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2021 (6) TMI 631 - HC - Money LaunderingMoney Laundering - scheduled offences - will the judgments of the Supreme Court rendered under the NI Act can be simply applied to the PML Act? - scope of Section 141 of the NI Act and Section 70 of the PML Act - HELD THAT - The NI Act offences are not economic offences, unlike offences under the PML Act. A prosecution under Section 138 of the NI Act stems from a civil dispute between the drawer and the drawee of a cheque. It gets a criminal colour, only when the drawer fails to pay the drawee within the stipulated period. Whereas, offences under the PML Act are economic offences and can by no stretch of imagination be equated to a prosecution between a drawer and a drawee under the NI Act. It is well settled that statutes not dealing with the same subject matter cannot be said to be in pari materia. Constitution Bench of the Supreme Court in STATE OF PUNJAB VERSUS OKARA GRAIN BUYERS SYNDICATE LTD. AND OTHERS 1963 (11) TMI 74 - SUPREME COURT has held in no uncertain terms that, even if the language of two provisions of different statutes are identical, it does not follow that they are in pari materia if the scope of the two legislations are different - Section 141 of the NI Act confines itself to a prosecution under Section 138 of the NI Act. It is not a general provision like Sections 34, 107 and 120-A IPC to be applied to all offences. Comparing a prosecution under Section 138 of the NI Act to a prosecution under the PML Act would clearly amount to comparing chalk with cheese. Therefore, there are no hesitation in holding that the rulings under Section 141 of the NI Act would not be of any avail to the petitioners herein. In the opinion of the FATF, Section 70 of the PML Act had been construed, or rather misconstrued, in some quarters to mean that a prosecution for an offence of money laundering against a company was not maintainable without concurrently prosecuting natural persons for offences under the Act - the recommendation of the FATF was incorporated into the PML (Amendment) Bill, 2011. The Bill was, thereafter, referred to a Standing Committee of the Ministry of Finance. The Committee submitted its 56th Report on the PML Amendment Act, 2011 - Explanation 2 to Section 70 was accordingly, inserted vide the PML (Amendment) Act, 2012 (Act 2 of 2013). The prosecution of juristic persons is not contingent upon the prosecution of natural persons for offences under the PML Act - Petition dismissed.
Issues Involved:
1. Jurisdiction of the Enforcement Directorate under the PML Act. 2. Validity of the cognizance order by the Special Court. 3. Criminal liability of the partners under the PML Act. 4. Application of Section 70 of the PML Act. 5. Interpretation of Explanation 2 to Section 70 of the PML Act. Detailed Analysis: 1. Jurisdiction of the Enforcement Directorate under the PML Act: The court observed that some of the offenses registered by the State police against the PRP group are scheduled offenses under the PML Act. Therefore, the jurisdiction of the Enforcement Directorate to investigate under the PML Act was rightly not questioned across the Bar. 2. Validity of the Cognizance Order by the Special Court: The petitioners contended that the order dated 14.12.2018, passed by the Special Court, did not disclose the application of mind. The court noted that while an order of taking cognizance should reflect the application of mind, it is not a thumb rule that a cryptic order should be quashed. The court cited the Supreme Court's ruling in State of Gujarat Vs. Afroz Mohammed Hasanfatta, emphasizing that detailed inquiry regarding the merits is not required at the stage of taking cognizance. The court concluded that the cognizance order in this case does not deserve to be quashed. 3. Criminal Liability of the Partners under the PML Act: The petitioners argued that there were insufficient materials to impose criminal liability on Selvi (A7), Chandraleka (A8), and Sivaranjani (A10). The court examined the allegations and found that Selvi (A7) and Chandraleka (A8) had sufficient knowledge about the properties acquired by the firms and were involved in money laundering activities. Therefore, the petition against Selvi (A7) and Chandraleka (A8) was dismissed. However, the court found no sufficient materials to proceed against Sivaranjani (A10) and quashed the proceedings against her. 4. Application of Section 70 of the PML Act: The court discussed the similarity between Section 70 of the PML Act and Section 141 of the Negotiable Instruments Act (NI Act). The court noted that while there is some similarity, the two provisions are not completely in pari materia. The court emphasized that offenses under the PML Act are economic offenses and cannot be equated to a prosecution under the NI Act. Therefore, the rulings under Section 141 of the NI Act would not be applicable to the PML Act. 5. Interpretation of Explanation 2 to Section 70 of the PML Act: The court examined the legislative history and the recommendations of the Financial Action Task Force (FATF) that led to the insertion of Explanation 2 to Section 70 of the PML Act. The court concluded that the explanation clarifies that the prosecution of a legal juridical person (juristic person) for an offense under the PML Act is not contingent upon the prosecution of natural persons. Conclusion: - The petition was dismissed as withdrawn concerning PRP Granite Exports (A3). - The petition was dismissed concerning Selvi (A7) and Chandraleka (A8). - The petition was allowed concerning Sivaranjani (A10). - Connected Crl.M. Ps were closed.
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