ED Should At Least Provide Substance Of Accusation To Summoned Person If Not A Copy Of ECIR: Allahabad High Court

This allows them to adequately prepare themselves or gather pertinent documents to respond to any inquiries during the interrogation by the ED, a bench of Justice Mohd Faiz Alam Khan noted.

“The inquiry or investigation, as the case may be, is required to be fair to all stake holders, moreso towards a person whose status before the ED is not known yet,” the Court added.

The single judge also opined that no person is entitled in law to evade the summons issued under Section 50 PMLA on the ground that there is a possibility that he may be arrested in the future.

“The law declares that every such person who is summoned is bound to state the truth. At the time of such investigative process, the person summoned is not an accused. Mere registration of ECIR does not make a person an accused. He may eventually turn out to be an accused upon being arrested or upon being prosecuted,” the Court observed.

These observations were made by the Court while dealing with a plea moved by one Saurabh Mukund seeking quashing of ECIRs registered by the ED in connection with a case registered by the Serious Fraud Investigation Office (SFIO).

Petitioner Mukund was issued a summons by the ED arising out of the same recommendation of SFIO concerning 111 Companies, in respect of which a complaint was filed by SFIO on September 2017.

It was the primary contention before the Court that the summons issued to him in the 2 ECIRs was nothing but an attempt to harass him, who was already facing prosecution by the Enforcement Directorate in an identical matter.

It was strongly contended by his counsel that when an ECIR had already been registered by the Enforcement Directorate in the same offence, another 2 ECIRs could not be registered.

It was further argued that the petitioner, to know the facts based on which subsequent ECIR had been lodged while replying to the said summons sought a copy of the ECIRs, but no copy of ECIRs had been provided to him.

On the other hand, the Counsel appearing for the ED submitted that at this stage, it is neither clear nor decided whether the applicant had been summoned as an accused or simply as a witness in the cases which are under investigation and the same depends upon the outcome of the investigation /interrogation of the petitioner and any judicial intervention at this stage is likely to create a hurdle in smooth and fair investigation.

Against the backdrop of these facts and submissions, the Court noted that the investigation in the two ECIRs is still continuing and the petitioner had only been summoned to appear and submit certain documents which may be in his possession as he had been an employee of the Companies under scanner.

Therefore, the Court noted that the petitioner's prayer for quashing of ECIRs itself was premature as at this stage even the status of the applicant before the ED is not known and the same is in the realm of the future.

The Court also added that as per Section 50 of PMLA as well as the Supreme Court's decision in the case of Vijay Madanlal Choudhary vs Union of India | 2022 LiveLaw (SC) 633, the authorities are empowered to summon 'any person' whose attendance may be crucial either to give some evidence or to produce any records during investigation or proceedings under PMLA.

“The persons so summoned are also bound to attend in person or through an authorised agent and are required to state the truth upon any subject concerning which such person is being examined or is expected to make a statement and produce documents as may be required in a case,” the Court further noted.

However, the Court further observed that despite the ED's counsel assuring to present the relevant ECIRs, they were not officially submitted for examination. Consequently, the Court was unable to scrutinize their contents. However, noting that the ED had proposed to provide the ECIRs in sealed envelopes for the bench's review, the Court noted thus:

“This Court is not inclined to promote the culture of sealed covers in judicial proceedings and this aspect of the matter, as to whether the ED in each and every case may refuse to provide the copy of ECIR to an accused person or even to a witness, may be deliberated in depth by this Court in an appropriate case.”

Consequently, noting that the instant petition had been filed on mere apprehension as the petitioner was not aware whether he was being summoned as an accused or a witness, the Court dismissed the petition.

Case title - Saurabh Mukund vs. Directorate Of Enforcement Thru. Its Joint Director Lko. 2024 LiveLaw (AB) 207

Case citation: 2024 LiveLaw (AB) 207

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