AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1548
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....ned counsel for the petitioner. 3. In this matter, the prosecution case is that, the 1st accused, M/s. Al Zarafa Travels and Manpower Consultations is a private limited company and the 1st and 2nd accused are Managing Director and Director of the company respectively. The 1st accused company was involved in recruitment of manpower. Initially, the 2nd accused was controlling the affairs of the company. Later, he made his wife, the 2nd accused, as the Director of the Company and made one Renny Eapen, who was an employee of the Company, as a second Director and withdrew his Directorship from the Company. During the period from December, 2014 to March, 2015, accused Nos.2 and 3, who were carrying out the affairs of the company, cheated nursing aspirants, dishonestly and illegally, as the outcome of criminal conspiracy hatched between them, collected huge sum of money from nursing aspirants and about Rs.100 Crores was transferred via illegal hawala channels to Dubai. It is alleged further that, the 2nd accused was the kingpin of the scam and the 3rd accused, who was the then Director of the Company knowingly assisted the 2nd accused in generating proceeds of crime, its concealment an....
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....r shall be read or stated or explained to the accused, shall be construed as a requirement that thing shall be done in the presence of the representative or read or stated or explained to the representative, and any requirement that the accused shall be examined shall be construed as a requirement that the representative shall be examined. As per Sub section (4) of Section 305, where a representative of a corporation does not appear, any such requirement as is referred to in sub-section (3) shall not apply. 7. The learned counsel for the petitioner also referred Section 70 of the PMLA Act. As per Section 70 of the PMLA Act, it has been provided as under: 70. Offences by Companies.-- (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained....
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....he representative of the 1st accused company. 9. The learned counsel for the petitioner placed decision reported in Krishnaswamy Sridhar v. State by CBI reported in [CDJ 2021 Kar HC 1543], wherein the impact of Section 305 of Cr.P.C. was considered and in the said case, the High Court of Karnataka, held that, in view of Section 305 (4) of Cr.P.C, where the representative of a company does not appear before the court and on such non-appearance, the procedure stipulated under sub section (3) of Section 305 would not apply and the procedure would apply is under Section 305(4) of Cr.P.C. 10. Countering this argument, it is submitted by the learned Standing Counsel for Enforcement Directorate that, in view of Section 248(7) of the Companies Act, the liability, if any, of every director, manager or other officer, who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved. Therefore, the prosecution against every member of a dissolved company under sub-section (5) shall continue and can be enforced. It is pointed out by the learned Standing Counsel further....
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....e company. The doctrine of attribution in corporate criminal liability holds that a company can be held liable for the actions of its employees, particularly those in positions of authority. 15. But, when the company is dissolved after commission of crime, in order to prosecute the company, the procedure followed is to restore its status after setting aside the dissolution or the state of non existence. Therefore, when a company is dissolved or came to an end by operation of law, then also the offence committed by the company can be prosecuted, because striking off or dissolution does not erase liability of the company and in such cases the company has to be restored to the register. 16. Section 252 of the Companies Act, 2013, allows aggrieved parties or regulators like ROC, SEBI, IT Department, to apply to the National Company Law Tribunal (NCLT) for restoration, within three years from the date of dissolution or striking off. 17. In this connection, it is relevant to refer a recent decision of the Apex Court reported in [MANU/SC/0889/2025 : 2025 SCC OnLine SC 1419 : 2025 INSC 831] Dhanasingh Prabhu v. Chandrasekar and another, wherein the Apex Court considered a criminal....
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....ability of the directors of a company when the company itself was not prosecuted against or made liable. We say so for the reason that the distinction between a company and a partnership firm has to be borne in mind while approaching these cases. Hence, the judgment of this Court in Aneeta Hada is of no assistance to the respondent herein. 6.3 In Dilip Hariramani vs. Bank of Baroda, 2022 SCC OnLine SC 579 ("Dilip Hariramani"), the issues raised were (i) whether the appellant therein, being a non-signatory to the dishonoured cheque, could have been convicted under Section 138 read with Section 141 of the Act on the basis that there was vicarious criminal liability of a partner; and (ii) whether the partner could be convicted and held to be vicariously liable when the partnership firm was not made an accused and therefore not tried for a primary or substantive offence. The facts of the case are necessary to be discussed inasmuch as in this case the respondent-Bank of Baroda had granted term loan on cash credit facility to a partnership firm-M/s Global Packaging and the repayment of the loan by the firm was through its authorized signatory who had issued three cheques which were di....
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.... 6.9 On considering the aforesaid judgments, we observe that even if we have to come to the conclusion that the juristic entity i.e., the partnership firm is the primary accused in the instant case it would be necessary for us to also state that such a juristic entity, namely, a partnership firm is not distinct from the partners who comprise the partnership. In other words, if the complainant had proceeded only against the partnership firm and not the partners it possibly could have been held that the partnership firm in the absence of its partners is not a complete juristic entity which can be recognised in law and therefore cannot be proceeded against. On the other hand, in the instant case the complainant has proceeded against the two partners. The complainant is aware of the fact that the cheque has been issued in the name of the partnership firm "Mouriya Coirs" and has been signed by one of the partners. The complainant has proceeded against the partners only without arraigning the partnership firm as an accused. It is necessary to reiterate that a partnership firm in the absence of its partners cannot at all be considered to be a juristic entity in law. On the other hand, ....
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....ers of the firm. 20. In fact, in consequence of dissolution of a company under Section 248 of the Companies Act, it shall on and from the date mentioned in the notice under sub-section (5) of that section cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for payment or discharge of the liabilities of obligations of the company, as stipulated under Section 250 of the Companies Act. 21. Coming to cases under the PMLA Act, Section 70 also would apply insofar as offences committed by the company and as per Section 70 of the PMLA Act, where a person committing a contravention of any of the provisions of the PMLA Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. 22. Section 71 of the PMLA Act provides that,....