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2022 Supreme(Mad) 465
IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.N. PRAKASH, R.N. MANJULA, JJ.
N. Raveendranatha Reddy – Petitioner
Versus
The Deputy Director, Directorate of Enforcement, Department of Revenue – Respondent
Crl. O.P. No. 29533 of 2015, M.P. Nos. 1, 2 of 2015
Decided On : 27-01-2022
Advocate Appeared:
For the Petitioners: Mr. N.R. Elango, Mr. R. Vivekananthan.
For the Respondent: Ms. G. Hema.
Headnote:
Prevention of Money Laundering Act, 2002 - Section 13(2) r/w 13(1) (d) and 43(1) – Indian Penal Code, 1860 - Sections 120-B r/w 420, 468 and 471 - Prevention of Corruption Act, 1988 - Section 13(2) r/w 13(1) (d) – Criminal Conspiracy - Bank Loans - Violation of Banking Norms - One T.D. Naidu approached, then Branch Manager of Andhra Bank, Anna Nagar Branch, for huge loans for starting a Medical College and Hospital sometime in the year 2008 - An important ingredient of the offence is that these persons must be knowingly or actually involved in any process or activity connected with proceeds of crime and “proceeds of crime” is defined under the Act, by Section 2(1)(u) thereof, to mean any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence. (Para 7).
Finding of the Court: There is no shred of material to show, had, in any manner, directly or indirectly, assisted T.D. Naidu in projecting the proceeds of crime as untainted money for him to be prosecuted under Sections 3 and 4 of the PML Act - As contended by, learned Special Public Prosecutor (ED), it is true that this Court has dismissed the quash petition of the co-accused in this case, but, the complaint disclosed specific overt acts against (A2), (A3), (A4) and (A5) as to how they had assisted T.D. Naidu in projecting the proceeds of crime as untainted property - However, the case stands on a different footing, inasmuch as, he had only helped T.D. Naidu to get huge loans from the Andhra Bank by abusing his official position and nothing beyond that - Hence, the prosecution for the offence under Section 3 r/w 4 of the PML Act cannot be sustained - Hence, this criminal original petition stands allowed and the proceedings qua in C.C.on file of Principal Sessions Court (Special Court for the PML Act Cases), Chennai, stands quashed.
Result: Petition dismissed.
ORDER :
1. This criminal original petition has been filed to call for the records in C.C. No. 31 of 2015 on the file of the Principal Sessions Court (Special Court constituted under Section 43(1) of the Prevention of Money Laundering Act, 2002), Chennai and to quash the same.
2. The brief facts that are required to decide this quash petition are as under:
2.1 One T.D. Naidu approached Raveendranatha Reddy, the then Branch Manager of Andhra Bank, Anna Nagar Branch, for huge loans for starting a Medical College and Hospital sometime in the year 2008. Raveendranatha Reddy, in collusion with T.D. Naidu, in violation of banking norms, appears to have sanctioned a sum of Rs. 41 crores and the account became a Non-Performing Asset (NPA).
2.2 Consequently, on a written complaint given by the General Manager of the Andhra Bank, Chennai, the Central Bureau of Investigation (for brevity “the CBI”) registered a case in RC-3(E)/2012 on 20.03.2012 for the offences under Sections 120-B r/w 420, 468 and 471 IPC and Section 13(2) r/w 13(1) (d) of the Prevention of Corruption Act, 1988 (for brevity “the PC Act”).
2.3 After completing the investigation, the CBI filed a charge sheet in C.C. No. 48 of 2013 in the Court of the XI Additional Sessions Judge, (Special Court for CBI Cases), Chennai, against three accused viz. T.D. Naidu (A1), R. Varadarajan (A2) and N. Raveendranatha Reddy (A3).
2.4 Since the case registered by the CBI disclosed an offence under Section 420 IPC, which is a scheduled offence under the Prevention of Money Laundering Act, 2002, (for brevity “the PML Act”) the Enforcement Directorate (for brevity “the ED”) registered a case in E.C.I.R. No. 13 of 2013 and after completing the investigation, the ED filed a complaint in C.C. No. 31 of 2015 in the Principal Sessions Court, (Special Court for the PML Act Cases), Chennai, for the offences under Sections 3 and 4 of the PML Act, against T.D. Naidu (A1), Prabavathy (A2), Tataji (A3), Sonia (A4), Varadharajan (A5) and Raveendranatha Reddy (A6), for quashing which, Raveendranatha Reddy is before this Court under Section 482 Cr.P.C.
3. Heard Mr. N.R. Elango, learned Senior Counsel representing Mr. R. Vivekananthan, learned counsel on record for the petitioner and Ms. Hema, learned Special Public Prosecutor (ED) appearing for the respondent.
4. The gravamen of the allegations of the ED in the complaint is that T.D. Naidu had committed a predicate offence by obtaining huge loans in collusion with Raveendranatha Reddy from Andhra Bank in gross violation of the Rules and had acquired proceeds of crime approximately amounting to Rs. 151 crores, which, he has projected as untainted money by purchasing various properties.
5. As regards the allegation against Raveendranatha Reddy in the complaint, it is found in paragraph no. 10.6, which reads as follows:
“10.6. Shri N. Raveendranathareddy (A-6 herein) had dishonestly processed and sanctioned the loans based on forged and fabricated documents in the capacity of the then Branch Manager and Branch Head, Andhra Bank, Anna Nagar Branch, as submitted by Shri T.D. Naidu (A-1 herein), and has actually involved himself and knowingly assisted with Shri T.D. Naidu in the process of defrauding the bank and in the activity connected with the proceeds of the crime. Thus, it is very well confirmed that Shri N. Raveendranathareddy (A-6 herein) has indirectly involved and knowingly is a party in the offence of money laundering. Therefore, Shri N. Raveendranathareddy (A-6 herein) has been guilty of offence of money laundering under Section 2(1)(p) r/w Section 3 of the PMLA, 2002.”
6. Apart from the above allegation, there is no other allegation in the complaint as against Raveendranatha Reddy that he had, in any manner, assisted or abetted T.D. Naidu in the commission of the offences under Sections 3 and 4 of the PML Act.
7. For fastening criminal liability under Section 3 r/w 4 of the PML Act, the following ingredients are required to be satisfied:
(i) a scheduled offenc
