TaxTMI 
TaxTMI 
2022 (3) TMI 231
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....n of the cases against him proceeded and they are at various stages now. We are told at the bar that Sridhar died in Cambodia on 04.10.2017. 2.2. Since the cases registered against him disclosed the commission of scheduled offences under the Prevention of Money Laundering Act, 2002 [hereinafter referred to as 'PMLA'] viz., 120-B, 302, 307, 364, 384 and 385 IPC and section 3 r/w 25 of the Indian Arms Act, 1959, the Enforcement Directorate registered a case in ECIR No.CEZO/03/2016 on 09.03.2016 and took up investigation under the PMLA. 2.3. It is the case of the Enforcement Directorate that D.Sridhar, by committing various criminal activities, had acquired wealth and purchased various properties in and around Kanchipuram. During the course of investigation, the Enforcement Directorate identified a property measuring 12945 sq.ft. in survey No.557/1A1A batch (for avoiding prolixity we refrain from mentioning all the survey numbers) as proceeds of crime. This property is the subject matter of the case at hand and therefore, we would call it as the "impugned property". 2.4. The impugned property was purchased by Kumari, wife of Sridhar, from 9 persons via 10 sale deeds registered in D....
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....ority and it is now too preposterous to hazard a guess on the outcome of such a plea.' 2.6. On 29.12.2016, the adjudicating authority confirmed the order of provisional attachment u/s.8(3) of the PMLA. Challenging the order of the adjudicating authority, the Pothy brothers approached the appellate Tribunal u/s.26 of the PMLA. The Pothy brothers contended that they were innocent purchasers and they did not know that their vendors had acquired the property via criminal activities of her father D.Sridhar. The Enforcement Directorate resisted the claim. However, the Tribunal, by order dated 11.01.2019, gave the following findings: '51. As mentioned earlier, the Appellants are bona-fide purchasers and they have not done anything against law. Furthermore, the Appellants are not involved in any crime or money laundering and the Appellants are law abiding citizens running an organization in the field of textile business, with the family business being there for more than 85 years. No case of money laundering against the appellants is made out. The prosecution complaint under PML Act, 2002 was filed by the respondent against Ramesh Pothy with mala-fide intention and after thought on the ....
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....so shall be at their own costs. 9. All these arrangements are subject to the result of the adjudication in S.C.No.74 of 2017 by the Special Court, Chennai. The respondents shall pay a sum of Rs. 2 lakhs (Rupees two lakhs only) without prejudice to the contentions in the pending case. These arrangements also subject to the result in S.C.No.74 of 2017 on the file of the Special Court, Chennai. 10. It is made clear that all the issues are left open to be decided by the Special Court. The Special Court, viz., the Principal Judge, City Civil Court, Chennai, shall dispose of S.C.No.74 of 2017 within a period of six months from the date of receipt of a copy of this order. The common order passed by the Appellate Tribunal stands modified to the extent indicated above. Consequently, the respondents shall not alienate and encumber the property sought to be attached and the condition imposed by the Appellate Tribunal also stands modified. These appeals are disposed of accordingly. No costs.' 2.9. In the meanwhile, the Enforcement Directorate filed a complaint in S.C.No.74 of 2017 in the Special Court for PMLA cases (Principal Sessions Court, Chennai) u/s.3 and 4 of the PMLA against Sridh....
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...., that the Pothy brothers were not involved in any crime or money laundering. 8. Mrs. G. Hema, learned Special Public Prosecutor [ED], further contended that in paragraph No.53 of the order of the appellate Tribunal, it is stated that the Pothy brothers have given an undertaking that they would have no objection for the criminal proceedings to continue as per law. In view of this undertaking, she stated that they cannot challenge the criminal proceedings in this petition u/s.482 Cr.P.C. 9. We are afraid, we cannot countenance this submission, because there cannot be any estoppel against statute. When a person has a statutory remedy, he cannot contract it out. That apart, the Pothy brothers have filed C.M.A.Nos.3336 of 2019 batch challenging paragraph Nos.53 and 54, extracted above, before a Division Bench of this Court, which has been alluded to above. 10. Now, the moot question is can the petitioner be prosecuted for the offences u/s.3 and 4 of the PMLA. The allegations against the petitioner in the impugned complaint in S.C.No.74 of 2017 that has been filed by the Enforcement Directorate are extracted hereunder: '8.7. Shri S. Ramesh Pothy (Accused-7 herein) has acquired/....
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....ayment in the name of "balance sale consideration" through the company that too, not to the seller, but to Smt.S.Kumari who is wife of Sridhar, the Accused 1 herein. The above narrated sale transactions made, within short span of time, between Sridhar, Smt.S.Kumari, Ms.Dhanalakshmi Sridhar, Shri S.Ramesh Pothy and his brothers and M/s.Pothys Private Ltd are very well within the ambit of the provision viz. "Interconnected Activities" under Section 23 of the PMLA, 2002. Keeping the above in view, it stands to reason that Shri S. Ramesh Pothy has indirectly involved and knowingly as a party in the offence of money laundering by way of acquiring the part of proceeds of crime which involved in money laundering in his name and his brothers name, from Sridhar (Accused 1 herein) through Smt. S. Kumarai (Accused 3 herein) and Ms.Dhanalakshmi Sridhar (Accused 4 herein) and made sale consideration through the company, in order to project/claim the said property as untainted property. It would not be out of place to humbly submit herein that through the POC sale transaction was made between Shri S.Ramesh Pothy (purchasers) & his brothers and Ms. Dhanalakshmi Sridhar (Seller), sale consider....
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....aid ingredients, and before somebody can be adjudged as guilty under the said provision, the said person must not only be involved in any process or activity connected with proceeds of crime, but must also project or claim it as being untainted property. ' (emphasis supplied) 13. A reading of the above clearly shows that for mulcting criminal liability u/s.3 and 4 of the PMLA, the prosecution should place materials before the Court to show that the person has not only acquired the property by committing a scheduled offence, but, he should have projected that property as untainted. 14. In this case, it is the definite case of the prosecution that the impugned property was acquired by Sridhar in the name of his wife by committing various criminal activities. Of course, a name lender to the principal accused can also be brought within the net of section 3 r/w 4 of the PMLA as abettors. In other words, where the principal offender projects a tainted property as an untainted one, not only will he be held liable, but also all others who had helped him to project the tainted property as untainted. It is not the case of the prosecution that the petitioner herein was projecting a tai....