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Prevention of Money Laundering Act, 2002

Case Law: Sachin Narayan v. Income-Tax Department (2019) 417 ITR 641 (Karn.)(HC)

Sub: Summons issued under provisions of Section 50(2 ) & (3) of PMLA,2002 cannot be quashed in Writ proceedings

Dismissing the petition, the Court held that, it is trite law that at the stage of showcase notice, charge sheet, summons or notice to appear, constitutional courts would not interfere so as to interject the proceedings and thereby prevent the authorities from proceeding.

Ordinarily, a writ petition would not lie against a show-cause notice for the reason that it does not give rise to any cause of action.

Summons issued u/s 50(2) and (3) of PMLA, 2002 cannot be quashed in Writ Proceedings

Summons issued under section 50(2) of the Act has nothing to do with the regulations as defined under the Regulatory Rules. The rules are referable only to proceedings for adjudication and not to pre-adjudication proceedings. In fact, section 50(2) does not refer to an accused at all. At the pre-adjudication stage, i.e., during investigation stage, the authorities are not required to state or reveal the nature of the material upon which they intend to rely for summoning a person for investigation. Accordingly, dismissing the writ petition, that summons clearly disclosed that they had been issued in exercise of power vested under section 50(2) and 50(3) of the Act.

There being no challenge to the Constitutional validity of these provisions and the jurisdiction of the authority not being in serious dispute, the writ petition on the ground of investigation being hit by article 20 of the Constitution of India could not be entertained at this stage.

CONCLUSION

Please note that PMLA 2002 Section 50(1) provides that Director shall for the purpose of Section 13 has same powers as vested in Civil Court under provisions of Civil Procedure Court ,1908 and provisions of Section 50(2) clearly state that,the Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.

50(3) provides that all the persons so summoned shall be bound to attend in person or through authorized agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required.

 

Footnotes

Section 3 of PMLA, 2002 provides that

Offence of money-laundering. Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.

Section 50 of PMLA, 2002 provides that

Powers of authorities regarding summons, production of documents and to give evidence, etc. -

(1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:

(a) discovery and inspection.
(b) enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath.
(c) compelling the production of records.
(d) receiving evidence on affidavits.
(e) issuing commissions for examination of witnesses and documents; and
(f) any other matter which may be prescribed.

(2) The Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.

(3) All the persons so summoned shall be bound to attend in person or through authorized agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required.

(4) Every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860).

(5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not -

(a) impound any records without recording his reasons for so doing; or

(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Director.

 

Article 20 of the Constitution of India provides that

Protection in respect of conviction for offences

(1) No person shall be convicted of any offence except for violation of the law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence

(2) No person shall be prosecuted and punished for the same offence more than once

(3) No person accused of any offence shall be compelled to be a witness against himself

Article 226 of the Constitution of India provides that

226. Power of High Courts to issue certain writs

(1) Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibitions, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose

(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories

(3) Where any party against whom an interim order, whether by way of injunction or stay or in any other manner, is made on, or in any proceedings relating to, a petition under clause ( 1 ), without

(a) Furnishing to such party copies of such petition and all documents in support of the plea for such interim order; and

(b) Giving such party an opportunity of being heard, makes an application to the High Court for the vacation of such order and furnishes a copy of such application to the party in whose favour such order has been made or the counsel of such party, the High Court shall dispose of the application within a period of two weeks from the date on which it is received or from the date on which the copy of such application is so furnished, whichever is later, or where the High Court is closed on the last day of that period, before the expiry of the next day afterwards on which the High Court is open; and if the application is not so disposed of, the interim order shall, on the expiry of that period, or, as the case may be, the expiry of the aid next day, stand vacated

(4)The power conferred on a High Court by this article shall not be in derogation of the power conferred on the Supreme court by clause (2) of Article 32

DISCLAIMER: The case law produced here is only for knowledge and information of readers. We advised that to go through order copy of the Hon’ble High Court for more clarification and understanding.

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