TMI Blog2021 (12) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Explanation to Section 44 and the second proviso to Section 5 (1) (b) of the PMLA, it is made clear in the statute that the proceedings under the PMLA not dependant to the predicate offence. Soon after registration of a schedule offence case, the authorities under the PMLA can act upon and register case under the PMLA, for money-laundering and also provisionally attach the proceeds of crime. Under first proviso to this Section in ordinary circumstances, the authorities shall wait till the filing of final report under Section 173 Cr.P.C. in the predicate offence. In extraordinary circumstances if the authority has reasons to believe that non-attachment of the suspected proceeds of crime will frustrate the proceeding under the PMLA, the authority need not wait for the schedule offence agency to file their final report, but shall proceed even prior to filing of final report by virtue of second proviso. Though the respondent has jurisdiction to issue summon, since the summon not being in the format prescribed under the statute and the deviation is prejudicial to the petitioners, the respondent is directed to issue fresh summons as per Form-V, fixing any future date for producti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation. 3.Meanwhile, the Enforcement Directorate on registration of complaint in the predicate offence disclosing prima facie case for money-laundering, had registered case in F.No.ECIR/MDSZO/16/2021 against the writ petitioners and had issued summons to them to appear and produce documents for the purpose of investigation. 4.The said summon dated 30.07.2021 is challenged in these writ petitions on the ground that, (a) The authorities of Enforcement Directorate acquire jurisdiction to commence investigation only after the conclusion / confirmation that the properties are the proceeds of crime as a result of criminal activity relating to the offences mentioned in the schedule to the PMLA. Before such declaration, authorities have no jurisdiction to summon under the PMLA. (b) The issuance of summon under Section 50 of the PMLA is for the attachment of the property involved in money-laundering. As per proviso of Section 5 of the PMLA, no provisional order of attachment shall be made unless a report has been forwarded to the Magistrate under Section 173 Cr.P.C. in relation to any schedule offence. In the instant case, F.I.R. alone is filed and no progress in the investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on formation of reason to believe that the said property is proceeds of crime. Filing of final report under Section 173 of Cr.P.C. before the Magistrate is not required while the power is exercised invoking the second proviso of Section 5(1)(b) of the PMLA. Further, after the amendment to the PMLA by insertion of Explanation to Section 44(1) of the PMLA any little ambiguity in the legislation is given quietus by removal of doubts that the offence under the PMLA during investigation, enquiry or trial will not depend upon any orders passed in respect of scheduled offence. 9.In addition, the learned counsel for the respondent also submitted that it is settled principle of law that summons cannot be quashed or stayed, except in exceptional cases and it is always open to the person summoned to appear in person or through his authorised representative and produce documents called to produce. 10.To buttress the submission, the learned counsel for the respondent (Enforcement Directorate) relied upon the following judgments. (i) M/s.VGN Developers, Rep. By its Managing Director and another vs. The Deputy Director, Directorate of Enforcement, Chennai (Crl.O.P.No. 9796 of 2019, dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial in his possession, that- (a) ..... (b) ..... Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under Section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or Court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country: Provided further that, notwithstanding anything contained in first proviso, any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act. 44.Offences triable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.'' 13.The fallacy in the petitioners' case can be put under two heads. First, the summons issued is not under Section 5 of the PMLA to provisionally attach the alleged proceeds of crime. It is a summon issued for production of documents and particulars sought in the Annexure to the summon. The writ petitioners presume the impugned summon is for provisional attachment. Through this summon, the documents and details are sought from the petitioners in connection with investigation and there is no indication in the said summon that the authorities has reason to believe that the writ petitioners are in possession of proceeds of crime and same if not attached immediately, it will likely to frustrate proceedings under the PMLA. Even otherwise by virtue of second proviso to Section 5(1)(b) of the PMLA, the respondent has the competency and jurisdiction to issue the impugned summon. 14.Unless final report in the predicate offence is filed, proceedings under the PMLA cannot be initiated is the second fallac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in these cases is the instruction in the impugned summon, that the recipient not to depart until permitted by the Assistant Director to do so. This instruction is not found in Form-V appended to Prevention of Money-Laundering (forms, search and seizure or freezing and the manner of forwarding the reasons and materials to the Adjudicating Authority, impounding and custody of records and the period of retention) Rule, 2005. 17.As pointed out by the learned counsel for the writ petitioners, while Section 50 (3) of the PMLA say all persons so summoned shall be bound to attend in person or through authorised agents and state the truth upon any subject respecting which they are examined, the additional instruction that they should not leave without the permission of the undersigned is not in tune with the form prescribed under the Rules. If at all, the respondent needs the presence of the person summoned under Section 50(2) and (3) of PMLA, they can ask to stay back or even remand if they are satisfied about the material collected indicates money-laundering, but when the format prescribed under statute does not provide for such instruction, any alteration in the format which is pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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