Power of competent authority to summon any person to give evidence or produce records not illegal #indianlaws

Section 50(2) of the PML Act, vest power in the competent authority 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 the Act.

The Petitioner in the present case registered against a Company who was summoned was give evidence and produce records relevant to investigation. Such action was sought to be declared as illegal, arbitrary and in violation of principles of natural justice and violation of Articles 14 and 21 of the Constitution of India and Section 50 of Prevention of Money Laundering Act, 2002 (PML Act).

The Petitioner was a Director of two Companies, against which several crimes were registered and in some of those, the Petitioner was also shown as accused. An Enforcement Case Information Report (ECIR) was registered and investigation was initiated and during this process of investigation, the Petitioner was summoned.

The Petitioner’s contention was that before a final report is filed as per Section 173 of the Code of Criminal Procedure, 1973 (Cr.P.C.), the Petitioner cannot be summoned for enquiry and also to produce records under the PML Act, and more so the Petitioner since has ceased to be the Director, he was also not in possession of any of the Company records and, therefore, hence the directions issued were illegal.

A distinction was laid down in regard to position of law under Sections 5(1) and 50(2) of the PML Act. Section 5(1) of the PML Act applies only when there is an order of seizure of properties. In the instant case, there was no such seizure but only summon was issued to appear during the investigation. Under Section 50(2) of the PML Act, the authority is empowered to summon any person whose attendance is considered necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under the Act. Since Petitioner was the Director of Companies in question during the relevant time and therefore, the summon was issued only to ascertain the truth in the process of investigation on alleged violations of the PML Act and thus the action was held as not illegal.

The Court held that the provisions of the Act which clearly and unambiguously enable initiation of proceedings for attachment and eventual confiscation of property in possession of a person not accused of having committed an offence under section 3 as well, does not violate the provisions of the Constitution including Articles 14, 21 and 300-A. Section 50(2) of the Act, vest power in the competent authority 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 the Act. ECIR was registered in accordance with the crimes already registered against the Petitioner and others and the investigation was in pursuant to the ECIR and thus powers of competent authority to summon the Petitioner was held to be not illegal or unjust.

[Kolakalapudi Brahma Reddy vs. Union of India]
(AP HC, 07.02.2014)