Money laundering liability cannot attach to a company when a forged account in its name was used by a third party to park illicit funds.

A company whose name was misused to open a bank account through fabricated authorisation documents could not be treated as the offender under the Prevention of Money Laundering Act when the complaint itself attributed the diversion, parking and concealment of funds to a third party. The Court noted that the petitioner consistently maintained that the account was unauthorised and that the money did not belong to it; on those admitted facts, it was not the person who generated, possessed, projected or attempted to project the alleged proceeds of crime as untainted. The criminal proceedings were quashed as an abuse of process, while the attachment of the alleged proceeds of crime was left unaffected.

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Issues: Whether the prosecution of the petitioner company for offences under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 was sustainable where the bank account in question was opened in its name by a third party using fabricated authorisation documents and the funds parked therein were alleged to be the third party's proceeds of crime.

Analysis: The complaint itself showed that Srinivasan, while in control of the company's affairs, had opened a current account in the petitioner's name in Bank of Baroda by producing fabricated board resolutions and had diverted and parked funds in that account. The company's stand from the beginning was that the account was unauthorised and that the money did not belong to it. The complaint further attributed the diversion and concealment to Srinivasan, while treating the petitioner as the nominal account holder. On those admitted allegations, the petitioner was not the person who generated, possessed, projected, or attempted to project the alleged proceeds as untainted. The Court held that a company whose name was misused for opening a fake account to park another person's ill-gotten money could not be prosecuted as if it were the offender.

Conclusion: The prosecution of the petitioner under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 was held to be an abuse of process and was quashed.

Final Conclusion: The criminal proceedings against the petitioner company were set aside, while the attachment of the amount alleged to be proceeds of crime was left unaffected.

Ratio Decidendi: An entity in whose name a forged account is opened without its knowledge, and into which another person parks proceeds of crime, cannot be fastened with criminal liability for money laundering merely because the account stands in its name.

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