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TMI Blog2024 (12) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission of offences punishable under Sections 120 B r/w 420, 467, 468 and 471 of IPC and Sections 13(2) r/w 13(1)(d) of Prevention of Corruption Act and substantive offences with regard to causing loss to the tune of Rs. 4.30 Crores to the Customs Department, on account of Customs duty evasion in the import of Carbide inserts imported vide 9 bills of entry during the period from 2009-2011. 4. On completion of investigation, charge sheet was filed under Section 173(2) of Cr.P.C before the learned Chief Judicial Magistrate, Coimbatore. The offences for which charge sheet was filed are Scheduled offences under Section 2(1)(y) of PMLA, 2002 and hence, the Enforcement Directorate filed Enforcement Case Information Report (ECIR) No. 07/2015 dated 11.05.2015 against the petitioners/A1 to A3. Consequently, investigation was launched. 5. Prior to the registration of ECIR, the Directorate of Enforcement commenced investigation into the imports made by M/s.Nithish Tools Private Limited and M/s.Shree Sai Enterprises under the provisions of Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA, 1999) as information received from the Directorate of Revenue Intelligence, Chen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing on behalf of the respondent would strenuously oppose by stating that, based on the FIR registered by the Additional Superintendent of Police, CBI, ACB Chennai and having noted that scheduled offences are involved, the Enforcement Directorate filed ECIR and commenced investigation by following the procedures as contemplated under PMLA. After investigation, prima facie case has been made out for prosecution under the provisions of PMLA against the petitioners and after collecting all relevant materials, a statutory complaint under Section 45 was filed before the competent Court. When prima facie offence has been made out under the PMLA, it would be sufficient to continue the prosecution and the very institution of the present petition seeking quashment of complaint is untenable. IV. ANALYSIS: 11. The petitioners have stated that the company imported the goods. Declarations on behalf of the company were made before the Customs Department. Therefore, in the absence of implicating the company as an accused, the Managing Director and the Director cannot be implicated as accused persons in their individual capacity. 12. Section 70 of the PMLA clearly states that, when a contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lure to array the Company itself as an Accused will not vitiate the Complaint, since the Company committed the predicate offence, need not have committed the offence of money laundering. During investigation, if it is found that the Company itself has satisfied the ingredients mentioned under Section 3 of the PMLA and that it had committed an offence of money laundering, then the Company and the persons in control of its affairs will also be proceeded against for the said offence. 14. Section 70 of the PMLA is similarly worded to the provisions contained in various penal statutes such as Section 34 of the Drugs and Cosmetics Act, 1940; Section 10 of The Essential Commodities Act, 1955, Section 140 of the Customs Act, 1962; Section 38 of the Narcotic Drugs and Psychotropic Substances Act, 1985; Section 17 of The Prevention of Food Adulteration Act, 1954; Section 9AA of the Central Excise Act, 1944; Section 33 of the Insecticides Act, 1968, etc., Even though these provisions are similarly worded to Section 70 of the PMLA, the position of law with regard to the said provisions is on a similar footing to that of Section 141 of the NI Act, which is relied upon by the Petitioners/Accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the person-in-charge or an officer of the Company may not be separately prosecuted if the Company itself is not prosecuted. Each or any of them may be separately prosecuted or along with the Company Section 10 lists the person who may be held guilty and punished when it is a Company that contravenes an order made Under Section 3 of the Essential Commodities Act, Naturally, before the person-in-charge or an officer of the Company is held guilty in that capacity it must be established that there has been a contravention of the Order by the Company. That should be axiomatic and that is all that the Court laid down in State of Madras v. C.V. Parekh (supra) as a careful reading of that case will show and not that the person-in-charge or an officer of the Company must be arraigned simultaneously along with the Company if he is to be found guilty and punished." 17. In the case of State Vs. Dindayal Agarwala and Others [MANU/OR/0234/2990], the Hon'ble High Court of Orissa held as follows, "11. Trial court relied upon the decision of this Court reported in ILR (1975) Cut 86 (SantikumarAgarwala v. State (1979) 48 CLT 1 (State of Orissa v. Paban Kumar Agrawal, where relying upon obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company. Any one or more or all of them may be prosecuted and punished. The company alone may be prosecuted. The person in charge only may be prosecuted. The conniving officer may individually be prosecuted. One, some or all may be prosecuted. There is no statutory compulsion that the person in charge or an officer of the Company may not be prosecuted unless he be ranged alongside the company itself. Section 10 indicates the persons who may be prosecuted where the contravention is made by the company it does not lay down any condition that the person-in-charge or an officer of the company may not be separately prosecuted if the company itself is not prosecuted. Each or any of them may be separately prosecuted or along with the Company Section 10 lists the person who may be held guilty and punished when it is a company that contravenes an order made Under Section 3 of the Essential Commodities Act. Naturally, before the person-in-charge or an officer of the company is held guilty in that capacity it must be established that there has been a contravention of the order by the Company That should be axiomatic and that is all that the Court laid down in State of Madras v. C. V. Parek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed where the contravention is made by the company. It does not lay down any condition that the person-in-charge or an officer of the company may not be separately prosecuted if the company itself is not prosecuted. Each or any of them may be separately prosecuted or along with the company. Section 10 lists the person who may be held guilty and punished when it is a company that contravenes an order made under Section 3 of the Essential Commodities Act. Naturally, before the person in-charge or an officer of the company is held guilty in that capacity it must be established that there has been a contravention of the order by the company." 19. The Economic offences like money laundering stand on far graver footing, as they harm the society as a whole and lead to illicit accumulation of wealth. The offence of money laundering being a serious offence affecting the society and country at large should be dealt with in a much stricter sense. 20. The Petitioners/Accused herein have been charged for the offence of money laundering in their individual capacity consequent to the predicate offence. The predicate offence was committed by the Accused herein through the Company. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in "Pavana Dibbur vs. The Directorate of Enforcement [MANU/SC/1271/2023] had held as follows: "15. Coming back to Section 3 of the PMLA, on its plain reading, an offence Under Section 3 can be committed after a scheduled offence is committed For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing an offence Under Section 3 of the PMLA. To give a concrete example, the offences Under Sections 384 to 389 of the Indian Penal Code relating to "extortion" are scheduled offences included in Paragraph 1 of the Schedule to the PMLA. An Accused may commit a crime of extortion covered by Sections 384 to 389 of Indian Penal Code and extort money. Subsequently, a person unconnected with the offence of extortion may assist the said Accused in the concealment of the proceeds of extortion. In such a case, the person who assists the Accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering. Therefore, it is not necessary that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in value held within the country or abroad." Thus, it is relevant to consider the scope of Section 3 which provides offence of money laundering. Section 3 stipulates that "Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or using and projecting it as untainted property shall be guilty of offence of money laundering." Therefore, mere possession of proceeds of crime would be sufficient to invoke the provisions of PMLA. Using the proceeds of crime by itself is an offence. Since the scope of Section 3 is wider enough to cover various Circumstances in order to curb the economic offences, High Court cannot restrict its meaning so as to restrain the Authorities from invoking the provisions of PMLA. 12. The very statement of objects and reasons for enactment is that it was realised world over that money laundering possess a serious threat not only to the financial systems of country but also to their integrity and sovereignty. Therefore, the scope if narrowed down would cause prejudice to the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but every pensioA who was responsible to the company for the conduct of the business of who was my, as well as the company proceeded anguilty of the the covention and are liable to be proceeded against and punish accordingly." 28. It has been repeatedly reiterated by the Hon'ble Apex Court that the offence of Money-Laundering is a stand-alone offence. The offence under the Customs Act is totally different and distinct from the offence of Money- Laundering. The Petitioners/Accuseds are attempting to paint two distinct offences, as if it is the very same transaction. Therefore, the submission of the Petitioner/Accused that the subject matter of investigation by the Department of Customs and ED emanates from the same transaction is incorrect. It is wrong to state that only when predicate/schedule offence is proved can the prosecution under the PMLA proceed. A prosecution of an offence of Money Laundering can be initiated only when an FIR is registered for the commission of a scheduled offence, the Prevention of Money Laundering Act does not state that the same has to be proved for the prosecution under the PMLA to proceed. 29. The Hon'ble Apex Court in "Vijay Madanlal Choudh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h contained in any other law for the time being in force. 22. Holistic reading of the provisions of PMLA would indicate that schedule offence is prerequisite condition for initiation of proceedings under PMLA. Once proceedings are initiated under PMLA by recording ECIR, thereafter the investigation and offence of money laundering traced out by the Enforcement Directorate become independent and to be dealt with under the provisions of PMLA and the application of CrPC is undoubtedly limited in view of Section 65 and 71 of PMLA 23. ECIR cannot be equated with FIR. The schedule offence is quintessential for initiation of proceedings and recording of ECIR but both the offences cannot be placed on the same footing. PMLA proceedings are distinct and the said Act is a complete code in itself. Whereas scheduled offences are tried under other penal laws. When two documents are difference and distinct in their own nature, a combined reading and implication cannot be adduced to them. 24. ECIR is born from FIR, but once the ECIR is born, the umbilical cord that connects the ECIR with FIR looses its relevance and the ECIR becomes an independent document in itself. Consequently, a new life in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n against the accused persons under PML Act and they are likely to get acquittal in the predicate/scheduled offences would not be a ground to stall the proceedings. In the given facts and circumstances of the case, it is difficult to state the result of the case of predicate/scheduled offence and its bearing over the proceedings or decision rendered in the subject offence under PML Act. Therefore, the contention raised that without proving the guilt of the accused in predicate/scheduled offences, trial of offences under PML Act cannot be proceeded with, is unsustainable. In view of the above observations, it cannot be held that unless proceeds of crime are established by putting the accused on trial, any prosecution of the person under PML Act would be premature and would be futile exercise. Since the offence under PML Act is a stand- alone offence and not dependent on predicate/scheduled offences, it can be proceeded with independently without awaiting the outcome of result of scheduled offences or commencement of trial in the predicate/scheduled offences. Further, there is no requirement under law to conduct trials of both category of cases simultaneously. Therefore, the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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