Kolkata: The Calcutta High Court has ruled that a former director cannot be compelled to represent a company in a money-laundering case, holding that the firm must first be summoned at its registered office and allowed to choose its own authorised representative.
The observation was made by the bench of Justice Ajoy Kumar Mukherjee in a case arising out of the Sarada chit fund scam.
The petition arose from a complaint filed by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA) involving two companies — M/s Disha Production & Media Pvt. Ltd. and M/s Akdin Media Pvt. Ltd. The petitioner said he resigned from Disha in 2013, but court records continued to show him as the company’s representative.
He told the court that no board resolution had ever authorised him to appear for the company and that the summons meant for Disha was wrongly sent to his personal address. After the trial court refused to remove his name, he approached the High Court.
In its submissions, the ED said proceeds of crime generated by the Sarada Group of Companies, led by Sudipto Sen, were allegedly routed through several entities in an attempt to conceal their origin.
The agency claimed that funds received by Disha and Akdin were projected as unsecured loans and that the movement of money between the two companies formed part of the layering of proceeds.
The High Court did not examine these allegations but limited itself to the question of due representation of the companies. It observed that a company is a separate legal entity and must be served with summons at its registered office before it can appoint a representative.
The bench noted that no proper summons had been issued to Disha and held that the prosecution could not impose an unwilling individual as the company’s representative.
The court also remarked that the issue could not be postponed to a later stage of trial because proceedings cannot move forward without the proper representation of all accused entities.
The High Court directed the magistrate to issue a fresh summons to Disha at its registered office and give the company an opportunity to nominate someone
of its choice. If the company does not respond despite proper service, the magistrate may proceed in accordance with law.
The entire exercise has been asked to be completed within 60 days of communication of the order.