested - Parallel criminal proceedings - Quashing of summons.

Comprehensive Analysis:

1. Challenge to Summons: The writ petitions challenge the summons issued by the Directorate of Enforcement, Madurai, calling the petitioners to appear before the designated authority on a specified date. The petitioners, partners of a firm, were directed to produce various documents, including passports, bank account details, and property information.

2. Compliance with Section 50 of the Act: The petitioners argue that the impugned summons is legally flawed. They contend that the powers under Section 50 of the Prevention of Money-Laundering Act, 2002, are akin to those of a civil court under the Code of Civil Procedure, allowing for the production of documents and evidence.

3. Legality of Summons: The petitioners claim that the documents requested do not align with the records specified in Section 12(1) of the Act, which reporting entities must maintain. They argue that the summons lack material particulars and are illegal, as they do not pertain to the required records.

4. Parallel Criminal Proceedings: The petitioners highlight ongoing criminal proceedings against them for alleged offenses under the Indian Penal Code. They obtained anticipatory bail previously, and they fear arrest due to the summons issued under the Money-Laundering Act, 2002, which grants authorities the power to arrest individuals.

5. Relevance of Documents Requested: The respondent argues that the documents sought are essential for conducting investigations under the Money-Laundering Act, 2002. They assert that the documents fall within the scope of Section 12 of the Act and are crucial for the investigation process.

6. Quashing of Summons: After hearing both parties, the court finds that some of the requested documents, such as passports and identification cards, are necessary for identification purposes and to ensure cooperation with the investigation. The court rules that the summons cannot be quashed outright and directs the petitioners to appear before the designated authority to produce the requested documents.

7. Final Decision: The court dismisses the writ petitions and miscellaneous applications, instructing the petitioners to appear before the authorities on a specified date to comply with the summons. The court emphasizes that the investigation must proceed lawfully without causing harassment to the petitioners, who are obligated to cooperate during the inquiry.

In conclusion, the judgment upholds the legality of the summons, emphasizing the importance of compliance with investigative procedures under the Money-Laundering Act, 2002, while ensuring the protection of the petitioners' rights during the process.