DATE: 01/12/2025
COURT: High Court of Delhi
BENCH: Justice Neena Bansal Krishna
FACTS:
The petitioner, Poonam Gahllot, a
53-year-old Canadian citizen and housewife residing in New Delhi, filed a writ
petition under Article 226 of the Constitution read with Section 482 Cr.P.C.,
challenging summons issued by the Directorate of Enforcement (ED) under Section
37 of FEMA read with Section 131 of the Income Tax Act, requiring her personal
appearance at the ED office in New Delhi for recording her statement and
submitting documents related to foreign exchange proceedings. The case stemmed
from an Income Tax raid on October 10, 2018, at her son's rented premises in
Vasant Vihar, where officials allegedly ransacked the place, threatened family
members, and confined them without a female official present, departing only on
October 13, 2018. The first summons dated November 27, 2018, lacked case
details, prompting the petitioner to respond on November 30, 2018, citing
family medical issues (severe viral fever affecting her husband and son) and
requesting a two-week deferral.
A second summons was issued on November 30,
2018, ignoring her request, to which she responded on December 4, 2018, stating
she too had viral fever but submitted all required documents. She followed up
with a letter on December 6, 2018, invoking Section 160(1) Cr.P.C. to argue
that as a woman, she could not be compelled to appear at the ED office and
should be examined at her residence, citing precedents like Asmita Agrawal v.
Enforcement Directorate. A third summons dated December 12, 2018, labeled as a
"final opportunity," rejected her request by relying on Nalini
Chidambaram v. Directorate of Enforcement (Madras HC), which she contested as
inapplicable (under PMLA, not FEMA) and under challenge in the Supreme Court.
She reiterated her stance on December 13, 2018, emphasizing cooperation,
submission of documents, and the need for all relied-upon materials to be
provided to her for effective response, alleging violations of Articles 14, 20,
and 21 of the Constitution
ISSUES:
The primary issues centered on whether
Section 160(1) Cr.P.C., which exempts women from attending places other than
their residence for investigation purposes, applies to summons issued under
Section 37 FEMA read with Section 131 Income Tax Act; the nature of proceedings
under FEMA as civil or criminal and the applicability of Cr.P.C. safeguards under
Section 4(2) Cr.P.C.; whether ED could insist on personal appearance at its
office despite the petitioner's cooperation via document submission and
requests for residence examination or representation through counsel;
distinctions between FEMA and PMLA frameworks; and alleged violations of
constitutional rights under Articles 14, 20, and 21 by denying access to
relied-upon documents and fair investigation procedures.
JUDGEMENT WITH REASONING:
The Delhi High Court dismissed the writ
petition, finding no merit in the challenge to the summons under Section 37
FEMA, and held that the petitioner must comply with the requirement for
personal appearance at the ED office, as Section 160 Cr.P.C. does not apply;
pending applications were also disposed of accordingly.
The court reasoned that Section 37 FEMA,
which empowers ED officers with search, seizure, and related investigative
functions akin to those under the Income Tax Act, distinguishes between powers
for discovery, production of evidence, and attendance (governed by Section 131
ITA, equivalent to Civil Procedure Code provisions) and those for search and
seizure (under Section 132 ITA, where Cr.P.C. applies). Since the summons were
issued for recording statements and producing documents to trace foreign asset
funding sources—falling under civil inquiry powers analogous to Section 131
ITA—the Cr.P.C. safeguards, including Section 160(1)'s exemption for women,
were inapplicable. The court emphasized that FEMA proceedings are
civil-administrative in nature, focused on penalties for contraventions rather
than criminal offenses, as established in cases like K.A. Mansoor v. Assistant
Director, where summons are preliminary and do not treat the summoned as an
accused until adjudication. Reliance on precedents like Nandini Satpathy v.
P.L. Dani was deemed misplaced, as they pertained to criminal contexts, and the
petitioner's arguments under Section 4(2) Cr.P.C. failed because FEMA's
framework incorporates ITA powers without invoking Cr.P.C. for non-search
matters. The "etc." in Section 37 FEMA's title was interpreted to
include attendance powers under civil rules, supported by Bombay HC's Avinash
Bhosale v. Union of India, affirming that ED's summons authority mirrors civil
court powers under CPC, not Cr.P.C.
Furthermore, the court distinguished PMLA
cases like Abhishek Banerjee v. Directorate of Enforcement, relied upon by ED,
noting that PMLA involves criminal prosecutions under Section 50, overriding
Cr.P.C. safeguards, whereas FEMA remains regulatory without such overrides.
Judgments like P. Giribabu v. Deputy Director and V. Datchinamurthy v.
Assistant Director reinforced that at the inquiry stage under FEMA/ITA,
officers act administratively, not judicially, and no right to legal assistance
or residence examination exists absent criminal elements. The petitioner's full
cooperation via documents was acknowledged but insufficient to waive
appearance, as mandatory compliance under Section 37 FEMA ensures effective
investigation without constitutional violations, given the civil domain. Thus,
insistence on personal appearance was upheld as lawful, without basis for
quashing summons or mandating residence recording.
ANALYSIS:
This judgment is a significant authority on
the limited applicability of Cr.P.C. safeguards in civil-regulatory
investigations under the Foreign Exchange Management Act, 1999. The Delhi High
Court categorically held that summons issued under Section 37 FEMA read with
Section 131 of the Income Tax Act are governed by the civil procedure framework
(CPC) and not by Cr.P.C. provisions such as Section 160(1), which prohibits
requiring a woman to attend any place other than her residence. The court drew
a sharp distinction between (a) civil powers of discovery, production of
evidence, and enforcing attendance (Section 131 ITA / Section 37 FEMA) that
mirror a civil court’s powers under the CPC, and (b) coercive
search-and-seizure powers (Section 132 ITA) where Cr.P.C. explicitly applies.
Because the ED summons in this case were only for recording a statement and
verifying documents in a preliminary civil inquiry (and not for
search/seizure), the gender-based territorial protection under Section 160(1)
Cr.P.C. was held inapplicable. The ruling reinforces that FEMA proceedings
remain essentially civil-administrative in character, aimed at adjudication of
contraventions and imposition of penalties rather than criminal prosecution,
thereby excluding most Cr.P.C. procedural safeguards that are reserved for
criminal investigations.
The decision also marks an important
divergence from PMLA jurisprudence: while the Supreme Court in Abhishek
Banerjee (2022) upheld mandatory personal appearance under Section 50 PMLA (a
criminal provision that expressly overrides Cr.P.C.), the Delhi High Court
clarified that no such override exists under FEMA. Consequently, although
Section 160(1) Cr.P.C. does not apply, the ED’s insistence on personal
appearance is still grounded in civil powers analogous to Order XVI CPC
(summons to appear and give evidence). The judgment effectively closes the door
on blanket claims by women (or any person) to insist on examination only at
residence in FEMA/Income Tax inquiries unless the authorities themselves
exercise discretion to do so. Practically, it strengthens the ED’s and Income
Tax authorities’ ability to compel personal attendance at their offices in
non-coercive, document-verification stages of civil investigations, while
leaving open the possibility of constitutional or humanitarian challenges on a
case-to-case basis (extreme old age, serious illness, etc.) under Article 21
rather than under any statutory gender shield.
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