Authority: High Court of Judicature at Madras

Order Date: August 2026 (pronounced -08-2026)

Case Overview

  • Parties: Petitioners – Khetmal J. Jain (partner of M/s Salem Steels Trading Co) and M/s Salem Steels Trading Co (represented by Khetmal J. Jain); Respondent – Assistant Director, Directorate of Enforcement, PMLA.
  • Predicate Investigation: CBI registered FIR No.RC AC-1 2021 A0005 on 05‑07‑2021 for offences under Sections 7, 9, 10, 11 of the Prevention of Corruption Act, 1988. The case is pending as C.C.No.36 of 2021 before the Special Judge, Prevention of Corruption Act, New Delhi.
  • Enforcement Directorate Action: ECIR No.CEZO‑I/56/2021 dated 07‑10‑2021 was filed. A complaint was lodged before the Special Court as Spl.C.C.No.6 of 2024 under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002 (PMLA).
  • Trial Court Disposition: The trial court, after framing charges, dismissed the petitioners’ discharge application under Section 227 CrPC, finding prima facie material indicating their involvement.
  • Petitioners’ Contentions: They argued that the three scrutinised transactions (out of ~21) amounting to Rs 1 crore were ordinary business receipts from A7 (Universal Engineers Chennai Pvt. Ltd.) and that no basis existed to label them proceeds of crime.
  • Respondent’s Evidence: Bank statements showed three transfers – Rs 25 lakh on 16‑06‑2021, Rs 25 lakh on 17‑06‑2021, and Rs 50 lakh on 02‑07‑2021 – totalling Rs 1 crore, transferred from A7 (through A6) to the account of the second petitioner (A4).
  • Statutory Statements: Statements under Section 50 of the PMLA were recorded from the petitioners and intermediaries (Bipin Jain, Sohanlal Gupta, Naresh Kumar). The first petitioner’s voluntary statements dated 06‑06‑2022 and 25‑07‑2022 admitted arranging two cash loans of Rs 50 lakh each at the request of Smt. Hamsa Venugopalan (A6) and delivering the cash in New Delhi to Om Prakash, who subsequently handed it to Sanjay Kathpal.
  • Nature of Transactions: The petitioner’s statements clarified that the funds were not for any supply of raw material but were personal loans intended for delivery to designated persons in Delhi, contradicting the claim of ordinary business.
  • Legal Precedents Cited: The court referred to Supreme Court judgments – Sajjan Kumar vs CBI, Prem Prakash vs Union of India, Tarun Jit Tejpal vs State of Goa, State of Bihar v Ramesh Singh, and Union of India v Prafulla Kumar Samal – to elucidate the scope of Section 227 CrPC, emphasizing that strong suspicion, not proof beyond reasonable doubt, suffices to deny discharge at the charge‑framing stage.
  • Court’s Reasoning: Considering the bank statements, the Section 50 statements, and the absence of any documentary proof of genuine business delivery, the court held that the material raised a strong suspicion of the petitioners’ participation in laundering proceeds of crime. The trial court’s dismissal of the discharge petition was therefore justified.

Final Outcome

  • The Criminal Revision Case (CRL RC No.925 of 2026) is dismissed.
  • The connected Miscellaneous Petition is closed.

Topics: Money Laundering, PMLA Enforcement, Judicial Review