Enforcement Directorate's Jurisdiction Upheld under PML Act: Partners Held Liable, Clarification on Legal Person Prosecution.

The court upheld the jurisdiction of the Enforcement Directorate under the PML Act, stating that scheduled offenses justified their investigation. It found the cognizance order by the Special Court valid, emphasizing that a detailed inquiry was not necessary at that stage. Criminal liability was imposed on some partners due to their involvement in money laundering activities, while proceedings against another partner were quashed for lack of evidence. The court clarified that Section 70 of the PML Act differs from Section 141 of the NI Act and explained that a juristic person can be prosecuted independently of natural persons. The outcome resulted in the dismissal of the petition regarding PRP Granite Exports, Selvi, and Chandraleka, while allowing it for Sivaranjani.

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Issues Involved:
1. Jurisdiction of the Enforcement Directorate under the PML Act.
2. Validity of the cognizance order by the Special Court.
3. Criminal liability of the partners under the PML Act.
4. Application of Section 70 of the PML Act.
5. Interpretation of Explanation 2 to Section 70 of the PML Act.

Detailed Analysis:

1. Jurisdiction of the Enforcement Directorate under the PML Act:
The court observed that some of the offenses registered by the State police against the PRP group are scheduled offenses under the PML Act. Therefore, the jurisdiction of the Enforcement Directorate to investigate under the PML Act was rightly not questioned across the Bar.

2. Validity of the Cognizance Order by the Special Court:
The petitioners contended that the order dated 14.12.2018, passed by the Special Court, did not disclose the application of mind. The court noted that while an order of taking cognizance should reflect the application of mind, it is not a thumb rule that a cryptic order should be quashed. The court cited the Supreme Court's ruling in State of Gujarat Vs. Afroz Mohammed Hasanfatta, emphasizing that detailed inquiry regarding the merits is not required at the stage of taking cognizance. The court concluded that the cognizance order in this case does not deserve to be quashed.

3. Criminal Liability of the Partners under the PML Act:
The petitioners argued that there were insufficient materials to impose criminal liability on Selvi (A7), Chandraleka (A8), and Sivaranjani (A10). The court examined the allegations and found that Selvi (A7) and Chandraleka (A8) had sufficient knowledge about the properties acquired by the firms and were involved in money laundering activities. Therefore, the petition against Selvi (A7) and Chandraleka (A8) was dismissed. However, the court found no sufficient materials to proceed against Sivaranjani (A10) and quashed the proceedings against her.

4. Application of Section 70 of the PML Act:
The court discussed the similarity between Section 70 of the PML Act and Section 141 of the Negotiable Instruments Act (NI Act). The court noted that while there is some similarity, the two provisions are not completely in pari materia. The court emphasized that offenses under the PML Act are economic offenses and cannot be equated to a prosecution under the NI Act. Therefore, the rulings under Section 141 of the NI Act would not be applicable to the PML Act.

5. Interpretation of Explanation 2 to Section 70 of the PML Act:
The court examined the legislative history and the recommendations of the Financial Action Task Force (FATF) that led to the insertion of Explanation 2 to Section 70 of the PML Act. The court concluded that the explanation clarifies that the prosecution of a legal juridical person (juristic person) for an offense under the PML Act is not contingent upon the prosecution of natural persons.

Conclusion:
- The petition was dismissed as withdrawn concerning PRP Granite Exports (A3).
- The petition was dismissed concerning Selvi (A7) and Chandraleka (A8).
- The petition was allowed concerning Sivaranjani (A10).
- Connected Crl.M. Ps were closed.

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