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TMI Blog2024 (9) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... ering. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (WWO) was sanctioned loan by M/s IDBI Bank, DIFC Branch, Dubai, for financial assistance of EURO 52 Million - (INR equivalent to 322.40 crores) towards Working Capital Facility, Capital Expenditure (CAPEX) and Loan Equivalent Ratio (LER). Due to lack of business, the company could not carry on the business and eventually ended up only accumulating losses. Later, WWO applied for Voluntary Bankruptcy and approached the Court of Finland who appointed Bankruptcy Estate Administrator (BEA) on 03.10.2013 for liquidation of assets. 4. After that, senior officials of IDBI Bank suggested to grant loan to M/s Axcel Sunshine Limited (M/s.ASL) based in the British Virgin Islands, for non-productive purpose to a tune of 83 Million USD to use the same for repaying the loan of M/s WWO and other associate companies of Siva Groups. Accordingly, the IDBI, DIFC Branch, Dubai disbursed a loan to the tune of 67 Million USD to M/s Axcel Sunshine Limited on 05.03.2014. The loans disbursed had not been utilised for the purpose for which it was availed from the IDBI Bank. Thus, the petitioners have involved in the process and activity of placement layering an integration of the proceeds of crime. 5. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not, prima facie, constitute the offence of money laundering as defined under Section 3 of PMLA. To prosecute a person under PMLA, commission of an offence under any of the schedule offence is a sine qua-non. The petitioner has not even arraigned as an accused in the FIR or in the ECIR. Despite the fact that the Trial Court noted the point that the petitioner has not been arraigned as an accused in the Charge-sheet filed by the CBI, for the offences under Section 120 and 420 of IPC, the fact that the petitioner is a mere shareholder and she has no involvement in the administration of the company, has not been taken into consideration. 9. The learned counsel for the petitioner, Mr.Nithyash Natarajan would contend that the Trial Court made a finding in Paragrpah No.10 of the impugned order that the statements, documents, and other materials produced by the respondent along with the complaint, do not contain any incriminating material against petitioner/A16 to relate her with any money laundering activities as stated under Section 3 of PMLA . In spite of the above finding, the discharge petition is dismissed. 10. The Trial Court made an erroneous finding that the petitioner was ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability, by specifically incorporating such a provision. 14. The judgement of the Calcutta High Court, in the case of Shree Hanuman Cotton Mills Ltd. and others vs Union of India and others (W.P.A No.17513 2022 dated 26.09.2022) . , has been referred wherein Calcutta High Court made an observation which is extracted hereunder : 32. In the present case, a portion of the property of the petitioner no.1-company and shares in the names of Mahesh and Alka in the company have been attached. The respondents allege that such fraction corresponds with the shareholding ratio of the accused Mahesh, Alka and their family in the petitioner no. 1-company. 33. Bacha Guzdar (supra) is a landmark judgment on the now-settled proposition that shareholders, irrespective of the size of their shareholding in a company, have no rights whatsoever in the assets of the company. The ratio of the said judgment has been followed in Electronics Corporation (supra), Pesticides Brewers (supra) and a series of other judgments of the Supreme Court, our court and other High Courts as well. 34. It is nobody s case that any of the accused persons are directors of the petitioner no. 1-company. The respondents best case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the PMLA. The trial Court, though made a finding in this regard, refused to grant relief without any valid reason. Thus, the present revision case is to be considered. 17. The learned Additional Solicitor General of India Mr.AR.L.Sundaresan, assisted by Mr.Cibi Vishnu, Special Public Prosecutor appearing on behalf of the respondent, would oppose the contentions of the petitioner by stating that the contentions of the petitioner that there is no evidence in the complaint filed by the respondent, is incorrect. The Trial Court has rightly appreciated the evidences made available in the complaint and rejected the discharge petition. (i)It is a fact that a scheduled offence has taken place and the CBI had on 13.04.2018 registered FIR No. 09/2018 and subsequently filed charge sheet/complaint before Additional Chief Metropolitan Magistrate for CBI Cases, Egmore, Chennai, in C.C. No. 554 of 2023. The relevant provisions that are scheduled offences are under Sections 120B and 420 IPC, and under Section 13 of the Prevention of Corruption Act. (ii) the aforementioned scheduled offence has resulted in the generation of proceeds of crime in the form of loans availed from IDBI Bank and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not have committed the predicate offence but has subsequently been involved in the offence of money laundering thus attracting Section 3 of PMLA. This proposition has been settled by the Hon'ble Supreme Court in Vijay Madanlal Choudry's case (supra) in Paragraph No.270, and in the case of Pavana Dibbur Vs. Directorate of Enforcement [2023 SCC Online Mad 1586] . , in Paragraph No.17, and also by this Hon'ble High Court in the case of P. Rajendran Vs. Asst Director, Directorate of Enforcement [2022 SCC Online Mad 9007] . , in Paragraph Nos. 9 to 14. 22. The Petitioner has relied upon the judgment of the Hon'ble Supreme Court in Vijay Madanlal Choudry's case, however, the said judgment in fact supports the Respondent/Complainant since admittedly a scheduled offence has taken place and the same is being prosecuted by the CBI, the said scheduled offence has resulted in the generation of proceeds of crime, and the petitioner is involved in the process and activity of placement, layering, and integration of the proceeds of crime. 23. The Petitioner is 86% shareholder of A-7 (SIHL) since 2007. Thus, decisions of A-7 company were taken by her or under her directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds cannot override the effect of other material evidences available on record in the complaint filed by the Enforcement Directorate under PMLA. 27. 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, discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnakannan Sivasankaran were transferred to his wife Ms S Jayalakshmi on 03.05.2014. 11.3 Further, it is found that Siva Industries and Holdings Limited (SIHL) is a closely held Indian company whose ultimate beneficiaries were Ms.S' Jayalakshimi (the then wife of Shri Chinnakannan Sivasankaran alias C. Sivasankaran) and other family members of C. Sivasankaran. It is pertinent to mention here that Shri C Sivasankaran was the major shareholder beneficiary of SIHL till 19.03.2007 when all his shares were transferred to his wife Ms. S Jayalakshmi. Further, during investigation it is found that Shri C. Sivasankaran was directly deriving benefits from the companies 'Chennai Property and Investment Ltd' (sister concern of SIHL) and 'AIWO Ltd' (almost 100% subsidiary of SIHL) related to SIHL of Siva Group as inter alia his expenses are being billed to these entities by The Leela Hotel, Chennai. 29. In the context of the above facts stated in the complaint, Paragraph No.13.16 is relevant, which reads as under: 13.16. Ms.S.Jayalakshmi, the then wife of C.Sivasankaran, Aged 55 years, the Shareholder ultimate beneficiary of M/s Siva Industries and Holdings Limited, Chennai ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... traventions 32. Pertinently, Section 70 of PMLA deals about Offences by Companies. Sub Section (1) to Section 70 of PMLA enumerates Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly . Therefore, it is immaterial whether a person is holding a particular post in a company or assisted for commission of an offence directly or indirectly in his/her capacity as a share holder. Section 70 of PMLA has to be read harmoniously in the context of Section 3 of PMLA. Section 3 of PMLA contemplates Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party... , therefore, the very purpose of Section 70 of PMLA is not to exclude any person in connection with a company, whether he/she is a Director, Shareholder or Executive etc. 33. Section 70 of PMLA cannot be read ..... X X X X Extracts X X X X X X X X Extracts X X X X
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