TaxTMI 
TaxTMI 
2021 (6) TMI 631
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....i. 2.2. When this came to light, there was a furore and the State law enforcement agencies woke up from their self-induced slumber and plunged into action by registering around 16 FIRs. on the findings of the Deputy Director, Geology and Mining. 2.3. Similarly, the Public Works Department found that the PRP group had not spared even the water canals in that area, for which, 15 FIRs. were registered. 2.4. The police also found that the PRP group had indulged in land grabbing by illegally encroaching into lands belonging to Temples, Government and innocent individuals, for which, 11 FIRs. were registered. 2.5. The common thread that runs through most of the FIRs. is Section 120-B read with 420, 465, 467, 468 and 471 IPC. Approximately, it was found that a sum of Rs. 2830.98 crores was earned by the PRP group via the aforesaid criminal activities. On coming to know of this, the Enforcement Directorate registered a case in ECIR No. CEZO/15/2013 and took up investigation under the Prevention of Money Laundering Act, 2002 (in short "the PML Act"). 2.6. After recording the statements of various persons and collecting materials, the Enforcement ....
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.... same should have to be quashed. The requirement of passing an explicit order, while taking cognizance of an offence and issuing process is to ensure that frivolous complaints are not taken on file and ordinary citizens are not harassed. This principle cannot be used as a sword by an accused to kill a prosecution, which cannot be said to be a frivolous one as in the present case. In State of Gujarat Vs. Afroz Mohammed Hasanfatta [ (2019) 20 SCC 539], the Supreme Court in paragraph 22 held as follows: "22. In summoning the accused, it is not necessary for the Magistrate to examine the merits and demerits of the case and whether the materials collected is adequate for supporting the conviction. The court is not required to evaluate the evidence and its merits. The standard to be adopted for summoning the accused under Section 204 CrPC is not the same at the time of framing the charge. For issuance of summons under Section 204 CrPC, the expression used is "there is sufficient ground for proceeding..."; whereas for framing the charges, the expression used in Sections 240 and 246 IPC is "there is ground for presuming that the accused has committed an offence...". At the stage o....
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.... judicial and official acts have been regularly performed". In view of the above discussions, the cognizance order in this case does not deserve to be quashed. 11. The gravamen of the allegation against the accused in C.C. No. 10 of 2018 is available in paragraph 9 of the complaint, which is as under: "9. In view of the foregoing investigation and the evidences available on records, it is reasonably believed that the said Shri/Smt. P. Palanisamy, P. Senthilkumar, P. Sureshkumar, A. Maharajan, P. Selvi, S. Chandraleka and M. Sivaranjani, partners of M/s. PRP Exports, M/s. PRP Granites and M/s. PRP Granite Exports, during the period from 2006-07 to 2012-13 have utilised funds aggregating to Rs. 102.95 crores (Rupees one hundred and two crore and ninety five lakhs only) out of the proceeds derived from the above said criminal acts towards the acquisition/purchase of immovable properties having present market value of Rs. 527 Crores (Rupees five hundred and twenty seven crore) in the name of M/s. PRP Exports, M/s. PRP Granites and M/s. PRP Granite Exports. Further, Rs. 32,57,275/- (Rupees thirty two lakhs fifty seven thousand two hundred and seventy five only) in the form o....
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....e business. In the absence of any such proof, no partner could be convicted. We, therefore, reject the contention urged by counsel for the State." We find it hard to apply this judgment because, in this case, we are dealing with a quash application under Section 482 Cr.P.C., whereas the aforesaid judgment was delivered in an appeal, challenging the conviction and sentence after a full-fledged trial. 13. Mr. A. Ramesh took this Court through Section 70 of the PML Act, and submitted that it is in pari materia with Section 141 of the Negotiable Instruments Act, 1881 (in short "the NI Act") and placed strong reliance on the judgments in National Small Industries Corporation Limited Vs. Harmeet Singh Paintal and another [ (2010) 3 SCC 330]; Monaben Ketanbhai Shah and another Vs. State of Gujarat and others [ (2004) 7 SCC 15] and SMS. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another [ (2005) 8 SCC 89], wherein, the Supreme Court has laid down the rule for mulcting criminal liability vicariously on a person, when the main offender is not a natural person. On facts, he took this Court through paragraph 13.7 of the complaint, wherein, the following averments appear: "13.7. I....
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.... (1) SCC 168]) 18. The following statement of law of a Constitution Bench of the Supreme Court in State of Punjab Vs. Okara Grain Buyers Syndicate Ltd., Okara and another (AIR 1964 SC 669) provides a complete answer to the issue at hand: "33. We are clearly of the view that this argument does not deserve to be accepted. In the first place, we are concerned solely with the interpretation of the Act of 1951 and unless there was an ambiguity it would be impermissible to refer to any previous legislation for construing the words in it. The examination we have made of the Act read in conjunction with the purposes it seeks to achieve which are manifest in its various provisions have led us unmistakably to the conclusion which we have expressed earlier. In the circumstances, there is no scope for invoking this external aid to the construction of the expressions used in the Act. Secondly, the scope of the two enactments viz. the Act of 1948 and that of 1951 are widely different, and the latter has a definitely more extended scope and is designed to secure substantive advantages to displaced persons which were wholly foreign to the earlier law which was but of very limited scope....
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....acity of partner did not participate in the business of the companies. Smt. P. Selvi admitted in her statement recorded under Section 50(2) and 50(3) of PMLA that she was house wife and admitted that she was partner of M/s. PRP Exports and PRP Granites from 2003 to 2010. The offence cases are registered against the partners of M/s. PRP Exports, M/s. PRP Granite by Madurai District Crime Branch Police Department and the same are under investigation. She (A7) was the Partner of PRP Exports and PRP Granites holding PAN number and her income from granite business were assessed by income tax department periodically. She can read and write in English very well and was aware that she was partner in the Granite business. Smt. Selvi (A7) had thorough knowledge about the movable and immovable properties acquired in the name of PRP Exports and PRP Granites. As such, she has knowingly assisted the other partners namely Shri P. Palanisamy (A4), P. Senthil Kumar (A5) and P. Suresh Kumar (A6) in acquisition, possession in the name of M/s. PRP Exports, PRP Granites and PRP Granite Exports and used the proceeds of crime to acquire immovable property to project and claiming it as untainted and there....
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....ow that, Selvi (A7) and Chandrelekha (A8) were income tax assessees; they could read and write English very well; they were aware that they were partners in the granite business; that they had thorough knowledge about the movable and immovable properties acquired by the firms in which they were partners. Mr. A. Ramesh contended that mere knowledge of acquisition of properties is not tantamount to knowledge of commission of the offence under the PML Act. 23. Section 3 of the PML Act is indeed very wide. It begins with the expression "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......". Money laundering simply means, to project tainted money as an untainted one. The allegation in this case is, by illegal mining and by commission of a schedule offence, the three firms in which, Selvi (A7) and Chandraleka (A8) were partners, generated Rs. 2830.98 crores with which they had purchased the properties listed in the complaint and projected them as untainted ones. In the teeth of the statutory presumption under Section 23 and the reverse burden under....
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....ention and shall be liable to be proceeded against and punished accordingly. Explanation 1--For the purposes of this section, (i)"company" means anybody corporate and includes a firm or other association of individuals; and (ii)"director", in relation to a firm, means a partner in the firm. Explanation 2--For the removal of doubts, it is hereby clarified that a company may be prosecuted, notwithstanding whether the prosecution or conviction of any legal juridical person shall be contingent on the prosecution or conviction of any individual." 27. To understand the true import of the 2nd Explanation, it is necessary to travel back in time to the early years of the 21st century to examine the position of law as it then stood vis-à-vis corporate liability. In Assistant Commissioner, Assessment-II, Bangalore Vs. Velliappa Textiles Limited [ (2003) 11 SCC 405], the Supreme Court held that where the offence complained of is punishable with a mandatory sentence of imprisonment, a company cannot be prosecuted as the sentence of imprisonment cannot be enforced against an artificial juristic entity i.e., a company. However, this view was subsequen....
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....dissented and held that the prosecution was maintainable. The matter was referred to a larger bench in view of the difference of opinion between the two learned judges. 29. When matters stood thus, India joined the Financial Action Task Force (FATF), an international inter-governmental body formulating guidelines at the global level for action against money laundering and terrorist financing, as its 36th member in 2009. On 25th June 2010, a mutual evaluation report was submitted by the FATF evaluating the existing provisions of the PML Act, in line with the benchmarks set out by the FATF. In the context of the present case, the relevant recommendations of the FATF are as under: "155. Section 70 of the PMLA and section 38 of the NDPS Act provide that where the violation of the Act is committed by a company, both the company and the individuals in charge of the company will be deemed to be guilty of that contravention unless they did not have the knowledge of contravention or they have exercised all due diligence to prevent it. 156. While the legal person is liable to be punished with a fine, imprisonment can obviously be imposed only on the natural persons in ch....