S.160 CrPC Not Applicable To Production Of Evidence Under FEMA: Delhi High Court Dismisses Woman’s Petition Insisting On No Personal Appearance Before ED

The High Court was considering a Writ Petition filed under Article 226 of the Constitution read with Section 482 of the Code of Criminal Procedure (Cr.P.C.) on behalf of the Petitioner/Poonam Gahllot for directing the Respondent Directorate of Enforcement (ED) to not insist on personal appearance of the Petitioner in the Office of Enforcement Directorate at New Delhi, in compliance of the Summons under section 37 of The Foreign Exchange Management Act, 1999 (FEMA) read with Section 131 of the Income Tax Act, 1961 (ITA).

The Single Bench of Justice Neena Bansal Krishna held, “Therefore, it is concluded that “powers regarding discovery and production of evidence” under Section 37 FEMA are analogous to those under Section 131 ITA, which is governed by Civil Code and therefore, S.160 Cr.P.C. would not be applicable, as argued by the Petitioner”

Advocate Malak Bhatt represented the Petitioner while Senior Advocate Arun Bhardwaj represented the Respondent.

Factual Background

The Petitioner, who is a Canadian Citizen, aged 53 years, is a house-wife and resides with her husband. Various persons claiming to be from the Income Tax Department, visited her property and the officials virtually ransacked the premises. It was alleged that they started giving grave threats to overawe and browbeat the Petitioner’s elder son, his wife and Petitioner’s younger son. Petitioner’s daughter-in-law, who was at home, was also not allowed to leave the premises. It was claimed that no lady official was accompanying the said Income Tax Officials on that day.

The Respondent issued a summons directing the Petitioner’s personal presence in the Office of the Respondent and to submit the documents which were in connection with proceedings under FEMA. In response to the First Summons, the Petitioner sent a Reply informing that she was facing a medical condition in her family. A second Summons was issued. The Petitioner, on the date of appearance, submitted a Reply/Letter on the same day, informing that she herself was suffering from viral fever. She submitted all the documents that were sought by the Respondent.

A third Summons with the endorsement “final opportunity to tender statement under Section 37 of FEMA, 1999-reg” was issued, again compelling the Petitioner to attend the Office personally for recording of her statement. The summons issued by the Respondent, thus came to be challenged on the ground that no personal appearance of the Petitioner, who is a woman, could be insisted in the Office of the Respondent. Reference was made to Section 160(1) Cr.P.C., which states that no woman, whose presence is required as a witness, shall be required to attend any place for such purpose other than the place in which such woman resides.

Reasoning

The Bench explained that for the investigation of contraventions related to foreign exchange under Section 37 FEMA, Officers, being Director or Assistant Director of ED, had been conferred with the power to issue summons under Section 37 FEMA for the purpose of inquiry/investigation, which is the same as under the Income tax Act.

The Bench asserted, “The present procedure under FEMA is of imposition of a penalty, for contravention of the provisions of the Act. Any contravention of FEMA, is to be determined by an Adjudicating Authority. Further Appeal lies to Special Director and thereafter, to Appellate Tribunal for foreign exchange. Section 15 of FEMA further provides for compounding of the contraventions. The entire face of the Act has been completely overhauled and the concept of offence has been removed and replaced only by penalty with a two tire Appellate Tribunal. It is, therefore, unthinkable to question the summons issued by the ED under Section 37 of FEMA.”

The Bench made it clear that Section 50 PMLA confers criminal investigative powers on the ED involving summons for inquiries related to money laundering, which is a scheduled offence under PMLA and involves criminal prosecution. In contrast, section 37 FEMA is primarily concerned with civil-administrative investigations of foreign exchange contraventions governed by a regulatory framework distinct from Criminal Law. Reference was also made to the judgment of the Apex Court in Abhishek Banerjee & Anr. vs. Directorate of Enforcement, wherein it has been held that Section 50 PMLA overrides certain Cr.P.C. safeguards such as territorial and gender safeguards under Sections 160-161 Cr.P.C. On the other hand, section 37 FEMA remains within the civil inquiry domain.

The Bench thus held that the Summons was issued for the production of evidence and recording of a statement to trace the source of funds utilised for acquiring foreign assets, under S.37 FEMA read with S.131 IT Act and thus the Civil Code was applicable. “Civil Code contains no provision like S.160 Cr.P.C mandating the recording of the statement of a woman at her residence. The insistence of the Petitioner for not appearing before the Authority is therefore, without any basis”, it noted.

Thus, finding no merit in the Petition, the Bench dismissed the same.

Cause Title: Smt. Poonam Gahllot v. Directorate of Enforcement (Neutral Citation: 2025:DHC:10698)

Appearance

Petitioner: Advocates Malak Bhatt, Neeha Nagpal, Samridhi

Respondent: Senior Advocate Arun Bhardwaj, Special Counsel Anupam S. Sharrma, Advocates Harpreet Kalsi, Vashisht Rao, Ripudaman Sharma

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