2021 (11) TMI 555 - HC - Money Laundering

Court orders petitioner to cooperate with investigation via video conference or in Kolkata office, grants protection from coercive measures.

The court directed the petitioner to cooperate with the investigation either via video conference or by appearing at the respondent's Kolkata office. It ... Constitutional validity of statutory provisions - presumption of constitutionality - duty to cooperate with investigation - interim protection from coercive measures - challenge to summons after complianceDuty to cooperate with investigation - challenge to summons after compliance - Petitioner's obligation to comply with summons and effect of earlier compliance with the first summon. - HELD THAT: - The Court found on the material before it that the petitioner had already replied to the first summon dated 24.9.2021 by furnishing the requested information and documents on 7.10.2021 and had sought adjournment and accommodation for appearance by video conference or at the Kolkata office. Having regard to that conduct and the nature of the summons, the Court recorded that there was no question of avoiding cooperation with the investigating authority and that the first summon had been dealt with by the petitioner. On that basis the petitioner was directed to cooperate further with the respondent by appearing either via video conferencing or by physical appearance at the respondent's Kolkata office as required for the ongoing investigation.Petitioner to cooperate with the investigation and to appear by video conference or physically at the respondent's Kolkata office; the first summon (24.9.2021) was effectively dealt with by the petitioner's earlier response.Interim protection from coercive measures - Whether coercive action may be taken against the petitioner pending further proceedings. - HELD THAT: - Balancing the petitioner's stated willingness to cooperate, the nature of the proceedings as investigative, and the absence of any showing that the petitioner was a named FIR accused, the Court granted limited interim protection. The Court observed that blanket stays of investigation or arrest absent reasons are inappropriate, but in the facts before it a limited protection was warranted to enable processing of the challenge and for the petitioner to make submissions. Consequently, the Court restrained the respondents from taking any coercive measures against the petitioner in connection with the investigation for a specified limited period.No coercive measures to be taken against the petitioner in connection with the investigation for six weeks from the date of the order.Constitutional validity of statutory provisions - presumption of constitutionality - Challenge to the constitutional validity of specified provisions of the Prevention of Money Laundering Act, 2002. - HELD THAT: - The petitioner challenged the constitutional validity of Sections 50(2),(3),(4) read with Sections 24, 63 and 66 of the PMLA, 2002 as violative of Articles 14, 20(3) and 21. The Court recorded submissions on both sides, noted the doctrine of presumption of constitutionality and that similar challenges were pending before the Supreme Court, and observed that the ultimate fate of this challenge would be governed by any decision of the Apex Court on the like issues. The Court did not finally adjudicate the constitutional challenge on merits at this stage but indicated that the result of the writ petition would abide by the decision of the Supreme Court if applicable.Constitutional challenge not finally decided; matter to await or abide by the outcome of similar proceedings in the Supreme Court.Final Conclusion: The writ petition was not finally determined on the constitutional challenge; the petitioner was directed to cooperate with the investigation (by video conference or physical appearance at Kolkata) and was granted limited interim protection from any coercive measures for six weeks, with respondents directed to file affidavit-in-opposition and the matter listed after six weeks. 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.