Ingenuine Documents Submitted By Clients For Form 15CB, CA Cannot Be Prosecuted Under PMLA: Madras High Court

The Madras High Court has held that the chartered accountant (CA) is not required to go into the genuineness or otherwise of the documents submitted by his clients.

"A Panel Advocate, who has no means to go into the genuinity of title deeds and who gives an opinion based on such title deeds, cannot be prosecuted along with the principal offender. Applying the same anomaly, we find that the prosecution of Murali Krishna Chakrala, in the facts and circumstances of the case at hand, cannot be sustained," the division bench of Justice P. N. Prakash and Justice G. Chandrasekharan observed.

The petitioner, Murali Krishna Chakrala, is a chartered accountant who was charged under the Prevention of Money Laundering Act, 2002 (PMLA). The petitioner was approached by his client for the issuance of Form 15CB. The client was required to pay for imports. After reviewing all of the required information, the petitioner issued Form 15CB at his client's request.

The Enforcement Directorate completed the investigation against the five persons. The allegations were that the persons had opened fictitious bank accounts, submitted forged Bills of Entry, parked huge amounts in those bank accounts, and had them transferred to various parties abroad through the bank, in order to make it a licit transaction for the alleged purpose of importation.

An initial investigation revealed that Rs. 8 crores was transferred out of India via seven banks to fictitious entities abroad. However, the Enforcement Directorate continued with the investigation of the case, though a complaint was filed. During its investigation, the Enforcement Directorate stumbled upon some Form 15CB that was issued by the CA. They zeroed in on him, and during interrogation, he revealed startling facts: one of his clients, Kiyam Mohammed, had approached him for issuance of Form 15CB under Rule 37-BB of the Income Tax Rules, 1962, and submitted documents in support of his request. The CA perused those documents and issued certificates to the effect that it is not necessary to issue Form 15CB in respect of overseas payment of imports.

The petitioner contended that Form 15CB for making overseas payments towards import is not required even under the law, and that is why, except for the State Bank of Travancore, all the other nationalized banks had transferred the funds based on the import documents without insisting upon a Form 15CB from a Chartered Accountant. Had Murali Krishna Chakrala been a part of the conspiracy, he would not have gullibly uploaded the certificates into the Income Tax Department portal on the same day.

The petitioner contended that the mere issuance of five numbers of Form 15CB at the request of the client would not, by itself, bring the CA into the net of a conspiracy to indulge in money laundering and merit acceptance. The CA had merely received Rs. 1,000 for a certificate without anything more.

The court discharged the petitioner from the prosecution and enlisted him as a witness.

Case Title: Murali Krishna Chakrala Versus Deputy Director,

Citation: 2022 LiveLaw (Mad) 495

Case No: Criminal Revision Case No.1354 of 2022 and Crl.M.P.No.14792 of 2022

Date: 23.11.2022

Counsel For Petitioner: Advocates Nithyaesh Natraj, Vaibhav R. Venkatesh, S.Ravi

Counsel For Respondent: Special Public Prosecutor N.Ramesh

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