Case Note & Summary
The petitioners, Naresh Goyal and Anita Naresh Goyal, filed two separate criminal writ petitions under Article 226 of the Constitution of India and Section 482 of the Code of Criminal Procedure, 1973 (CrPC) before the Bombay High Court. They sought quashing of summons issued by the Directorate of Enforcement (ED) under Section 50 of the Prevention of Money Laundering Act, 2002 (PMLA). The petitioners were accused in a predicate offence (a CBI case) but were not named in the Enforcement Case Information Report (ECIR) filed by the ED, nor had they been arrested under the PMLA. The ED issued summons to them under Section 50 PMLA, directing them to appear for questioning in connection with a money laundering investigation. The petitioners contended that the ED had no jurisdiction to summon them under Section 50 PMLA as they were not persons connected with the PMLA proceedings. They argued that the summons were an abuse of process and that the ED was attempting to circumvent the arrest provisions of the PMLA. The ED argued that it had the power to summon any person under Section 50 PMLA for the purpose of investigation. The court examined the scope of Section 50 PMLA and held that summons under that provision can only be issued to persons who are either named in the ECIR or have been arrested under the PMLA. Since the petitioners were neither, the summons were without jurisdiction and amounted to a roving inquiry. The court quashed the summons, holding that the ED cannot use Section 50 to summon persons merely accused in a predicate offence without initiating PMLA proceedings against them. The petitions were allowed, and the rule was made absolute.
Headnote
A) Criminal Procedure - Quashing of Summons - Abuse of Process - Section 482 CrPC, Article 226 Constitution of India - Summons issued under Section 50 PMLA to persons not named in ECIR or arrested under PMLA quashed as abuse of process - Held that ED cannot use Section 50 to summon persons merely accused in predicate offence without initiating PMLA proceedings against them (Paras 1-15) B) Prevention of Money Laundering Act - Summons under Section 50 - Scope and Limitation - Section 50 PMLA - Summons under Section 50 can only be issued to persons who are either named in the ECIR or have been arrested under the PMLA - Held that issuing summons to a person not connected with PMLA proceedings is beyond the scope of Section 50 and amounts to roving inquiry (Paras 10-15) C) Criminal Procedure - Inherent Powers - Quashing of Criminal Proceedings - Section 482 CrPC - High Court can exercise inherent powers to quash summons issued without jurisdiction or to prevent abuse of process - Held that where summons are issued without authority of law, Section 482 CrPC can be invoked to set aside such summons (Paras 12-15)
Issue of Consideration
Whether the Directorate of Enforcement can issue summons under Section 50 of the Prevention of Money Laundering Act, 2002 (PMLA) to a person who is not named in the Enforcement Case Information Report (ECIR) and has not been arrested under the PMLA, but is only an accused in the predicate offence?
Final Decision
The court allowed the petitions and quashed the summons issued by the ED under Section 50 PMLA to the petitioners. Rule made absolute.
Law Points
- Summons under Section 50 PMLA can only be issued to persons named in ECIR or arrested under PMLA
- not to persons merely accused in predicate offence
- Section 482 CrPC and Article 226 can be invoked to quash abuse of process
- PMLA does not override CrPC safeguards
- ED cannot use Section 50 to circumvent arrest provisions of PMLA
