Summons versus Shackles: Defining the Limits of Coercive Power in Money Laundering Probes

Introduction

Can the state’s power to investigate transform a simple summons into a threat of immediate incarceration? In the high-stakes world of financial investigations, the line between a cooperative witness and an accused criminal often seems blurred, raising a fundamental question: can a person be hunted with NBWs¹ before they are even charged with a crime?

The Delhi High Court recently provided a definitive answer in Sachin Dev Duggal Versus Directorate Of Enforcement², ruling that NBWs cannot be issued against individuals summoned merely as witnesses or suspects unless they are formally projected as accused of a non-bailable offense. The core dispute centered on whether the ED could bypass standard procedures to secure the arrest of UK-based businessman Sachin Dev Duggal for failing to appear in a money-laundering inquiry.

The legal battle pitted two sharp perspectives against each other: the ED³ asserted that warrants were essential to curb the evasion of a sensitive investigation, while the petitioner argued that as a mere witness who was never legally served, he could not be treated as a fugitive. This article will navigate the underlying legal principles and the “sacrosanct” procedural requirements of the CrPC that formed the basis of this significant judgment, ensuring that the zeal for investigation does not override the mandate of the law.

Can a Court Bridge the Gap Between “Investigation Aid” and “Loss of Liberty”?

The power of a Magistrate to issue a warrant during an investigation is often viewed by agencies as a tool of convenience to ensure cooperation. However, the Delhi High Court anchored this power strictly within the four corners of Section 73 of the CrPC. Justice Amit Sharma reminded the Enforcement Directorate (ED) that the “power to issue non-bailable warrants in aid of investigation is not a blank check”.

For an NBW to be legally sustainable under Section 73, the individual must fall into one of three narrow corridors: they must be an escaped convict, a proclaimed offender, or a person who is accused of a non-bailable offence and is evading arrest. In the case of Sachin Dev Duggal, the ED found itself in a self-created contradiction. While they sought the warrants to compel his presence, they simultaneously identified him in their own records and MLAT requests as a “witness” or, at most, a “suspect.” This semantic choice proved fatal to their plea, as Section 73 does not permit the arrest of a person merely to facilitate an inquiry if they haven’t been formally projected as an “accused.”

Does the “Sui Generis” Nature of PMLA Allow for a Bypass of the CrPC?

The ED’s argument relied heavily on the unique, or sui generis, scheme of the PMLA⁴. They contended that since the investigation is at a “crucial stage,” the court should assist the agency in securing the presence of a key player. However, this argument encountered a formidable legal hurdle in the Supreme Court’s landmark ruling in Vijay Madanlal Choudhary v. Union of India⁵.

In that case, the Apex Court held that during the stage of inquiry and summons under Section 50 of the PMLA, the person being questioned does not formally stand in the capacity of an “accused.” The High Court used this very precedent as a shield for the petitioner. If, according to the Supreme Court, a noticee under Section 50 is not yet an accused, then the third prerequisite of Section 73 CrPC (being an “accused of a non-bailable offence”) cannot be met. The Court essentially told the agency they cannot have it both ways: they cannot benefit from the flexible nature of a PMLA inquiry while simultaneously using the accused-only coercive powers of the CrPC.

When Does a “Suspect” Become a “Fugitive” in the Eyes of the Law?

The ED’s frustration was palpable; they argued that a “piquant situation” would arise if they were left powerless against a person evading an investigation simply because they hadn’t been formally charged. The High Court, however, pointed toward a different, less invasive remedy. If a person intentionally omits to attend a summons issued by a public servant, the law provides for a specific consequence under Section 174 of the IPC.

The Court noted that when a person fails to appear in response to summons under Section 50 of the PMLA, which are deemed judicial proceedings, the appropriate step is to file a complaint for non-attendance. Treating a witness like an accused fugitive by issuing NBWs skips the intermediate steps of due process. As the Court observed, the “sacrosanct” nature of Section 73 remains the sine qua non (essential condition) of the warrant-issuing power, and no amount of investigative urgency can authorize a court to expand that power beyond the legislature’s intent.

If a Power is Given to Do a Thing in a Certain Way, Can it Be Done Otherwise?

The judgment ultimately leaned on the classic legal principle established in Nazir Ahmad v. King Emperor⁶, which states that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. The ED attempted to justify the warrants by citing cases like State through CBI v. Dawood Ibrahim Kaskar⁷ and Ottavio Quattrocchi v. CBI⁸. However, the High Court distinguished these by pointing out that in those instances, the individuals were clearly “accused” of non-bailable crimes.

By applying the Nazir Ahmad principle, the Court held that the Special Court had acted beyond its jurisdiction. Even the argument regarding the “maintainability” of the petition, because it was filed via a Power of Attorney, was brushed aside. The Court recognized the practical reality that a man residing in the UK, facing an NBW, cannot realistically fly to India just to challenge the warrant’s legality. To deny him a hearing on such a technicality would be a further affront to justice. Consequently, the High Court quashed the warrants, reminding the ED that while they are free to pursue the investigation “in accordance with law,” they cannot sacrifice the procedural safeguards of the CrPC at the altar of efficiency.

Conclusion

The judgment stands as a sentinel at the gates of personal liberty, reinforcing the principle that procedural laws are not mere technicalities to be bypassed in the name of investigative efficiency. By insisting that the status of a “witness” or “suspect” cannot be surreptitiously upgraded to that of an “accused” solely for the purpose of securing a warrant, the Delhi High Court has restored the equilibrium between the state’s power to probe and the individual’s right to freedom. It serves as a stern reminder that the “sacrosanct” provisions of the CrPC are not suggestions, but mandates that ensure the transition from a summons to a cell is paved with formal accusation and judicial scrutiny.

Looking forward, this ruling creates a significant tactical shift for agencies like the Enforcement Directorate. The era of using Non-Bailable Warrants as a primary tool to “coax” the attendance of non-accused entities appears to be drawing to a close. Agencies must now weigh their options carefully. They must either formally array a person as an accused, thereby triggering a suite of constitutional protections for the individual, or rely on the less-coercive prosecution under Section 174 of the IPC for non-compliance. This clarity will likely prevent the “piquant situations” where individuals find themselves hunted as fugitives without ever having been informed of the specific charges against them, thereby bringing much-needed transparency to the early, often opaque, stages of PMLA inquiries.Yet, the judgment leaves behind a trail of provocative questions that will undoubtedly test the courts in the years to come. In an increasingly globalized world, does this strict interpretation provide a sanctuary for those residing abroad who can strategically avoid “accused” status while frustrating domestic investigations? How will the judiciary define the threshold of “projecting” someone as an accused before a formal prosecution complaint is filed? As the legal landscape continues to evolve, the tension between the mandate to recover the “proceeds of crime” and the duty to uphold the “due process of law” remains. The Sachin Dev Duggal case is not merely a conclusion to a single dispute, but a new chapter in the ongoing dialogue regarding the limits of state authority in the age of complex financial crime.

Citations

1. Non-Bailable Warrants
2. Sachin Dev Duggal Versus Directorate Of Enforcement CRL.M.C. 4362/2023
3. Enforcement Directorate
4. Prevention of Money Laundering Act,2002
5. Vijay Madanlal Choudhary v. Union of India 2022 SCC OnLine SC 929
6. Nazir Ahmad v. King Emperor 1936 SCC OnLine PC 41
7. State through CBI v. Dawood Ibrahim Kaskar (2000) 10 SCC 438
8. Ottavio Quattrocchi v. CBI1998 SCC OnLine Del 519

Expositor(s): Adv. Anuja Pandit