DIRECTORATE OF ENFORCEMENT versus PADMANABHAN KISHORE
[2022] 13 S.C.R. 1064, Supreme Court of India, 2022
Outcome: Appeal(s) allowed (Granted)
Segment: Body
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[2022] 13 S.C.R. 1064
1064
DIRECTORATE OF ENFORCEMENT
v.
PADMANABHAN KISHORE
(Criminal Appeal No. 1864 of 2022)
October 31, 2022
[UDAY UMESH LALIT, CJI AND BELA M. TRIVEDI, J.]
Prevention of Money Laundering Act, 2002 – ss. 2(1)(u), 3,
and 4 – Prosecution case was that A-1 was Additional Commissioner
of Income Tax – On intelligence, the CBI checked a car that was
parked in front of the house of A1 and recovered a sum of
Rs.50,00,000/- in cash – It is alleged that A1 and A3 were in that
car at that time – During investigation, it came to light that the sum
of Rs.50,00,000/- was handed over to A-1 by A-2 whose income tax
file was pending with A1 for clearance – Since A-2 wanted certain
benefits, he had allegedly paid the sum of Rs.50,00,000/- as bribe
to A1 – In connection with this seizure, case was registered under
s.120- B IPC and ss.7, 12, 13(1)(d) r/w s.13(2) of the Prevention of
Corruption Act, 1988, s.3 of the Prevention of Money Laundering
Act, 2002 against A-1, A-2, A-3, A-4, A-5 and A6 – A-2 filed writ
petition before High Court for quashing the proceedings on the
ground that the amount in question as long as it was in the hands of
respondent could not be said to be tainted money; that it assumed
such character only after it was received by the public servant and
as such respondent could not be proceeded against under the
provisions of PML Act – High Court allowed writ petition and
quashed the proceedings in
PML Act against the respondent – On
State’s appeal, held: The definition of “proceeds of crime” in PML
Act, inter alia, means any property derived or obtained by any person
as a result of criminal activity relating to a scheduled offence – The
offences punishable under ss.7, 12 and 13 are scheduled offences
– Any property thus derived as a result of criminal activity relating
to offence mentioned in paragraph 8 of Part-A of the Schedule
would certainly be “proceeds of crime” – It is true that so long as
the amount is in the hands of a bribe giver, and till it does not get
impressed with the requisite intent and is actually handed over as a
bribe, it would definitely be untainted money – If the money is handed
over without such intent, it would be a mere entrustment – If it is
thereafter appropriated by the public servant, the offence would be
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of misappropriation or species thereof but certainly not of bribe –
The crucial part therefore is the requisite intent to hand over the
amount as bribe and normally such intent must necessarily be
antecedent or prior to the moment the amount is handed over –
Thus, the requisite intent would always be at the core before the
amount is handed over – Such intent having been entertained well
before the amount is actually handed over, the person concerned
would certainly be involved in the process or activity connected
with “proceeds of crime” including inter alia, the aspects of
possession or acquisition thereof – By handing over money with
the intent of giving bribe, such person will be assisting or will
knowingly be a party to an activity connected with the proceeds of
crime – Without such active participation on part of the person
concerned, the money would not assume the character of being
proceeds of crime – The relevant expressions from s.3 of the PML
Act are thus wide enough to cover the role played by such person –
A bare perusal of complaint made by the Enforcement Directorate
showed that the respondent was prima facie involved in the activity
connected with the proceeds of crime.
Allowing the appeal, the Court
HELD: 1. The definition of “proceeds of crime” in PML
Act, inter alia, means any property derived or obtained by any
person as a result of criminal activity relating to a scheduled
offence. The offences punishable under Sections 7, 12 and 13
are
scheduled offences, as is evident from paragraph 8 of Part-A of
the Schedule to the PML Act. Any property thus derived as a
result of criminal activity relating to offence mentioned in said
paragraph 8 of Part-A of the Schedule would certainly be “proceeds
of crime”. [Para 13][1071-B-C]
2. It is true that so long as the amount is in the hands of a
bribe giver, and till it does not get impressed with the requisite
intent and is actually handed over as a bribe, it would definitely
be untainted money. If the money is handed over without such
intent, it would be a mere entrustment. If it is thereafter
appropriated by the public servant, the offence would be of
misappropriation or species thereof but certainly not of bribe.
The crucial part therefore is the requisite intent to hand over the
DIRECTORATE OF ENFORCEMENT v. PADMANABHAN
KISHORE
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amount as bribe and normally such intent must necessarily be
antecedent or prior to the moment the amount is handed over.
Thus, the requisite intent would always be at the core before the
amount is handed over. Such intent having been entertained well
before the amount is actually handed over, the person concerned
would certainly be involved in the process or activity connected
with “proceeds of crime” including inter alia, the aspects of
possession or acquisition thereof. By handing over money with
the intent of giving bribe, such person will be assisting or will
knowingly be a party to an activity connected with the proceeds
of crime. Without such active participation on part of the person
concerned, the money would not assume the character of being
proceeds of crime. The relevant expressions from Section 3 of
the PML Act are thus wide enough to cover the role played by
such person. On a bare perusal of the complaint made by the
Enforcement Directorate, it is quite clear that the respondent
was prima facie involved in the activity connected with the
proceeds of crime. [Paras 16 and 17][1071-E-H; 1072-A-B]
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
1864 of 2022.
From the Judgment and Order dated 01.03.2021 of the High Court
of Judicature at Madras in WP No.25670 of 2019.
Balbir Singh, ASG, Mukesh Kumar Maroria, Ms. Alka Agarwal,
Ms. Snehashish Mukerjee, Naman Tondan, Digvijay Dam, Vishal
Agarwal, Advs.
for the Appellant.
S. Nagamuthu, Sr. Adv., Y. Arunagiri, Ashok Kumar, Rajagopal,
A. S. Vairawan, R. Sudhakaran, G. R. Vikash, D. Subrahmanya Bhanu,
Rohan, T. Hari Hara Sudhan, P. Soma Sundaram, Advs. for the
Respondent.
The Judgment of the Court was delivered by
UDAY UMESH LALIT, CJI
1. Leave granted.
2. This appeal challenges the final judgment and order dated
1.3.2021 passed by the High Court of Judicature at Madras in Writ Petition
No. 25670/2019.
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3. The aforestated writ petition was filed by the respondent herein
seeking quashing of proceedings initiated against him under the provisions
of the Prevention of Money Laundering Act, 2002 (“PML Act”, for
short).
4. The basic facts which led to the filing of said writ petition stand
captured in paragraphs 2.1 to 2.3 of the judgment under appeal, as under:-
“2.1 One Andasu Ravinder (A1), IRS, was working as Additional
Commissioner of Income Tax, Chennai. On intelligence, the
Central Bureau of Investigation (for brevity “the CBI”) checked
a car that was parked in front of the premises of the said Andasu
Ravinder’s (A1) house on 29.08.2011 and recovered a sum of
Rs.50,00,000/- in cash. It is alleged that Andasu Ravinder (A1)
and one Uttam Chand Bohra (A3) were in that car at that time.
2.2 During investigation, it came to light that the sum of
Rs.50,00,000/- was handed over to the said Andasu Ravinder (A1)
by one Padmanabhan Kishore (A2), petitioner herein, whose
income tax file was pending with Andasu Ravinder (A1) for
clearance. Since Padmanabhan Kishore (A2) wanted certain
benefits, he had allegedly paid the sum of Rs.50,00,000/- as bribe
to Andasu Ravinder (A1).
2.3 In connection with this seizure, the CBI registered an FIR in
R.C.No.MA1 2011 A 0033 on 29.08.2011 and after completing
the investigation, filed charge sheet in C.C.No.3 of 2013 before
the Special Court for the CBI Cases, Chennai, for the offences
under Section 120-B IPC and Sections 7,
12, 13(1)(d) r/w 13(2)
of the Prevention of Corruption Act, 1988, against Andasu
Ravinder (A1), Padmanabhan Kishore (A2), Uttam Chand Bohra
(A3), Ramakrishnan (A4), T.Banusekar (A5) and
P.Chandrasekaran (A6). Since the case registered by the CBI
disclosed the commission of a ‘schedule offence’ under
the Prevention of Money Laundering Act, 2002 (for brevity “the
PML Act”), the Enforcement Directorate registered a case in
E.C.I.R.No.13 of 2016 and after completing the investigation, filed
a complaint in C.C.No.60 of 2018 against Everonn Education
Limited and three others including Padmanabhan Kishore (A2)
for the offences under Section 3 r/w 4 of the PML Act, for quashing
which, Padmanabhan Kishore (A2) is before this Court.”
DIRECTORATE OF ENFORCEMENT v. PADMANABHAN
KISHORE [UDAY UMESH LALIT, CJI]
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5. As is evident from the quoted portion, the respondent had
allegedly handed over a sum of Rs.50,00,000/- (Rupees fifty lakhs only)
to a public servant, which transaction and the surrounding circumstances
were projected in FIR dated 29.8.2011, leading to registration of crime
under Section 120B, Indian Penal Code, 1860 (“IPC”, for short) and
Sections 7, 12, 13(1)(d) read with Section 13(2) of the Prevention of
Corruption Act, 1988 (“PC Act”, for short). Later, a case was registered
by the Enforcement Directorate against the accused including the
respondent under Sections 3 and 4 of the PML Act.
6. The basic submission advanced on behalf of the respondent
was that the amount in question, as long as it was in the hands of
respondent, could not be said to be tainted money; that it assumed such
character only after it was received by the public servant; and as such
the respondent could not be said to be connected with proceeds of crime
and could not be proceeded against under the provisions of the PML
Act. The submission was accepted by the High Court with the following
observations: -
“7. For attracting the penal provisions of the PML Act, the accused
should have projected the proceeds of a crime as untainted money.
In this case, the sum of Rs.50,00,000/- as long as it was in the
hands of Padmanabhan Kishore (A2) could not have been stated
as a tainted money because it is not the case of the CBI in
C.C.No.3 of 2013
that Padmanabhan Kishore (A2) had mobilised
Rs.50,00,000/- via a criminal activity. The sum of Rs.50,00,000/-
became the proceeds of a crime only when Andasu Ravinder
(A1) accepted it as a bribe. Even before Andasu Ravinder
(A1) could project the sum of Rs.50,00,000/- as untainted money,
the CBI intervened and seized the money in the car on 29.08.2011.
8. Therefore, the prosecution of Padmanabhan Kishore (A2)
under the PML Act, in our considered opinion, is misconceived.
7. The High Court thus allowed the writ petition and quashed the
proceedings in PML Act against the respondent, which decision is
presently under challenge before us.
8. We have heard Mr. Balbir Singh, learned Additional Solicitor
General of India in support of appeal and Mr. S. Nagamuthu, learned
senior counsel for the respondent.
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9. The definition of proceeds of crime, as appearing in Section
2(1)(u) of the PML Act is as under: -
“2. Definitions. — (1) In this Act, unless the context otherwise
requires,—
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(u) “proceeds of crime” means any property derived or obtained,
directly or indirectly, by any person as a result of criminal activity
relating to a scheduled offence or the value of any such property
or where such property is taken or held outside the country, then
the property equivalent in value held within the countryor abroad;
Explanation.—For the removal of doubts, it is hereby clarified
that “proceeds of crime” include property not only derived or
obtained from the scheduled offence but also any property which
may directly or indirectly be derived or obtained as a result of any
criminal activity relatable to the scheduled offence;”
10. Sections 3 and 4 of the PML Act which are the principal
sections for the present purposes, are as under: -
“3. Offence of money-laundering.—Whosoever directly or
indirectly attempts to indulge or knowingly assists or knowingly is
a party or is actually involved in any process or activity connected
proceeds of crime including its concealment, possession, acquisition
or use and projecting or claiming] it as untainted property shall be
guilty of offence of money-laundering.
Explanation.—For the removal of doubts, it is hereby clarified that,—
(i) a person shall be guilty of offence of money-laundering if such
person is found to have
directly or indirectly attempted to indulge
or knowingly assisted or knowingly is a party or is actually involved
in one or more of the following processes or activities connected
with proceeds of crime, namely: —
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property,
in any manner whatsoever;
DIRECTORATE OF ENFORCEMENT v. PADMANABHAN
KISHORE [UDAY UMESH LALIT, CJI]
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(ii) the process or activity connected with proceeds of crime is a
continuing activity and continues till such time a person is directly
or indirectly enjoying the proceeds of crime by its concealment or
possession or acquisition or use or projecting it as untainted
property or claiming it as untainted property in any manner
whatsoever.
4. Punishment for money-laundering.—Whoever commits the
offence of money-laundering shall be punishable with rigorous
imprisonment for a term which shall not be less than three years
but which may extend to seven years and shall also be liable to fine:
Provided that where the proceeds of crime involved in money-
laundering relates to any offence specified under paragraph 2 of
Part A of the Schedule, the provisions of this section shall have
effect as if for the words “which may extend to seven years”, the
words “which may extend to ten years” had been substituted.”
11. Paragraph 8 of the Part-A of the Schedule to the PML Act
deals with offences under the PC Act and said paragraph is to the
following effect: -
“PARAGRAPH 8
OFFENCES UNDER THE PREVENTION OF CORRUPTION
ACT, 1988
(49 of 1988)
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12. The respondent stands charged for having committed offence
of conspiracy to commit offences punishable under Sections 7, 12, 13(1)(d)
read with Section 13(2) of the PC Act. The controversy in the instant
matter is not with regard to his involvement in the offence punishable
under the PC Act, but raises a question whether the respondent can be
proceeded against under the provisions of the PML Act.
13. The definition of “proceeds of crime” in PML Act, inter alia,
means any property derived or obtained by any person as a result of
criminal activity relating to a scheduled offence. The offences punishable
under Sections 7, 12 and 13 are scheduled offences, as is evident from
paragraph 8 of Part-A of the Schedule to the PML Act. Any property
thus derived as a result of criminal activity relating to offence mentioned
in said paragraph 8 of Part-A of the Schedule would certainly be
“proceeds of crime”.
14. The further question to be answered is: whether the role played
by respondent could come within the purview of Section 3 of the PML
Act?
15. Said Section 3 states, inter alia, that whoever knowingly assists
or knowingly is a party or is actually involved in any process or activity
connected with proceeds of crime including its concealment, possession,
acquisition or use shall be guilty of offence of money-laundering
(emphasis added by us).
16. It is true that so long as the amount is in the hands of a bribe
giver, and till it does not get impressed with
the requisite intent and is
actually handed over as a bribe, it would definitely be untainted money.
If the money is handed over without such intent, it would be a mere
entrustment. If it is thereafter appropriated by the public servant, the
offence would be of misappropriation or species thereof but certainly
not of bribe. The crucial part therefore is the requisite intent to hand
over the amount as bribe and normally such intent must necessarily be
antecedent or prior to the moment the amount is handed over. Thus, the
requisite intent would always be at the core before the amount is handed
over.Such intent having been entertained well before the amount is actually
handed over,the person concerned would certainly be involved in the
process or activity connected with “proceeds of crime” including inter
alia, the aspects of possession or acquisition thereof. By handing over
money with the intent of giving bribe, such person will be assisting or will
DIRECTORATE OF ENFORCEMENT v. PADMANABHAN
KISHORE [UDAY UMESH LALIT, CJI]
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knowingly be aparty to an activity connected with the proceeds of crime.
Without such active participation on part of the person concerned, the
money would not assume the character of being proceeds of crime.The
relevant expressions from Section 3 of the PML Act are thus wide enough
to cover the role played by such person.
17. On a bare perusal of the complaint made by the Enforcement
Directorate, it is quite clear that the respondent was prima facie involved
in the activity connected with the proceeds of crime.
18. The view taken by the High Court that the respondent cannot
be held liable for the offence under the PML Act isthus completely
incorrect.
19. The observations made by us regarding involvement of the
respondent are prima facie in nature and for considering whether the
allegations made by the prosecution if accepted to be true at this stage,
would make out an offence or not. Needless to say that, on facts, the
matter shall be considered purely on merits at the appropriate stage(s).
20. We therefore allow this appeal and set aside the judgment and
order passed by the High Court.Consequently, the respondent shall
continue to be arrayed and proceeded against in accordance with law in
E.C.I.R. No. 13 of 2016 registered by the Enforcement Directorate.
21. The appeal is thus allowed.
Devika Gujral
Appeal allowed.
(Assisted by : Mahendra Yadav, LCRA)