TMI Blog2021 (2) TMI 1356X X X X Extracts X X X X X X X X Extracts X X X X ..... nforcement Directorate cannot be agreed upon that the salaries and perquisites that were paid to Sivaramakrishnan (A.1) while he was in employment with FLCI would amount to proceeds of crime and any property purchased with that would stand tainted. Albeit the presumption under Section 24 of the PML Act, on facts, it is held that the impugned prosecution of Sivaramakrishnan (A.1) and his wife Ratha (A.2) under the PML Act is misconceived and the same is accordingly quashed. This Criminal Original Petition is allowed. - Honourable Mr. Justice P.N. Prakash And The Honourable Mr. Justice V. Sivagnanam For the Petitioners : Mr. B. Kumar Senior Counsel for Mr. S. Ramachandran For the Respondent : Mr. R. Sankaranarayanan Additional Solicitor General assisted by Ms. G. Hema Special Public Prosecutor for ED. ORDER P.N.PRAKASH, J. This Criminal Original Petition has been filed to quash the proceedings in C.C.No.71 of 2016 on the file of the Principal Sessions Court, Chennai. 2 Undisputed facts: 2.1 First Leasing Company of India Limited (in short FLCI ) was a company incorporated under the Companies Act, 1956 and was into the business of giving indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Prevention of Money Laundering Act, 2002 (in short the PML Act ), viz., Section 420 IPC, the Enforcement Directorate registered a case in ECIR No.10 of 2015 on 20.11.2015 against the aforesaid persons. 2.9 Likewise, on a complaint lodged by the SBI, the CBI registered a fresh FIR in Crime No.RC-02(E) of 2016 on 08.01.2016 for the offences under Sections 120-B read with 409, 420, 467, 468, 471 and 477-A IPC against the aforesaid persons in respect of fraud that was allegedly committed by them qua SBI. 2.10 During the course of the investigation in ECIR No.10 of 2015 registered pursuant to the complaint given by IDBI Bank, the Enforcement Directorate arrested some of the accused, but, consciously did not go anywhere near A.C.Muthiah for the reasons best known to them. 2.11 After completing the investigation, the Enforcement Directorate filed three separate complaints in the Special Court for PMLA Cases, Chennai, which are as under: i. C.C.No.63 of 2016 in ECIR.No.10 of 2015 against Farouk Irani (A1) and his wife Sherna F Irani (A2), for quashing which, they have filed Crl.O.P.No.26586 of 2016 and Crl.O.P.No.23917 of 2018, respectively; ii. C.C.No.71 of 2016 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily members, does show that they are adopting a pick and choose attitude, merits serious consideration. However, this Court can only raise its eyebrows and stop with that and cannot quash the prosecution against Sivaramakrishnan, on the ground of discrimination under Article 14 of the Constitution of India. 7 This Court has to see whether the materials disclosed in the complaint against Sivaramakrishnan and his wife are sufficient enough to mulct them with criminal liability under the PML Act. This Court is aware that the findings of the CBI in the final report are not binding on the Enforcement Directorate and that, the Enforcement Directorate has to independently place materials to show that via the alleged criminal activity, Sivaramakrishnan has acquired some proceeds of crime and has projected them as untainted money. 8 In the complaint, the Enforcement Directorate has stated how Sivaramakrishnan, as Accountant, had made false entries in the account books and had inflated the financial status of the company and had induced the banks to give loans to FLCI. There is absolutely no mention in the complaint that he had acquired any proceeds of crime by that activity, apart fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osecution case that FLCI's only job was to engage in criminal activities. In fact, as stated above, Sivaramakrishnan joined FLCI in the year 1997; the subject loan of Rs.20 crores was given by the SBI on 08.02.2005; similarly, the IDBI Bank sanctioned the loan of Rs.18 crores only on 17.08.2005; only thereafter, the diversion of funds had taken place into the shell companies of FLCI and the proceeds of crime generated. 10 Mr.Sankaranarayanan, learned Additional Solicitor General attempted to defend the prosecution by contending that the loans obtained from the banks were paid as salary to Sivaramakrishnan and since Sivaramakrishnan is alleged to have been a party to the conspiracy for fudging the records, his salary should be treated as proceeds of crime. In our opinion, this is indeed far-fetched. The complaint is no doubt replete with the misdemeanours of Sivaramakrishnan in manufacturing the accounts of FLCI. But, he is facing the music for that in the CBI prosecution before the Additional Chief Metropolitan Magistrate, Chennai, in C.C.No.8 of 2017. The immovable property that is said to have been purchased by Sivaramakrishnan, viz., a vacant house site measuring 1,500 sq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefits of Shri A.C. Muthiah (A-1), Shri Farouk M. Irani (A-2), Shri. Ashwin C. Muthiah (A-13), M/s. Darnolly Investments Ltd. (A-14), M/s. Ranford Investments Ltd. (A-15), M/s. Sicagen India Ltd.(A-16), M/s. ACM Educational Foundation (A-17), M/s. ACM Medical foundation (A-18), M/s. MAC Public Charitable Trust (A-19), M/s. South India House Estates Properties Ltd. (A-20), M/s.South India Travels Pvt. Ltd. (A-21), Smt. Sherna F. Irani (A-24), Smt. Farah Bakshay (A-25), Smt. Lia Gagrat (A.26).... Likewise, in the FIR in Cr.No.6 of 2015 that was registered by the CBI based on the complaint given by the IDBI Bank, investigation was completed and charge sheet has been filed in C.C. No.7756 of 2018 in the Court of the Additional Chief Metropolitan Magistrate, Egmore, Chennai against A.C.Muthiah and others for the offences under Sections 120-B read with Sections 201,409,420,468,471 and 477-A IPC. In that charge sheet also, with regard to diversification of funds, it is stated as follows in paragraphs 42 and 43: 42. That as per the Section 205 of the Companies Act, 1956 which states that No dividend shall be declared or paid except out of profits . That Shri. A.C. Muthiah (A-1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of dividends against the false profits, have misappropriated the assets of the company entrusted to them amounting to criminal breach of trust of the shareholders of the company. Even the C.B.I. has not found that Sivaramakrishnan benefitted financially from the criminal activity of fudging records. Of course, these findings of the C.B.I. are not binding on the Enforcement Directorate, but, this Court cannot turn a Nelson's eye to this, especially in the light of the fact the Enforcement Directorate themselves have filed a separate complaint in C.C.No.63 of 2016 against Farouk Irani and Sherna F. Irani for diverting the loan amounts into their personal accounts and into the account of their family Trust and for projecting them as untainted money. It may be pertinent to state here that we have dismissed the quash applications of Farouk Irani and Sherna F. Irani in Crl.O.P.Nos.26586 of 2016 and 23917 of 2018, respectively, today, vide separate order. 14 In view of the above discussion, we are unable to persuade ourselves to agree with the Enforcement Directorate that the salaries and perquisites that were paid to Sivaramakrishnan (A.1) while he was in employment with FLCI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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