In a significant ruling, the Allahabad High Court (Lucknow Bench) has quashed the Enforcement Directorate’s (ED) summon against Ankur Aggarwal under the Prevention of Money Laundering Act, 2002 (PMLA), holding that a summon must reference a predicate offence for the accused to respond appropriately. The judgment, delivered by Justice Rajesh Singh Chauhan, emphasized that investigative agencies must follow due process and provide clarity to individuals summoned under the PMLA.
Background of the Case
The case arose when Ankur Aggarwal challenged the ED’s summon dated January 15, 2025, bearing No. PMLA/SUMMON/LKZO/2025/2911/5537, issued under Section 50(2) and (3) of PMLA, 2002. The summon was linked to an alleged money laundering investigation concerning Uttar Pradesh Pollution Control Board v. M/s J.M. Orchid and Others, registered under Sections 43/44 of the Water (Prevention and Control of Pollution) Act, 1974.
The applicant, through his counsels Nadeem Murtaza and Prashast Puri, argued that no predicate offence had been established against him, and the summon lacked any clear reference to a case warranting his interrogation. The defense contended that since the U.P. Pollution Control Board case had already been closed, there was no basis for further proceedings against Aggarwal under the PMLA.
On the other hand, the Enforcement Directorate, represented by Advocate Shiv P. Shukla, maintained that the summon was valid and issued as part of an ongoing investigation. However, the ED failed to provide any concrete reference to a predicate offence justifying the summon.
Key Legal Issues
Can a summon under PMLA be issued without a predicate offence?
The court emphasized that under the PMLA, 2002, a money laundering investigation can only proceed if there is a “scheduled offence” (predicate offence) from which the alleged proceeds of crime originate.
Does the lack of reference to a predicate offence render the summon invalid?
The court found that without a clear reference to a predicate offence, the accused is left without clarity on the allegations, preventing an effective response to the summon.
Does a person have an obligation to respond to an unclear summon under Section 50 of PMLA?
The ruling distinguished this case from Vilelie Khamo v. Director, Enforcement Directorate & Another (Criminal Appeal No. 5545 of 2024, decided on December 19, 2024), where the Supreme Court upheld the summons even after the discharge of the accused in the predicate offence. However, in Aggarwal’s case, there was no predicate offence at all, making the summon procedurally defective.
Observations and Ruling
In his judgment, Justice Rajesh Singh Chauhan strongly criticized the Enforcement Directorate for issuing a summon without referencing a predicate offence, observing:
“If the competent authority/Enforcement Directorate issues a summon under Section 50 of the Act seeking presence/appearance of the person concerned, at least some sort of reference/detail of the predicate offence/case must have been indicated so that the person concerned could appear before the authority concerned with complete details.”
The court reasoned that a person cannot be summoned arbitrarily under PMLA without being informed of the case’s foundation, stating that an individual must have knowledge of the allegations to prepare a defense and assist in the investigation.
Justice Chauhan further observed:
“Even if there was any case, to be more precise, a predicate offence/case, at least a reference thereof must have been indicated in the impugned summon so that the present applicant may appear before the authority concerned pursuant to the summoning order with all relevant documents.”
He also stressed the importance of procedural fairness, stating:
“The absence of a predicate offence at this stage makes the very basis of the summon questionable, and investigative agencies cannot expect individuals to respond to vague or ambiguous summonses.”
The court noted that the ED had ample opportunity to clarify the basis of the investigation, yet it failed to provide a specific link to any scheduled offence. The ruling highlights that a summon cannot be used as a tool to coerce individuals into compliance without first establishing a legal foundation.
Justice Chauhan, therefore, quashed the summon dated January 15, 2025, and directed the ED to issue a fresh summon within two weeks only if it can specify a valid predicate offence.
