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TMI Blog2022 (12) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were diverted for the purposes other than for which the loans were sanctioned to the company. No ground to quash the impugned proceedings. Thus, the present petition has no merit and substance, which is hereby dismissed. As provided that if the petitioner surrenders before the PMLA Court and applies for regular bail, his bail application should be considered expeditiously in accordance with law. - Application U/s 482 No.764 of 2022 - - - Dated:- 14-12-2022 - Dinesh Kumar Singh , J. For the Applicant : Surendra Pratap Singh,Purnendu Chakravarty For the Opposite Party : A.S.G,Kuldeep Srivastava,Shiv P. Shukla ORDER Hon'ble Dinesh Kumar Singh, J. 1. The present petition under Section 482 Cr.P.C. has been filed seeking quashing of the entire proceedings of Session Case No. 2072 of 2021 (Directorate of Enforcement Vs. M/s Simbhaoli Sugars Limited and others), arising out of ECIR/02/PMLA/LKZO/2018 dated 27.02.2018 and Complaint Case No.946 of 2020, including the order dated 3.12.2021 taking cognizance and summoning the petitioner under Section 45 read with Section 17 of the Prevention of Money Laundering Act, 2002 (for short ''PMLA, 2002&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsion of funds by the company. The company vide its letter dated 28.05.2013 while admitting the liability and requesting for charging of normal rate of interest, had also admitted that the funds were utilized for payment of arrears of sugarcane supplied earlier to their mills and thus, had admitted the diversion of the funds for purposes other than that agreed between the company and the bank. The money received by the company has been used for purposes other than those stipulated in the Memorandum of Understanding (MOU). The bank had declared company as suspected fraud for an amount of Rs.97.85 Crores for the reason of misappropriation, cheating and criminal breach of trust and the same was reported to the Reserve Bank of India on 13.05.2015. 5. It is also said that the accounts of the borrower farmers were also declared as Non Performing Asset on 31.03.2015 in accordance with the prudential norms as the company had committed breach of terms of MOU and diverted funds for purposes other than that agreed between the company and the bank. 6. The bank had sanctioned financial facility to the company for financing individual/JLGS/SHGs/sugarcane farmers under tie up arrangement wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken the responsibility of distribution of materials like seeds, fertilizers and other necessary equipments etc. to the farmers. The company has also executed a corporate guarantee guaranteeing the repayment of the loan. As per MoU, after supply of sugar-care by farmers to the company, out of the sugarcane price to be paid by the company to the farmers, loan liability was to be adjusted by the company and the remaining amount was to be paid by the company to the farmers. 10. Original Application No.26 of 2016 for recovery of Rs.112.94 Crores was filed by the bank in Debts Recovery Tribunal, Lucknow on 16.01.2015 against the company. After filing the said application before the Tribunal, the company was making repayments in piecemeal and approached the bank for the purpose of financing a fresh corporate loan to the tune of Rs.110 Crores, so that it may clear the entire liability of all those loans of farmers, which it had diverted. Upon acknowledgment of liability by the company and converting the unsecured loans into secured loan and company's undertaking to gradually reduce the bank dues, a corporate loan of Rs.110 Crores was sanctioned by the bank on 28.01.2015 with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of money laundering under Section 3 and punishable under Section 4 of PMLA, 2002. The petitioner is one of the accursed in the said complaint. 16. It is alleged that from the recovery, seizure of various documents and enquiries with various banks, it would reveal that accounts, including Escrow Account No.05371131001453 of the company had been used for diverting the loan funds disbursed for providing assistance to the designated 5762 farmers under the tie-up arrangement with the company, towards regular cane dues payments to the farmers registered under various cane unions falling in its reserved area, repayment of various term loans, repayment of interest and loans, repayment of External Commercial Borrowings taken from Punjab National Bank and towards operational expenses of the company. The statements of various persons, including bank officials and managerial persons of the company and others were also recorded under Section 50 of PMLA, 2002. 17. In the complaint, role of the petitioner had been designated in money laundering alleging that he was the Executive Director of the company since 2000. His designation was changed to Executive Director and Chief Executive Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e wrongful loss to the bank or unjust enrichment to the company. 23. Learned counsel for the petitioner further submits that the bank had initiated insolvency proceedings before the NCLT, Allahabad in the year 2018 and the Punjab National Bank had also initiated the said proceedings in the year 2019. He further submits negotiations are going on between the company and the bank and the same are on the verge of finalization and, it is expected that the offer made by the company would be accepted by the banks for full and final settlement of the outstanding dues. It is also submitted that neither in the FIR nor in the ECIR any role has been attributed to the petitioner for fraudulently availing the loan from the bank. The petitioner did not play any role for advancement of loan to the farmers on the basis of MOU inasmuch as he was not a signatory or has not involved in any other way. 24. Learned counsel for the petitioner further submits that the petitioner was merely the Chief Executive Officer of the company and as per the provisions of the Company's Law, Chief Executive Officer is responsible for the operations of the business unit and implementation of the new projects o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court rendered in the case of P. Chitambharam Vs. Directorate of Enforcement (2019) 9 SCC 24 and the judgement of the Delhi High Court in the case of Rajiv Chanana Vs. Dy. Director, Directorate Enforcement, (2014) SCC Online Del 4889. 28. Learned counsel for the petitioner further submits that the ''proceeds of crime' under PMLA, 2002 must be read down to mean proceeds of such crimes that may generate black money or tainted money, which is outside the regular or normal financial system. Therefore, when such tainted money is knowingly introduced into the normal financial system, the crime of money laundering takes place and in cases such as the present case, where the money is already in financial system and is merely diverted for use, which was allegedly not authorized by the agreement though there is no denying that the loan availed by the company was not utilized for the purpose of which it was sanctioned, the offence of ''money laundering' within the meaning of PMLA, 2002 can not be said to have been committed, and since the amount collected in Escrow account was not the black money, there was no ''proceeds of crime'. He also submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed persons. It is not the case of the Directorate that the loan amount received in the Escrow Account was proceeds of crime, however, its further diversion and utilization for uses other than the uses for which the loan had been granted constituted the offence of money laundering. He, therefore, submits that there is no force in the present petition and the offence against the petitioner is prima facie is made out and, therefore, the petition is liable to be dismissed. 33. I have considered the submissions advanced by the learned counsel for the parties and perused the record. 34. Money laundering often involves a complex series of transactions and it generally includes placement i.e. introduction of the proceeds of crime into the financial system. The proceeds of crime is layered in several financial transactions to distance the illicit proceeds from their source and to disguise the audit trail. In this process, a series of conversions or transactions are involved for moving the funds and places such as offshore financial centers operating in a liberal regulatory regime. 35. The proceeds of crime is invested in the legitimate economy, so that the money may get the colour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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