2022 (11) TMI 502 - HC - Money Laundering

Money Laundering - Jurisdiction of lower court - Summoning of petitioner by the ED for recording of the statement after registration of the crime - petitioner is in judicial custody - HELD THAT - It is deemed appropriate to notice the statutory frame work of the PMLA. Section 2 of the PMLA deals with definitions. Section 2(1)(z) defines a Special Court to mean a Court of Session designated as Special Court under sub-section (1) of Section 43. It is not in dispute that an ECIR is filed against the petitioner and it is in furtherance of the said registration of the crime, statements of the petitioner are sought to be recorded by the respondent/ED to consider whether there is an offence made out against the petitioner for offences punishable under the PMLA. Now PMLA would mean offences punishable under Chapter II which deals with offence of money laundering. Section 50 empowers the authorities under the PMLA with regard to summons, production of documents and to give evidence. Sub-Section (3) of Section 50 directs that all persons so summoned shall be bound to attend in person or through authorized agents and shall be bound to state the truth upon any subject with respect to which they are examined or make statements and produce documents as may be required. Therefore, the authority under the PMLA does have power to summon and record statement of witnesses in terms of Section 50 of the Act - If the ED wants to invoke the provisions of the PMLA to discern the offence under Section 3 of the PMLA, the designated Court is the Court of Session alone which had the power to even consider any application emanating from the provisions of the PMLA as the offence supra, Section 43 supra and Section 71 clearly mean that the designate Court to try anything emanating from the PMLA is the Special Court and the Special Court is the Court of Session. Section 71 has overriding effect on any law. A Three Judge Bench of the Apex Court in the case of HARSHAD S.MEHTA 2001 (9) TMI 991 - SUPREME COURT followed the judgment in the case of A.R.ANTULAY 1984 (2) TMI 317 - SUPREME COURT to hold, if a Special Court is created under the provisions of a special enactment, the proceedings falling under that enactment shall be held only before the Special Court. For this purpose the Apex Court holds that the Special Court enjoys all the powers of the court of original jurisdiction and it holds a dual capacity and powers of both the Magistrate and the Court of Session depending upon the stage of the case. In the light of the statutory frame work of the PMLA and the application filed under Section 50 of the Act, this Court is of the considered view that the application was not maintainable before the learned Magistrate, since the Court did not have the power to direct recording of statements for it to become a record under the PMLA, the order which is passed by the Court which did not have a jurisdiction to even consider any application under the PMLA, is rendered unsustainable. Petition allowed.

Summary

Issues Involved:
1. Jurisdiction of the Magistrate to permit the Enforcement Directorate (ED) to record statements under the PMLA.
2. Interpretation of relevant sections of the PMLA, specifically Sections 43, 44, and 50.
3. Overriding effect of the PMLA over other laws.
4. Applicability of judgments regarding jurisdiction and special courts.

Detailed Analysis:

1. Jurisdiction of the Magistrate:
The petitioner challenged the order of the I Additional Chief Metropolitan Magistrate, Bengaluru, allowing the ED to record statements of the petitioner and other accused under Section 50(3) of the PMLA. The petitioner contended that only the Sessions Court, designated as the Special Court under the PMLA, had the jurisdiction to permit such actions. The ED argued that since the petitioner was in judicial custody, the application had to be moved before the Magistrate who ordered the custody.

2. Interpretation of Relevant Sections of the PMLA:
The court analyzed the statutory framework of the PMLA, particularly Sections 43, 44, and 50. Section 43 designates the Court of Session as the Special Court for trying offences under the PMLA. Section 44 mandates that offences under the PMLA are triable by the Special Court. Section 50 empowers the authorities under the PMLA to summon and record statements. The court emphasized that the Special Court (Court of Session) has exclusive jurisdiction to deal with matters under the PMLA.

3. Overriding Effect of the PMLA:
Section 71 of the PMLA states that the provisions of the PMLA have an overriding effect over any other law. The court highlighted that any application or proceedings under the PMLA must be placed before the Special Court, irrespective of the accused being in judicial custody ordered by a Magistrate.

4. Applicability of Judgments:
The court referred to several judgments to support its decision:
- A.R. Antulay v. R.S. Nayak: The Supreme Court held that jurisdiction conferred by a special statute cannot be overridden by any other court, even by the Supreme Court.
- Harshad S. Mehta v. State of Maharashtra: The Supreme Court reiterated that special courts created under special enactments have exclusive jurisdiction over matters falling under those enactments.
- Vijay Madanlal Choudhary v. Union of India: The Supreme Court emphasized that trials under the PMLA must be conducted by the Special Court, and the PMLA has an overriding effect over other laws.

Conclusion:
The court concluded that the Magistrate did not have the jurisdiction to entertain the application filed by the ED under Section 50 of the PMLA. The application should have been placed before the Special Court (Court of Session) designated under the PMLA. Consequently, the order passed by the Magistrate was quashed, and the ED was granted liberty to file the application before the Special Court.

Order:
(i) The Writ Petition is allowed.
(ii) The impugned order dated 14.09.2022 passed by the I Additional Chief Metropolitan Magistrate, Bengaluru in C.C.No.25035 of 2022 stands quashed.
(iii) The 3rd respondent - Enforcement Directorate is reserved liberty to file an application of the kind that it has filed before the learned Magistrate, before the Special Court, which shall deal with it in accordance with law.