Ex-Director Cannot Be Compelled To Represent Company In PMLA Case: Calcutta High Court

The Calcutta High Court has recently held that a former director cannot be forced to represent a company in a money-laundering case after he has left the company.

Allowing a criminal revision petition filed by the former director of Dish Pruduction and Media Ltd, a bench of Justice Ajoy Kumar Mukherjee ruled that the prosecution has no power to decide who should appear on behalf of a company in court.

The court held, “Section 70 of the PMLA is no way in conflict with section 305 of Cr.P.C. or section 141 of N.I. Act. It is the corporation within the meaning of section 305 Cr.P.C. and as such the said company alone can appoint a representative for facing the prosecution.”

The court further clarified, “The complainant is not empowered to make the petitioner to represent the accused company. Since the company/accused no. 23 is a juristic person and on the date of launching the prosecution the petitioner herein had severed all ties with the accused company the petitioner cannot be compelled to plead on behalf of the accused company under section 246 (2) of Cr.P.C. and the petitioner also cannot be compelled to answer the questions under section 311 Cr.P.C. unless he is being appointed by the company/accused to represent in an inquiry or trial.”

It also added that there is a distinction between a company's trial and an individual's liability.

It observed, “Needless to say that representation of a company during inquiry or trial must not be confused with liability of a company in case the offence is committed by the company.”

The case arose from proceedings under the Prevention of Money Laundering Act in which Suman Chattopadhyay was arraigned as an individual accused and was also shown as the representative of Disha Production & Media Pvt Ltd.

Chattopadhyay told the court that he had resigned from the company on March 14, 2013 and had no connection with it thereafter. Despite this, summons meant for the company were issued to his personal address and the trial court refused to remove his name as the company's representative.

The Enforcement Directorate opposed the plea and alleged that Chattopadhyay controlled the company when the offence was committed and used it to launder proceeds of crime linked to the Sarada Group, a company that run chit funds and collective investment schemes that collapsed in 2013.

It argued that since he was in charge at the relevant time, he was required to represent the company during trial, irrespective of his later resignation.

Setting aside the trial court's order, the High Court held that the issue of representation cannot be postponed.

It observed, “The trial Court's observation that at the stage of section 207 Cr.P.C. the issue about representation of the company is not required to be considered, is not lawful as the case cannot be proceeded at any stage without due representation of the accused no.23 and if the petitioner herein is reluctant to represent accused no. 23 then even at the stage of section 207 Cr.P.C. the company/accused no. 23 has cause to prejudice.”

The court directed that summons be served at the registered office of the company allowing it to appoint a representative of its choice.

If the company fails to appoint a representative despite being properly served, the trial court was directed to proceed with the case even in the absence of anyone appearing on the company's behalf. The entire exercise was ordered to be completed within 60 days.

Case Title: Suman Chattopadhyay v. Enforcement Directorate

Case Number: CRR 3146 of 2023

For  Petitioner: Advocate Somopriya Chowdhury, Koushik Dey, Iram Hassan, S. Sarawgi, M. Majumder

For Enforcement Directorate: Advocates Debjani Roy, Steven S. Biswas 

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