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2024 (9) TMI 246 - HC - Money LaunderingDismissal of petition under Section 227 of Criminal Procedure Code for discharge - allegations in the complaint under PMLA constitute the offence of money laundering as defined under Section 3 of PMLA or not - prosecution of share holders of the company in the absence of any specific evidence to hold their involvement in the commission of crime - HELD THAT - Carving out a line between the material evidences available in the complaint and the grounds taken by the accused persons, seeking discharge, are to be considered with reference to the objectives of the PMLA. The scope of Section 3 of PMLA cannot be narrowed down so as to grant exoneration from the proceedings merely on the ground that a person is not directly connected with the affairs of a company. Section 3 of PMLA unambiguously stipulates that whosoever indirectly attempts to indulge or knowingly assist or knowingly is a party, are also guilty of offence of money laundering. Mere concealment or possession or use, would be sufficient to prosecute a person under Section 3 of PMLA. The connecting material evidences would be sufficient for the purpose of allowing the trial to go on. It is not necessary that there must be a direct link between the accused and the offence of money laundering. Indirect involvement and the connecting link, if established, would be sufficient for the purpose of prosecuting the person and therefore, discharge under Section 227 of Criminal Procedure Code in respect of PMLA cases cannot be granted akin to that of the criminal cases registered under the general penal laws. Whether any material evidences are available in the complaint against the petitioner for considering the present Revision Case? - HELD THAT - In the context of material evidences available in the complaint, the Trial Court in Paragraph No.10 has observed that whether the consent of the petitioner/A-16 as a major shareholder was obtained by the Board of Directors in any special resolution passed by SIHL to borrow money from the IDBI Bank or to offer collateral security for the loan as required under Section 180(1)(c) and 180(2) of Companies Act, 2013, are to be proved in the trial. Section 70 of PMLA cannot be read in isolation in view of the spirit of Section 3 of PMLA. Section 3 of PMLA, if to be implemented effectively, then Section 70 of PMLA, as enumerated under the Act, is to be scrupulously followed. Therefore, a general principle that shareholder is not liable for prosecution under general penal law cannot have any implication with reference to a shareholder against whom a prosecution is launched under PMLA. In the present case, the petitioner admittedly was holding 86% shares of the company. Her then husband is also an accused. Therefore, it is for the affected persons to prove that the money laundering has been made without the knowledge of such person seeking exoneration and not merely on the ground that such person is a shareholder of the company. Whether the person is a Director, Shareholder or holding an Executive post in a company, but if the material evidences are available to implicate any person who is connected with the company, then it constitutes an offence under Section 3 of PMLA and under proviso clause to Section 70 of PMLA and it is for such person to establish that he/she had no knowledge about such money laundering during the course of trial. In view of the fact that the complaint contains material evidences for prosecution, the petitioner has to prove her innocence by undergoing the trial - conclusion reached is that the case on hand is not fit to grant discharge from proceedings under PMLA. There are no infirmity in respect of the findings made in the order impugned - the Criminal Revision Case stands dismissed.
Issues Involved:
1. Dismissal of the petition under Section 227 of the Criminal Procedure Code for discharge. 2. Allegation of money laundering under Section 3 of the Prevention of Money Laundering Act (PMLA). 3. Petitioner's involvement and liability as a shareholder. 4. Applicability and interpretation of Section 70 of PMLA. 5. Burden of proof under Section 24 of PMLA. Issue-wise Detailed Analysis: 1. Dismissal of the Petition under Section 227 Cr.P.C. for Discharge: The petitioner, Accused No.16, filed a petition under Section 227 Cr.P.C. for discharge, which was dismissed, leading to the present Criminal Revision Case. The petitioner argued that the allegations in the PMLA complaint do not prima facie constitute the offence of money laundering as defined under Section 3 of PMLA. Despite the trial court noting that the petitioner was not arraigned as an accused in the CBI charge-sheet for the predicate offences, the discharge petition was dismissed. 2. Allegation of Money Laundering under Section 3 of PMLA: The case involves loans sanctioned by IDBI Bank to M/s Win Wind Oy, Finland, and M/s Axcel Sunshine Limited, British Virgin Islands, which were allegedly not utilized for their intended purposes. The petitioner was implicated in the process and activity of placement, layering, and integration of the proceeds of crime. The trial court found that the petitioner, as a major shareholder, had no direct involvement in money laundering activities, yet the discharge petition was dismissed. 3. Petitioner's Involvement and Liability as a Shareholder: The petitioner contended that she was merely a shareholder and had no involvement in the administration of the company. The petitioner relied on the Supreme Court judgment in Sunil Bharti Mittal vs. CBI, which states that shareholders cannot be prosecuted in the absence of specific evidence of their involvement in the commission of a crime. The trial court, however, noted that the petitioner's status as a shareholder and the transfer of shares from her former husband, who was also an accused, were matters to be proved in trial. 4. Applicability and Interpretation of Section 70 of PMLA: Section 70 of PMLA deals with offences by companies, stating that every person responsible for the conduct of the business of the company shall be deemed to be guilty of the contravention. The petitioner argued that she did not participate in any decisions or activities of the company. The court clarified that Section 70 should be read harmoniously with Section 3 of PMLA, which includes indirect involvement in money laundering activities. The court emphasized that the burden of proof lies on the petitioner to show that the contravention took place without her knowledge. 5. Burden of Proof under Section 24 of PMLA: Section 24 of PMLA shifts the burden of proof to the accused to prove that the proceeds of crime are not involved in money laundering. The court stated that the petitioner must prove her innocence during the trial. The complaint contained material evidence for prosecution, and the petitioner must undergo trial to establish her lack of knowledge or involvement in money laundering activities. Conclusion: The court dismissed the Criminal Revision Case, concluding that the trial court's findings were not erroneous. The trial court is to proceed with the trial uninfluenced by the observations made in the present order. The petitioner's discharge from PMLA proceedings was denied, emphasizing the need for a trial to determine her innocence based on the material evidence available in the complaint.
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