TMI Blog2022 (12) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... e benamies of Sridhar and his family, the immovable property in the hands of the Pothys cannot be said to be proceeds of crime . At the risk of repetition, this Court has quashed the prosecution against Ramesh Pothy holding that he was not involved either directly or indirectly in the money laundering offence with Sridhar and his family members. Section 8(7) of the PMLA came up for consideration before a Division Bench of this Court in The Assistant Director v. Canara Bank [ 2021 (10) TMI 894 - MADRAS HIGH COURT ], wherein, this Court has held that Section 8(7) of the PMLA is a stand alone section and is not governed by the proviso to Section 8(8) of the PMLA, as the latter would come into effect only after the culmination of the trial, but, whereas the former could be invoked during the pendency of the trial, if it is found that the trial is not progressing for any other reason . In this case, there was no progress in the trial from 2017 onwards for various reasons - the property in question, which belongs to the Pothys cannot be confiscated in lieu of Rs.5,30,74,500/- in the hands of their vendors, to wit, Kumari and Dhanalakshmi. Of course, it would be open to the Enforceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 December 2015 in the office of the Sub Registrar Joint II, Kanchipuram. Thereafter, Kumari settled the impugned property in favour of her daughter Dhanalakshmi Sridhar, who was 20 years old then, vide a deed of settlement dated 02.01.2016 registered as Document No.03 of 2016. 2.5. The petitioner belongs to the Pothy family, which runs a chain of textile outlets in various parts of Tamil Nadu. This Pothy family appears to be owning land measuring 64734 sq.ft. in Survey No.555/2, Kanchipuram, which is adjacent to the impugned property. The impugned property is a pathway connecting the main road with the property of the Pothys in Survey No.555/2. Therefore, the Pothy brothers, numbering 5, purchased the impugned property from Dhanalakshmi Sridhar for a total sale consideration of Rs.5,30,74,500/- by a deed of sale dated 29.02.2016 registered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 date of passing the provisional attachment order. 52. I am of the opinion that complaint filed against Ramesh Pothy is not sustainable and is filed after-thought as the IO has failed to trace the amount paid by the appellant to the family members of Late Sridhar. In order to save its skin, the complaint against the Ramesh Pothy has been filed. This is because of the reasons that the appellants are not directly or indirectly involved in the money laundering. They have no direct link or nexus with deceased who has now passed away. 53. The appellants have no objection if criminal proceedings already pending against accused parties may continue as per law. 54. The appellants despite of above are agreeable to deposit a sum of Rs.6,47,25,000/- as value assessed by the ED in the Investigation Report with the respondent (witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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 Sridhar [A1], Senthil [A2], Kumari [A3], Dhanalakshmi Sridhar [A4], Arul [A5], Kamalakannan [A6] and Ramesh Pothy [A7]. Challenging the prosecution, Ramesh Pothy [A7] has filed the present petition u/s.482 Cr.P.C. 3. Heard Mr.Nithyaesh Natraj, learned counsel appearing for the petitioner and Mrs.G.Hema, learned Special Public Prosecutor [ED] appearing for the respondent. 4. At the outset, Mrs.G.Hema, learned Special Public Prosecutor [ED], submitted that this Court had dismissed the quash petition of the co-accused in this case viz ., Dhanalakshmi Sridhar in Crl.O.P.No.24316 of 2018 vide order dated 04.02.2021 and so this petitioner deserves the same fate. This order has been passed by a Division Bench of this Court, in which one of us [P.N.Prakash, J] was a member. 5. This Court had dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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/purchased an immovable property in Kanchipuram District involved in money laundering and worth around Rs.6.50 Crores, from the possession of Ms.Dhanalakshmi Sridhar (Accused-4 herein) and the said immovable property has been registered in the name of Shri S.Ramesh Pothy along with his brothers. The details of the said transactions are explained as under: Sridhar (A1) has involved in major criminal activities and committed Scheduled Offences and from the major criminal activities, he gained huge Proceeds of Crime. From the part of gained Proceeds of Crime, he acquired/purchased properties in his name and in the name of his family members and in the name of his associates. Sridhar (A1) has acquired the subject property from the part of proceeds of crime and registere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t.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 consideration transaction was made between M/s.Pothys Private Ltd. (who is not the purchaser) and Smt.S.Kumari (who is not the seller). Therefore, Shri S.Ramesh Pothy has been knowingly and actually involved in the money-laundering activity connected with the proceeds of crime derived by Shri Sridhar (Accused-1 herein), including its possession and acquisition, use and claiming and projecting the same as untainted properties and thus committed the offence of money laundering under Section 3 of PMLA, 2002 and has been guilty of offence of money laundering under Section 2(1)(p) r/w Section 3 of the PMLA, 2002, punishable under Section 4 of the said Act. ' 11. A reading of the above shows that the petitioner, being the Managing Director of the Pothy brothers, has been prosecuted for pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse, 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 tainted property as an untainted one nor is it their case that the petitioner had abetted D.Sridhar in projecting a tainted property as an untainted one. The petitioner was only a bonafide purchaser of the impugned property from the daughter of D. Sridhar. 15. Mrs.G.Hema, learned Special Public Prosecutor [ED] submitted that the petitioner had paid only Rs.25,43,755/- to Dhanalakshmi Sridhar, their vendor and not the entire sale consideration of Rs.5,30,74,500/-. The Enforcement Directorate obtained this information from the sale deed dated 29.02.2016, which is a relied upon document. This sale deed clearly shows in page No.15, the schedule of payment that has been made by the Pothy brothers for the purchase of the impugned property. For the sake of convenience, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reflected in the sale deed itself, cannot amount to an offence u/s.3 r/w 4 of the PMLA. 17. In view of the foregoing discussions, we are of the opinion that the prosecution of the petitioner u/s.3 and 4 of the PMLA in S.C.No.74 of 2017 is an abuse of process of law. Ergo, this Criminal Original Petition is allowed and the prosecution qua the petitioner herein in S.C.No.74 of 2017 on the file of the learned Principal Sessions Judge, Chennai, is hereby quashed. However, in view of the undertaking given by the petitioner in the C.M.A.Nos.3336 of 2019 batch, he will have to abide by the verdict of the trial Court in S.C.No.74 of 2017 with regard to the confiscation of the impugned property u/s.8(5) (6) (7) and (8) of the PMLA. Consequently, connected miscellaneous petition is closed. 3. To summarise the above, one Sridhar, a local don, purchased 12,945 sq.ft. of land in Kanchipuram in the name of his wife Kumari between 28.12.2015 and 30.12.2015 under a number of sale deeds by allegedly intimidating the owners of the lands. This property was settled by Kumari in favour of her daughter Dhanalakshmi on 04.01.2016. The Pothy family, represented by Ramesh Pothy, purchased this l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... traj, learned counsel appearing for the petitioners and Mr.P.Sidharthan, learned Special Public Prosecutor [ED] appearing for the first respondent. 8. The Enforcement Directorate has filed a counter strongly objecting to the claim of Ramesh Pothy and praying for sustaining the order of the trial Court. 9. This Court gave its anxious consideration to the rival submissions. 10. Admittedly, the Pothys had paid Rs.5,30,74,500/- as sale consideration to Kumari and Dhanalakshmi for purchasing the property. It is not the case of the Enforcement Directorate that the Pothys were benamies of Sridhar or Kumari or Dhanalakshmi. The Pothys have disclosed the entire payments that were made for the purchase of the said property. The Enforcement Directorate was not able to trace Rs.5,30,74,500/-, which had gone into the kitty of Kumari and Dhanalakshmi and therefore, they are now holding on to the property of the Pothys. 11. In our considered opinion, when it is not the case of the Enforcement Directorate that the Pothys had purchased the property for a nominal consideration and that they are benamies of Sridhar and his family, the immovable property in the hands of the Pothys cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if they are not able to trace the sum of Rs.5,30,74,500/-, but, that can, by no stretch of imagination, empower them to attach the buyers' properties for the sin of having purchased the same for a valid consideration from a tainted seller. 17. In fact, the appellate authority himself had questioned the Enforcement Directorate as to why they had not gone behind the sale consideration that was paid by the Pothys to Dhanalakshmi and Kumari, for which, there was no satisfactory explanation. It may be pertinent to extract the relevant portion from the order of the appellate authority: 20. The respondent despite of having the details of bank account of the sellers in which the money was transferred did not attach the amount and accounts of Mrs.Kumari and Ms.Dhanalakshmi rather attach the subject matter of property. The requisite details of payments made to seller/accused persons including bank account details to which payments were made were given to the Adjudicating Authority, however the respondent had chosen to attach impugned property only in question. The IO and counsel has failed to give any answer as to why despite of having knowledge, why amount received from the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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