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2022 (11) TMI 1380 - HC - Money LaunderingMoney Laundering - proceeds of crime - Validity of the Supplementary Complaint under sections 44 and 45 of the Prevention of Money Laundering Act, 2002 - vicarious liability can be fastened against the petitioner who is one of the director - HELD THAT - It is crystal clear that there is allegation against the petitioner who happens to be director of the company whose case has been considered and dismissed. Merely because he has been cleared by the Income Tax Department allegation made against the petitioner are not rendered infructuous. It is not known whether in that income tax return the proceeds of crime have been shown by the petitioner in that return or not. Moreover in the judgment relied by Mr. Rai in the case of J. Sekar Alias Sekar Reddy 2022 (5) TMI 309 - SUPREME COURT , the facts of that case are different. The C.B.I. and E.D. has closed the case and the income tax department has also closed the case and in that scenario the Hon ble Supreme Court came to the conclusion that finding of the High court is not sustainable. So far as reliance placed in Ram Kishan Rohtagi 1982 (12) TMI 218 - SUPREME COURT , the fact of that case is on different footing. That case was arising out of Food Adulteration Act and the director of the company has been made accused on presumption and in that scenario the Hon ble Supreme Court has given finding that when there is no averment of the role of director and who is looking day to day affairs of the company, the prosecution is bad. Where as in the case in hand there is averment in the complaint that the petitioner is looking after day to day affairs of the company. The petitioner is facing charge in money laundering case. How the white collor criminals affect the fibre of country economic structure, has been considered by the Hon ble Supreme Court in the several judgments. This crime has been made in well planned manner and not in the hit of moment as occurred in section 302 of I.P.C. Further the petitioner has not taken care of the order of the High Court whereby he has been provided interim protection. The Magistrate is only required to pass an order issuing summons to the accused. Such an order issuing summons to the accused is based upon subject to satisfaction of the Magistrate considering the police report and other documents and satisfying himself that there is sufficient ground for proceeding against the accused. In a case based upon the police report, at the stage of issuing the summons to the accused, the Magistrate is not required to record any reason. In case, if the chargesheet is rejected or not taken on file, then the Magistrate is required to record his reasons for rejection of the chargesheet and for not taking on file. Cognizance was taken considering the report filed by the E.D. Order of issuance of process is not illegal. Mens rea is subject matter of trial. No case of interference is made out. Accordingly, this petition is dismissed.
Issues Involved:
1. Quashing of Supplementary Complaint under sections 44 and 45 of the Prevention of Money Laundering Act, 2002. 2. Validity of the cognizance order dated 03.05.2019. 3. Allegations against the petitioner as a director of Quantum Power Tech Private Limited. 4. Impact of Income Tax clearance on the PMLA proceedings. 5. Vicarious liability of the petitioner. 6. Absconding status of the petitioner and issuance of process under section 82 Cr.P.C. 7. Validity of the cognizance order being cryptic. Issue-wise Detailed Analysis: 1. Quashing of Supplementary Complaint under sections 44 and 45 of the Prevention of Money Laundering Act, 2002: The petitioner sought to quash the Supplementary Complaint and the entire criminal proceeding under the Prevention of Money Laundering Act, 2002. The court noted that the petitioner is a director of Quantum Power Tech Private Limited, and the case against the company had already been dismissed by the court. The court found that there are direct allegations against the petitioner for enjoying proceeds of crime to the tune of Rs. 11.10 crores through the company. The court emphasized that the allegations against the petitioner are not rendered infructuous merely because he has been cleared by the Income Tax Department. 2. Validity of the cognizance order dated 03.05.2019: The petitioner argued that the cognizance order is bad and cryptic in nature. The court held that in a case instituted on a police report, the Magistrate is not required to record reasons for issuing the process. The Magistrate only needs to pass an order issuing summons to the accused based on the satisfaction derived from the police report and other documents. The court found the cognizance order to be valid and not illegal. 3. Allegations against the petitioner as a director of Quantum Power Tech Private Limited: The court noted that there are allegations against the petitioner, who is a director of Quantum Power Tech Private Limited, for knowingly concealing and transferring proceeds of crime through the company. The court referred to specific parts of the complaint that detailed the involvement of the petitioner and the company in money laundering activities. The court emphasized that the petitioner is responsible for the day-to-day business affairs of the company and has been implicated in the money laundering case. 4. Impact of Income Tax clearance on the PMLA proceedings: The petitioner argued that income tax clearance should have a bearing on the PMLA proceedings. The court referred to the judgment in "J. Sekar Alias Sekar Reddy V. Directorate of Enforcement" and noted that the facts of that case were different. The court found that merely being cleared by the Income Tax Department does not render the allegations under PMLA infructuous. The court emphasized that it is not known whether the proceeds of crime were shown in the income tax returns filed by the petitioner. 5. Vicarious liability of the petitioner: The petitioner argued that vicarious liability cannot be fastened against him as a director of the company. The court referred to the judgment in "Municipal Corporation of Delhi V. Ram Kishan Rohtagi and others" and noted that the facts of that case were different. The court found that there is an averment in the complaint that the petitioner is looking after the day-to-day affairs of the company, and thus, the petitioner can be held liable. 6. Absconding status of the petitioner and issuance of process under section 82 Cr.P.C.: The court noted that the petitioner is absconding and has not appeared before the court. The process under section 82 Cr.P.C. was issued against the petitioner, which was challenged by him but dismissed by the court. The court emphasized that the petitioner has not taken care of the order of the High Court, which provided interim protection, and has violated the order. 7. Validity of the cognizance order being cryptic: The petitioner argued that the cognizance order is cryptic. The court held that in a case based on a police report, the Magistrate is not required to record reasons for issuing the process. The court found that the cognizance order was based on the report filed by the Enforcement Directorate and was not illegal. The court emphasized that mens rea is a subject matter of trial and not required to be detailed in the cognizance order. Conclusion: The court dismissed the petition, finding no case for interference. The court upheld the validity of the Supplementary Complaint, the cognizance order, and the entire criminal proceeding under the Prevention of Money Laundering Act, 2002. The court emphasized that the allegations against the petitioner are serious and need to be addressed in the trial. The interim order was vacated.
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