Case Law Details
K. Murali Krishna Vs Deputy Director (Supreme Court of India)
Issuing Form 15CB Bona Fide Not ‘Assisting’ Under PMLA: Supreme Court Upholds Madras HC Order- Professional Duty ≠ Criminal Liability – SC Affirms Madras HC Relief to Chartered Accountant
Background
Petitioner, K. Murali Krishna Chakrala, a practicing Chartered Accountant, was prosecuted by the Directorate of Enforcement (ED) under the Prevention of Money-Laundering Act (PMLA), 2002. The allegation was that he had issued five Form 15CB certificates to a Chennai-based entity, M/s B.K. Electro Tool Products, which allegedly engaged in bogus import transactions & illegal outward remittances through fictitious accounts. The CA had certified those remittances under Rule 37BB of the Income-tax Rules, 1962, based on the documents & declarations furnished by his client. ED contended that such certification amounted to “knowingly assisting” in the process of laundering, attracting Section 3 PMLA.
High Court Decision (08-08-2024 – Madras HC – 457 ITR 579 (Mad.))
The Madras High Court examined the scope of a CA’s obligation while issuing Form 15CB & drew a sharp distinction between professional certification & active complicity.
Key findings:
- The CA’s role under Rule 37BB is confined to verifying the taxability & applicability of TDS on the remittance.
- He is not expected to investigate the genuineness of the underlying commercial transaction or the authenticity of import documents.
- Unless the CA had knowledge or intent that the documents were forged, no offence under Section 3 PMLA could be made out.
- The High Court therefore discharged the Petitioner, holding that issuing Form 15CB in the ordinary course of professional duty does not constitute “assistance in laundering”.
Proceedings Before the Supreme Court
The ED carried the matter in appeal via SLP (Crl.) Diary No. 8123/2024, which was dismissed on 18 March 2024.
Later, the Petitioner sought recall of certain connected orders through Misc. Application No. 1900/2025 in SLP (Crl.) No. 10821/2025.
Supreme Court Order (10 November 2025)
A Bench of Justice Surya Kant & Justice Joymalya Bagchi held that there existed no valid ground to interfere with the Madras High Court’s judgment.
Quoting briefly:
“… there is no valid ground to interfere with the impugned order dated 08.08.2024 passed by the Madras High Court.”
Accordingly, the Miscellaneous Application was dismissed, & all pending applications stood disposed of.
Analytical Commentary
1. Endorsement of the High Court’s Reasoning
The Supreme Court’s refusal to interfere effectively endorses the principle that a CA acting bona fide within statutory limits under Form 15CB cannot be criminally prosecuted under PMLA unless mens rea or “knowing assistance” is demonstrably proved.
2. Boundary of Professional Liability
The order safeguards professionals from being dragged into PMLA proceedings merely for discharging statutory certification duties.
Certification ≠ complicity. The obligation is administrative, not investigative.
3. Recall Jurisdiction Narrowed
The Supreme Court reaffirmed that recall cannot substitute for review. Absent procedural error or manifest injustice, the Court will not reopen concluded SLPs.
4. Wider Impact
The combined effect of both judgments gives comfort to the CA fraternity: so long as Form 15CB certifications are made bona fide, relying on client-supplied records, no PMLA liability arises.
It also aligns with earlier judicial trends limiting PMLA’s reach to genuine offenders, not professionals performing regulated duties.
Result
- Madras HC Order (Discharge) — Upheld
- SLP / Recall Application — Dismissed
- Effect: All proceedings against the CA under PMLA stand terminated.
This ruling reinforces a crucial principle: “Professional certification under fiscal law cannot be criminalised unless there is conscious participation in laundering.” For practising CAs, it delineates the outer limit of responsibility under Form 15CB — ensuring due diligence within tax law without transforming into investigators for money-laundering offences. The decision thus balances anti-laundering enforcement with professional autonomy, setting a welcome precedent against regulatory overreach.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Having heard learned counsel for the petitioner, we are satisfied that regardless of the dismissal of SLP (Crl.) Diary No. 8123/2024 on 18.03.2024, which was filed by Directorate of Enforcement, there is no valid ground to interfere with the impugned order dated 08.08.2024 passed by the Madras High Court.
2. The Miscellaneous Applications is, accordingly, dismissed.
3. All pending applications, if any, also stand disposed of.
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