2021 (11) TMI 555 - HC - Money Laundering

Constitutional validity of Section 50(2), (3) and (4) of the Prevention of Money Laundering Act, 2002 (PMLA) read with Section 24, 63 and 66 of the PMLA 2002 - Seeking for a direction to restrain the respondent no. 2 from issuing any further summons under Section 50(2) of PMLA 2002 against the petitioner - HELD THAT - This Court while considering the prayer as made on behalf of the petitioner finds that petitioner has challenged the constitutional validity of the provisions of the PMLA, 2002 as void and inoperative or being violative of Article 14, 20(3), 21 of the Constitution of India. The petitioner has also sought for an order of interim stay of the operation of the impugned summons dated 24.9.2021 and 25.10.2021 to restrain the respondent no. 2 from issuing any further summons under Section 50 (2) of the PMLA, 2002. It is rightly pointed out that the summon dated 24.9.2021 has already been dealt with by virtue of the reply given by the petitioner on 7.10.2021 enclosing the copies of the documents required by the respondent authority. So, there is no question of challenging the summon dated 24.9.2021. It appears that the second summon dated 25.10.2021 issued by respondent no. 2 received by the petitioner is on similar terms as in the first summon in response to which the petitioner had replied and sought for accommodation of time for his attendance and to appear before the respondent no. 2 through video conferencing or by physical appearance before the office of the respondent no. 2 in Kolkata. Thus, the petitioner is not avoiding to co-operate the respondent no. 2 into the investigation but the prayer as made on behalf of the petitioner alternatively is for ad interim order of protection which has been sought for against the respondent no. 2 from taking any coercive action against the petitioner in connection with the said case and further to allow him to be examined or to allow him to cooperate into the investigation before the respondent no. 2 vide video conferencing or at the office of the respondent no. 2 at Kolkata. This Court is convinced that the petitioner is required by the respondent authority only for cooperating into the investigation as he is not an FIR named accused in connection with the case - Let the matter appear six weeks hence with the direction upon the respondents to file affidavit-in-opposition and reply thereto within the period of six weeks. List the matter accordingly.

Summary

Issues Involved:
1. Constitutional validity of Section 50(2), (3), and (4) of the Prevention of Money Laundering Act, 2002 (PMLA).
2. Jurisdiction of the respondent to register a case.
3. Petitioner's challenge to the summons dated 24.9.2021 and 25.10.2021.
4. Request for interim stay and protection against coercive actions.

Issue-wise Detailed Analysis:

1. Constitutional Validity of Section 50(2), (3), and (4) of PMLA:
The petitioner challenged the constitutional validity of Section 50(2), (3), and (4) of the PMLA, arguing that these provisions are coercive and force a person to give self-incriminatory evidence without ensuring constitutional safeguards. The petitioner contended that these provisions violate Articles 14, 20(3), and 21 of the Constitution of India. The respondent argued that similar matters are pending before the Supreme Court and that there is a presumption of constitutionality until rebutted. The court noted that the outcome of this writ application would be subject to the decision of the Supreme Court on similar issues.

2. Jurisdiction of the Respondent to Register a Case:
The petitioner questioned the jurisdiction of the respondent to register a case in New Delhi when the alleged predicate offense occurred in West Bengal, where a specific case was already registered by the Central Bureau of Investigation (CBI). The court did not provide a detailed analysis on this issue but acknowledged the petitioner's contention.

3. Petitioner's Challenge to the Summons Dated 24.9.2021 and 25.10.2021:
The petitioner challenged the summons issued on 24.9.2021 and 25.10.2021 under Section 50(2) of the PMLA, arguing that they were coercive. The court noted that the petitioner had already responded to the first summon by providing the required documents and seeking an extension. The second summon was on similar terms, and the petitioner expressed willingness to cooperate with the investigation, either through video conferencing or by appearing at the respondent's Kolkata office.

4. Request for Interim Stay and Protection Against Coercive Actions:
The petitioner sought an interim stay on the operation of the impugned summons and protection against coercive actions. The respondent argued that there was no urgency as the petitioner was only required to cooperate with the investigation and was not an accused. The court, considering the petitioner's willingness to cooperate, directed that no coercive measures be taken against the petitioner for six weeks. The court also referenced the Supreme Court's decision in Neeharika Infrastructure Private Ltd. Vs. State of Maharashtra, emphasizing that blanket orders against coercive actions should not be granted without reasons.

Conclusion:
The court directed the petitioner to cooperate with the investigation either via video conference or by appearing at the respondent's Kolkata office. It granted the petitioner protection from coercive measures for six weeks and scheduled the matter for further hearing, directing the respondents to file their affidavits within this period. The court's decision on the constitutional validity of the PMLA provisions would depend on the Supreme Court's ruling on similar issues.