PMLA | Supreme Court Shows Green Flag To ED

The Supreme Court has challenged the Summons issued to the TMC MP Abhishek Banerjee under Section 50 of the Prevention of Money Laundering Act (PMLA).

The bench of Justice Bela M. Trivedi and Justice Satish Chandra Sharma did not find any illegality in the summons issued by the respondent-ED summoning the Appellants to its Office at Delhi, which also has the territorial jurisdiction, a part of the offence having been allegedly committed by the accused persons as alleged in the complaint. The appellant being a Member of Parliament has also an official residence at Delhi.

Background

The Appellants – Abhishek Banerjee and Rujira Banerjee challenged the summons issued by the Respondent – ED under Section 50 of the Prevention of Money Laundering Act, 2002 (PMLA), and seeking further direction against the Respondent not to issue any Summons under Section 50 of the PMLA to the Appellants for their appearance in New Delhi, rather than their hometown/place of domicile i.e. Kolkata.

The petition was filed by the Rujira Banerjee seeking quashing of the Complaint filed by the ED a for the offence under Section 174 of India Penal Code, and for quashing the Order passed by the Chief Metropolitan Magistrate (CMM), Patiala House, New Delhi taking cognizance of the complaint, as also the Order summoning her, passed by the Court.

An FIR was registered by the CBI 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 FIR, an ECIR came to be registered by the ED at their Head Investigative Unit situated at New Delhi.

During the course of investigation of the 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/ equipments used in the illegal coal mining and its transportation were seized. It was also found that the case involved money laundering to the tune of Rs. 1300 Crores.

During the course of investigation, Inspector Ashok Kumar Mishra 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; Rs.168 crores were allegedly transferred through vouchers to Delhi and Overseas.

Arguments

The appellants contended that 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. 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. 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.

The appellant contended that 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.

The department contended that 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.

The department contended that 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.

Court’s Analysis Of PMLA Provisions

The court noted that the dispensation regarding Prevention of Money Laundering, Attachment of Proceeds of Crime, and Inquiry/Investigation of offence of Money Laundering includes 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 PMLA 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.

PMLA Provisions Are Gender Neutral

The court held that Section 50 is a gender neutral, as it does not make any distinction between a man and a woman, there are glaring inconsistencies between the provisions contained in Section 50 of PMLA and Section 160/161 of Cr.P.C. The Chapter XII of Cr.P.C. pertains to the “Information to the Police and their Powers to Investigate”.

Statements Recorded By ED Not Hit By Fundamental Rights

The court held that the statements recorded by the Authorities under Section 50 of PMLA are not hit by Article 20(3) or Article 21 of the Constitution, rather the statements recorded by the authority in the course of inquiry are deemed to be the Judicial proceedings in terms of Section 50(4), and are admissible in evidence.

However, the statements made by any person to a Police Officer in the course of an investigation under Chapter XII of the Code could not be used for any purpose, except for the purpose stated in the proviso to Section 162 of the Code. In view of such glaring inconsistencies between Section 50 PMLA and Section 160/161 Cr.P.C, the provisions of Section 50 PMLA would prevail in terms of Section 71 read with Section 65.