Will Be Too Much To Ask Authorities To Record Reasons At Every Stage Even While Issuing Summons U/s. 50 Of PMLA Act: Calcutta HC

The Calcutta High Court has observed that it will be too much to ask the authorities to record reasons at every stage even while issuing summons in terms of Section 50 of the Prevention of Money Laundering (PMLA) Act, 2002.

The Court was dealing with an application under Article 226 of the Constitution of India praying for quashing of the summons and a direction that no coercive measures should be taken against the petitioner in respect of the said summon.

A Single Bench of Justice Jay Sengupta said, “… there is a clear indication that documents have been sought as regards several other companies. Item 9 indicates that another purpose for such attendance is to tender evidence. In exercise powers under Section 50 of the PMLA Act, it was specifically directed that the petitioner should attend in person. It will be too much to ask the authorities to record reasons at every stage even while issuing summons in terms of Section 50 of the PMLA Act.”

The Bench observed that if the petitioner is not in a position to produce certain documents because he is not in charge of a company anymore, this can fairly be contended before the authorities.

Senior Advocate Bikash Ranjan Bhattacharyya appeared on behalf of the petitioner while Advocate Arijit Chakrabarti appeared on behalf of the Enforcement Directorate (ED) and DSGI Billwadal Bhattacharyya appeared on behalf of the Centre.

The counsel representing the petitioner submitted that the petitioner was not an accused and only a summon was issued to him. The petitioner suffered from diverse ailments and the company in question in which he was a director was then sold to another company as per the IBC (Insolvency and Bankruptcy Code). Therefore, the petitioner was not in a position to produce the documents sought. Earlier, the petitioner was in a position and did submit a few documents in that regard.

Most of the records sought were already with the ED and some documents that were not there were disclosed in the writ petition. Section 50 (3) of the PMLA Act provides that a witness can be asked to attend in person or through an authorized agent. In this case, as per the court, there was no reason why the petitioner should be asked to come in person and that the summon was sent for any other purpose than for production of documents.

The High Court in the above regard noted, “First, the power of the Enforcement Directorate to arrest an accused cannot be in question in view of the decisions in V. Senthil Balaji’s Case (supra). However, that is not directly an issue here.”

The Court said that it appears that a notice has been given to the petitioner to appear and produce certain documents and tender evidence in terms of Section 50 of the PMLA Act.

“… I do not find any reason as to why the petitioner could not co-operate with the proceeding. … The petitioner also could not show any patent illegality in the summoning of the petitioner by the Enforcement Directorate. No case is made out either to seek the exceptional relief of ‘not to take coercive action’. In fact, such relief could be granted only in very exceptional cases. On this, reliance may be placed on Neeharika Infrastructure (P) Ltd., 2021 SCC Online 315”, held the Court.

The Court further noted that it is necessary that the petitioner co-operates with the ED and appropriately responds to the summons that was issued by the said authorities.

“As it was alleged that noticees are usually made to await for long hours at the office of the Enforcement Directorate, it is clarified that once the petitioner reaches the Enforcement Directorate, the authorities that shall take prompt steps to examine him and/or record any evidence. … Considering the purported health condition of the petitioner, let the interrogation, if any, on a particular day not exceed 4 hours”, concluded the Court.

Accordingly, the High Court dismissed the writ petition.

Cause Title- Pritimoy Chakraborty v. Union of India & Ors.

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