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TELANGANA HIGH COURT
C.V. Bhaskar Reddy, J.
M. Malla Reddy – Appellant
versus
Union of India – Respondent
Writ Petition No.3681 of 2024
Decided on 18.9.2024
Prevention of Money Laundering Act, 2002 – Sections 44(1)(d) and 50 – Constitution of India – Article 20(3) – Summons – Challenge as to – Sections 44 and 50 of PMLA Act emphasizes requirement to seek permission from Special Court only when Enforcement Directorate wishes to introduce additional evidence based on further investigation, particularly related to proceeds of crime – Law does not mandate taking of prior permission from Magistrate for carrying out further investigation, even after filing of charge-sheet – Power conferred to Enforcement Directorate to conduct further investigation/ issuing of summons to trade proceeds of crime arising out of an offence under Section 3 of PMLA Act, cannot be restricted upon filing of complaint on file of Special Court – Petitioner even after receipt of summons can always exercise his right to remain silent in the event that any questions posed to him might lead submissions of incriminating evidence or testimony against him which amounts to compulsion would attract Article 20(3) of Constitution of India – Mere issuance of summons to accused is not violative of Article 20(3) of Constitution of India – Mere fact that accused person when he made statement in question was in police custody would not by itself, be foundation or an inference of law that accused was compelled to make statement – There is no illegality or irregularity warranting interference to quash summons issued by respondents.(Paras 11, 12, 13, 16, 17 and 18)
Result: Writ Petition dismissed.
ORDER
This Writ Petition is filed assailing the action of respondent No.3 in issuing summons bearing No. PMLA/SUMMON/HYZO/ 2024/2633 in File No.ECIR/HYZO/26/22 dated 07.02.2024 to the petitioner under Section 50 (2) and (3) of Prevention of Money Laundering Act, 2002 (for short “PMLA Act”), calling upon him to attend before him, despite the case in S.C.No.16 of 2023 is pending on the file of learned Metropolitan Sessions Judge-cum- Special court under PMLA Act, 2002, at Nampally, Hyderabad, as illegal, arbitrary and violative of Article 14 and 21 of Constitution of India and in contravention with provisions of PMLA Act, and for other consequential reliefs.
2. The brief facts of the case that are necessary for disposal of the writ petition are stated under:
3. The petitioner claims to be Director of M/s. Farmax India Limited upto 23.11.2011 and thereafter he resigned from his directorship. It is stated that the petitioner herein is looking after sales and marketing division of the company. Basing on the FIR No.664/2013 dated 29.10.2013 registered on the file of Station House Officer, Dundigal Police Station, the respondent No.3 herein registered ECIR No.IHY/ZO/26/2022 on 05.05.2022. The FIR initially registered was transferred to Crime Investigation Department CID) and thereafter, it was referred to the Enforcement Directorate (ED). Initially, complaint was filed by one of the Director of the company and on the basis of said predicate offence, the respondent No.3 issued summons to the petitioners and other directors of the company. It is stated that Criminal Petition No.10076/2022 has been filed on the file of this Court seeking to quash the proceedings in ECIR/HYZO/26/22 and this Court has granted interim stay on 15.11.2022. In view of the stay granted by this Court, the proceedings against the Morthala Srinivasa Reddy/A.2 stalled. While the matter stood thus, the respondent No.3 herein proceeded to file a complaint under Sections 44 and 45 of PMLA Act for the alleged offences under Sections 3 r/w Section 4 r/w 70 (1) and (2) of the Act and said complaint was taken on record as SC No.16/2023 on the file of learned Metropolitan Sessions Judge-cum-Special Court under PMLA Act, Nampally, Hyderabad. It is also case of the petitioner, the respondents while invoking provisions of Section 37(A)(1) of Foreign Exchange Management Act, seized certain properties vide order dated 20.11.2023.
4. The grievance of the petitioner in the present writ petition is that while the matter is sub-judice on the file of Special Court under PMLA Act in SC No.16/2023, the respondent No.3 has issued summons to the petitioner vide No.PMLA/SUMMON/HYZO/2024/2633 in File No.ECIR/HYZO/26/22 dated 07.02.2024 invoking Section 50(2) and(3) of PMLA Act without seeking leave of the Court and therefore, the said action on the part of respondents amounts to violation of principles of natural justice and the provisions of the PMLA Act.
5. A counter affidavit has been filed by the respondent No.2, wherein it is stated that petitioner was one of the Executive Directors of M/s. Farmax India Limited and actively involved in all major decisions of the company. It is further stated that the petitioner being a Director has met Accused No.3-Arun Panchariya in Dubai to device the fraudulent scheme and was responsible for the decisions made by the company’s board and for passing resolutions that facilitated the scam. It is further stated that the petitioner and his brother, misused their positions, engaging directly in criminal activities. It is stated that the petitioner was arrayed as Accused No.2 in ECIR/HYZO/26/2022. It is further stated that since money laundering is a continuous activity and investigation against the petitioner is still ongoing, summons have been issued to the petitioner based on some important information that has come to the notice of the Enforcement Directorate, to verify the facts which came to light during ongoing investigation. Itis further stated
(1) Money laundering – Law does not mandate taking of prior permission from Magistrate for carrying out further investigation, even after filing of charge-sheet.(2) Mere issuance of summons to accuse....
The Enforcement Directorate can issue summons for further investigation under the PMLA Act without prior permission from the Special Court, and this does not violate the accused's rights under Articl....
(1) There is a statutory right of police to investigate cognizable crime without requiring any authority from judicial authority – Functions of judiciary and police are complementary, not overlapping....
The issuance of summons by the ED under Section 50 of the PMLA is part of the lawful investigation and does not amount to legal or factual malice unless the Applicant can establish otherwise.
Money Laundering – Issuance of summons – PMLA is a self-contained Code and dispensations envisaged thereunder, must prevail – At the stage of issue of summons, the person cannot claim protection unde....
Mere summons does not constitute a positive action entitling petitioner to question it in a writ petition – Mere charge-sheet or show-cause notice does not give rise to any cause of action.
A writ petition challenging a summons issued under the Prevention of Money-Laundering Act is premature and not maintainable, as such inquiry does not require a prior formal criminal report, and tax s....
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