TaxTMI 
TaxTMI 
2022 (3) TMI 111
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....ions Court, Chennai, as against the petitioner herein. 2. The minimum facts that are required for deciding this quash petition are as under : 2.1. The persons involved in the various transactions would be referred to by their respective names. One S.K.Karthikeyan and his family were running Ari Fabrics Ltd. in Coimbatore, which went into a loss. So, the Board of Directors of the said mill decided to sell it to one G.Srinivasan, who was introduced to them by one M.R.Thiyagarajan, an Auditor by profession. Accordingly, the said Srinivasan was appointed as an Additional Director in Ari Fabrics Ltd. and was requested to discharge the debts of the mill and redeem it. 2.2. Similarly, one K.Doraisamy and his family were running a spinning....
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....my also lodged a police complaint in Karumathampatti Police Station, based on which, a case in Karumathampatti P.S. Crime No.364/2009 was registered on 01.04.2009 for the offence under Section 420 IPC against Muthusivam (A1), Srinivasan (A2), Venkatesan (A3), Selvakumar (A4), Thiyagarajan (A5) and Rajesh (A6). 2.6. Since the case in DCB Crime No.27/2009 that was launched by Ari Fabrics Ltd. disclosed the commission of a 'scheduled offence' under the Prevention of Money Laundering Act, 2002 (in short "the PML Act"), the Enforcement Directorate registered a case in ECIR No.31/CEZO/PMLA/2009 on 31.10.2009 and took up investigation of the case. After completing the investigation, the Enforcement Directorate has filed a complaint in C....
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....ing, it is the case of VMT Mills that the sum of Rs. 17,05,277/- that was found parked in the current account in the Bank of Baroda, Udumalpet Branch, does not belong to them at all. However, strangely, in the criminal prosecution in C.C.No.56/2016 that has been launched by the Enforcement Directorate, VMT Mills has been shown as 2nd accused. 6. Mr.B.Kumar submitted that even going by the averments in the impugned complaint, VMT Mills was a victim of the crime that was committed by Srinivasan, inasmuch as, without the knowledge of the Directors of the said mill, Srinivasan had opened an account with forged documents in the name of VMT Mills in Bank of Baroda, Udumalpet Brnach, whereas, the mill was having its account in Indian Overseas B....
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.... would be redeemed. Whereas, Shri.G.Srinivasan had paid only an amount of Rs. 2.25crores to IOB, Kollupalayam Branch and thereafter without making any payments had diverted the sale proceeds of the cotton yarn manufactured in the said mill to various other accounts held in the Bank of Baroda, Udumalpet Branch. In order to enable such diversion Shri G.Srinivasan also opened a current account in the name of M/s.VMT Spinning Mills India Pvt. Ltd., with the said Bank of Baroda by furnishing a fabricated board resolution passed purportedly by the Board of Directors of the said mill, authorizing Shri G.Srinivasan and one Selvakumar to open the current account. 7.3. Shri G.Srinivasan, with an intention to cheat M/s.Global Trade Finance, b....
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....rojected as untainted funds held in the bank account with Bank of Baroda, Udumalpet Branch, M/s.VMT Spinning Mills India Pvt. Ltd. has also committed the offence of money laundering as defined under Section 3 of the PMLA, punishable under Section 4 of the PMLA." 10. From a reading of the above, even according to the Enforcement Directorate, Srinivasan, to whom the affairs of Ari Fabrics Ltd. and VMT Mills were entrusted in good faith by their respective owners, had opened bank accounts in the name of those companies in the Bank of Baroda, Udumalpet Branch, with the connivance of Balan, Branch Manager and has parked the funds that were generated by him by indulging in cheating. One such amount is, the sum of Rs. 17,05,277/-, which was par....
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....ow the subject matter with the investigation agencies will not be claimed by the company." (emphasis supplied) 12. The case of VMT Mills can be better explained with the following illustration. 'A' is an honest public servant. 'B', a dishonest public servant, opens a bank account in the name of 'A' and parks the bribe monies received by him in that account. Can 'A' be prosecuted along with 'B' under the Prevention of Corruption Act, 1988 ? The answer is an obvious 'No'. So too, VMT Mills, in whose name, Srinivasan had opened a fake bank account in Bank of Baroda, Udumalpet Branch and had parked Rs. 17,05,277/-, cannot be prosecuted for money laundering. 13. Therefore, in our con....