Supreme Court Affirms ED's Power to Summon Across States in Money Laundering Cases

In the case of Abhishek Banerjee & Anr V Directorate Of Enforcement, the Supreme Court of India upheld the Director of Enforcement's (ED) power to summon individuals across state lines. The Court determined that the provisions of the Prevention of Money Laundering Act, 2002 (PMLA) supersede those of the Criminal Procedure Code (CrPC) in cases related to money laundering, granting the ED broad authority in conducting inquiries and summoning individuals deemed necessary for such investigations.

Background:
The case stemmed from an FIR filed by the CBI in Kolkata against Anup Majee alias Lala, alleging illegal coal mining and theft from Eastern Coalfields Limited (ECL). The ED, during its investigation, unearthed evidence of potential money laundering amounting to Rs. 1300 Crores, leading to the issuance of summons to Abhishek Banerjee and his wife Rujira Banerjee, residents of Kolkata, to appear before the ED in New Delhi. The Appellants challenged these summons, asserting their permanent residency in Kolkata and the presence of an ED zonal office there, arguing that summoning them to New Delhi was an overreach of the ED’s jurisdiction.

Now the question of Law is;

Can the ED, under Section 50 of the PMLA, summon individuals to a location beyond their state of residence, considering the territorial jurisdiction provisions outlined in the CrPC and the presence of ED zonal offices?

The Supreme Court analyzed the interplay between the CrPC and PMLA, ultimately upholding the ED’s stance. The Court observed that while Section 65 of the PMLA allows for the application of CrPC provisions when not inconsistent with the PMLA, Section 71 asserts the overriding effect of the PMLA over any other law in case of conflict, and the Supreme court held “....Thus, having regard to the conjoint reading of Section 71 and Section 65 of the PMLA as also Section 4(2) and Section 5 of the Code, there remains no shadow of doubt that the provisions of PMLA will have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, including the provisions of the Cr.P.C.”

Furthermore, the Court clarified that the procedures for summoning under the PMLA are distinct from those under the CrPC and while refering to the Vijay Madanlal Choudhary and Others vs. Union of India and Others has held that "15. In view of the above, it is abundantly clear that the dispensation regarding Prevention of Money Laundering, Attachment of Proceeds of Crime, and Inquiry/Investigation of offence of Money Laundering including issuing summons, recording of statements, calling upon persons for production of documents etc. upto filing of the Complaint in respect of offence under Section 3 of PMLA is fully governed by the provisions of the said Act itself." While acknowledging that Section 160 of the CrPC allows for summoning individuals within specific territorial limits, the Court held that: “the process envisaged by Section 50 of the PMLA is in the nature of an inquiry against the proceeds of crime and is not “Investigation” in the strict sense of the term for initiating prosecution”

Further solidifying the ED's authority, the Court stated "The dispensation regarding Prevention of Money Laundering, Attachment of Proceeds of Crime, and Inquiry/Investigation of the offence of Money Laundering including issuing summons, recording of statements, calling upon persons for production of documents etc. upto filing of the Complaint in respect of offence under Section 3 of PMLA is fully governed by the provisions of the said Act itself." The Court also dismissed the argument regarding the ED's zonal offices and their territorial jurisdictions, emphasizing that: "The Regional Offices created in the Directorate of Enforcement are for administrative convenience and do not in any manner limit the scope of enquiry of those concerned offices or officers, if the offence of money laundering spreads over multiple States." Based on these interpretations, the Court upheld the summons issued to the Appellants, finding no procedural or jurisdictional irregularities.

Coram: Justice Bela M. Trivedi and Justice Satish Chandra Sharma.
Between: Abhishek Banerjee & Anr V Directorate Of Enforcement
Date of Judgment:09-09-2024