A Deep Dive into the Interplay of PMLA, CrPC, and the Crucial Distinction Between 'Suspect', 'Witness', and 'Accused'
In the high-stakes arena of
financial crime investigations, particularly under the stringent Prevention of
Money Laundering Act, 2002 (PMLA), the powers of enforcement agencies are vast.
However, a recent judgment from the Delhi High Court serves as a critical
reminder that even these expansive powers are not without their legal
boundaries. The case of Sachin Dev Duggal v. Directorate of Enforcement is a
masterclass in procedural law, dissecting the fine distinctions between a
'suspect', a 'witness', and an 'accused', and clarifying the exact legal
prerequisites for a court to issue a coercive instrument like a non-bailable
warrant (NBW) at the investigation stage.
This blog post unpacks this
significant ruling, which is essential reading for legal practitioners
navigating white-collar crime defence, investigators ensuring procedural
sanctity, and the public understanding the checks and balances within India's
criminal justice system.
The Backdrop: The Videocon Web and a Global
Entrepreneur
The genesis of this legal battle
lies in the sprawling investigation into the alleged multi-thousand-crore loan
fraud and subsequent money laundering related to the Videocon Group. The
Enforcement Directorate (ED) registered an Enforcement Case Information Report
(ECIR) in 2020, tracing the alleged diversion of foreign currency loans.
During its probe, the ED
scrutinised transactions between Videocon Group entities and companies
associated with Sachin Dev Duggal, a UK citizen and entrepreneur. The ED's case
highlighted several transactions:
I.Payments from Videocon to Mr.
Duggal's Indian company, Nivio, between 2008-2011, followed by a loan agreement
signed later in May 2011—an arrangement the ED termed an
"afterthought."
II. A loan agreement where Mr.
Duggal lent money to a Videocon overseas company, Jupiter Corporation.
III. A complex transfer of nearly
USD 2 million from Videocon to Mr. Duggal's Swiss entity, nHoldings SA, in
November 2011.
The ED alleged these formed part
of the layered transactions used to siphon and launder proceeds of crime. To
"ascertain his role," the ED summoned Mr. Duggal under Section 50 of
the PMLA in January 2022.
The Procedural Tug-of-War: Summons, Emails,
and Conflicting Stands
What followed was a protracted
exchange:
I. The ED sent summons to Mr.
Duggal's Indian business address and via email.
II. Mr. Duggal, through emails,
sought adjournments (citing health), questioned the mode of service, and
eventually took a legal stance: as a UK citizen, he must be served through
official channels like the Mutual Legal Assistance Treaty (MLAT), and he
offered to appear via video conference.
III. The ED insisted on physical
appearance, alleging non-cooperation and contending he was in India during
certain periods.
Frustrated, the ED approached
courts seeking open-ended non-bailable warrants (NBWs) to compel his presence.
This is where the legal complexities deepened.
I. First Attempt in Mumbai:
The ED's application before the Special PMLA Court in Greater Bombay was rejected
in February 2023. Crucially, the court recorded the ED's submission that Mr.
Duggal was a "witness." The court held that for a non-cooperative
witness, the remedy lies in filing a complaint under Section 174 of the IPC
(non-attendance in obedience to a public servant's order), not in issuing NBWs.
II. Second Attempt in Delhi:
The ED then moved the Special PMLA Court in Delhi. This court, in February
2023, issued the NBWs, noting the seriousness of the allegations and the need
for his personal presence for investigation.
III. Cancellation Plea
Rejected: Mr. Duggal applied for cancellation of these NBWs, which was
dismissed by the Special Court in June 2023 (the impugned order).
IV. Approach to High Court:
Mr. Duggal, represented by Senior Advocate Mohit Mathur, challenged this
dismissal before the Delhi High Court under Section 482 of the CrPC, invoking
its inherent powers to prevent abuse of process.
The Core Legal Battle: Dissecting Section 73
of the CrPC
The arguments before Justice Amit
Sharma crystallised around one central provision: Section 73 of the Code of
Criminal Procedure, 1973 (CrPC).
The Petitioner's (Mr.
Duggal's) Contention:
The power to issue an NBW during
investigation flows from Section 73 CrPC. This section permits a Magistrate to
issue a warrant for the arrest of:
(a) an escaped convict,
(b) a proclaimed offender,
or
(c) "any person who is
accused of a non-bailable offence and is evading arrest."
Mr. Duggal's counsel argued:
I.He was not an
"accused." The ED's own application, MLAT requests, and submission
before the Bombay Court categorised him as a "witness" or at best a "suspect."
II. Since the precondition of
being an "accused of a non-bailable offence" was not met, Section 73
could not be invoked. The ED's remedy for his alleged non-cooperation was a
complaint under Section 174 IPC.
III. The summons were not served
as per the prescribed MLAT procedure for overseas residents.
The Respondent's (ED's)
Contention:
The ED, represented by Special
Counsel Zoheb Hossain, argued:
I. Under the sui generis (unique)
scheme of the PMLA, a person summoned under Section 50 is not formally an
accused until a prosecution complaint is filed. They exist in a twilight zone
as a "suspect" crucial to the investigation.
II. Citing Supreme Court
precedents like State through CBI v. Dawood Ibrahim Kaskar and Vijay Madanlal
Choudhary v. Union of India, they contended that courts have the power to issue
NBWs in aid of investigation to apprehend persons evading the process.
III. They argued that Mr.
Duggal's conduct showed deliberate evasion, and his knowledge of the summons
via email amounted to sufficient service.
The High Court's Landholding: A Lesson in
Legal Precision
Justice Amit Sharma's judgment is
a meticulous exercise in statutory interpretation. The court allowed Mr.
Duggal's petition, quashed the NBWs, and set aside the lower court's order. Its
reasoning provides several cardinal principles:
I. The Section 73 CrPC
Prerequisites Are "Sacrosanct and Sine Qua Non"
The court held that while the
power to issue NBWs during investigation is settled law, it is not an unbridled
power. It is strictly governed by the conditions in Section 73 CrPC. The court
reiterated that for an NBW to be issued at the investigation stage, the
investigating agency must satisfy the court that the person is "accused of
a non-bailable offence and is evading arrest."
II. "Suspect" or
"Witness" ≠ "Accused" for the Purpose of Section 73
This was the crux of the
decision. The court scrutinised the ED's own records:
a. In the MLAT request sent to UK
authorities, Mr. Duggal's status was explicitly marked as "Witness."
b. In the application for NBWs,
the ED stated, "the person summoned... is neither considered to be witness
nor as an accused... [but] only suspect."
c. Before the Bombay Court, the
ED's officer stated he was a "witness."
The court held that these
repeated characterisations were binding. The ED could not, at a later stage for
the purpose of obtaining an NBW, retrospectively treat him as an
"accused" to fit the Section 73 mould. The court cited the principle
from M.S. Gill v. Chief Election Commission that the validity of an order must
be judged by the reasons mentioned at the time, not supplemented later.
III. The Correct Remedy for
Non-Cooperation by a Witness/Suspect
The judgment clarified the legal
pathway. If a person summoned under Section 50 PMLA—who is not (yet) an
accused—fails to appear, the ED's recourse is to file a complaint under Section
174 of the IPC for disobedience of a public servant's lawful order. This is a
distinct criminal proceeding, with a defined, lesser penalty. Issuing an NBW
under Section 73 CrPC is not the appropriate tool in this scenario.
IV. Distinguishing Precedents:
Context is Key
The court distinguished the
judgments relied upon by the ED (Dawood Ibrahim Kaskar, Ottavio Quattrocchi,
Anil Kumar Madaan). It noted that in all those cases, the investigating agency
had categorically projected the individuals as "accused" from the outset
in their applications for NBWs. The legal principle from those cases (that NBWs
can be issued during investigation) was not in dispute; the dispute was about
its application to the specific facts where the person was not labelled an
accused.
V. Observations on Service and
Maintainability
While the court did not delve
deeply into the MLAT service issue, having decided the case on the Section 73
ground, it made two other notable observations:
1. On Maintainability via
Power of Attorney: The court rejected the ED's objection that the petition
filed by Mr. Duggal's attorney was not maintainable. It held that as a UK
resident facing an NBW, it was an "exceptional circumstance"
justifying the mode of filing.
2. On the Nazir Ahmad Principle:
The court invoked the classic legal maxim: "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 "way" to get an NBW is via Section 73, fulfilling its
conditions. The ED's attempt to use it without fulfilling the condition (i.e.,
without projecting him as an accused) was forbidden.
Key Takeaways for Legal Practitioners and the
Public
I. Terminology is Destiny in
Law: How an investigating agency characterises an individual in its
official communications and court filings has serious legal consequences.
Labels like "witness," "suspect," and "accused"
are not interchangeable for procedural purposes.
II. Procedure Trumps Perceived
Necessity: However serious the investigation or however strong the
suspicion, the law mandates a specific procedure for each coercive step. The
perceived necessity of an individual's presence cannot override the statutory
prerequisites for issuing an NBW.
III. The PMLA's Unique Scheme
Has Limits: While the PMLA grants wide powers, they are not above the
foundational procedural safeguards of the CrPC. The Vijay Madanlal Choudhary
judgment's description of the "non-accused" status at the summons
stage was used against the ED here to highlight that Section 73 CrPC could not
be triggered.
IV. A Clear Roadmap for
Agencies: The judgment provides clarity: to seek an NBW during a PMLA
investigation, the agency must, in its application, clearly allege and provide
material to show that the person is "accused of a non-bailable
offence" and is "evading arrest." Merely stating they are needed
for investigation is insufficient.
V. A Shield for Individuals:
For individuals interacting with agencies like the ED, the judgment reinforces
that legal rights to proper procedure exist even at the early stages. It
underscores the importance of the characterisation assigned to them by the
agency.
Conclusion: A Judgment Upholding Procedural
Sanctity
The Delhi High Court's decision
in Sachin Dev Duggal v. Directorate of Enforcement is a significant judicial
check on the exercise of coercive power. It does not comment on the merits of
the allegations against Mr. Duggal, nor does it curtail the ED's power to
investigate or, upon gathering sufficient evidence, to formally accuse and
arrest him.
Instead, it performs the
essential judicial function of ensuring that state power is exercised within
the four corners of the law. By insisting on a strict interpretation of Section
73 CrPC, the judgment maintains the delicate balance between the imperative of
effective investigation and the fundamental right to liberty and due process.
It reminds us that in a rule-of-law society, the "how" is just as
important as the "why."
Case Cited: Sachin Dev
Duggal v. Directorate of Enforcement, CRL.M.C. 4362/2023 & 6462/2025, High
Court of Delhi, Judgment dated December 19, 2025.
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