By TIOL News Service

HYDERABAD, APRIL 28, 2016: THE first petitioner is a company registered under the Companies Act and the second petitioner is its Managing Director. Consequent to a case booked by CBI, the Enforcement Directorate also booked an offence case under Section 3 of the PMLA and issued an ECIR. The Petitioner was issued summons under Section 50 of the PMLA and the same is challenged in Writ Petition.

Ld Counsel, Sri P Chidambaram contended inter alia on behalf of the Petitioners that the second petitioner is in a situation where if he gives a statement and produces documents that will amount to incriminating himself and causing serious prejudice to him in the CBI case as well as in ECIR. Compelling attendance of second petitioner by virtue of the impugned summons is violative of Article 20(3) of the Constitution of India as well as provisions of Section 91 of Cr.P.C. Referring to 180 the report of the Law Commissioner, it was argued that the Commission, ultimately, was of the opinion that no change in the law relating to right to silence of accused is necessary and if made, they will be ultravries Article 20(3) and Article 21 of the Constitution of India.

After hearing both sides, the High Court held:

+ Undoubtedly, the protection under Cr.P.C as well as under Article 20(3) of the Constitution of India against testimonial compulsion is now well settled by several decisions of the Supreme Court, and the law declared thereunder, undoubtedly, would assist the petitioners, if it is shown that petitioners are accused under PMLA.

+ The ECIR is not filed before any jurisdictional Magistrate and is only an information report with the Directorate of Enforcement. The stage of filing of complaint for prosecution under PMLA is envisaged under Section 44(1)(b) of PMLA. Admittedly, that stage has not yet reached. Thus, though the charge sheet filed by the CBI is to the extent of predicate offences, so far as offence under Section 3 of PMLA is concerned, the matter is clearly at the investigation stage.

+ At this stage, investigation is only for the purpose of collecting evidence with regard to proceeds of crime in the hands of the persons suspected and their involvement, if any, in the offence under Section 3 of PMLA. It is not correct to equate ECIR registered by the first respondent to an FIR under Section 154 Cr.P.C and consequently, the contention of the respondent that under PMLA the petitioners are not accused at present is acceptable. Consequently, therefore, the submission on behalf of the petitioners on the assumption that petitioners are accused under PMLA is liable to be rejected.

+ From the precedent decisions, it would be clear that when an ECIR is lodged with the Directorate of Enforcement there is no Magisterial intervention unlike an FIR and mere registration of ECIR against the suspects of offence under Section 3 of PMLA cannot go to mean that such persons are accused under Section 3 of PMLA. Consequently, therefore, the protection against testimonial compulsion as under Cr.P.C as well as under Article 20(3) of the Constitution of India, would not be available, as claimed by the petitioners.

Accordingly, the High Court dismissed the Writ Petitions.

(See 2016-TIOL-839-HC-AP-PMLA)