Statements recorded by Authorities are “Admissible Evidence” under PMLA, proceedings are deemed ‘Judicial’: Supreme Court [Read Judgement]

The Supreme Court observed that 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 Indian Penal Code,1860. Also according to sub-section(4) of Section 63, a person who intentionally disobeys any direction issued under Section 50 of Prevention of Money Laundering Act, 2002 ( PMLA,2002 ) is liable to be proceeded against under Section 174 of Indian Penal Code,1908. The Writ Petition was filed by the Appellants - Abhishek Banerjee and Rujira Banerjee seeking quashing of the Summons dated 10.09.2021 issued to them by the Respondent – Enforcement Directorate ( ED ) under Section 50 of the Prevention of Money Laundering Act, 2002 and seeking further direction against the Respondent not to issue any Summons under Section 50 of the said Act to the Appellants for their appearance in New Delhi, rather than their hometown/ place of domicile i.e. Kolkata. Essential Training for Tax Professionals: Know Your Sections! The Crl. M.C. No. 2442 of 2021 was filed by the Appellant - Rujira Banerjee seeking quashing of the Complaint dated 13.09.2021 filed by the respondent-ED against her for the offence under Section 174 of India Penal Code ( IPC ), and for quashing the Order dated 18.09.2021 passed by the Chief Metropolitan Magistrate ( CMM ), Patiala House, New Delhi taking cognizance of the complaint, as also the Order dated 30.09.2021 summoning her, passed by the said Court. The facts are that an FIR/R.C. bearing No. RC0102020A0022 was registered by the CBI, ACB, Kolkata on 27.11.2020 for the offences u/s 120B and 409 of IPC and Section 13(2) r/w 13(1)(a) of the Prevention of Corruption Act, 1988, in respect of alleged illegal excavation and theft of Coal taking place in the leasehold areas of Eastern Coalfields Limited ( ECL ) by one Anup Majee alias Lala with the active connivance of certain employees of ECL. Based on the said FIR, on 28.11.2020, an ECIR bearing No. 17/HIU/2020 came to be registered by the Respondent at their Head Investigative Unit situated at New Delhi. Essential Training for Tax Professionals: Know Your Sections! During the course of investigation of FIR in respect of theft of Coal and illegal excavation being done by the criminal elements in the leasehold area of ECL, a large number of vehicles/ equipment used in the illegal coal mining and its transportation were seized. It was found that money laundering of Rs.1300 crore was involved. According to the respondent, Enforcement Directorate( ED ), one of the accused Vikas Mishra was arrested on 16.03.2021 and another accused Inspector Ashok Mishra of Bankura Police Station was arrested on 03.04.2021, who had become part of illegal Coal mafia and had helped in laundering several hundred crores of rupees. It was also found that the Inspector had allegedly received Rs.168 crores in just 109 days from the co-accused, Anup Majee, to be delivered to his political bosses including co-accused Vinay Mishra. The said Rs.168 crores were allegedly transferred through vouchers to Delhi and Overseas. On 22.07.2021, the Respondent issued Summons to the Appellant No.1, Abhishek Banerjee under Section 50 of PMLA seeking his personal appearance on 03.08.2021 in New Delhi with the documents sought for. Again on 04.08.2021, another Summons were issued to the Appellant No.1 seeking the same documents as sought in Summons dated 22.07.2021 for remaining present on 12.08.2021 in New Delhi. Essential Training for Tax Professionals: Know Your Sections! The Appellant No.2 was also issued Summons on 04.08.2021 under Section 50 of PMLA for her personal appearance in New Delhi on 13.08.2021 along with the documents/records stated in the said Summons. Both the Appellants did not remain present as directed and furnished their respective replies on 12.08.2021 seeking time to comply with the said Summons. The Respondent again issued Summons on 18.08.2021 requiring the Appellant No.1 to remain present in New Delhi on 06.09.2021 and Appellant No.2 to remain present in New Delhi on 01.09.2021. The Appellant No.2 replied to the Summons dated 18.08.2021 requesting the Respondent to examine her at Kolkata as there was a functional office of the Respondent in Kolkata and the alleged cause of action had arisen in West Bengal. The appellant No.1 was again served the summons on the same day of appearing before the respondent, but appellant did not respond to this summons following which another summons was issued on 10.09.2021 which was challenged by the appellant by the W.P. ( Crl. ) No.1808/2021 before the High Court. Essential Training for Tax Professionals: Know Your Sections! On 13.09.2021, the Respondent filed a Complaint against the Appellant No.2 in the Court of Chief Metropolitan Magistrate, Patiala House, New Delhi under Section 190 (1)(a) r/w Section 200 Cr.P.C. r/w Section 63(4) PMLA, alleging the commission of the offence under Section 174 of IPC for non-compliance of the Summons dated 04.08.2021 and 18.08.2021. The court vide order took cognizance of the impugned offence and issued summons to Appellant No.2 for personal appearance. Appellant 2 virtually appeared and sought exemption and was granted with direction to be present personally before the court on 12.10.2021. The said complaint of respondent and the order by CMM was challenged by the Appellant Rujira by filing Crl. M.C No. 2442 of 2021 before the High Court. As stated earlier, both the W.P. ( Crl. ) No.1808/2021 and Crl. M.C. No.2442/2021 came to be dismissed by the High Court vide the impugned order. Essential Training for Tax Professionals: Know Your Sections! The Learned Senior Counsel Mr. Kapil Sibal, appearing for the Appellant No.1 – Abhishek Banerjee made lengthy submissions, crux of which is: i. Section 50 of the PMLA merely indicates the substantive power of ED to summon but does not provide the procedure for exercise of such power. ii. The procedure relating to territoriality of investigation, or power to summon sick, or infirm/ women/ children and record their statements has not been provided under Section 50 PMLA, as it is provided under Section 160 and 161 Cr.P.C. Iii. Power without guidance for manner in which it is to be exercised could not be said to be fair, just and reasonable procedure established by law under Article 21 of the Constitution. Iv. A combined reading of Section 4(2) Cr.P.C. and Section 65 PMLA would show that the application of the Code is not barred as long as the provisions of the Code are consistent with the PMLA. v. The Judgment of this Court in Vijay Madanlal Choudhary and Others vs. Union of India and Others1 has not dealt with the issue of procedure for summoning under Section 50 of the PMLA. vi. The Cr.P.C. provides that the existence of the territorial nexus to the commission of a crime is a jurisdictional threshold for the exercise of powers of investigation by a police officer. However, the Respondent – ED has not demonstrated as to how it could be prejudiced by calling the Appellant No.1 to its office in Kolkata where the ED has the Zonal Office. vii. The Department of Revenue, Ministry of Finance has issued administrative instructions consistent with Section 51 of PMLA that demarcate the specific territorial jurisdiction of various Zonal Offices of the ED. The said instructions must be strictly complied with by the ED in consonance with Article 21 of the Constitution of India. viii. The Appellant No.1 is a permanent resident of Kolkata and being Member of Parliament has a residence in Delhi, which however does not alter his permanent residence at Kolkata. ix. Section 91 of Cr.P.C. only deals with summons for production of documents, whereas the summons issued to the Appellant No.1 under PMLA are for personal appearance before the Respondent at New Delhi is nothing but an abuse of process of law. Essential Training for Tax Professionals: Know Your Sections! In addition to the above submissions, Senior Counsel Mr. Abhishek Manu Singhvi along with Senior Counsel Mr. Gopal Sankaranarayanan appearing for the Appellant No.2 also made certain submissions. The Senior Counsel, Mr. S.V. Raju also made elaborate submissions on behalf of the Respondent – ED which may be summarized as under: - i. Section 91 Cr.P.C. neither encompasses any territorial jurisdictional limit nor does it contain any proviso for women, minors or elderly akin to Section 160 Cr.P.C. A police officer has to resort to Section 91 Cr.P.C. to mandate the provision of any document. Hence, Section 91 Cr.P.C. cannot be equated with the powers under Section 50 of PMLA. Ii. Section 160 Cr.P.C. applies to a Police Officer who is making an investigation under Chapter XII of Cr.P.C., whereas the process envisaged by Section 50 of PMLA is in the nature of an inquiry and is not an Investigation in the strict sense of the term as held in case of Vijay Madanlal ( supra ). iii. ED has the power to summon any person whose attendance is considered necessary whether to give evidence or to produce any record as contemplated in Section 50 of the PMLA. A statement made under Section 50 is admissible in evidence, whereas the statement made under Section 161 is inadmissible as provided under Section 162 Cr.P.C. iv.There are stark inconsistencies between Section 50 PMLA and Section 160 Cr.P.C., and therefore Section 160 Cr.P.C would not apply to the proceedings under Section 50 of PMLA. v. The procedure to exercise power under Section 50 PMLA is laid down in the Rules called the Prevention of Money Laundering ( Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention ) Rules, 2005. Essential Training for Tax Professionals: Know Your Sections! Various other submissions were also made on behalf of the Respondent. Certain provisions of Cr.PC and PMLA, were also referred to. As per Rule 11 of the PML Rules,2005, the Summoning Officer, while exercising the powers under sub-section (2) and (3) of Section 50 of the PMLA, has to issue Summons in Form V, appended to the said Rules. Rule 11 of the said Rules reads as under: - “Rule 11: - Forms of records. - The Summoning Officer shall, while exercising powers under sub-sections (2) and (3) of Section 50 of the Act, issue summons in Form V appended to these rules.” At the outset, it may be noted that as well settled by now, the provisions of PMLA are not only to investigate into the offence of money laundering but more importantly to prevent money laundering and to provide for confiscation of property derived from or involved in money laundering and the matters connected therewith and incidental thereto. As held by the Three-Judge Bench in Vijay Madanlal (supra), provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, which includes provisions of the Cr.P.C. Essential Training for Tax Professionals: Know Your Sections! The Section 65 of the Act predicates that the provisions of the Cr.P.C. shall apply insofar as they are not inconsistent with the provisions of the PMLA in respect of arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under the Act. Thus, having regard to the conjoint reading of Section 71 and Section 65 of the PMLA as also Section 4(2) and Section 5 of the Code, there remains no shadow of doubt that the provisions of PMLA will have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, including the provisions of the Cr.P.C. In view of the above, it is abundantly clear 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. Essential Training for Tax Professionals: Know Your Sections! Much reliance has been placed by the Learned Counsels for the Appellants on the Annual Report of Ministry of Finance, GOI, which according to them has stated about the Organizational Structure of Directorate of Enforcement, demarcating the territorial jurisdiction of various Zonal Office of the ED. According to them, such instructions by the Department of Revenue are for exercise of powers of investigation by the ED as mandated by Section 51 PMLA and therefore must be strictly complied with. The said submission also being fallacious cannot be accepted. Apart from the fact that the document relied upon is an Annual Report by the Ministry of Finance, showing the Organizational Structure of the ED, the same could not be construed as the directions issued by the Central Government for the purpose of exercise of powers and performance of the functions by the Authorities as contemplated in Section 51 of the said Act. Essential Training for Tax Professionals: Know Your Sections! As stated in the said Report, the said Offices of the Directorate of Enforcement all over India are set up to ensure that the Money Laundering offences are investigated in an effective manner and they act as deterrence for the potential offenders of the Money Launderers. Pertinently, the Headquarters Investigation Unit ( HIU ) has not been restricted to any territorial jurisdiction in the said Organizational Structure. Justice Bela M.Trivedi and Justice Satish Chandra Sharma observed that the court finds no substance in the challenge made by the Appellants to the Summons issued to the Appellants u/s 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. Essential Training for Tax Professionals: Know Your Sections! 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. As transpiring from the Status Report submitted by the Deputy Director, Directorate of Enforcement, New Delhi, the Appellant No.2 – Rujira Banerjee had not appeared and not produced the documents as required vide the Summons dated 04.08.2021 and 18.08.2021.The ED therefore had filed the Complaint in the Court of Chief Judicial Magistrate, Patiala House Courts, New Delhi against her under Section 63 PMLA r/w Section 174 IPC. It is to note that though the appellant has challenged the order passed by the CJM Court, she has not even bothered to produce the said Orders before this Court in the instant Appeals. Since the said Complaint is pending before the concerned Court of Chief Judicial Magistrate, the court does not express any opinion on the merits of the said Complaint. Suffice to say that the court finds no illegality in the said orders passed by the concerned court and that the said complaint shall be proceeded further by the said Court in accordance with law. For the reasons stated above, both the Appeals being devoid of merits are dismissed. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates