2015 (4) TMI 1232 - HC - Money Laundering

Jurisdiction to issue summons in connection with the investigation being conducted under the provisions of Money Laundering Act, 2002 - validity of summons issued by the respondent. Held that - The reasons for introducing Money Laundering Act is that the money laundering causes serious threat not only to the financial systems of the country, but also their integrity and sovereignty and the object of the Act is to prevent money laundering and provide for confiscation of property, derived from income involved in money laundering or materials connected or incidental thereto. Any statement obtained from the petitioner does not infringe the constitutional guarantee of protection against self-incrimination under Article 20(3) of the Constitution of India - It cannot be said that the respondent lacks jurisdiction to issue summons or has no authority of law to issue summons for the purpose of aiding investigation under the provisions of Money Laundering Act. Petition dismissed.

Summary

Issues:
1. Alleged commission of offences under Sections 120B r/w. 420 IPC and Sections 13(2) r/w. 13(1)(d) of the Prevention of Corruption Act, 1988.
2. Challenging the legality of the summons issued under the Prevention of Money Laundering Act, 2002.
3. Jurisdiction of the respondent to issue summons for aiding investigation under the Money Laundering Act.

Analysis:

Issue 1:
The petitioner, as the Managing Director of a company, is accused of not complying with the terms of a loan sanction, diverting funds, and causing wrongful loss to the bank. The prosecution alleges that the petitioner intentionally kept the bank unaware of fund utilization, leading to the account becoming a Non-Performing Asset. The company also maintained different accounts and obtained fraudulent certificates to secure loans. The petitioner is accused of committing the offence punishable under Section 420 IPC.

Issue 2:
The respondent issued a summons under the Prevention of Money Laundering Act, 2002, calling the petitioner for investigation. The petitioner challenges the legality of the summons, citing that Section 420 IPC was not a scheduled offence under the Act when the alleged offences occurred. The petitioner argues that the respondent lacks jurisdiction due to the timing of the amendment making Section 420 IPC a scheduled offence.

Issue 3:
The Court examined the legality of the summons under the Money Laundering Act. The respondent's power to issue summons under Section 50(2) and (3) of the Act was considered. The Court highlighted that the Act aims to prevent money laundering and confiscate property derived from such activities. It was noted that the summons issued were in conformity with the intent and purpose of the Act. The Court rejected the petitioner's argument that the summons infringed on constitutional guarantees, citing precedents that upheld the authority to issue such summons for investigation purposes.

In conclusion, the Court dismissed the writ petition challenging the summons issued under the Money Laundering Act, stating that the petitioner's arguments were unsustainable. The Court affirmed the respondent's jurisdiction to issue the summons and conduct the investigation under the provisions of the Act.