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Disobeying summons under money laundering law is a criminal offence, says SC

New Delhi: Disobeying summons issued by an investigating agency under the money laundering law amounts to a criminal offence, the Supreme Court said on Thursday.

Representational image. PTI

Representational image. PTI

The apex court's order came as it set aside a Karnataka High Court order which had held that disobedience of summons for appearance did not amount to contravention of the provisions of the 1963 Foreign Exchange Regulation Act (FERA).

"In any event, the judgment of the high court cannot be sustained as it is contrary to the law laid down by this court," a bench of justices SA Bobde and L Nageswara Rao said.

The bench passed the judgement on an appeal filed by the Enforcement Directorate (ED) challenging the high court order.

The trial court had dismissed a complaint by ED and acquitted one Mohammed Akram under the FERA.

It was alleged in the complaint that Banglore-based M/s Pheroze Framrose, an authorised money changer, indulged in releasing substantial foreign exchange in contravention of the law.

The agency alleged that two employees of the firm were summoned during the enquiry and they admitted that foreign exchange worth Rs 50 crore was released on the basis of bogus documents by the money changer.

Summons were issued under Section 40 of FERA in October 1997 directing Akram and two others to appear before ED officer, but they had failed to respond.

Thereafter, a complaint was filed against them in a court in Bangalore where Akram was represented in the proceedings by an advocate. The lower court, however, acquitted him and directed the other two to face the trial.

The trial court had held that the summons issued by ED were not duly served on the respondent personally and the refusal to appear before the enforcement officer in spite of summons under the provision of FERA, cannot be regarded as a contravention of the Act.

Challenging the trial court's order, the agency moved the high court which also dismissed its appeal.

The apex court, however, said "the question of service under Section 40(3) of FERA, 1973 not being effected on the respondent is irrelevant at this point of time as he was represented by an advocate before the trial court. It appears that the respondent is not interested in these proceedings."

The apex court set aside the high court order and allowed the agency's appeal.


Updated Date: Aug 17, 2017 19:01 PM

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