The Karnataka High Court quashed the Prevention of Money Laundering Act, 2002 (PMLA) case against Razorpay on commission earned from illegal business.
In the complaint, it is stated that the accused No.7 is a payment gateway, and they were negligent in allowing the transactions in the name of the accused No.5 without due diligence, and the said allegation is substantiated by the statement of the employee of the accused No.7.
The counsel for the respondent submitted that Section 202 of Cr.PC would not stand attracted to the complaint filed under Section 44 of the Act, 2002, as Section 44(1)(b)(d) of the Act, 2002 confers jurisdiction on the Special Court to take cognizance notwithstanding anything contained in the Criminal Procedure Code. Even otherwise, without conceding that, Section 202 is applicable, the complaint was filed by the public servant in discharge of his duties, and there is no requirement for the Special Court to examine the respondent or any witnesses before taking cognizance.
It was also submitted that the contention of the petitioner that the knowledge of proceeds of crime is not established against it, and therefore, launching of prosecution under the PMLA Act is impermissible lacks substance. The possession of proceeds of crime being key to the offence of money laundering, and the petitioner, who was in possession of proceeds of the crime, is required to rebut the presumption under Section 24 of the PMLA.
A Single Bench of Justice Hemand Chandangoudar observed that “There is no evidence to suggest that the petitioner, who is a payment gateway, had knowledge that the funds transferred to the merchant IDs of accused No.5 were derived from criminal activity related to a scheduled offence, nor did they knowingly assist accused No.5 in concealing or transferring illicit proceeds as clean money. Even if we accept the statements from the Director of accused No.5 and the employee of accused No.7, at most, it indicates that accused No.7 was negligent in setting up the merchant IDs in the name of accused No.5.”
“The aforesaid discussion clearly establishes that the complaint averments does not apparently satisfy the essential elements to constitute the offences alleged against the Petitioner, and , therefore the continuation of the criminal proceedings will be an abuse of the process of the law” the Court held.
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