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Who Can Be Summoned under Section 50 PMLA? Karnataka High Court Clarifies the Reach and Limits of ED’s Power

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Who Can Be Summoned under Section 50 PMLA? Karnataka High Court Clarifies the Reach and Limits of ED’s Power

The Karnataka High Court has held that the Enforcement Directorate may summon a person under Section 50(2) of the Prevention of Money-Laundering Act, 2002 even when the offences specifically alleged against that person in the predicate case are not scheduled offences. The decisive questions at the summons stage are whether a PMLA investigation or proceeding based on a subsisting scheduled offence exists and whether the authorised officer considers the person’s attendance necessary to give evidence or produce records.

In R.M. Manjunath Gowda v. Directorate of Enforcement, W.A. No. 497 of 2024, decided on 22 March 2025, a Division Bench comprising Justices V. Kameswar Rao and S. Rachaiah dismissed the appeal against the rejection of a writ petition challenging an ED summons. The ruling is important, but it must be read narrowly: it concerns the legality of requiring attendance. It does not decide that the summoned person committed money laundering, and it does not dispense with the separate statutory safeguards applicable to arrest, attachment or prosecution.

Background

The appellant had served as chairman of a district central cooperative bank. The judgment records that Crime No. 325 of 2014 concerned allegations arising from lending transactions and that the original charge-sheet included offences under Sections 409, 120B and 201 read with Section 37 IPC. The appellant was not initially arraigned, but a further report following investigation under Section 173(8) CrPC later alleged offences under Sections 409 and 202 read with Section 36 IPC against him.

The appellant argued that the later offences attributed to him were not scheduled offences under the PMLA and therefore could not sustain action against him. He challenged a summons dated 6 October 2023 issued in ECIR/BGO/05/2021 and sought consequential relief against the PMLA proceedings.

These events arose under the earlier criminal codes. Section 173(8) CrPC, dealing with further investigation after a report, now has its substantial counterpart in Section 193(9) of the Bharatiya Nagarik Suraksha Sanhita, 2023. That procedural transition does not convert an old FIR or charge-sheet into a BNS case; historical references to the IPC and CrPC remain legally accurate.

The legal question

The central issue was whether ED’s Section 50 power is restricted to persons who are themselves accused of a scheduled offence. Section 50(2) authorises specified officers to summon any person whose attendance they consider necessary to give evidence or produce records during an investigation or proceeding under the PMLA. Under Section 50(3), the recipient must attend personally or through an authorised agent as directed, state the truth on the subjects of examination and produce the documents required.

The statutory words “any person” are materially wider than “an accused”. They permit an inquiry to obtain information from a witness, record-holder, office-bearer, intermediary or a person whose role is still being examined. This power nevertheless operates within a PMLA investigation or proceeding; Section 50 is not a free-standing licence for an inquiry unrelated to proceeds of crime arising from scheduled criminal activity.

What the Division Bench held

At paragraphs 36 to 39, the High Court read Section 50 with Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1. It concluded that the appellant’s individual status in the predicate prosecution did not prevent ED from requiring his evidence or records while scheduled-offence proceedings against other accused remained pending.

The Court placed particular weight on three features. First, Section 50(2) expressly uses “any person”. Second, the summons did not accuse the appellant of money laundering; it required appearance before the authority. Third, the scheduled-offence case had not ceased to exist merely because the later charges specifically attributed to the appellant were argued to be outside the Schedule.

The Court therefore upheld the single judge’s conclusion that attendance could be required to obtain evidence or records concerning scheduled offences allegedly committed by others. At paragraph 46, it further held that a bare summons, issued by an officer whose jurisdiction was not disputed and containing no adverse determination, did not give the appellant a presently actionable grievance. The appeal was dismissed at paragraph 48.

The scheduled offence remains indispensable

The expression “any person” cannot be separated from the PMLA’s jurisdictional foundation. Section 2(1)(u) defines proceeds of crime by reference to property derived or obtained from criminal activity relating to a scheduled offence. Section 3 then addresses involvement in a process or activity connected with those proceeds.

Vijay Madanlal states at paragraph 253 that the authorities cannot proceed on a mere assumption that a scheduled offence has been committed: the scheduled criminal activity must be registered with the competent forum or be the subject of a pending complaint, inquiry or trial in the legally recognised manner. Paragraph 467(d) further explains that if the person is finally discharged or acquitted of the scheduled offence, or the scheduled case is quashed in its entirety, a prosecution for money laundering based only on that extinguished criminal activity cannot continue.

Manjunath Gowda did not dilute that dependency. It found that relevant scheduled-offence proceedings remained pending. The ruling separates the jurisdictional foundation of the investigation from the personal status of a particular recipient of a summons. A valid scheduled-offence foundation may support evidence-gathering from persons who are not accused in that case; it does not make each recipient guilty of either offence.

Why a summons is not an accusation

In Vijay Madanlal, paragraphs 425 and 431 distinguish evidence-gathering under Section 50 from a formal accusation. An authorised officer may summon a person to collect information relevant to proceeds of crime and to place evidence before the adjudicating or prosecuting machinery. Information obtained may later reveal involvement, but that possible consequence does not retrospectively turn every summons into a charge.

The Karnataka High Court also relied on Kirit Shrimankar v. Union of India, where the Supreme Court treated a challenge at the summons stage as premature and left the person free to seek appropriate relief if positive adverse action were later taken. State of Gujarat v. Choodamani Parmeshwaran Iyer, 2023 INSC 825, similarly held that recipients were expected to honour investigative summons rather than seek anticipatory bail before any apprehension of arrest was demonstrated.

This distinction has practical importance. A summons does not by itself authorise detention, attachment or prosecution. Arrest under Section 19 requires the authorised officer to possess material, form and record reasons to believe that the person is guilty of money laundering, inform the person of the grounds of arrest and comply with production requirements. Attachment under Section 5 and search under Section 17 have their own conditions. Each coercive power must independently satisfy its statutory threshold.

Obligations and safeguards for a recipient

A recipient should first confirm the issuing officer, date, place, mode of attendance and categories of records demanded. Relevant documents should be preserved, indexed and produced with an accurate covering record. If personal attendance is impossible for a genuine reason, a written request for a short accommodation should be made promptly with supporting material; silence or informal non-compliance creates avoidable risk.

The duty to state the truth is not a duty to speculate, adopt an investigator’s premise or confess. A person should answer from personal knowledge, identify when records are needed for an accurate response and avoid reconstructing facts from guesswork. Section 50 proceedings are deemed judicial proceedings for the limited purposes identified by the Act, so deliberate falsehood and destruction or concealment of records carry serious consequences.

Article 20(3) protects an accused from compelled self-incrimination, but its application depends on the existence and timing of a formal accusation and the nature of the compelled material. Vijay Madanlal held that a person summoned at the evidence-gathering stage cannot invoke Article 20(3) merely because the inquiry might later lead to prosecution. The judgment also recognised that the position may change after formal arrest and that evidentiary objections remain available in the appropriate proceeding.

Judicial review is narrow, not extinguished

Manjunath Gowda should not be read as making every summons immune from review. Paragraph 46 itself notes the absence of a jurisdictional challenge to the issuing officer. A materially different case may arise where the officer lacks authority, no scheduled-offence foundation exists, the demand is impossible or manifestly unrelated, the summons is used for a legally prohibited purpose, or fundamental procedural protections are breached.

Courts ordinarily avoid interrupting an investigation merely because attendance is inconvenient or because the recipient fears future implication. A successful challenge requires a present legal defect, not conjecture about what investigators may later do. Any later arrest, attachment, prosecution or use of a statement remains separately reviewable on its own statutory and constitutional grounds.

Practical effect of the ruling

For individuals and businesses, the ruling means that the absence of their name from the scheduled-offence FIR, or the attribution to them of only non-scheduled offences, is not a complete answer to a Section 50 summons. The immediate response should focus on lawful compliance, document control, privilege review, accuracy and preservation of objections.

For ED, the breadth of “any person” carries a corresponding obligation of disciplined relevance. The agency should be able to connect the requested attendance or records to a live PMLA investigation founded on scheduled criminal activity. Section 50 should not be used as a substitute for satisfying the more demanding conditions attached to coercive powers.

For courts, the decision reinforces stage-specific review. A summons gathers evidence; it does not establish liability. Premature interference may obstruct an investigation, while later positive action must still be tested against the precise power invoked and the safeguards governing it.

Conclusion

R.M. Manjunath Gowda confirms that Section 50 PMLA is an evidence-gathering provision of broad personal reach. Where a scheduled-offence investigation subsists, ED may call a person whose evidence or records are considered necessary even if that person is not accused of a scheduled offence.

The limit is equally important. The ruling validates a summons, not guilt. The PMLA proceeding must remain anchored to scheduled criminal activity and identifiable proceeds of crime, and any arrest, attachment or prosecution must independently meet the statutory conditions applicable to that action.

This article provides general legal information and does not constitute legal advice.

Sources

Karnataka High Court, R.M. Manjunath Gowda v. Directorate of Enforcement, W.A. No. 497 of 2024, judgment dated 22 March 2025, especially paragraphs 36–48. Judgment available through the Karnataka High Court judgments portal: https://judiciary.karnataka.gov.in/

Supreme Court of India, Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1, judgment dated 27 July 2022, especially paragraphs 253, 425, 431 and 467: https://api.sci.gov.in/supremecourt/2018/20982/20982_2018_1_1501_37292_Judgement_27-Jul-2022.pdf

Supreme Court of India, State of Gujarat v. Choodamani Parmeshwaran Iyer, 2023 INSC 825, judgment dated 6 September 2023: https://api.sci.gov.in/supremecourt/2023/24321/24321_2023_5_1501_46746_Judgement_06-Sep-2023.pdf

India Code, Prevention of Money-Laundering Act, 2002, Sections 2(1)(u), 3, 19 and 50: https://www.indiacode.nic.in/handle/123456789/15402

India Code, Bharatiya Nagarik Suraksha Sanhita, 2023, Section 193(9): https://www.indiacode.nic.in/handle/123456789/20099

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