IMPORTANT POINT
The court established that summons under the PMLA can only be challenged on limited grounds, emphasizing the importance of allowing the competent authority to adjudicate the merits of the case.

ORDER :

(S.M. Subramaniam, J.) :

(Prayer: Writ Petition filed under Article 226 of the Constitution of India to issue a Writ of Certiorari, to call for the entire records in connection with the summon No.PMLA/SUMMON/CEO/2022/658 issued by the respondent dated 08.07.2022 and F.no.ECIR/CEZO-1/50/2022 and quash the same as illegal and unconstitutional.)

The writ petition has been instituted questioning the validity of Summon issued by the Assistant Director of Directorate of Enforcement in proceedings dated 08.07.2023.

2. The impugned Summon has been issued in exercise of the powers conferred upon the Authority under sub-Section (2) and sub-Section (3) of Section 50 of Prevention of Money Laundering Act, 2002 (hereinafter referred to as 'PMLA Act').

3. Section 50 of the PMLA Act enumerates powers of Authorities regarding Summons, production of documents and to give evidence, etc., Sub-Section (1), (2) and (3) are extracted hereunder:

“(1) The Director shall, for the purpose of section 12, 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[reporting entity] and examining him on oath; (c) compelling the production of records;

(d) receiving evidence on affidavits;

(e) issuing commission 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 Direction 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 person so summoned shall be bound to attend in person or through authorised 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. The Director shall, for the purpose of Section 12, 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. Therefore in order to ascertain the complete facts, summons are issued. Therefore, the said summon would not provide a cause for instituting a writ proceedings.

5. No writ against show cause notice/summon/enquiry notice is entertainable in a routine manner.

6. Such summons can be challenged only if issued by an incompetent Authority having no jurisdiction or tainted with the allegations of malafides. Even in case of raising an allegation of malafides, the Authority against whom such allegations are raised are to be impleaded as respondents in their personal capacity. In the absence of any one of these grounds, no writ proceedings are entertainble against summon/show cause notice/enquiry notice. Adjudication of disputed facts are impermissible in a writ proceedings, more specifically if instituted against summons. High Court cannot make any finding at the preliminary stage, which would cause prejudice to either of the parties and may result in miscarriage of justice. Therefore, it is always preferable by allowing the competent Authority to adjudicate the issues instead of going into the merits in a writ proceedings filed challenging summons/show cause notices.

7. Sub-section (4) to Section 50 stipulates “Every proceedings under Sub-Sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of Section 193 and 228 of the Indian Penal Code (45 of 1860).”

8. That being the nature of the proceedings and summons issued, the petitioner has to appear and defend his case by availing the opportunities to be provided by the competent Authority. It is for the petitioner to prove his innocence through documents and evidences. Contrarily, the writ petitioner cannot file a writ petition in order to