NEW DELHI: The Supreme Court has stayed all proceedings initiated under the Prevention of Money Laundering Act (PMLA) against R Subramanian, the former promoter of retail store chain Subhiksha group in a bank fraud case.
A top court bench headed by Justice Rohinton F Nariman ordered that all PMLA proceedings pending before a special court in Chennai against Subramanian will remain stayed till further orders.
"...there shall be stay of proceedings under the Prevention of Money Laundering Act," the bench, also comprising Justice Vineet Saran, said.
Subramanian had approached the top court through advocate Avneesh Arputham challenging an October 2018 order of the Madras High Court upholding the special court order taking cognisance of the money laundering complaint against him.
His plea said that he had taken various loans from different banks and was unable to repay the same, and the Central Bureau of Investigation (CBI) charged him with cheating and other offences.
Subsequently, the Enforcement Directorate (ED) also registered a complaint against him. Apart from the arrest, his property was also attached by ED, advocate Arputham said.
The appeal in the top court said the order of the special court taking cognisance of the PMLA offence was challenged before the Madras High Court on the ground that the offence of cheating was not a Scheduled Offence in the PMLA when the alleged crime was committed and therefore, the PMLA cannot be applied retrospectively.
The appeal also stated that Bank of Baroda filed a complaint with the CBI alleging that whereas the loan was taken for the purposes of establishing new stores, Subramanian utilised the loan sanctioned for purchasing goods for the existing stores and also for making payment to sundry creditors for goods purchased earlier, which, according to the bank, amounted to an offence of cheating on his part.
"Mere non-payment of loan amount would not make the initial obtaining of the loan, a punishable offence under Section 420 IPC. There may be a number of reasons as to why a person is unable to repay a loan taken for bonafide business purposes. In the present case, the business failed owing to the liquidity crunch arising out of the crisis in the global financial market and related causes, resulting in the failure of the business. Also, violation of the terms of the loan will not make it an offence under Section 420 IPC," the appeal stated, adding that offence of cheating is not made out at all.