ED not Mandated to Record Woman’s Statement at Residence during FEMA Summons for Discovery & Production of Evidence: Delhi HC [Read Order]

The Delhi High Court recently clarified that the Enforcement Directorate (ED) is not legally bound to record a woman’s statement at her residence during summons issued during investigations under the Foreign Exchange Management Act (FEMA), 1999, when the inquiry pertains to discovery and production of evidence.

The decision was given by the Delhi High Court against a writ filed by Poonam Gahllot, a 53-year-old Canadian citizen who challenged the ED’s repeated summons under Section 37 of FEMA, 1999, and sought exemption from personal appearance before the ED and requested that her statement be recorded at her residence.

The facts point towards a search process undertaken by the income tax department at her premises where they allegedly issued threats to the petitioner’s family members. It was further stated that the petitioner’s daughter-in-law was not allowed to leave the premises at the time and that no lady official had accompanied the income tax officers, during the apparent house arrest which lasted a few days.

The ED later issued summons against the petitioner in November and December 2018 in connection with an inquiry into foreign exchange transactions and acquisition of foreign assets.

After she failed to appear due to illness, the ED issued a third summons marked as a final opportunity for recording her statement under Section 37 of FEMA. In response, she claimed that as a woman, she could not be compelled to appear at the ED office, citing Section 160(1) of the Code of Criminal Procedure (CrPC) which exempted women from being summoned outside their residence. She relied on the Delhi High Court decision in Asmita Agrawal v. Enforcement Directorate (2002) and argued that her statement should be taken at home.

“Section 160(1) in The Code of Criminal Procedure, 1973

• Any police officer making an investigation under this Chapter may, by order in writing require the attendance before himself of any person being within the limits of his own or any adjoining station who, from the information given or otherwise, appears to be acquainted with the facts and circumstances of the case; and such person shall attend as so required

Provided that no male person [under the age of fifteen years or above the age of sixty-five years or a woman or a mentally or physically disabled person] [Substituted for the words "under the age of fifteen years or woman" by Criminal Law (Amendment) Act, 2013] shall be required to attend at any place other than the place in which such male person or woman resides.”

Subsequently, the petitioner approached the Delhi High Court through the instant case contesting her summons to the office of the ED, represented by Malak Bhatt, Neeha Nagpal and Samridhi.

The petitioner contended that the ED’s reliance on the Madras High Court decision in Nalini Chidambaram vs. Directorate of Enforcement & Ors., (2018) would not be applicable here as the same was in challenge before the Supreme Court, where notice has been issued and interim protection was granted; besides the Nalini Chidambaram was said to pertain to Prevention of Money Laundering Act (PMLA), which is completely different from the FEMA. be made to the said judgment.

The ED, represented by Senior Advocate Arun Bhardwaj and Special Counsel Anupam S. Sharma, opposed the plea, contending that FEMA is a special statute and the procedural protections of Section 160 of the CrPC are inapplicable. It was submitted that the summons were issued as part of a civil inquiry, not a criminal investigation.

The ED counsel referred to the Supreme Court decision in Abhishek Banerjee & Anr. vs. Directorate of Enforcement (2023) where it was held that summons issued under Section 50 of PMLA, directing the Petitioner to appear in the Office for recording of statement, were distinct from the procedure provided under Section 160 Cr.P.C. and thus no challenge to the summons issued under Section 50 of PMLA could stand.

Justice Neena Bansal Krishna agreed with the ED, holding that Section 37 of FEMA confers powers similar to Section 131 of the Income Tax Act, 1961, which pertains to discovery and production of evidence and is governed by the Code of Civil Procedure (CPC). Justice Bansal drew a clear distinction between civil inquiries under FEMA and criminal investigations under the Prevention of Money Laundering Act (PMLA), clarifying that CrPC safeguards such as Section 160(1) were applicable only in the latter context.

Justice Krishna observed that the powers under Section 37 FEMA are ‘analogous to those under Section 131 of the Income Tax Act,’ and therefore the ED’s summons for personal appearance were valid.

Accordingly, the Court dismissed the petition, concluding that the ED can summon a woman to its office for discovery and production of evidence under FEMA, and that the procedural protections under Section 160 CrPC are not applicable to such civil proceedings.

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