2016 (8) TMI 1176 - HC - Money Laundering

This Court may issue notice to the Respondent as to whether a reference may be made to a large Bench inter alia on tentatively the following questions - A. Whether the judgment rendered in Karam Singh s case is not a binding precedent as it does not take into account the ratio laid down by the Hon ble Supreme Court in Om Parkash s case (2011 (9) TMI 65 - SUPREME COURT OF INDIA) regarding the applicability of the procedure to the investigations under a special statute as contemplated under Chapter XII of the Code in the absence of any provision to the contrary in such special statute? B. Whether the offences under Sections 3/4 PMLA are noncognizable in view of the amendment carried out on 21.5.2005 read with the Lok Sabha debates quoting the then Finance Minister that the said amendment was proposed to make the offences non-cognizable ? C. Whether in view of Section 65 PMLA read with Section 4(2) and 5 Cr.P.C. in the absence of any specific procedure to the contrary under PMLA the provisions of Chapter XII Cr.P.C. would straightway apply? D. Whether the statements recorded under Section 50(2) PMLA are hit by Section 25 of the Evidence Act?

Summary

Issues:
1. Interpretation of Section 50 of the Prevention of Money Laundering Act, 2002 (PMLA) and admissibility of recorded statements.
2. Challenge to investigations under PMLA and the procedure to be followed for non-cognizable offences.
3. Requirement for Enforcement Directorate officers to follow Cr.P.C. procedures even for cognizable offences under PMLA.
4. Jurisdictional validity of summons issued under Section 50(2) PMLA.
5. Comparison with a previous Division Bench judgment regarding cognizability of offences under PMLA.
6. Critique of the previous judgment's application of Cr.P.C. provisions and Rules under PMLA.
7. Consideration of the need for a larger Bench to address specific questions related to the interpretation and application of PMLA provisions.

Analysis:

1. The petitioners seek to limit the scope of Section 50 of PMLA and challenge the admissibility of recorded statements. They reference previous judgments to support their argument, including "Noor Aga vs. State of Punjab," "Nirmal Singh Pehalwan @ Nimma v. Inspector, Customs, Customs House, Punjab," and "Vinod Solanki v. Union of India." They also mention a larger Bench reference in "Tofan Singh versus State of Tamil Nadu" by the Supreme Court.

2. Petitioners contest PMLA investigations, arguing that non-cognizable offences under Section 3, punishable under Section 4, require compliance with Chapter XII of Cr.P.C. They rely on the Supreme Court judgment in "Om Parkash vs. Union of India" to assert that Enforcement Directorate officers must follow Cr.P.C. procedures.

3. Even if PMLA offences are deemed cognizable, the petitioners maintain that Cr.P.C. procedures must be adhered to by Enforcement Directorate officers. They specifically mention Sections 154, 157, 167, and 172 of Cr.P.C. as relevant.

4. The petitioners challenge the jurisdiction of summons issued under Section 50(2) PMLA, arguing that they are unwarranted. They highlight the lack of previous arrests and question the necessity of summoning petitioner no. 2.

5. Reference is made to a Division Bench judgment in "Karam Singh and others versus Union of India," where the issue of cognizability of PMLA offences and the applicable Cr.P.C. procedures were discussed. The petitioners note the rejection of claims in that case.

6. Criticism is directed towards the Karam Singh judgment, alleging it overlooked the precedent set by the Supreme Court in Om Parkash's case. The petitioners argue that the judgment misinterpreted the application of Cr.P.C. provisions and PMLA Rules.

7. The court considers potential reference to a larger Bench to address critical questions, including the binding nature of the Karam Singh judgment, the cognizability of PMLA offences post-amendment, the applicability of Cr.P.C. in the absence of specific PMLA procedures, and the admissibility of statements under Section 50(2) PMLA. Notice is issued for a hearing to address these questions.