2021 (11) TMI 21 - HC - Money Laundering

Money Laundering - scope of proceedings - issuance of summons - compliance with the mandate of Section 50(2) 50(3) of PMLA - penal/coercive action against the Applicant in purported exercise of powers under Section 19 of PMLA - arrest and sentence contemplated under Section 3 of PMLA - HELD THAT - The learned ASG is right in contending that the reference to remedies under Cr.P.C. is significant, and reference to Article 226 of the Constitution of India is consciously omitted as the issues of law are under consideration of the Supreme Court. In the case of DEVENDRA DWIVEDI VERSUS UNION OF INDIA ORS. 2021 (1) TMI 302 - SUPREME COURT , the Supreme Court had disposed of the petitions under Article 32 and left it open to the petitioner therein to pursue the remedies available in law by approaching the High Court, unlike in the present case, where the petition is pending consideration in the Supreme Court. Since the Supreme Court had disposed of the case pending before it in the case Devendra Dwivedi, the Supreme Court, in that context, made observations in paragraph-8 that the Supreme Court will have the benefit of the considered view of the jurisdictional High Court. The Supreme Court made a distinction between Article 226 of the Constitution of India and section 482 of Cr.P.C. in respect of grievance regarding the conduct of the investigation. Therefore, the Applicant's grievance will have to be considered in the light of the remedies under Cr.P.C. and cannot be considered under Article 226 of the Constitution of India. Therefore, it is not proper to decide and declare on the questions of law pending before the Apex Court in the Applicants petition. The Supreme court, in the case of NEEHARIKA INFRASTRUCTURE PVT. LTD. VERSUS STATE OF MAHARASHTRA AND ORS. 2021 (4) TMI 1244 - SUPREME COURT , has laid down that the High Court shall not pass the order of not to arrest and/or no coercive steps while dismissing/disposing of the quashing petition under Section 482 Cr.P.C. and/or under Article 226 of the Constitution of India - As no case is made out by the Applicant on facts for the exercise of jurisdiction under 482 of the Cr.P.C., this dicta of the Supreme Court will be applicable. No case is made out by the Applicant for the exercise of our jurisdiction under Section 482 Cr. P.C to restrain Respondent No.1 and Respondent No.2 from taking any penal/coercive action against the Applicant. If the applicant has apprehension of arrest, he has the statutory remedy under section 438 of Cr. P.C by approaching the competent court - the prayer to direct Respondent No.2 to permit the Applicant to appear through an authorized representative or through any electronic mode and not to compel the presence of the Applicant in person, is rejected and it is left to the discretion of the Directorate of Enforcement as regards the mode. Direction to the Directorate to act in a transparent manner and not to misuse the power - HELD THAT - It is not a specific prayer. Even if it could be considered, it must be first demonstrated that there is an arbitrary exercise of power, which the Applicant has not established. Under the provisions of PMLA, the issuance of summons is part of the investigation. The High Courts would not interfere and interdict a lawful investigation under its powers under section 482 of Cr.P.C. unless exceptional circumstances as per the settled law are present. None of these grounds exists in the present case. There is no jurisdictional error in the issuance of summonses as they have been issued by the officers duly authorized under the PMLA. The object and purpose of PMLA show that it not only confers powers on the authority to investigate the offence of money laundering but a duty to investigate it in the larger public interest. The Applicant, without any valid reason, has refused to cooperate with the investigation by not attending the summonses issued by the authorities. The Applicant has failed to establish the case of legal and factual malice on the part of the Respondent-Directorate in proceeding with the investigation in question. The Applicant has failed to make out a case for exercise of jurisdiction under 482 of Cr.P.C. to quash the impugned summonses and for order directing Respondent Nos.1 and 2 not to take coercive steps against the Applicant. Like any other person apprehending arrest the Applicant can, if so advised, approach the competent court relief under section 438 of Cr.P.C. to be decided on its own merits - application disposed off.

Summary

Issues Involved:
1. Quashing of Summons Issued Under Section 50 of PMLA
2. Restraining Respondents from Taking Coercive Actions
3. Compliance with Section 50(2) & 50(3) of PMLA
4. Transparency and Objectivity in Investigation
5. Adherence to Supreme Court Directions on COVID-19 in Prisons
6. Compliance with Section 41A of Cr.P.C.
7. Compliance with Directives on Arbitrary Arrests
8. Audio/Video Recording of Proceedings
9. Transfer of Investigation to a Special Investigating Team (SIT)

Detailed Analysis:

1. Quashing of Summons Issued Under Section 50 of PMLA:
The Applicant sought to quash the summons issued by the Directorate of Enforcement under Section 50 of the PMLA. The court noted that the summons were part of an ongoing investigation and that the Applicant had repeatedly failed to attend despite being called. The court emphasized that the powers under Section 482 of Cr.P.C. to interfere with an investigation are to be exercised sparingly and only in exceptional cases. The court found no jurisdictional error or abuse of power in the issuance of the summonses and thus rejected the prayer to quash them.

2. Restraining Respondents from Taking Coercive Actions:
The Applicant requested an order restraining the Directorate from taking any coercive actions. The court referred to the Supreme Court's guidance in the case of Neeharika Infrastructure Pvt. Ltd., which states that interim orders of "no coercive steps" should be issued with circumspection and not routinely. The court concluded that no exceptional circumstances were demonstrated by the Applicant to warrant such an order and noted that the Applicant could seek anticipatory bail under Section 438 of Cr.P.C.

3. Compliance with Section 50(2) & 50(3) of PMLA:
The Applicant argued that the Directorate should allow him to appear through an authorized representative or via electronic mode. The court held that it is within the discretion of the investigating authority to decide the mode of questioning and found no abuse of this discretion by the Directorate. Therefore, this prayer was rejected.

4. Transparency and Objectivity in Investigation:
The Applicant sought a direction for the Directorate to act transparently and not misuse its powers. The court found that the Applicant had not established any arbitrary exercise of power by the Directorate. Therefore, this prayer was also rejected.

5. Adherence to Supreme Court Directions on COVID-19 in Prisons:
The Applicant requested that the Directorate comply with the Supreme Court's directions on COVID-19 in prisons. The court found that this stage had not arisen as the Applicant had not been arrested. Hence, this prayer was not considered.

6. Compliance with Section 41A of Cr.P.C.:
The Applicant sought compliance with Section 41A of Cr.P.C. regarding arrests. The court noted that the stage of arrest under Section 19 of PMLA had not yet arisen and thus did not consider this prayer.

7. Compliance with Directives on Arbitrary Arrests:
The Applicant requested adherence to directives on arbitrary arrests. The court reiterated that the stage of arrest had not arisen and thus did not consider this prayer.

8. Audio/Video Recording of Proceedings:
The Applicant sought audio/video recording of proceedings and the installation of CCTV cameras during the investigation. The court found no provision under PMLA for such a requirement and thus rejected this prayer.

9. Transfer of Investigation to a Special Investigating Team (SIT):
The Applicant requested the transfer of the investigation to an SIT. The court found no evidence of legal or factual malice in the investigation by the Directorate and thus rejected this prayer.

Conclusion:
The court rejected most of the Applicant's prayers, including quashing the summons and restraining the Directorate from taking coercive actions. However, the court granted the prayer to allow the Applicant's lawyer to remain present during questioning at a visible distance but beyond audible range. The Applicant was advised to seek anticipatory bail under Section 438 of Cr.P.C. if apprehensive of arrest.