West Bengal Coal Scam | SC dismisses Abhishek Banerjee and wife Rujira’s appeal against ED summons

Supreme Court: While considering the appeal filed by sitting Trinamool Congress MP, Abhishek Banerjee, challenging the dismissal of petitions filed by him and his wife, Rujira Banerjee, seeking quashment of summons issued by Enforcement Directorate under S. 50 of Prevention of Money Laundering Act, 2002 (PMLA); the Division Bench of Bela M. Trivedi and Satish Chandra Sharma, JJ., upon perusing the relevant provisions of PMLA, CrPC and PML Rules, 2005 vis-a-vis summons, dismissed the instant appeals stating that there was no illegality in the summons issued under S. 50, PMLA as appropriate procedure established under the Act was followed.

Background:

In 2020, a FIR was registered by the CBI, ACB, Kolkata for the offences under Section 120-B and 409 of IPC and Section 13(2) r/w 13(1)(a) of the Prevention of Corruption Act, 1988 (PC Act) in respect of alleged illegal excavation and theft of Coal taking place in the leasehold areas of Eastern Coalfields Limited (ECL). During the investigation many vehicles/ equipments used in the illegal coal mining and its transportation were seized. It was also found that the said case involved money laundering to the tune of Rs. 1300 Crores.

Subsequently, ED issued Summons to Abhishek Banerjee (1st Appellant) under Section 50 of PMLA seeking his personal appearance in New Delhi with the documents sought for. Again on 04-8-2021, another Summon was issued seeking the same documents. Rujira Banerjee (2nd Appellant) was also issued summons under Section 50 of PMLA for her personal appearance in New Delhi along with the documents/records stated in the said summons. However, both the parties failed to remain present and sought time to comply with the summons. Summons issued on 10-9-2021 seeking 1st Appellant’s appearance in New Delhi on 21-9-2021, was challenged by him in Delhi High Court.

On 13-9-2021, ED filed a Complaint against the 2nd Appellant in the Court of Chief Metropolitan Magistrate, Patiala House, New Delhi under Section 190(1)(a) r/w Section 200 CrPC r/w Section 63(4) PMLA, alleging the commission of the offence under Section 174 of IPC for non-compliance of the Summons. 2nd Appellant virtually appeared before the Court seeking exemption and Chief Metropolitan Magistrate passed an Order allowing the exemption application for that day only and directed the 2nd Appellant to remain personally present before the Court on 12-10-2021. Eventually, the complaint filed by the ED and CMM’s order was challenged by the 2nd Appellant before Delhi High Court.

Delhi High Court via the impugned orders dismissed the Appellants’ petitions seeking quashment, hence the instant appeal came into being.

Contentions:

Counsels for the Appellants contended that S. 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 have not been provided under S. 50 PMLA, as it is provided under Section 160 and 161 CrPC. It was stated that the Supreme Court in Vijay Madanlal Choudhary v. Union of India, (2023) 21 ITR-OL 1, has not dealt with the issue of procedure for summoning under S. 50 of the PMLA. It was further contended that 1st Appellant is a permanent resident of Kolkata and being Member of Parliament (MP) has a residence in Delhi, which however does not alter his permanent residence at Kolkata.

It was further argued that 2nd Appellant is neither an accused in the predicate offence nor in the money laundering offence. Protection of woman provided under Section 160, CrPC would be applicable to the PMLA also. Furthermore, Section 65 of PMLA makes provisions of CrPC applicable in so far as they are not inconsistent with the provisions of PMLA regarding arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under PMLA. Therefore, in the absence of any specific procedure for summoning witnesses, CrPC will be applicable.

Per contra, counsel for ED 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 CrPC. There are stark inconsistencies between Section 50 PMLA and Section 160, CrPC and therefore Section 160 CrPC would not apply to the proceedings under Section 50 of PMLA. The statement made under Section 50 of PMLA would not infringe any fundamental right of the person contained in Article 20(3) of the Constitution inasmuch as the person making the statement is not an accused at the time when the statement under Section 50 is recorded.

As regards territorial jurisdiction, it was submitted that as per the case of ED, the proceeds of crime to the tune of Rs.168 Crores were transferred through vouchers to Delhi and Overseas, and therefore, there was adequate nexus with the territory of Delhi with the alleged offence. Even a prosecution complaint could have been filed in Delhi which would be consistent with the law laid down in Rana Ayyub v. Directorate of Enforcement, (2023) 4 SCC 357.

The respondents pointed out that Section 50, PMLA is gender neutral as it does not make any distinction between a man and a woman. The Court cannot carve out an exception in favour of women in Section 50, when there is none. Whenever the legislature felt the need to carve out an exception in favour of women, it has done so as evident from the proviso to Section 45 of PMLA. Therefore, there cannot be any presumption that a casus omissus exists in Section 50.

Court’s Assessment:

Perusing the facts and contentions raised in the matter, the Court took note of the relevant provisions of CrPC and PMLA related to summons, jurisdiction of authorities etc., and 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.

It was stated that it is 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.

In a conjoint reading of Section 71 and Section 65 of the PMLA as also Section 4(2) and Section 5 of CrPC, the Court pointed out 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 CrPC.

Relying on Vijay Madanlal (supra), the Court emphasised 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, PMLA is fully governed by the provisions of PMLA itself. The jurisdictional police who is governed by the regime of Chapter XII, CrPC, cannot register the offence of money laundering, nor can investigate into it, in view of the special procedure prescribed under the PMLA regarding the registration of offence and inquiry/investigation thereof, and that the special procedure must prevail in terms of Section 71 of the PMLA.

The Court also stated that S. 50 of PMLA is gender neutral and highlighted the glaring inconsistencies between the provisions in Section 50 of PMLA and Section 160/161 of CrPC. The Court thus stated that the provisions of Section 50 PMLA would prevail in terms of Section 71 r/w Section 65 thereof.

Vis-a-vis procedure to be followed by the Summoning Officer while exercising the powers under S. 50(2) and (3), the Court noted that Rule 11 of PML Rules, 2005 requires the Summoning Officer to follow the procedure as prescribed therein, i.e., to issue Summons in Form V appended to 2005 Rules. Thus, there being specific procedure prescribed under the Statutory Rules of 2005 for summoning the person the same would prevail over any other procedure prescribed under CrPC, particularly the procedure contemplated in Sections 160/161, as also the procedure for production of documents as contemplated in Section 91, CrPC, in view of the overriding effect given to the PMLA over the other Acts including the CrPC under Section 71 r/w Section 65 of the PMLA.

Vis-a-vis the constitutional aspect, remarking that the Appellants tried to reagitate issued raised in Vijay Madanlal (supra) the Court pointed out that at the stage of issue of summons, a person cannot claim protection under Article 20(3) of the Constitution, the same being not “testimonial compulsion”. At the stage of recording of statement of a person for the purpose of inquiring into the relevant facts in connection with the property being proceeds of crime, is not an investigation for prosecution as such. Summons can be issued even to witnesses in the inquiry so conducted by the authorized officers. The consequences of Article 20(3) of the Constitution or Section 25 of the Evidence Act may come into play only if the involvement of such person (noticee) is revealed and his or her statements is recorded after a formal arrest by the ED official.

Vis-a-vis territorial jurisdiction of ED, the Court stated that offices of the Directorate of Enforcement all over India have been 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. The Court noted a clearly established adequate nexus of the offence and the offenders with the territory of Delhi.

The Court therefore did not find any substance to the challenge raised by the Appellants against the summons issued by ED under S. 50, PMLA.

Buy Constitution of India  HERE

Buy Penal Code, 1860   HERE

Buy Prevention of Corruption Act, 1988   HERE