FEMA Summons Governed By CPC, Not CrPC; ED Can Call Women To Office For Recording Their Statement: Delhi High Court
The Delhi High Court has held that the summons issued for discovery and production of evidence under the Foreign Exchange Management Act, 1999, are governed by Code of Civil Procedure and not Code of Criminal Procedure. Justice Neena Bansal Krishna said that the powers under Section 37 of FEMA are analogous to those under Section 131 of Income Tax Act, which is governed by the Civil Code....
The Delhi High Court has held that the summons issued for discovery and production of evidence under the Foreign Exchange Management Act, 1999, are governed by Code of Civil Procedure and not Code of Criminal Procedure.
Justice Neena Bansal Krishna said that the powers under Section 37 of FEMA are analogous to those under Section 131 of Income Tax Act, which is governed by the Civil Code.
The Court clarified that summons for production of evidence and recording of statements under Section 37 of FEMA are part of a civil-administrative process, which is different from criminal investigations under the PMLA.
The judge dismissed a plea filed by a Canadian citizen, Poonam Gahhlot, seeking a direction on the Directorate of Enforcement (ED) to not insist on her personal appearance and sought permission to be represented through a lawyer. She challenged the summons on the ground that they were in contravention of the procedural safeguards enshrined under the CrPC.
She contended that the procedure under Section 37 of FEMA is akin to that provided under Section 132 of ITA and therefore, Section 160 of CrPC becomes applicable whereby a woman is exempted from appearing in a Police Station for recording the evidence.
Section 160 empowers an investigating officer to seek attendance of any person who appears to be acquainted with the facts of the case. However, the proviso prescribes that women, children under 15, and people over 65, cannot be required to attend at a place other than their residence.
Rejecting her plea, Justice Krishna said that “while seeking attendance and production of Documents under FEMA” the Code of Civil Procedure would apply, while for the “search and seizure” the Criminal Code would be applicable.
The Court said that the PMLA and FEMA have distinct statutory frameworks and nature of proceedings and that Section 50 of PMLA confers criminal investigative powers on the ED involving summons for inquiries related to money laundering, which is a scheduled offence under PMLA and involves criminal prosecution.
Whereas, the judge added, that Section 37 of FEMA is primarily concerned with civil-administrative investigations of foreign exchange contraventions governed by a regulatory framework, distinct from Criminal Law.
It further said that there is a difference in the scope of summons and procedural safeguards.
“Therefore, it is concluded that “powers regarding discovery and production of evidence” under Section 37 FEMA are analogous to those under Section 131 ITA, which is governed by Civil Code and therefore, S.160 Cr.P.C. would not be applicable, as argued by the Petitioner,” the Court said.
It concluded that the summons were issued to Gahhlot for the production of evidence and recording of statement to trace the source of funds utilized for acquiring foreign assets under Sec. 37 of FEMA read with Sec. 131 of IT Act, on which Civil Code is applicable.
“Civil Code contains no provision like S.160 Cr.P.C mandating the recording of the statement of a woman at her residence. The insistence of the Petitioner for not appearance before the Authority is therefore, without any basis,” the judge said.
Title: SMT. POONAM GAHLLOT v. DIRECTORATE OF ENFORCEMENT