Too Much To Ask ED To Record Reasons At Every Stage, Even While Issuing Summons Under PMLA: Calcutta High Court

The Calcutta High Court recently dismissed a plea for no coercive measures and quashing of summons moved by one Pritimoy Chakraborty against the Enforcement Directorate (“ED”) under the Prevention of Money Laundering Act (“PMLA”).

In holding that the petitioner failed to show any patent illegality in the ED’s summons, or to make out a case for “the extraordinary relief of no-coercive action,” a single-bench of Justice Jay Sengupta held:

In exercise of powers under Section 50 of the PMLA Act, it was specifically directed that the petitioner should attend in person. It will be too much to ask the authorities to record reasons at every stage even while issuing summons in terms of Section 50 of the PMLA Act. Therefore, I do not find any reason as to why the petitioner could not co-operate with the proceeding. The petitioner also could not show any patent illegality in the summoning of the petitioner by the Enforcement Directorate. No case is made out either to seek the exceptional relief of ‘not to take coercive action’. In fact, such relief could be granted only in very exceptional cases. Therefore, it is necessary that the petitioner co-operates with the Enforcement Directorate and appropriately responds to the summons that was issued by the said authorities.

It was argued by counsel for the petitioner that he was not an accused in the present case but a summons had been issued in his name as he was the director of Zenit Finease Pvt Ltd, which was sold during IBC proceedings, rendering the petitioner unable to produce any documents being sought by the ED.

Petitioner submitted that he was suffering from many ailments and that in deference to V Senthil Balaji’s case, the power to arrest under the PMLA needs to be exercised cautiously by the ED. Counsel for the petitioner prayed for no-coercive action, since two other witnesses who had been summoned along with the petitioner, had subsequently been arrested.

It was argued that under Section 50(3) of the PMLA, the petitioner could appear through an authorised agent as well, since the summons only sought for production of documents.

On the other hand, the respondent-ED submitted that the summons sent to the petitioner was for in-person appearance only, and that his presence would not merely be required for production of documents, but also for tendering evidence.

Respondents cited the judgement in V. Senthil Balaji’s case to vindicate the ED’s power to arrest and argued that such a stage had not been arrived at yet, since the petitioner was yet to be examined.

Upon hearing the submissions of both parties, the Bench was of the opinion that while the petitioner may fairly contend before the ED that he was not in a position to produce the documents being sought for, that in itself would not be a reason to avoid the summons.

In making considerations for the ailing condition of the petitioner, the Court directed the ED to not question him for more than 4 hours on any occasion. It concluded:

“As it was alleged that noticees are usually made to wait for long hours at the office of the Enforcement Directorate, it is clarified that once the petitioner reaches the Enforcement Directorate, the authorities that shall take prompt steps to examine him and/or record any evidence. Considering the purported health condition of the petitioner, let the interrogation, if any, on a particular day not exceed 4 hours.”

Case: Pritimoy Chakraborty Vs. Union of India & Ors.

Coram: Justice Jay Sengupta

Citation: 2023 LiveLaw (Cal) 237

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