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TMI Blog2021 (6) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... sions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 10 of 2018 in the Court of the Principal Judge (Special Court under the PML Act), Madurai for the offences under Section 3 read with 4 and 8(5) of the PML Act against 10 accused including Palanichamy (A4), for quashing which, PRP Granite Exports (A3), Selvi (A7), Chandraleka (A8) and Sivaranjani (A10) are before this Court. Selvi (A7) is the wife of Palanichamy (A4); Chandraleka (A8) is his daughter-in-law; and Sivaranjani (A10) is his daughter. 3. Heard Mr. A. Ramesh, learned Senior Counsel representing Mr. S. Ramesh, learned counsel on record for the petitioners and Mr. R. Sankaranarayanan, learned Additional Solicitor General assisted by Mr. Rajnish Pathiyil, learned Special Public Prosecutor appearing for the Enforcement Directorate. 4. At the outset, Mr. A. Ramesh submitted that he is withdrawing this petition in respect of PRP Granite Exports (A3) and recording the same, this Criminal Original Petition stands dismissed vis- -vis PRP Granite Exports (A3). 5. It is beyond cavil that some of the offences registered by the State police against PRP group are schedule offences under the PML Act and therefore, the jurisdiction of the Enforcement Directorate to investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olice report and for issuance of summons under Section 204 CrPC, detailed enquiry regarding the merits and demerits of the case is not required. The fact that after investigation of the case, the police has filed charge-sheet along with the materials thereon may be considered as sufficient ground for proceeding for issuance of summons under Section 204 CrPC. The above statement of law cannot be distinguished by contending that it would apply only for a police report because, all investigations culminate in the investigating agencies filing either a police report or a complaint with the materials collected by them, for the Court to take cognizance thereon. 9. In a simple private complaint case, the Magistrate may not have any materials dehors the sworn statement of the complainant to take cognizance of the offences alleged in the complaint. In such cases, it will be desirable, if the Magistrate passes an order giving reasons for taking cognizance of the offence and issuing process. In this case, along with the complaint, the Enforcement Directorate has filed 26 documents and also the statements recorded under the PML Act in support of the allegations in the complaint. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e name of M/s. PRP Exports. The trade proceeds of M/s. PRP Exports and M/s. PRP Granites derived thereafter as well as the business income/earnings gained out of the said investment, by relentlessly incubating the taint of the proceeds of crime had resulted in its accruals camouflaged in the organizational system and thus any investments made in the form of the acquisition of immovable and movable properties are involved in money laundering. 12. Mr. A. Ramesh submitted that there are insufficient materials to mulct criminal liability on Selvi (A7), Chandraleka (A8) and Sivaranjani (A10). He placed strong reliance on the judgment of the Supreme Court in Sham Sunder and Others Vs. State of Haryana [ (1989) 4 SCC 630] and laid emphasis on paragraphs 9 and 10, which are extracted hereunder: 9. But we are concerned with a criminal liability under penal provision and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owingly assisted in the business as Partner of M/s. PRP Exports, PRP Granites and M/s. PRP Granite Exports to conduct the business and in the capacity of partner did not participated in the business of the companies....... (emphasis supplied) Thus, placing reliance on the aforesaid, Mr. A. Ramesh argued that Selvi (A7), Chandraleka (A8) and Sivaranjani (A10) cannot be prosecuted with the aid of Section 70 of the PML Act. 14. Per contra, Mr. R. Sankaranarayanan refuted the aforesaid contentions and stated that the amendment to Section 70 of the PML Act by which, explanation to Section 2 has been added, changes the very structure of the provision. He also submitted that the entire paragraph 13.7 itself reveals that there are sufficient materials to hold that Selvi (A7) and Chandraleka (A8) had sufficient knowledge about the properties that were acquired by the firms and in the teeth of the presumption under Section 23 and the reverse burden under Section 24 of the PML Act, the prosecution against them cannot be quashed. 15. This Court gave its anxious consideration to the rival submissions. 16. At the outset, Section 141 of the NI Act cannot be said to be completel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not even the case here--the same conclusion would not necessarily follow having regard to the differing scopes of the two pieces of legislation. It could not therefore be said that the two Acts are in pari materia so as to attract the Rule relied on. Lastly, the Rule of construction which is certainly not one of a compelling nature, is generally adopted in the construction of consolidating enactments where provisions which have appeared in earlier repealed statutes which have received an uniform and accepted judicial interpretation are re-enacted. Obviously that is not the case here. In the circumstances, we consider it unnecessary to examine whether this solitary decision on the construction of Section 4 of the Act of 1948, was correct. We have, therefore, no hesitation in rejecting the second point urged. (emphasis supplied) Thus, the Constitution Bench 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng by virtue of Section 2(1)(p) read with Section 3 of the PMLA and is liable to be punished under Section 4 of the PMLA. 13.8. It is humbly submitted that Smt. S. Chandraleka (A8), W/o. Shri P. Senthil Kumar knowingly assisted in the business as Partner of M/s. PRP Exports, PRP Granites and M/s. PRP Granite Exports to conduct the business and in the capacity of partner did not participate in the business of the companies. Shri S. Chandraleka admitted in her statement recorded under Section 50(2) 50(3) of the PMLA admitted that she was partner of PRP Exports and PRP Granites from 2003 to 2010. The offence cases are registered against the partners of M/s. PRP Exports, PRP Granite by Madurai District Crime Branch Police Department and the same are under investigation. She (A8) was the partner of PRP Exports and PRP Granites holding PAN number and she did not file her income tax return knowing very well that her income was within the exemption limit. She can read and write in English very well and was aware that she was partner in the Granite business. Smt. Chandraleka had thorough knowledge about the movable and immovable properties acquired in the name of PRP Exports and PRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cr.P.C. that they did not know that they were indulging in money laundering. Ergo, this petition qua Selvi (A7) and Chandraleka (A8) stands dismissed. 24. Coming to the case of Sivaranjani (A10), she is the daughter of Palanichamy (A4) and Selvi (A7). She was born on 14.03.1993 and was inducted as a partner in PRP Exports on 22.10.2003. She resigned on 31.03.2010. It appears that most of the properties were purchased from the criminal activity in the name of Sivaranjani (A10), when she was a minor. 25. In the opinion of this Court, there are no sufficient materials to proceed against Sivaranjani (A10) for money laundering and hence, the proceedings in C.C. No. 10 of 2018 on the file of the II Additional District Court (CBI Court), Madurai against Sivaranjani (A10) is quashed. 26. Coming to the interesting question, that was raised across the Bar with regard to the interpretation of Explanation 2 to Section 70 of the PML Act that has been added by Act 2 of 2013, it would be useful to extract Section 70 of the PML Act: 70. Offences by companies (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 530], wherein it was held by the majority (K.G. Balakrishnan, J. as he then was) as under: 31. As the company cannot be sentenced to imprisonment, the court cannot impose that punishment, but when imprisonment and fine is the prescribed punishment the court can impose the punishment of fine which could be enforced against the company. Such a discretion is to be read into the section so far as the juristic person is concerned. Of course, the court cannot exercise the same discretion as regards a natural person. Then the court would not be passing the sentence in accordance with law. As regards company, the court can always impose a sentence of fine and the sentence of imprisonment can be ignored as it is impossible to be carried out in respect of a company. This appears to be the intention of the legislature and we find no difficulty in construing the statute in such a way. We do not think that there is a blanket immunity for any company from any prosecution for serious offences merely because the prosecution would ultimately entail a sentence of mandatory imprisonment. The corporate bodies, such as a firm or company undertake a series of activities that affect the life, liber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 70 of the PMLA/section 38 of the NDPS Act is interpreted by some prosecutors in the sense that no charges can be brought against a company without concurrently prosecuting the responsible natural person for the ML offence. 30. 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 FATF added: 157. Parallel or additional proceedings can be initiated under other relevant statutes against a legal person being prosecuted under the PMLA. First of all, the assets of the company are liable to confiscation. Section 388B of the Companies Act provides for the possibility of destitution of managerial personnel of a company for indulging in e.g. fraudulent practices and money laundering that is found to have indulged in fraud etc. and against which company prosecution proceedings under relevant statutes including PMLA are likely to be initiated upon conclusion of investigations. Section 433 of the Companies Act provides for the di ..... 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