Women Partners In Firms Involved In Economic Offenses Cannot Claim Immunity Merely On Account Of Gender: Madras High Court

"Contention that the women accused deserve a different treatment merely on account of their gender cannot be accepted. The records reveal that the daughter and daughter-in-law of the principal accused were partners in the quarrying concern... Their subsequent retirement from the partnership firm does not, by itself, efface the criminal liability," Madurai Bench of Madras High Court, in a significant ruling, held that female family members of a principal accused who are partners in a business entity cannot be exempt from criminal prosecution in economic offenses simply based on their gender.

A bench comprising Justice N. Anand Venkatesh and Justice K.K. Ramakrishnan observed that where materials disclose active participation or the status of a partner during the commission of a crime, the court cannot invoke its inherent jurisdiction to quash proceedings against them.

The court made these observations while dismissing a massive batch of petitions filed by M/s. PRP Exports and its partners, who were seeking to quash criminal cases and discharge themselves from prosecutions involving illegal granite quarrying and money laundering. The bench emphasized that gender does not serve as a shield against the legal consequences of being a partner in a firm that generates "proceeds of crime."

The case pertains to allegations of large-scale illegal granite quarrying in Madurai District, which reportedly caused a loss of approximately Rs. 13,178.49 crores to the state exchequer. The prosecution alleged that the petitioners trespassed into government lands and water bodies to extract minerals in violation of the Mines and Minerals (Development and Regulation) Act and the IPC. Following these predicate offenses, the Enforcement Directorate (ED) initiated proceedings under the Prevention of Money Laundering Act (PMLA) against the firm and its partners, including the wife, daughter, and daughter-in-law of the principal accused, P. Palanisamy.

The primary question before the court was whether female partners of a firm can be prosecuted for economic offenses and money laundering in the absence of specific overt acts. The court was also called upon to determine if the subsequent retirement of these women from the partnership firm or their domestic status as "housewives" could efface their criminal liability for acts committed during their tenure as partners.

Court’s Observations On Gender Equality In Criminal Liability

Court Rejects Plea For Special Treatment Based On Gender

The High Court categorically rejected the argument that the female family members of the principal accused were unnecessarily implicated. The bench noted that the materials on record prima facie disclosed their active involvement as partners in the firms through which illegal activities were conducted. The court stated that once a prima facie case of participation is established, the law must take its course regardless of the gender of the accused.

"This Court finds considerable force in the submission and hence, the contention that the women accused deserve a different treatment merely on account of their gender cannot be accepted," the bench observed.

Retirement From Firm Does Not Efface Past Criminal Liability

Addressing the contention that some female accused had retired from the partnership firm before the registration of the FIR, the court held that such a cessation of association does not extinguish liability for crimes committed during the period of active association. Relying on Supreme Court precedents, the bench noted that if the illegal operations occurred while they were partners, the subsequent transfer of property or retirement cannot be a ground to quash the proceedings.

"Their subsequent retirement from the partnership firm does not, by itself, efface the criminal liability, if any, committed during the period of their active association with the enterprise," the court remarked.

Wide Scope Of Section 3 PMLA And Statutory Presumptions

The court highlighted the expansive nature of Section 3 of the PMLA, which covers anyone who "knowingly assists" or is a "party" to any activity connected with the proceeds of crime. It observed that the female partners were aware of the granite business and the acquisition of properties in the firm's name. In light of the statutory presumption under Section 23 and the reverse burden of proof under Section 24 of the PMLA, the court refused to grant a finding of innocence at the quash stage.

"In the teeth of the statutory presumption under Section 23 and the reverse burden under Section 24 of the PML Act, the Court cannot give a finding in a petition under Section 482 Cr.P.C. that they did not know that they were indulging in money laundering," the bench held.

Knowledge Of Business Affairs Tantamount To Participation

The bench perused statements where certain female accused admitted to being partners while claiming they did not participate in daily business as they were "housewives." However, the court found that their knowledge of property acquisitions and their status as income tax assessees regarding the granite business were sufficient to proceed. The court held that the extent of each accused's participation can only be conclusively determined during a full-fledged trial.

"The records reveal that they were aware that they were partners in the granite business; that they had thorough knowledge about the movable and immovable properties acquired by the firms in which they were partners," the court noted.

Dismissing the petitions, the High Court directed the state to constitute a Special Public Prosecution Team to ensure the trial is concluded expeditiously, preferably within three months. The court concluded that the allegations involved serious economic offenses with substantial ramifications on public interest, and the trial judge must independently assess the evidence without being influenced by the observations made in the quash proceedings.

Date of Decision: 24 June 2026