ABHISHEK BANERJEE & ANR. versus DIRECTORATE OF ENFORCEMENT

Summary

The Supreme Court upheld summonses issued by the Enforcement Directorate under Section 50 of the PMLA requiring the appellants, residents of Kolkata, to appear in New Delhi. It held that the PMLA and the 2005 Rules prescribe a self-contained summoning procedure that prevails over Sections 160, 161 and 91 CrPC, so the CrPC protection for women against being called outside their place of residence does not apply, and that Delhi had sufficient territorial nexus with the alleged money laundering.

Issues

1. Whether Section 160 CrPC, including its proviso protecting women from being required to attend outside their place of residence, applies to summonses issued under Section 50 of the PMLA.
2. Whether the PMLA lays down a procedure for exercising the summoning power under Section 50, or whether the CrPC fills that gap through Section 65 of the PMLA.
3. Whether a summoning power under Section 50 without CrPC safeguards violates Articles 20(3) and 21 of the Constitution.
4. Whether the territorial demarcation of ED zonal offices barred the ED from summoning Kolkata residents to New Delhi.
5. Whether the complaint under Section 174 IPC against the second appellant for not complying with the summonses, and the magistrate's orders on it, should be quashed.

Provisions considered

• Section 50, Prevention of Money Laundering Act, 2002Read as empowering the specified officers to summon any person whose attendance is considered necessary to give evidence or produce records; persons summoned are bound to attend in person or through authorised agents and state the truth, and the proceedings are deemed judicial proceedings. The provision is gender neutral and the process under it is an inquiry into proceeds of crime, not a police investigation. (¶¶ 11, 16, 17, 19, 21)
• Sections 65 and 71, Prevention of Money Laundering Act, 2002Section 65 applies the CrPC only so far as it is not inconsistent with the PMLA, and Section 71 gives the PMLA overriding effect. Read together, they make the PMLA's summoning procedure prevail over inconsistent CrPC provisions. (¶¶ 11, 13, 15, 16, 17)
• Sections 4(2) and 5, Code of Criminal Procedure, 1973Offences under other laws are dealt with under the Code subject to any special enactment regulating the manner or place of investigation or inquiry, and the Code does not affect special procedures prescribed by other laws; this reinforced the primacy of the PMLA procedure. (¶¶ 11, 13)
• Sections 160 and 161, Code of Criminal Procedure, 1973Section 160 governs a police officer investigating under Chapter XII and limits where women and certain others may be required to attend. Because ED authorities are not police officers, the Section 50 process is an inquiry, and statements under Section 50 are admissible unlike those under Section 161, the provisions are inconsistent and Section 160 does not apply to PMLA summonses. (¶¶ 11, 14, 16, 17)
• Section 91, Code of Criminal Procedure, 1973The procedure for summoning production of documents under Section 91 was held to yield to the specific procedure under Section 50 of the PMLA and the 2005 Rules. (¶¶ 11, 17)
• Rule 11 and Form V, Prevention of Money-Laundering (Forms, Search and Seizure or Freezing ... Impounding and Custody of Records and the Period of Retention) Rules, 2005Rule 11 requires the summoning officer acting under Section 50(2) and (3) to issue summons in Form V, which specifies the officer, the person summoned and the documents sought. This statutory procedure answered the argument that Section 50 lacks any procedure. (¶¶ 12, 17)
• Section 51, Prevention of Money Laundering Act, 2002Section 51 lets the Central Government issue directions on jurisdiction by territorial area and other criteria. An Annual Report of the Ministry of Finance showing the ED's organisational structure was held not to be such a direction. (¶¶ 11, 20)
• Section 63(4), Prevention of Money Laundering Act, 2002A person who intentionally disobeys a direction under Section 50 may be proceeded against under Section 174 IPC in addition to the penalty under Section 63(2)(c); this supported the complaint against the second appellant. (¶¶ 11, 21, 22)
• Articles 20(3) and 21, Constitution of IndiaFollowing Vijay Madanlal Choudhary, the Court held that a person summoned under Section 50 cannot claim protection under Article 20(3) at the summons stage, and that the challenge under Article 21 merely reagitated issues already settled. (¶¶ 18, 19)

Held

• The PMLA is a self-contained code. Under Sections 65 and 71 of the PMLA, read with Sections 4(2) and 5 CrPC, its provisions prevail over anything inconsistent in the CrPC. Issuing summons, recording statements and calling for documents up to the filing of a complaint under Section 3 are governed entirely by the PMLA. (¶¶ 13, 14, 15)
• Section 160 CrPC, which falls in Chapter XII and governs police investigations, does not apply to summonses under Section 50 of the PMLA. Section 50 is gender neutral; the Section 50 process is an inquiry into proceeds of crime, not an investigation in the strict sense; ED authorities are not police officers; and Section 50 statements are admissible, unlike statements under Section 161. These are glaring inconsistencies, so Section 50 prevails. (¶¶ 14, 16)
• Rule 11 of the 2005 Rules and Form V lay down the procedure for summoning under Section 50(2) and (3). That specific procedure overrides the procedure in Sections 160, 161 and 91 CrPC. (¶ 17)
• The challenge under Articles 20(3) and 21 was already answered in Vijay Madanlal Choudhary. A person summoned under Section 50 is bound to attend and state the truth. At the summons stage there is no testimonial compulsion, and Article 20(3) or Section 25 of the Evidence Act may come into play only if the statement is recorded after a formal arrest. (¶¶ 18, 19)
• An Annual Report showing the ED's zonal structure is not a direction of the Central Government under Section 51. The Headquarters Investigation Unit, where the ECIR was registered, has no territorial limit. The ED's case was that Rs. 168 crores had been transferred to Delhi and overseas, which gave the offence an adequate nexus with Delhi, so summoning the appellants to Delhi was not illegal. The first appellant also had an official residence in Delhi. (¶ 20)
• Under Section 63(4) of the PMLA, intentional disobedience of a Section 50 summons can be prosecuted under Section 174 IPC. The Court found no illegality in the magistrate's orders taking cognizance of the complaint against the second appellant and summoning her, and directed that the complaint proceed in accordance with law, without expressing any view on its merits. (¶¶ 21, 22)

Result

Appeals dismissed. The High Court's refusal to quash the Section 50 summonses and the Section 174 IPC complaint was upheld, and the complaint will proceed before the magistrate in accordance with law.