Introduction
The Hon’ble Supreme Court of India in Abhishek Banerjee & Anr. v. Directorate of Enforcement[i] held that the issuance of summons under s. 50 of the Prevention of Money Laundering Act, 2002 (‘PMLA’), requiring the personal appearance of any individual, is distinct from the provisions of s. 160 of Code of Criminal Procedure, 1908 (‘CrPC’). The Court clarified that the power of the Enforcement Directorate (‘ED’) under PMLA is broader and not subject to the territorial or gender-specific safeguards as provided under the CrPC.
Background
A first information report (‘FIR’) was registered by the Central Bureau of Investigation (‘CBI’), Anti-Corruption Branch, Kolkata, on 27.11.2020 under s. 120B and s. 409 of the Indian Penal Code, 1860 (‘IPC’) and s.13(2) read with s. 13(1)(a) of the Prevention of Corruption Act, 1988.
Following the FIR, the ED registered an Enforcement Case Information Report (ECIR) on 28.11.2020 at its Headquarters Investigation Unit, New Delhi, under the PMLA.
During the investigation, ED found money laundering operations involving proceeds of crime amounting to Rs. 1,300 crore. It was alleged that these proceeds of crime were transferred through vouchers to Delhi and overseas.
The ED issued various summons under s. 50 of the PMLA to Abhishek Banerjee (Appellant No. 1) and Rujira Banerjee (Appellant No. 2), requiring their personal appearances in New Delhi and the production of documents.
Both appellants sought adjournments and requested that the inquiry be conducted in Kolkata, given the presence of a functional ED office.
Although Appellant No. 1 appeared once on 06.09.2021, further summons issued for 08.09.2021 and 21.09.2021 were not complied with.
Appellant No. 2 failed to appear as directed, which caused ED to file a complaint under s. 63(4) of the PMLA read with s. 174 of the IPC before the Chief Metropolitan Magistrate (‘CMM’), Patiala House Courts, New Delhi. The CMM took cognizance and issued a summons to Appellant No. 2 to appear before the court.
The appellants filed a writ petition (Crl.) No. 1808/2021 challenging the legality of the summons issued under s. 50 of the PMLA and Criminal Miscellaneous Case No. 2442/2021 seeking to quash the complaint filed against Appellant No. 2 and the subsequent orders taking cognizance and issuing summons.
The Delhi High Court dismissed both petitions, due to which appellants filed the present appeal before the Hon’ble Supreme Court.
Issues
Whether the summons issued under s. 50 of the PMLA, requiring the appellants to appear in New Delhi instead of their place of residence (Kolkata), were lawful and valid?
Whether the procedural safeguards under the s. 160 of the CrPC also apply to S. 50 of the PMLA?
Whether the complaint filed against Appellant No. 2 under s. 174 of the IPC before CMM for non-compliance, along with summons procedurally and legally justified?
Held
The Court dismissed the appeal, holding that the summons issued by the ED under s. 50 of the PMLA were lawful based on the following reasoning:
Jurisdiction and Territorial Nexus
The court observed that the ED Headquarters Investigation Unit is not bound by territorial limitations. Further, in the present case, the investigation revealed that proceeds of crime amounting to Rs. 168 crore were transferred to Delhi and overseas. This established a clear nexus between the offense and the territory of Delhi. Therefore, ED justified summoning the appellants to appear in New Delhi.
Applicability of PMLA Over CrPC and Nature of Proceeding Under PMLA
The court emphasized that the PMLA is a special law with overriding provisions, as provided under ss. 71 and 65 of the PMLA. These provisions ensure that:
PMLA’s procedures override the CrPC wherever there is any inconsistency.
S. 50 of the PMLA grants broad powers to ED officers to summon any person, examine them on oath, and for the production of documents. The court clarified that these powers are not limited by territorial or gender-specific protections as under s. 160 of the CrPC.
The statements recorded under s. 50 are considered judicial proceedings as per s. 50(4) of the PMLA, and hence admissible in court. This distinguishes PMLA inquiries from regular police investigations under Chapter XII of the CrPC.
The court further clarified that the protections under a. 20(3) of the Constitution of India do not apply unless the person summoned is formally accused or arrested. Summons can be issued even to witnesses as part of the inquiry, and refusal to comply attracts penalties under s. 63 of the PMLA and s. 174 of the IPC.
Conduct of the Appellants and Pending Proceeding
The court observed that:
Abhishek Banerjee appeared only once in response to the summons and later sought repeated adjournments, delaying the investigation. Rujira Banerjee’s repeated non-compliance with the summon led to a complaint filed against her under s. 174 of the IPC for intentional disobedience.
The court declined to interfere with the pending complaint against Rujira Banerjee in the Patiala House Court. It held that the complaint must proceed according to law, and no opinion was expressed on its merits.
The appellants’ challenge to the summons was without merit, as the ED established sufficient grounds for summoning them to New Delhi based on the clear nexus between the offense and the jurisdiction of Delhi.
Our Analysis
The judgment upholds that PMLA prevails over CrPC in the context of money laundering investigations. The Court emphasized that the ED, under s. 50 of the PMLA has the authority to summon individuals irrespective of their location or place of residence. It was clarified that s. 160 of the CrPC, which limits a police officer’s power to require the attendance of women or certain categories of individuals at places other than their residence, does not apply to proceedings under PMLA. This distinction arises because PMLA is a special law which takes precedence over CrPC due to the overriding effect of s. 71 of the PMLA.
The court struck a balance between the importance of effective investigation into serious economic offenses and the need to maintain procedural equity. This interpretation highlights the legislative intent to prioritize the objectives of special legislation like PMLA in tackling complex economic offences.
End Note
[i] 2024 SCC OnLine SC 2454 dated 09.09.2024.
Authored by Ritik Kumar Jha, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.