2024 (9) TMI 508 - SC - Money Laundering

Seeking quashing of the Summons and seeking further direction against the Respondent not to issue any Summons under Section 50 of PMLA to the Appellants for their appearance in New Delhi - illegal excavation and theft of Coal taking place in the leasehold areas of Eastern Coalfields Limited (ECL) - offences under Section 120B and 409 of IPC and Section 13(2) r/w 13(1)(a) of the Prevention of Corruption Act, 1988 - HELD THAT - The dispensation regarding Prevention of Money Laundering, Attachment of Proceeds of Crime, and Inquiry/Investigation of offence of Money Laundering including issuing summons, recording of statements, calling upon persons for production of documents etc. upto filing of the Complaint in respect of offence under Section 3 of PMLA is fully governed by the provisions of the said Act itself. The jurisdictional police who is governed by the regime of Chapter XII of the Code, can not register the offence of money laundering, nor can investigate into it, in view of the special procedure prescribed under the PMLA with regard to the registration of offence and inquiry/investigation thereof, and that the special procedure must prevail in terms of Section 71 of the PMLA. The ratio laid down in Vijay Madanlal 2022 (7) TMI 1316 - SUPREME COURT clinches the contentions raised by the learned counsels for the appellants with regard to the provisions of Section 50 being violative of Article 20(3) or Article 21 of the Constitution, and it is not required to further elaborate the same, nor it is needed to deal with the decisions of this Court on the said issue which have already been dealt with in Vijay Madanlal. Suffice it to say that Section 50 enables the authorized Authority to issue summon to any person whose attendance he considers necessary for giving evidence or to produce any records during the course of the proceedings under the Act, and that the persons so summoned is bound to attend in person or through authorized agent, and to state truth upon the subject concerning which he is being examined or is expected to make statement and produce documents as may be required by virtue of subsection (3) of Section 50. At the stage of issue of summons, the person cannot claim protection under Article 20(3) of the Constitution, the same being not testimonial compulsion . There are no substance in the challenge made by the Appellants to the Summons issued to the Appellants under Section 50 of the PMLA. As contemplated in the sub-section (3) of Section 50, all the persons summoned are bound to attend in person or through authorized agents as the officer may direct and are bound to state the truth upon any subject respecting which they are examined or make statements, and to produce the documents as may be required. As per sub-section (4) thereof every proceeding under sub-sections (2) and (3) is deemed to be a Judicial proceeding within the meaning of Section 193 and Section 228 of the IPC. As per sub-section (4) of Section 63, a person who intentionally disobeys any direction issued under Section 50 is liable to be proceeded against under Section 174 of the IPC. Both the Appeals being devoid of merits are dismissed.

Issues Involved:
1. Quashing of Summons issued under Section 50 of the Prevention of Money Laundering Act (PMLA).
2. Jurisdictional challenge regarding the place of appearance.
3. Application of procedural safeguards under Cr.P.C. to PMLA.
4. Validity of the Complaint under Section 174 IPC for non-compliance with Summons.
5. Gender neutrality and procedural fairness under Section 50 of PMLA.

Detailed Analysis:

1. Quashing of Summons issued under Section 50 of PMLA:
The appellants sought to quash the Summons issued by the Enforcement Directorate (ED) under Section 50 of PMLA, arguing that Section 50 merely indicates the substantive power of ED to summon but does not provide the procedure for exercise of such power. The Supreme Court upheld that Section 50 of PMLA allows the ED to summon any person whose attendance is considered necessary for giving evidence or producing records. The Court emphasized that the provisions of PMLA are self-contained and have an overriding effect over inconsistent provisions in other laws, including the Cr.P.C. (Sections 65 and 71 of PMLA).

2. Jurisdictional Challenge Regarding the Place of Appearance:
The appellants argued that they should be summoned to Kolkata, their place of domicile, rather than New Delhi. The Supreme Court dismissed this argument, stating that the ED has the power to summon individuals to New Delhi, especially given the alleged transfer of Rs. 168 crores to Delhi and Overseas, establishing a nexus with Delhi. The Court noted that the organizational structure of ED, including the Headquarters Investigation Unit (HIU), is not restricted by territorial jurisdiction, and the summons issued by the ED in New Delhi were valid.

3. Application of Procedural Safeguards under Cr.P.C. to PMLA:
The appellants contended that procedural safeguards under Sections 160 and 161 Cr.P.C. should apply to PMLA, arguing that the PMLA does not provide specific procedures for summoning. The Court rejected this, clarifying that the procedures under PMLA, including issuing summons, recording statements, and calling for documents, are governed by PMLA itself and not by Cr.P.C. The Court highlighted that Section 50 of PMLA is a special procedure that prevails over the general provisions of Cr.P.C. due to the overriding effect of Section 71 of PMLA.

4. Validity of the Complaint under Section 174 IPC for Non-compliance with Summons:
The appellant Rujira Banerjee challenged the Complaint filed under Section 174 IPC for non-compliance with Summons. The Court found no illegality in the Complaint filed by the ED, as the appellant had failed to comply with the Summons. The Court noted that the Complaint and subsequent orders by the Chief Metropolitan Magistrate (CMM) were valid and should proceed in accordance with the law.

5. Gender Neutrality and Procedural Fairness under Section 50 of PMLA:
The appellants argued that summoning a woman to a place other than her residence violates procedural fairness and protections under Section 160 Cr.P.C. The Court held that Section 50 of PMLA is gender-neutral and does not distinguish between men and women. The Court reiterated that the procedural safeguards under Cr.P.C. do not apply to PMLA due to the specific and overriding provisions of PMLA. The Court also emphasized that the statements made under Section 50 of PMLA are admissible in evidence and do not violate fundamental rights under Articles 20(3) and 21 of the Constitution.

Conclusion:
The Supreme Court dismissed both appeals, upholding the validity of the Summons issued under Section 50 of PMLA and the Complaint filed under Section 174 IPC. The Court emphasized the self-contained and overriding nature of PMLA provisions over Cr.P.C., affirming the ED's power to summon individuals to New Delhi and the gender-neutral application of Section 50 of PMLA.

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