IMPORTANT POINT
Money Laundering – After provisional attachment of property under Section 5(1) of Act, 2002, it is incumbent on Adjudicating Authority to issue notice to person whose property has been provisionally attached.

JUDGMENT

This matter is taken up through hybrid mode.

2. Petitioner in this writ petition assails the initiation proceeding under Section 8 of the Prevention of Money Laundering Act, 2002 (for brevity ‘the Act, 2002’) and consequential show cause notice dated 19th June, 2015 under Annexure-5. He further prays to keep the said proceeding in abeyance till completion of trial in VGR No.05 of 2013 pending in the Court of learned Special Judge, (Vigilance), Keonjhar.

3. Mr. Rath, learned counsel for the Petitioner submits that the initiation proceeding under Section 8 of the Act, 2002 is per se illegal as the Petitioner being an accused in the proceeding under the Act 2002 is compelled to disclose the sources of income, earning or assets, out of which or by means of which, he has acquired the property, provisionally attached. He can make such a disclosure only at the stage of recording of the statement of the accused. Trial under the Act, 2002 is continuing and it has not yet reached the stage of recording the accused statement. At this stage, if the Petitioner discloses his defence, it will be utilized against him to prove the charges, which is indirect violation of Article 20(3) of the Constitution of India. He, therefore, submits that the proceedings initiated under Section 8 of the Act, 2002 should wait till completion of the trial in VGR No.05 of 2013 (supra). It is further submitted that in the case of Vijay Madanlal Choudhary and others -v- Union of India and others, reported in 2022 SCC OnLine SC 929, Hon’ble Apex Court held the provisions of the Act, 2002 to be intra vires. But, at para-159, Hon’ble Supreme Court observed as under:

“159. In the context of the 2002 Act, it must be remembered that the summon is issued by the Authority under Section 50 in connection with the inquiry regarding proceeds of crime which may have been attached and pending adjudication before the Adjudicating Authority. In respect of such action, the designated officials have been empowered to summon any person for collection of information and evidence to be presented before the Adjudicating Authority. It is not necessarily for initiating a prosecution against the noticee as such. The power entrusted to the designated officials under this Act, though couched as investigation in real sense, is to undertake inquiry to ascertain relevant facts to facilitate initiation of or pursuing with an action regarding proceeds of crime, if the situation so warrants and for being presented before the Adjudicating Authority. It is a different matter that the information and evidence so collated during the inquiry made, may disclose commission of offence of money-laundering and the involvement of the person, who has been summoned for making disclosures pursuant to the summons issued by the Authority. At this stage, there would be no formal document indicative of likelihood of involvement of such person as an accused of offence of money-laundering. If the statement made by him reveals the offence of money-laundering or the existence of proceeds of crime, that becomes actionable under the Act itself. To put it differently, at the stage of recording of statement for the purpose of inquiring into the relevant facts in connection with the property being proceeds of crime is, in that sense, not an investigation for prosecution as such; and in any case, there would be no formal accusation against the noticee. Such summons can be issued even to witnesses in the inquiry so conducted by the authorised officials. However, after further inquiry on the basis of other material and evidence, the involvement of such person (noticee) is revealed, the authorized officials can certainly proceed against him for his acts of commission or omission. In such a situation, at the stage of issue of summons, the person cannot claim protection under Article 20(3) of the Constitution. However, if his/her statement is recorded after a formal arrest by the ED official, the consequences of Arti