TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 570
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....revention of Corruption Act, 1988 against Mr. L. Balasubramanian for amassing huge assets disproportionate to his known source of income. As per the FIR Mr. L. Balasubramanian had amassed huge wealth in the form of Fixed Deposits and immovable properties to the tune of Rs.2,03,84,378/- disproportionate to his known sources of income during the period 01.01.2010 to 30.06.201. Another FIR in Crime No.21 of 2014 dated 11.01.2014 was registered by the Central Crime Branch, Chennai City under Sections 406, 408, 471, 420 and 506(ii) IPC against Mr. L. Balasubramanian, Mr. S. Srinivasan / petitioner and other person belonging to All India Indian Overseas Bank Employees Union for diverting the funds collected from the members of All India Indian Overseas Bank Employees Union and purchasing property in the name of Mr. L. Balasubramanian. 4. The CBI, Chennai in FIR No.4 of 2018 and 51 of 2014 filed charge sheets while C.C.No.7 of 2016 and 3 of 2019 respectively under Section 120B read with Section 420 of IPC, Sections 7, 8, 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 against Mr. L. Balasubramanian and other before the Learned Special Court for CBI Cases, Chenn....
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....ior Counsel appearing on behalf of the petitioner would mainly contend that the petitioner / A2 is no way connected with the money collected by A1 on behalf of A4 Trustee. He had not involved in the administration of the Association. Therefore, implicating the petitioner as an accused is beyond the scope of the provisions of PMLA. 10. The learned Senior Counsel drew the attention of this Court with reference to the allegation in paragraph 10.2 of the complaint and contended that the averments in paragraphs 7.2, 7.3 and 10.1 are running counter to the said paragraphs. Thus, there is no material to establish that the allegations set out in paragraph 10.2 of the complaint. ECIR was recorded under PMLA based on the predicate offence registered in FIR Nos.25A 2013, 6A 2014 and 4A 2014. Even as per the complaint under PMLA, Mr. L. Balasubramanian / A1 had constituted two trust and he was the life time managing trustee along the petitioner and one Mr. R. Masilamani as nominated trustees. Further allegation is that Mr. L. Balasubramanian used the trust as conduit for siphoning of funds legitimately due to the Union and its members and the said Mr. L. Balasubramanian / A1 colluded with man....
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.... petition, this Court has to find out, whether any prima facie materials are made available against the petitioner in the complaint filed or not? 14. The complaint against the petitioner was filed under Section 45(1) read with Sections 3 and 4 and 8(5) of PMLA. The following paragraphs in the complaint would throw light on the prima facie case made against the petitioner as they are extracted hereunder; "6.1 Shri. R. Parthasarathy, the then General Secretary of the All India Overseas Bank Union in his statements dated 19.05.2015, 21.05.2015, 03.06.2015 and 06.10.2015 had stated inter-alia that the purpose of the formation of AIOBEU Trust was to do charitable activities; that S/Shri. L. Balasubramanian and S.Srinivasan who were the then President and the General Secretary of the Union respectively, mooted the idea and the AIOBEU Trust was formed on 13th July 2005 with Shri. L. Balasubramanian as the Fonder Trustee along with the aforesaid Shri. S. Srinivasan and Shri. Masilamani, the then Treasurer of the Union, as the Trustees; that the Union had provided 5% of the monthly subscription received by the Union from its members during the years 2007 and 2009; that the AIOBEU Trust h....
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....unt of Rs.31 lakhs was given from the Union to the Trust during the years 2007 and 2009 for the furtherance of the objects of social vision of the Union; that he had no idea about the utilization of these funds; that no questions or queries were raised by the President and the General Secretary of the Union about the utilization of these funds as they were also the Trustees of the Trust during that period; that presently the Trust was charging a rent of Rs. 60000/- per day for clerical staff, Rs. 50000/- per day for sub-staff and Rs.1,75,000/- per day from the Public including service tax; that the receipts for these rents were split and issued under two categories as Rent and donation to Corpus Fund; that apart from this rent, the AIOBEU Trust also takes cash of Rs. 1,00,000/- for which no receipt is issued; that the Union members have not benefitted from the Marriage Hall which was let out mainly to the general public at lucrative rates; that the Union was also put to monetary loss as the rent paid to the Union by the Trust was very less compared to the prevailing market rates for a property located in a prime locality; that the money earned by the Trust out of the Marriage hall ....
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....out the said property as a Function Hall on commercial rates, whereas the owner of the Property, i.e. the Union was cheated of its legitimate money. The Union was being paid only a small amount as monthly rent, initially Rs. 5,000 late on Rs. 50,000/- and for the past few years Rs. 1,00,000/-, whereas the AIOBEU Trust was earning more than a lakh rupees per day as rent. It may be noted that the donation given to the AIOBEU Trust was also utilized to convert the building into a Functional Hall. Hence, it can be seen that the premises along with the building and the fixtures therein were totally funded by the Union, but neither the Union nor its members were deriving any benefit out of the same. 7.6. Although the Trust was initially registered as a Public Charitable Trust and was granted Income Tax exemption, since it started indulging in commercial activities, it lost its Income Tax exemption and had to pay Income Tax and Service Tax to the tune of many lakhs of rupee annually. 7.7. As per the statements given by S/Shri. L. Balasubramanian and R. Masilamani (one of the Trustees and who was later looking after the accounts cum administration, of the said property which is being u....
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.......................... 10.2 Shri.S.Srinivasan, Ex- Trustee of AIOBEU Trust and Accused No. 2 herein, by being the then Trustee of AIOBEU Trust, had entered into a criminal conspiracy with Accused No. 1 herein, by floating & discharging the affairs of the AIOBEU Trust and had knowingly assisted and actually involved with Accused No. 1 in the acquisition, possession and use of the Proceeds of Crime and projection of the Proceeds of Crime as untainted, and had committed the offence of Money-laundering as defined in Section 3 and punishable under Section 4 of the PMLA." 15. As per the complaint, the petitioner / A2 was a First Trustee as per the Trust Deed dated 13.7.2005 and its subsequent Amendment Deed dated 17.7.2009 to the Trust Deed. 16. In his capacity as a First Trustee, along with A1, had entered into various agreements such as Agreement for Sale dated 19.6.2013 with M/s Balaji Real Estates for purchasing of property worth Rs.87,30,000/-. A Deed of Sale of Undivided Shares in Land dated 15.07.2016 with M/s Balaji Real Estates and Lease Deed dated 06.03.2009, Construction Agreement dated 19.6.2019 with M/s A.R Estates and Investments. 17. Subsequent to the registration of ....
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.... it can be applied to all entities that engage in such activities. 23. Secondly, the definition of "person" in Section 11 is consistent with the legal principle that companies and associations are separate legal entities from their members. As a result, these entities can be held liable for their actions, and individuals within the organization may be prosecuted for criminal offences committed on behalf of the entity. AS PER SECTION 2(S) OF PMLA, 2002 PERSON INCLUDES: 24. "An association of persons or a body of individuals, whether incorporated or not" As such there is no ambiguity that trust is included or falls under the ambit of the definition for person as defined under PMLA, 2002. Further a conjoint reading of Section 2(s) and Section 70 of PMLA, 2002 makes it clear that trust is also an artificial person, as it is an association of parties who jointly fulfil a common purpose. 25. The respondent Department, after a thorough and detailed investigation, had filed a complaint along with necessary annexures, detailing the proceeds of crime before this court. 26. The PMLA, being a special and standalone statute, the trial proceedings under this Act does not have any bearing o....
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....mple device of one person possessing proceeds of crime and his accomplice would indulge in projecting or claiming it to be untainted property so that neither is covered under Section 3 of the 2002 Act. Thus, a person who is as longer as in possession and enjoyment of Proceeds of Crime, PMLA can certainly be invoked. It is also submitted that the subsequent amendments made to the PMLA in respect of Section 3 of PMLA has been upheld by the Hon'ble Supreme Court of India on the premise that all the said amendments are in clarificatory in nature. 32. Therefore, mere possession of proceeds of crime would be sufficient to invoke the provisions of PMLA. Using the proceeds of crime by itself is an offence. Since the scope of Section 3 is wider enough to cover various circumstances in order to curb the economic offences, High Court cannot restrict its meaning so as to restrain the Authorities from invoking the provisions of PMLA. 33. Section 24 of PMLA denotes "Burden of Proof". "In any proceeding relating to proceeds of crime under PMLA in a case of a person charged with offence of money laundering under Section 3, the authority or Court shall unless the contrary is proved presume th....