The court affirmed that directors can be prosecuted under the Prevention of Money Laundering Act independently of the company's involvement in the complaint, establishing the principle of distinct liability for money laundering.

ORDER :

S.M. SUBRAMANIAM, J.

The lis on hand has been instituted seeking to assail the complaint filed under Section 4 5 read with Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as PMLA, 2002)

2. The petitioners are A1, A2 and A3 in C.C.No.5 of 2017.

I. BRIEF FACTS OF THE CASE:

3. The Additional Superintendent of Police, CBI, ACB, Chennai, registered an FIR vide RC.14(A)2014 dated 28.03.2014 against Mr.C.Manoharan, Proprietor of M/s.Shree Sai Enterprises, and authorised representative of M/s.Nithish Tools Private Limited and Shri V.Karunaraj, Proprietor of M/s.Sivasakthi Enterprises, four officers of customs Department, and unknown others for commission of offences punishable under Sections 120 B r/w 420, 467, 468 and 471 of IPC and Sections 13 (2) r/w 13(1)(d) of Prevention of Corruption Act and substantive offences with regard to causing loss to the tune of Rs.4.30 Crores to the Customs Department, on account of Customs duty evasion in the import of Carbide inserts imported vide 9 bills of entry during the period from 2009-2011.

4. On completion of investigation, charge sheet was filed under Section 173(2) of Cr.P.C before the learned Chief Judicial Magistrate, Coimbatore. The offences for which charge sheet was filed are Scheduled offences under Section 2 (1)(y) of PMLA, 2002 and hence, the Enforcement Directorate filed Enforcement Case Information Report (ECIR) No. 07/2015 dated 11.05.2015 against the petitioners/A1 to A3. Consequently, investigation was launched.

5. Prior to the registration of ECIR, the Directorate of Enforcement commenced investigation into the imports made by M/s.Nithish Tools Private Limited and M/s.Shree Sai Enterprises under the provisions of Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA, 1999) as information received from the Directorate of Revenue Intelligence, Chennai, revealed a case of investigation in January 2012 into the imports made by M/s Nithish Tools Private Limited and M/s Shree Sai Enterprises. Show cause notice was issued on 13.04.2013 demanding differential duty of Rs.13,79,42,157/- from M/s.Nithish Tools Private Limited and Rs.3,00,77,659/- from M/s.Shree Sai Enterprises.

6. Consequent to the investigation under the PMLA Act, the Directorate of Enforcement filed the complaint under Sections 4 5 r/w 3 and 4 of PMLA Act. The prima facie case relating to proceeds of crime under Section 2 (1)(u) of PMLA, 2002 and offence of money laundering under Section 3 are made out, the complaint has been filed before the competent Court.

II. CONTENTIONS ON BEHALF OF THE PETITIONER:

7. Mr.Natarajan, the learned Senior Counsel appearing on behalf of the petitioners would mainly contend that, admittedly the import was made out by the Company M/s.Nithish Tools Private Limited and declarations to the customs was made on behalf of the Company and the Company is a legal person. Therefore, without implicating the company as one of the accused, filing complaint against the Directors alone is not maintainable. In this regard, the learned Senior Counsel relied on Section 70 of PMLA, 2002. Once the alleged offence has been made against the company without impleading the company, the Managing Director and Director of the company cannot be impleaded as an accused and therefore, the very foundation for PMLA is in violation of Section 70 of PMLA and on that score, the complaint is liable to be set aside.

8. The petitioners 2 and 3 are also liable for business transactions of the company and after admitting the same, they are no way connected with the day-to-day affairs a