Money-laundering can be defined as a process by which a person makes huge income out of the illicitly obtained money and he has placed it into a chain of transactions to hide its origin.
Section 3 of Prevention of Money laundering Act, 2002 defines offences of Money-laundering.
This article is small attempt to examine the power of Investigation by proper officer, issuance of summon and its scope, relevancy of statement etc. Further, whether the statement recorded before ED (Enforcement Directorate) is admissible before Court of law or not?
1. WHAT IS A SUMMON?
Section 50 of Prevention of Money-laundering Act, 2002, provides the scope for power of officers regarding their power to summon, production of documents and to give evidence.
Once the summons is issued, the person is required to attend the ongoing investigation, to give evidence and to produce records, which were in his possession, for necessary examination and verification for the purpose of investigation under PMLA.
2. THE DIRECTOR HAS THE SAME POWER AS ARE VESTED IN A CIVIL COURT
In the case of G. Radhakrishnan v Assistant Director (2014) SCC online Mad 3980, it had been seen that, under section 50(1) of PMLA, the power which are vested with a civil court under Code of Civil Procedure, 1973, while trying a suit in respect of the matters like discovery and inspection, or, enforcing the attendance of any person and production of records and receiving evidence, issuing commissions of examination of witnesses and documents and any other matter, which may be prescribed have been conferred on the authority exercising power under Section 50 of PMLA.
In addition, every proceeding under sub-section (2) and (3) of Section 50 of PMLA is deemed to be a judicial proceeding. In the case of B. Narayanaswamy v Deputy Director and Others (2019) SCC online Mad 32868, it was held that, every proceeding under sub-section(2) and (3) of Section 50 of PMLA, 2002 shall be deemed to be a judicial proceeding within the meaning of Section 193 and Section 228 of IPC, 1860.
Section 193 of IPC provides, Punishment for giving false evidence.
In addition, Section 228 of IPC says, Intentional insult or interruption to public servant sitting in a judicial proceeding.
Also, Section 50(5) of PMLA provides, on behalf of the Central Government, any officer (director, additional director, joint director and deputy director) may impound and keep any records in his custody for any period, as he thinks fit.
A deputy director shall not take any records without recording his reasons for doing so, or,
Shall not keep any such records in his custody for a period exceeding three months, without receiving the previous approval of the Joint director.
3. POWER TO INVESTIGATE DOES NOT MEAN POWER TO HARASS
Till the filing of a prosecution complaint under section 44 of PMLA, no person can be treated as an accused of the offence of money-laundering. It was held that, in case of B. Narayanaswamy v Deputy and others (supra), under section 50(2) and 50(3) of the act, the persons summoned, unless found to have been involved in the offence of money laundering, they cannot be treated as an accused at the stage of enquiry.
It was also contended that, The Investigating Officer cannot harass the person physically, mentally and verbally even at the stage of enquiry. The person cannot be treated as an accused, for the purpose of extracting a statement against his will.
4. INVESTIGATION IS ONLY DONE FOR THE PURPOSE OF COLLECTING EVIDENCE
Section 2(na) of PMLA, defines:-
“Investigation” includes all the proceedings under this act conducted by the director or by an authority authorized by the Central Government under this Act for the collection of evidence.
Hence, Investigation is only for the purpose of collecting the evidence with regard to proceeds of crime in hands of the persons suspected and their involvement under Section 3 of PMLA. It was seen in the case of, Dalmia Cement (Bharat) Limited v Assistant Director of Enforcement Directorate Writ Petition Nos. 36838 of 2014.
5. STATEMENT RECORDED BEFORE ED IS ADMISSIBLE
It was seen in the case of, Chief Enforcement Officer v D. Uttamchand Jain CRL.A.(MD).No.912 of 2003, that the statement given before the Enforcement Director is a piece of admissible evidence during the investigation, but if a statement is made before a police officer it is inadmissible evidence, as per Section 25 of the Indian Evidence Act,1872.
In, Ripen Kumar v Department of customs 2000 (55) DRJ (DB)9, it was held that, the evidence provided by a witness is relevant during the investigation, but the witness must be permitted to be cross-examined then such a statement can be termed as evidence of the witness or can be read as evidence.
6. WHAT IF THE STATEMENT IS RECORDED AFTER ARREST?
It is violative of Article 20(3) if an accused person is compelled to be a witness against himself, as the officers of ED, can easily compel individuals to give certain statement through coercion, undue influence etc. In the case of, Directorate of Enforcement v Ratul Puri (2020) SCC online Del 97, it was seen that, the statement recorded under Section 50 of PML Act, is inadmissible if it is recorded after the arrest of the accused person by compulsion. And recorded statements are to be tested during the trial.
7. WHAT IF THE STATEMENT RECORDED BEFORE ED IS RETRACTED AFTER?
In the case of, A. Tajudeen v Union of India (2015) 4 Supreme Court Cases 435, it was seen that, A. Tajudeen and his wife retracted their statement(s), and contended that the same has been recorded under threat and against their will and compulsion of the officers of the Enforcement Directorate.
The officers of ED can easily pressurize individuals to give false statements through coercion, threat and undue influence.
The Hon’ble court held that, The statement so obtained through any improper means must be rejected brevi manu.
The confession made by a person which is voluntary and free from any pressure, threat etc, can only be accepted. It was seen in the case of, Chief Enforcement Officer v D. Uttamchand Jain (supra).
8. THE BURDEN OF PROOF IS ON THE PROSECUTION TO SHOW THAT STATEMENT RECORDED IS VOLUNTARY
In the case of, Vinod Solanki v Union of India (2008) 16 SCC 537, it was held that, the burden is on the prosecution to show that the confession obtained is voluntary and is not obtained by threat etc. A person accused of commission of an offence is not expected to prove that the confession made by him was obtained by inducement, threat etc.
It had been also seen that, the detaining authority should consider the next retraction and must record its opinion before accepting the statement.
9. THERE IS NO INFRINGEMENT OF ARTICLE 20(3) WHEN A PERSON IS SUMMONED BEFORE ED
Article 20(3) of the Constitution of India provides that, ‘no person accused of any offence shall be compelled to be a witness against himself’.
It was seen in the case of, Dalmia Cement (Bharat) Ltd. V Assistant Director of Enforcement Directorate (supra), that mere registration of ECIR (Enforcement Case Information Report) would not make any person an accused of the offence of money-laundering. The only purpose of the investigation is to collect evidence. Issuing summons under Section 50(2), requiring a person to appear and make a statement is not violate of Article 20(3).
Power given to authority under PMLA is extensive, hence an investigating officer can easily misuse his powers. Person summoned before ED can easily be compelled to give a statement which is not in his favour under coercion, threat, undue influence. An Investigation is only done for the purpose of collecting evidence and one should know that and an investigating officer cannot harass a person physically or mentally just because a person summoned is responding to the summons issued. The purpose of an investigation is to collect evidence and issuing summons, it cannot be held to be violative of Article 20(3). But once the accused person gets arrested and is compelled to give certain statement then it is violative of Article 20(3).
CS NAMRATA SINGH