DIRECTORATE OF ENFORCEMENT versus PADMANABHAN KISHORE

DIRECTORATE OF ENFORCEMENT versus PADMANABHAN KISHORE

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले


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REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO………….. OF 2022
(arising out of SLP (Crl.) No. 2668 OF 2022)
DIRECTORATE OF ENFORCEMENT …..APPELLANT(S)
versus
PADMANABHAN KISHORE ..RESPONDENT(S)
J U D G M E N T
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.
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).
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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.”
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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
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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.
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,—
xxx xxx xxx
(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 country or abroad;
Explanation.— For the removal of doubts, it is hereby
clarified that "proceeds of crime" include property not
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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 moneylaundering 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;
(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
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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)
Section Description of offence
7. Offence relating to public servant being
bribed.
7A. Taking undue advantage to influence public
servant by corrupt or illegal means or by
exercise of personal influence.
8. Offence relating to bribing a public servant.
9. Offence relating to bribing a public servant by
a commercial organisation
10. Person in charge of commercial organisation
to be guilty of offence.
11. Public servant obtaining undue advantage,
without consideration from person concerned
in proceeding or business transacted by such
public servant.
12. Punishment for abetment of offences.
13. Criminal misconduct by a public servant.
14. Punishment for habitual offender.”
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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
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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
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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.
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 is thus 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
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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.
……………………………..CJI.
[Uday Umesh Lalit]
………………………………..J.
[Bela M. Trivedi]
New Delhi;
October 31, 2022.

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