Source: Supreme Court 

Why in News? 

Recently, the Supreme Court in the matter of Abhishek Banerjee and Anr. v. Directorate of Enforcement (2024) has held that matters related to summoning of person provisions of Prevention of Money Laundering Act, 2002 (PMLA) shall prevail over Code of Criminal Procedure, 1973 (CrPC). 

What was the Background of the Abhishek Banerjee and Anr. V. Directorate of Enforcement Case? 

• In the present case, First Information Report (FIR) was registered by the Central Bureau of Investigation (CBI), Respondent, for the offences under Section 120B and 409 of Indian Penal Code, 1860 and Section 13(2) read with Section  13(1)(a) of the PMLA. 
• It was alleged that alleged illegal excavation and theft of Coal taking place in the leasehold areas of Eastern Coalfields Limited (ECL) with the active connivance of certain employees of ECL. 
• Several summonses were served by the respondent (Enforcement Directorate) on the appellants to mark their personal presence along with the documents, but both the appellants did not comply with the summons. 
• The respondent replied to these summonses by requesting four weeks time to collect and collate the documents sought. The respondent was again summoned on the same day of reply which was challenged by him under Criminal Writ Petition before the Delhi High Court. 
• The appellant argued that the respondent only has the substantive power to issue summons under Section 50 of PMLA and the procedural powers to be exercised only in accordance with the provisions of CrPC. 
• The appellant also argued that the procedure of summoning was in violation of Article 20 and Article 21 of the constitution. 
• The respondent filed a Complaint against the Appellant No.2 in the Court of Chief Metropolitan Magistrate (CMM) under Section 190 (1)(a) read with Section 200 CrPC read with Section 63(4) PMLA, alleging the commission of the offence under Section 174 of IPC for non-compliance of the Summons. 
• Appellant No.2 sought an exemption application from personal appearances by presenting virtually before the court on the date of hearing.  
• The Learned CMM passed an Order allowing the exemption application for that day only and directed Appellant No.2 to remain personally present before the Court for the further proceedings. 
• The said order was also challenged by Appellant No.2 before the Delhi High Court. 
• It was argued by the Appellant No.2 that she cannot be compelled to make the physical presence in Delhi but only in Kolkata as Delhi is beyond the territorial limits of the place of cause of action. 
• The Delhi High Court dismissed both the appeals filed by the appellants. 
• Both the appellants then preferred an appeal before the Supreme Court. 

What were the Court’s Observations? 

• The Supreme Court observed that: 
  • Provisions of Section 65 of PMLA states that PMLA shall prevail when there is any inconsistency with the provisions of CrPC and PMLA. 
  • Provisions of Section 71 states that PMLA shall have an overriding effect over all other laws. 
  • Section 4(2) and Section 5 of CrPC were also considered to check the applicability of PMLA over CrPC. 
  • Section 160 of CrPC was also taken into consideration which states that the provisions of CrPC not to be applied on all the aspects where information is to be derived relating to the matters of money laundering. 
• The Supreme Court further observed that there are inconsistencies between Section 50 of PMLA and Section 160 of CrPC as: 
  • Section 50 of PMLA is a gender-neutral provision while Section 160 of CrPC is not. 
  • Section 50 of PMLA deals with the investigation while Section 160 of CrPC deals with only inquiry. 
  • Section 50 of PMLA cannot be hit by Article 20(3) of the Constitution while the evidence collected under Section 160 of CrPC cannot be produced as a proof but only for special purpose when read with Section 162 of CrPC. 
  • The Supreme Court also considered the PMLA Rules, 2005 regarding summoning of the person. 
• The Supreme Court also noted that as per Section 50 of PMLA : 
  • Clause (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. 
  • Clause (4) every proceeding shall be a judicial proceeding. 
• The Supreme Court also noted that as per Section 63 of PMLA: 
  • Clause (4) states that a person who intentionally disobeys any direction issued under section 50 shall also be liable to proceed against under section 174 of IPC. 
  • Considering the above observations made by the Supreme Court, the Court dismissed the appeals filed by the appellants. 

What is Section 50 of PMLA? 

• Powers of authorities regarding summons, production of documents and to give evidence, etc. 
  • It details the powers of authorities in issuing summons, producing documents, and giving evidence.  
  • It equates the director's powers to those of a civil court under the Code of Civil Procedure, 1908, for matters like discovery and inspection, enforcing attendance, compelling production of documents, and issuing commissions. 
    • Section 50(2) empowers the Director and other officers to summon any person during any investigation or proceedings under the PMLA. Rule 2(p) and Rule 11 of PML Rules, 2005 further specify these powers. 
    • Section 50(3) mandates that all summoned persons must attend in person or through authorized agents, state the truth upon examination, and produce required documents. 
    • Section 50(4) deems every proceeding under Section 50(2) and Section 50(3) as a judicial proceeding as per Sections 193 and 228 of the Indian Penal Code, 1860. 
    • Section 50(5) allows any officer referred to in Section 50(2) to impound and retain any records produced before him in any proceedings under Act 15 of 2003. There are safeguards in place to prevent misuse of this power.

What is the Case Referred in the Abhishek Banerjee and Anr. V. Directorate of Enforcement Case? 

• Vijay Madanlal Choudhary v. Union of India (2022):  
  • In this case the Supreme Court held that power of arrest, attachment and search and seizure are conferred on the Enforcement Directorate. 
  • It was held that Section 160 of CrPC was also taken into consideration which states that the provisions of CrPC not to be applied on all the aspects where information is to be derived relating to the matters of money laundering.