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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 ..... e PMLA need not even be arrayed as an Accused in the prosecution of the predicate offence as long as the said person has satisfied the ingredients mentioned under Section 3 of the PMLA. The contention of the 2nd and the 3rd Petitioner herein are that they had nothing to do with the day-to-day administration of the Company, will not hold water, even if proved to be true by the Accuseds in trial, since the Complaint under PMLA was filed against them for the possession, acquisition, use of the proceeds of crime, while claiming the same to be untainted property and not for the offences committed by them in their capacity as the Directors of the Company. 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. The Hon'ble Ape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation 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, Chennai, revealed a case of investigation in January 2012 into the imports made by M/s Nithish Tools Private Limited and M/s Shree Sai Enterprises. Show cause notice was issued on 13.04.2013 demanding differential duty of Rs. 13,79,42,157/- from M/s.Nithish Tools Private Limited and Rs. 3,00,77,659/- from M/s.Shree Sai Enterprises. 6. Consequent to the investigation under the PMLA Act, the Directorate of Enforcement filed the complaint under Sections 45 r/w 3 and 4 of PMLA Act. The prima facie case relating to proceeds of crime under Section 2(1)(u) of PMLA, 2002 and offence of money laundering under Section 3 are made out, the complaint has been filed before the competent Court. II. CONTENTIONS ON BEHALF OF THE PETITIONER: 7. Mr.Natarajan, the learned Senior Counsel appearing on behalf of the petitioners woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners 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 contravention has been committed by a Company, the Company as well as every person who at the time of commission of the offence was in charge of and was responsible to the Company are said to have committed the offence of money laundering. Section 70(1) of the PMLA, 2002 is extracted hereunder for ease of reference: 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 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: Provided that nothing contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/Accuseds and clearly distinct from an offence under Section 3 of the PMLA. Where an offence is committed by a Company under the different enactments set out above, the Company as well as the person in charge of the Company are proceeded with as the contravention is committed by the Company and since the Company is a juristic person, the person who is in charge of the day-to-day affairs of the Company i.e., its Director etc., are prosecuted. The Company, namely M/s. NTPL has been arrayed as an Accused in the predicate offence i.e., C.C. No.9 of 2015 on the file of the Learned Chief Judicial Magistrate's Court, Coimbatore. However, a subtle distinction arises when it comes to the prosecution of offences under PMLA wherein Section 3 being the penal offence reads as follows: 3. Offence of money-laundering Whosoever directly or indir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 observation of Supreme Court in the decision reported in MANU/SC/0195/1970) (The State of Madras v. C. V. Parekh) partners were acquitted on the ground that term (firm) has not been made an accused. In another unreported decision in Cri. Revn. No. 183 of 1978 decided on 19-4-1979 (Chandra. Sekhar Das v. State) same view has been taken. However, in the decision in ILR (1978) Cut 291 (State of Orissa v. Sib Narayan Patro, it has been observed (at page 304): .......But merely because the firm has not been prosecuted, that cannot absolve the responsibility of the respondents who are directly connected with the transaction Of course, in this decision, earlier decision reported in ILR (1975) Cut 86 (supra) has not been taken into consideration possibly because the same was not brought to the notice of the Court. In (1979) 48 CLT 1 (supra) it has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 MANU/SC/0195/1970 (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 View in ILR (1975) Cut 86 (supra) and similar view in (1979) 48 CLT 1 (supra) and Cri Revn. No. 183 of 1978 decided on 19-4-1979 (supra) that Firm is to be made an accused for prosecuting partners is no longer binding on me in view of the observation of Supreme Court in MANU/SC/0112/1984 (supra) and the said view of this Court stood overruled. In case, decision reported in MANU/SC/0195/1970(supra) would not have been considered in MANU/SC/0112/1984(supra) it might have been open to me to examine if view expressed in MANU/SC/0112/1984 (supra) can prevail over the view expressed in MANU/SC/0195/1970(supra) in case I would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting 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 Company has been arrayed as an Accused in C.C. No. 9 of 2015 on the file of the Learned Chief Judicial Magistrate's Court, Coimbatore. It is pertinent to note that, from the investigation conducted by the Enforcement Directorate, the proceeds of the crime committed have been traced to immovable properties in the name of the three Accuseds herein and not in the name of the Company. The investigation is still being continued and if it is found that any proceeds of crime have been purchased beneficial to the Company, then the Company and the Petitioners as Directors have to be proceeded against for the said offence by way of a supplementary Complaint as provided under Section 44(1)(d) Explanation (ii) of the Prevention of Money Laundering Act. 21. According to Section 65 of PMLA, the provisions of Cr.P.C shall apply insofar as they are not inconsisten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 a person against whom the offence. Under Section 3 of the PMLA is alleged must have been shown as the Accused in the scheduled offence. What is held in paragraph 270 of the decision of this Court in the case of Vijay Madanlal Choudhary MANU/SC/0924/2022 supports the above conclusion. The conditions precedent for attracting the offence Under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in Clause (u) of Subsection (1) of Section 3 of the PMLA 24. The ingredients of the offence of money laundering u/s. 3 of the PMLA are that any person who is involved in the Concealment, Possession, Acquisition, use and Projecting or Claiming it as Untainted Property shall be guilty of offence of Money-Laundering. The investigation conducted under the PMLA revealed that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of nation's wealth. 27. In S. Jayalakshmi vs. Directorate of Enforcement, Chennai Zone [MANU/TN/4712/2024] , this Hon'ble Court held as follows: 31. In this context, proviso clause of Section 70 of PMLA contemplates that Provided that nothing contained in this sub section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contraventions 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey 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 Choudhary and Ors -Vs- Union of India and Ors (Supra) had also held that the investigation conducted by the Respondent Department is into the offence of money laundering and the same can be established through the prosecution of the offence of money laundering independent of the predicate offence. The Hon'ble Court held as follows: 269. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money-laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, 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 the form of ECIR emerges, which has breath on its own without the support of FIR. So, the FIR and ECIR become two different documents and both tend to take shape on its own, independent of each other. ...32. In any angle, pendency of a criminal appeal cannot be an absolute bar for proceeding with the PMLA trial, which is now being undertaken by the Special Court for PMLA. Both the trial in the schedule offence and the trial in the PMLA case are distinct and different and the nature of offences are distinguishable. 33. The wider implications and ramifications of the offence of money laundering cannot be equated with the offence under the other penal laws. The objective of PMLA are to protect the economic status of our Country. Therefore, we are of the considered opinion that the trial court has committed an error in postponement of PMLA trial during the pendency of the criminal appeal. The same claim may be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 contention that Money Laundering offence starts at the end of predicate offence and commencement of trial in offence under PML Act shall not precede trial of predicate/scheduled offence, is unsustainable. 32. The Constitutional validity of Section 50 of the PMLA has been challenged and upheld in Vijay Madanlal Choudhary and Ors -Vs- Union of India and Ors (Supra) and Hon'ble Supreme Court had stated that, the same is both admissible and relevant in a criminal trial. If the Accused specifically alleges that the statements were obtained by the Complainant by way of coercion, the same is to be proved by the Accused in trial and not through empty accusations in this Criminal Original Petition. By action of Section 24, a presumption is formed against the Accused for having committed an offence of money laundering and the burden to prove the contrary will be on the Accused. Section 24 of the PMLA is extracted hereunder for referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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