2022 (12) TMI 142 - HC - Money Laundering

Defendant Cleared of Money Laundering Charges; Only Issued Form 15CB Based on Client's Documents, May Testify for Prosecution.

Murali Krishna Chakrala Versus The Deputy Director, Directorate of Enforcement, Chennai

The court discharged the defendant from prosecution, determining that his involvement was limited to issuing Form 15CB based on client-provided documents, ... Money Laundering - Onus on Chartered Accountant (CA) for giving certificate - scheduled offences - whether mere issuance of five numbers of Form 15CB at the request of client, would by itself, brings the CA into the net of conspiracy to indulge in money laundering? - HELD THAT:- As regards the requirements for submission of Form 15CB, we find from the records that only the State Bank of Travancore had insisted upon the said certificates and not the other six banks through which, foreign remittances were made by Kiyam Mohammed [A7] and Abdul Haleem [A8]. The complaint and the accompanying background show that Abdul Haleem [A8] had operated the bank accounts and Kiyam Mohammed [A7] had facilitated the opening of the bank account and preparation of various documents by availing the services of various persons including Murali Krishna Chakrala, an Auditor, for the limited purpose of obtaining Form 15CB for transferring monies from State Bank of Travancore, Mount Road Branch. A reading of paragraph Nos.81 and 143 of the impugned complaint, which have been extracted supra, shows that Murali Krishna Chakrala had issued five numbers of Form 15CB in favour of B.K.Electro Tool Products, which were handed over by him to his client Kiyam Mohammed [A7] for which, a sum of Rs.1,000/- per certificate was given to him as remuneration. Even on a demurrer, on a perusal of Form 15CB, we find that a Chartered Accountant is required to only examine the nature of the remittance and nothing more. The Chartered Accountant is not required to go into the genuineness or otherwise of the documents submitted by his clients. This could be compared with the legal opinion that are normally given by panel lawyers of banks, after scrutinizing title documents without going into their genuinity. A Panel Advocate, who has no means to go into the genuinity of title deeds and who gives an opinion based on such title deeds, cannot be prosecuted along with the principal offender. Applying the same anomaly, we find that the prosecution of Murali Krishna Chakrala, in the facts and circumstances of the case at hand, cannot be sustained. This Criminal Revision is allowed. Issues Involved:1. Legitimacy of the proceedings against Murali Krishna Chakrala.2. Role and involvement of Murali Krishna Chakrala in the alleged money laundering activities.3. Examination of Form 15CB issuance and its implications.4. Determination of whether Murali Krishna Chakrala should be discharged from prosecution.Detailed Analysis:Legitimacy of the Proceedings Against Murali Krishna Chakrala:The revision was filed challenging the proceedings dated 26.08.2022 in Crl.M.P.No.2864 of 2022 in Spl.C.C.No.07 of 2021 by Murali Krishna Chakrala. The Enforcement Directorate (ED) justified the prosecution, contending that there are prima facie materials against him for the trial to proceed further. They argued that as a Chartered Accountant, Chakrala went beyond his professional scope by issuing Form 15CB using the PAN number of A-2 and the photo identity of A-1, facilitating the transfer of foreign exchange without disclosing the identity of the beneficial owner and end-use.Role and Involvement of Murali Krishna Chakrala:Chakrala issued certificates in Form 15CB at the request of Kiyam Mohammed (A7). The ED alleged that Chakrala did not interact with A1 or A2, whose PAN and photograph were used, and handed over the certificates to A7 without ascertaining their relationship. The ED's investigation revealed that Chakrala had issued certificates for multiple entities linked to Kiyam Mohammed. However, Chakrala argued that he acted within his professional duties and had no reason to suspect the genuineness of the import documents presented by Kiyam Mohammed.Examination of Form 15CB Issuance and Its Implications:The ED's complaint highlighted that Chakrala issued five certificates in Form 15CB for B.K. Electro Tool Products, facilitating fraudulent foreign remittances. Chakrala contended that Form 15CB is not required for overseas payments towards import under the law, and only the State Bank of Travancore insisted on it. He argued that his role was limited to examining the nature of the remittance, not the genuineness of the documents. The court compared this to legal opinions given by panel lawyers of banks, who are not prosecuted for the genuineness of title deeds.Determination of Whether Murali Krishna Chakrala Should Be Discharged from Prosecution:The court found that Chakrala had merely received Rs.1,000 per certificate and had helped the ED identify Kiyam Mohammed, the mastermind. The court concluded that Chakrala did not directly or indirectly participate in the generation of proceeds of crime. The prosecution of Chakrala could not be sustained based on the facts and circumstances of the case. The court allowed the revision, set aside the order dated 26.08.2022, and discharged Chakrala from prosecution. However, the prosecution could enlist Chakrala as a witness if desired.Conclusion:The court discharged Murali Krishna Chakrala from prosecution, emphasizing that his role was limited to issuing Form 15CB based on documents presented by his client, without any involvement in the actual money laundering activities. The court acknowledged his cooperation with the ED and his willingness to act as a prosecution witness.