2023 (8) TMI 1240 - HC - Money Laundering

Money Laundering - proceeds of crime - huge fund diversion from the Company, which is managed by the Directors, to its subsidiaries and related entities and made investments - HELD THAT - In the instant case, the statements made by the petitioners under Section 50 of PMLA indicate the possible commission of offence under Section 3 of PMLA. The charge sheet has also not been filed in the instant ase. Above all, in view of the statements made by the petitioners indicating their nexus with the first accused Company, there was a possibility that they could be involved in the management of the company, which possibility requires to be established through the proceeds of a full fledged trial. The scope of the powers of the Court to quash the complaint under Section 482 Cr.P.C. has been time and again dealt by the Hon'ble Supreme Court, in a catena of decisions, by holding that such powers requires to be exercised in the rarest of rare cases, the exceptions to which have been repeatedly pointed out. In the case of STATE OF HARYANA VERSUS BHAJAN LAL 1990 (11) TMI 386 - SUPREME COURT , some of the exceptions for quashing the complaint under Section 482 Cr.P.C. held that Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. In a recent decision of the Hon'ble Supreme Court in ANOOP BARTARIA ETC. VERSUS DY. DIRECTOR ENFORCEMENT DIRECTORATE ANR. 2023 (5) TMI 102 - SUPREME COURT , the dictum in Bhajan Lal's case was followed and by pointing out that the case involved therein, did not fall under any of the exceptions pointed out in Bhajan Lal's case and in view of the material to show prima facie involvement of the accused for the offence of money laudering, the Supreme Court had refused to quash the complaint. Thus, the material on record does make out a prima facie case to implicate the petitioners for the offence of money laundering, as contemplated under PMLA - there are no reason to entertain the prayer sought for in the present petition. Petition dismissed.

Summary

Issues Involved:
1. Quashing of proceedings under Section 482 of Cr.P.C.
2. Prima facie case under Section 3 of the Prevention of Money Laundering Act (PMLA).
3. Involvement of petitioners in the management and financial affairs of the company.
4. Applicability of the exceptions for quashing complaints as laid down in Bhajan Lal's case.

Summary:

Issue 1: Quashing of proceedings under Section 482 of Cr.P.C.
The petitioners sought to quash the proceedings on the grounds that they were not involved in the management or financial affairs of the company. The Court held that when the complaint establishes a prima facie case, it is impermissible to quash the complaint under Section 482 Cr.P.C. The Court emphasized that such powers should be exercised in the rarest of rare cases, as per the guidelines in Bhajan Lal's case.

Issue 2: Prima facie case under Section 3 of PMLA
The Enforcement Directorate registered an ECIR based on the CBI's FIR alleging offences under Sections 120-B, 406, 420, 468 & 471 of IPC. The petitioners' statements indicated their possible involvement in money laundering. The Court noted that the statements made by the petitioners under Section 50 of PMLA indicate the possible commission of an offence under Section 3 of PMLA, thus making out a prima facie case.

Issue 3: Involvement of petitioners in the management and financial affairs of the company
The petitioners argued that they were not involved in the company's management. However, their statements revealed direct or indirect nexus with the company. The Court observed that the petitioners' involvement in the management of the company requires a full-fledged trial to establish the facts.

Issue 4: Applicability of the exceptions for quashing complaints as laid down in Bhajan Lal's case
The Court referred to the exceptions for quashing complaints under Section 482 Cr.P.C., as laid down in Bhajan Lal's case. It found that the grounds raised by the petitioners do not fall under any of these exceptions. The material on record makes out a prima facie case for implicating the petitioners under PMLA.

Conclusion:
The Court dismissed the Criminal Original Petition, stating that the prima facie case against the petitioners necessitates a trial. The observations made are solely for the purpose of refusing to exercise powers under Section 482 Cr.P.C. and should not influence further proceedings.