2022 (3) TMI 112 - HC - Money Laundering

Court upholds summons under Prevention of Money Laundering Act, denies petitioners access to ECIR

Mishrilal Pandey And Others, Smt. Amrita Pandey W/o Shri M.L. Pandey, Akash Pandey S/o Shri M.L. Pandey Versus Enforcement Directorate (ED) Government of India and Others, Debidatta Sarangi Assistant Director (Pmla), Assistant Director (Pmla) Raipur

The court dismissed the petitions challenging the summons issued under Section 50 of the Prevention of Money Laundering Act. It held that the authorities ... Money laundering - Recovery of foreign currencies - petitioner submits that it can be safely said that ECIR is certainly akin to FIR as it sets the investigation in motion in PMLA - HELD THAT:- It is clear from the documents that the investigation under the PMLA is initiated against the petitioner and impugned summons are issued under Section 50 of the PMLA. From bare reading of Section 50 of the PMLA it can be said that the respondent/authorities have ample power to summon any person during the investigation and to record their statement, give evidence or produce documents as sought by the respondent/authorities. Section 50(4) of the PMLA stated that every proceeding under sub-sections (2) an (3) shall be deemed to be a judicial proceeding within the meaning of Section1 93 and Section 228 of the Indian Penal Code, 1860 - Section 50(2) gives sufficient power to the authority to summon any person whose attendance is considered necessary. The main challenge of the petitioners is that the respondent/Agency is proceeding with the issuance of summons under Section 50 of the PMLA to the petitioners without supplying copy of the aforesaid ECIR to them which is against the law. The provisions of the PMLA indicate that it is a special act and is a complete code in itself, which does not come into the preview of other criminal law statute. No one can take benefit of the ground that there is a possibility of him getting prosecuted in future and under Section 50 of the PMLA, it is not mandatory that before appearing in front of the authority, a copy of ECIR is to be supplied therefore the petitioners cannot claim copy of ECIR as a right. It is clear from the documents filed by both the parties that the petitioner was not acquitted in the FERA case but was imposed with fine after which the authorities started investigation under PMLA. The impugned summons were issued under Section 50 PMLA and there is nothing on record by which it can be inferred that the issuance of summons by the respondents for investigation has caused or has the effect of causing any prejudice to any of the petitioners. Petition dismissed. Issues Involved:1. Challenge to the summons issued under Section 50(2) of the Prevention of Money Laundering Act, 2002 (PMLA).2. Non-grant of a copy of the Enforcement Case Information Report (ECIR) to the petitioners.3. Alleged violation of rights guaranteed under Article 20(2) and Article 21 of the Constitution of India.4. Demand for reasonable time to reply and legal representation.5. Allegation of coercive action by the Enforcement Directorate (ED).Issue-wise Detailed Analysis:1. Challenge to the Summons Issued Under Section 50(2) of PMLA:The petitioners challenged the summons dated 19.07.2021 issued under Section 50(2) of the PMLA, directing them to appear personally and produce documents. The court noted that Section 50 of the PMLA empowers the authorities to summon any person during an investigation to record statements, give evidence, or produce documents. The provisions of Section 50(4) state that such proceedings are deemed judicial proceedings within the meaning of Sections 193 and 228 of the Indian Penal Code, 1860. Therefore, the court held that the authorities acted within their jurisdiction, and the summons were legally valid.2. Non-grant of a Copy of ECIR to the Petitioners:The petitioners contended that they were denied a copy of the ECIR, which they argued was necessary for preparing their defense. The court observed that the PMLA does not mandatorily require the provision of the ECIR to the person being summoned. The court referenced the case of Virbhadra Singh Vs. Enforcement Directorate, where it was held that the mere registration of an ECIR does not make a person an accused, and they are not entitled to evade summons on this ground. The court concluded that the petitioners' demand for a copy of the ECIR was not legally justified.3. Alleged Violation of Rights Guaranteed Under Article 20(2) and Article 21 of the Constitution of India:The petitioners claimed that their rights under Article 20(2) (protection against double jeopardy) and Article 21 (right to life and personal liberty) were violated. The court noted that the petitioners were not yet accused under the PMLA, and their legal status as 'accused' or 'witness' would be determined after the conclusion of the inquiry under Section 50 of the PMLA. The court referenced the case of Ramanlal Bhogilal Shah Vs. D.K. Guha, which held that the protection under Article 20(3) (protection against self-incrimination) does not extend to providing information that does not tend to incriminate the person.4. Demand for Reasonable Time to Reply and Legal Representation:The petitioners sought reasonable time to reply to the summons and legal representation. The court observed that opportunities and time were granted to the petitioners to appear before the authorities. The court did not find any merit in the petitioners' claim that they were denied reasonable time or legal representation.5. Allegation of Coercive Action by the Enforcement Directorate:The petitioners alleged that the ED was creating pressure on them through the summons. The court found these allegations to be baseless and noted that the ED's actions were within the legal framework of the PMLA. The court emphasized that economic offenses involving money laundering pose a serious threat to the financial systems and integrity of the country, and the PMLA provides comprehensive powers to the authorities to investigate such offenses.Conclusion:The court dismissed the petitions, finding them devoid of merit. It held that the summons issued under Section 50 of the PMLA were legally valid, and the petitioners were not entitled to a copy of the ECIR at this stage. The court also concluded that there was no violation of the petitioners' constitutional rights, and the ED's actions were justified and within the legal framework. The court emphasized the importance of the PMLA in combating money laundering and corruption, which are serious threats to the country's economy and integrity.