2024 (5) TMI 980 - HC - Money Laundering

Money Laundering - issuance of summons in the background of Articles 20(3) and 21 of the Constitution - cause of action - power conferred upon the authorities by virtue of Section 50 of PMLA - HELD THAT - It is apparent from the reading of Section 50 of PMLA as well as decision in Vijay Madanlal Choudhary 2022 (7) TMI 1316 - SUPREME COURT that the power conferred upon the authorities by virtue of Section 50 of PMLA empower them to summon 'any person' whose attendance may be crucial either to give some evidence or to produce any records during the course of investigation or proceedings under PMLA. The persons so summoned are also bound to attend in person or through authorised agent and are required to state truth upon any subject concerning which such person is being examined or is expected to make statement and produce documents as may be required in a case. In the case of Commissioner of Customs, Calcutta v. M.M. Exports 2007 (3) TMI 265 - SUPREME COURT , the Hon'ble Apex Court, while dealing with a case of issuance of summons under Section 108 of Customs Act, had expressed that except in exceptional cases, High Courts should not interfere at the stage of issuance of summons. In respect of the provisions of PMLA , Section 50(2) of the Act unambiguously enumerates that the Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act - The PMLA , being a Special Act, has provided certain mandatory provisions in order to ensure the effective investigation of the offence of money laundering. The officers empowered under PMLA are required to make investigation into the offences under the said law and having regard to the observations made by the Apex Court in Vijay Madanlal Choudhary they could not be equated with police officers. The law confers upon them requisite powers to carry out investigation and collect evidence. No person is entitled in law to evade the summons issued under Section 50 PMLA on the ground that there is a possibility that he may be arrested in the future. The investigation in the present ECIR,S are still continuing and the petitioner has only been summoned to appear and submit certain documents which may be in his possession as he had been an employee of the Companies under scanner, thus the petitioner's prayer for quashing of ECIR'S itself is premature as at this stage even the status of the applicant before the ED is not known and the same is in the realm of future. This Court is of the considered opinion that this petition has been filed by petitioner on mere apprehension. If the Investigating Authorities are having enough materials to proceed against a person in a manner known to law and by adhering strictly to the provisions of law, then they are duty bound to do so as the law so warrants and permits them to adopt such course of action. These are all the decisions to be taken only after completing an effective investigation or atleast preliminary investigation. The investigation process should not be hampered at this initial stage. This Court is of a strong opinion that interference at this stage in respect of the facts and the circumstances of the present case on hand, is certainly unwarranted. This Court finds no good ground to quash the summons issued under Section 50 of PMLA to the petitioner or the impugned ECIR's - Petition dismissed.

Summary

Issues Involved:
1. Abuse of authority in issuing multiple ECIRs.
2. Quashing of subsequent ECIRs and related proceedings.
3. Mandamus to prevent misconduct by the Enforcement Directorate.
4. Legal validity of summons issued u/s 50 PMLA.
5. Requirement of providing ECIR copies to the petitioner.

Summary:

Abuse of Authority in Issuing Multiple ECIRs:
The petitioner argued that the issuance of multiple ECIRs (ECIR/13/LKZO/2019 and ECIR/25/LKZO/2023) by the Enforcement Directorate (ED) is a deliberate abuse of authority and a manifest violation of law. The petitioner contended that these ECIRs are based on the same set of facts and allegations already investigated, and a complaint has been filed by the SFIO and the ED. The petitioner cited the Supreme Court's judgment in T.T. Antony Vs. State of Kerala (2001)6 SCC 181 to support the claim that multiple ECIRs for the same offense are impermissible.

Quashing of Subsequent ECIRs and Related Proceedings:
The petitioner sought a writ of certiorari to quash the subsequent ECIRs and all related proceedings, arguing that these are attempts to harass him. The ED countered that the ECIRs pertain to different and distinct matters and are not connected to the earlier ECIR. The court noted that the contents of the two ECIRs have not been revealed, making it impossible to determine if they pertain to the same cause of action.

Mandamus to Prevent Misconduct by the Enforcement Directorate:
The petitioner requested a writ of mandamus to direct the ED to avoid misconduct and not to use their investigation to violate fundamental rights. The court emphasized that the ED has statutory powers to investigate and that judicial intervention at this stage would hinder a smooth and fair investigation. The court also noted that the petitioner has been summoned under Section 50 of the PMLA, which empowers the ED to summon any person to give evidence or produce records during the investigation.

Legal Validity of Summons Issued u/s 50 PMLA:
The court referred to the Supreme Court's judgment in Vijay Madanlal Choudhary and Ors. vs. Union of India (UOI) and Ors. (27.07.2022 - SC) : MANU/SC/0924/2022, which upheld the validity of Section 50 of the PMLA. The court noted that the power to summon under Section 50 is for collecting information or evidence and does not violate Articles 20(3) and 21 of the Constitution. The court emphasized that the ED's power to summon is crucial for effective investigation and that the petitioner is bound to comply with the summons.

Requirement of Providing ECIR Copies to the Petitioner:
The petitioner argued that he should be provided with copies of the ECIRs. The ED contended that the ECIR is an internal document and not mandatory to be provided to the petitioner. The court, referring to the Supreme Court's judgment in Vijay Madanlal Choudhary (supra), agreed that the ECIR is an internal document and not equivalent to an FIR. The court stated that the ED is not required to provide a copy of the ECIR but must inform the person of the grounds of arrest.

Conclusion:
The court found no grounds to quash the summons issued under Section 50 of the PMLA or the impugned ECIRs. The petition was dismissed, emphasizing that the investigation process should not be hampered and that the ED has the statutory authority to summon any person for the investigation.