TaxTMI 
TaxTMI 
2023 (6) TMI 594
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.... of SLP (Crl.) No. of 2023) (Arising out of Diary No.10186 of 2023) CRIMINAL APPEAL NO. OF 2023 (Arising out of SLP(Crl) No. of 2023) (Arising out of Diary No. 5364 of 2023 KRISHNA MURARI And V. RAMASUBRAMANIAN , JJ. For the Parties : Mr. Balaji Srinivasan, Adv. Mr. D.Raghu, Adv. Ms. Aakriti Priya, Adv. Mr. K.kathiresan, Adv. Mr. Scv Vimal Pani, Adv. Mr. A. Lakshminarayanan, AOR Mr. C. A Sundaram, Sr. Adv. Ms. Misha Rohatgi, AOR Mr. Nakul Mohta, Adv. Ms. Riya Dhingra, Adv. Mr. Devansh Srivastava, Adv. Mr. Bharat Monga, Adv. Ms. Rohini, Adv. Mr. Zafar, Adv. Mr. Gopalshankarnayanan, Sr. Adv. Mr. Balaji Srinivasan, AOR Ms. Aakriti Priya, Adv. Ms. Gauri Pasricha, Adv. Mr. Rohan Dewan, Adv. Mr. Shiva Krishnamurthi, Adv. Mr. Devamshu Behl, Adv. Mr. Venugopala Gowda, Sr. Adv. Mr. K. Balambihai, Adv. Mr. Nar Hari Singh, AOR Mr. Balaji Srinivasan, Adv. Ms. Garima Jain, AOR Ms. Lakshmi Rao, Adv. Ms. Pallavi Sengupta, Adv. Ms. Jhanvi Dubey, Adv. Mr. Gopal Sankaranarayanan, Sr. Adv. Mr. N Subramaniyan, Adv. Mr. Pranav Sachdeva, AOR Ms. Jatin Bhardwaj, Adv. Ms. Jhanvi Dubey, Adv. Mr. Prashant Bhushan, Adv. Mr. N Subramaniyan, Adv. Mr. Pranav Sachdeva, AOR Mr. Jatin Bhardwaj, Adv. Ms. Neha....
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.... senior counsel, Shri Prashant Bhushan and Shri Balaji Srinivasan, learned counsel appearing for one set of parties (victims and a NGO), Shri Kapil Sibal, Shri C.A. Sundaram, Shri Sidharth Luthra, Shri Mukul Rohatgi, learned senior counsel appearing for another set of parties (accused), Ms. V. Mohana and Shri Siddharth Agrawal, learned senior counsel appearing for the de facto complainants and Shri Ranjit Kumar, learned senior counsel appearing for the State of Tamil Nadu. Background Facts 6. The background facts necessary to understand the complexities of the batch of cases on hand are as follows: (i) In November 2014, the Metropolitan Transport Corporation, wholly owned by the State of Tamil Nadu issued five Advertisements, in Advertisement Nos.1/2014 to 5/2014, calling for applications for appointment to various posts such as Drivers (746 posts), Conductors (610 posts), Junior Tradesman (Trainee) (261 posts), Junior Engineer (Trainee) (13 posts) and Assistant Engineer (Trainee) (40 posts); (ii) After interviews were held on 24.12.2014 and the Select List got published, one Devasagayam lodged a complaint on 29.10.2015 with the Chennai PS CCB against 10 individuals, al....
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....t that the Minister did not figure as an accused in the complaint of Devasagayam. A specific grievance was projected by Gopi that the Police are not going beyond the lower level officers. Accepting his statement, the High Court passed an Order dated 20.06.2016 in Crl. OP No.7503 of 2016 filed by Gopi, holding that the Police is duty bound to probe beyond the lower level minions to find out where the money had gone. After so holding, the Court directed the Assistant Commissioner of Police, Central Crime Branch (Job Racketing) to take over the investigation in FIR No.441 of 2015 and also directing the Deputy Commissioner of Police to monitor the same. The Court also held that since a FIR has already been registered at the behest of Devasagayam, it is not necessary to have another FIR registered on the complaint/representation made by Gopi. (vi) Despite the direction issued by the High Court on 20.06.2016 to the Police to go beyond lower level officers and find out where the money trail ends (more than about 2 crores allegedly given to the Minister during January and March, 2015) and despite Gopi making specific averments against the brother and brother-in-law of the Minister, the ....
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....r at the residence of the Minister in the first week of January, 2015. It was further stated in the complaint that after money was paid to Shanmugam, the complainant also met Ashok Kumar (brother of the Minister) and Senthil Balaji (Minister) and that the Minister assured to get appointment orders issued. This complaint was registered by Chennai CCB PS as FIR No.344 of 2018, again for offences only under Section 406, 420 and 506(1) IPC. We do not know why the State Police were averse to the idea of including the offences punishable under the PC Act, in any of the three FIRs. While one may be averse to corruption, one cannot be averse to the PC Act. (ix) As had happened in respect of the other two complaints, the complaint in FIR No.344 of 2018 was also investigated (or not investigated) and a Final Report was filed on 12.04.2019. Even this Final Report, taken on record in Calendar Case No.25 of 2021 did not include the offences under the PC Act. (x) At this juncture, a person by name R.B. Arun Kumar, working as a Driver in the Metropolitan Transport Corporation and who was cited as witness LW 47 in the Final Report in CC No.3627 of 2017 arising out of FIR No.441 of 2015 (Deva....
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....ipt remained the same for the victims and the political fortunes of the Minister continued, as he got a berth in the Cabinet, even in the new dispensation. (xv) Thereafter, the person alleged to be the PA to the Minister, namely, Shanmugam, who was arrayed as Accused No.3 in CC No.25 of 2021 arising out of FIR No.344 of 2018 lodged by Arulmani, filed a petition in Crl.O.P No.13374 of 2021 on the file of the High Court seeking to quash CC No.25 of 2021. He claimed in the said petition that a compromise had been reached between the victims (Arulmani and others and the accused) and that, therefore, the complaint may be quashed. Following suit, R. Sahayarajan who was Accused No.3 in CC No.19 of 2020 also filed a quash petition in Crl.O.P No.13914 of 2021, enclosing a joint compromise memo seeking to quash CC No.19 of 2020. Similarly, one Vetrichelvan (Accused No.10) filed Crl. O.P No.6621 of 2021 for quashing the proceedings in CC No.24 of 2021. (xvi) By an order dated 30.07.2021, the High Court quashed CC No.25 of 2021 on the basis of the Joint Compromise Memo. This order was passed completely overlooking the nature of the allegations, the offences for which the accused ought to....
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....o issue certified copies of unmarked documents. (xxi) As against the order dated 30.07.2021 passed by the Madras High Court quashing CC No.25 of 2021 on the basis of the Joint Compromise Memo, a special leave petition was filed by one P. Dharmaraj. It may be recalled that he was one of the unsuccessful candidates and he had filed a writ petition seeking to quash the entire selection. (xxii) An NGO by name Anti-Corruption Movement also filed a special leave petition against the order of the High Court quashing CC No.25 of 2021. (xxiii) Aggrieved by one portion of the order of the Trial Court refusing to grant certified copies of unmarked documents, the ED filed petitions before the High Court. By an order dated 30.03.2022 the High Court permitted ED to conduct an inspection under Rule 237 of the Criminal Rules of Practice, 2019 For short "Rules, 2019" and thereafter to make third party copy applications for supply of copies of documents. The High Court also noted that under Rule 238, ED was entitled even to take extracts and thereafter file a fresh third party copy application before the Special Court. Challenging the limited relief granted by the High Court to ED in its or....
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.... dated 30.03.2022, permitting the ED to conduct an inspection of the documents before the Trial Court under Rule 237 of the Rules, 2019. Another appeal is filed by the unsuccessful candidate challenging an order passed by the High Court dismissing a petition for extension of time to complete investigation. (xxxi) Thus, we have on hand 12 appeals, four of them challenging the quashing of summons issued by ED, six of them challenging the order for de novo investigation, one of them challenging an order permitting ED to have inspection of documents and the last arising out of the order refusing to grant further time for completion of investigation. (xxxii) Other than the appeals, we also have two contempt petitions filed by the Anti-Corruption Movement, complaining willful disobedience by the State of the directions issued by this Court in the order dated 08.09.2022 in Criminal Appeal Nos.1515-1516 of 2022. (xxxiii) We also have an application in IA No.26527 of 2023 filed by the appellant in one of these appeals, who is an unsuccessful candidate. The prayer in this application is for the constitution of a Special Investigation Team to undertake a comprehensive investigation i....
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....ame Gopi, in Criminal O.P. No.7503 of 2016, that Devasagayam had been won over by the accused. 10. On Devasagayam's complaint, the Investigating Officer filed a Final Report on 13.06.2017, which led to the registration of a Calendar Case in CC No.3627 of 2017. Even in this Final Report, the offences under the PC Act were not included. Devasagayam did not bother to question the Police or move the Court as to why the offences under the PC Act were not included. 11. But fortunately, pursuant to the order passed by the High Court in the petition filed by Gopi, another Calendar Case came to be registered in CC No.24 of 2021, on a further Report submitted by the Police under Section 173(8) of the Code. In this CC No.24 of 2021, the Minister and his accomplices were included as accused and the offences under the PC Act were included. 12. This further Report under Section 173(8) of the Code which culminated in the registration of CC No.24 of 2021 was filed on 08.03.2021. 13. The inclusion of the name of the Minister and his accomplices in the Final Report submitted under Section 173(8) and the inclusion of the offences under the PC Act seems to have bothered Devasagayam more th....
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....be permitted to degenerate into a weapon of harassment of prosecution. 29. The allegations made in the Final report are so absurd and inherently Improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused, but may escape from the clutches of law. 30. The present criminal proceeding is manifestly attended with mala fide and/or the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge." 17. It appears that Devasagayam, originally seems to have had a genuine grievance against the culprits at the bottom of the layer, but he later turned out to be a Trojan horse, willing to sabotage the investigation against influential persons. This fact is borne out more by his pleadings in paragraph 31 of the petition in Criminal O.P. No.15122 of 2021. The relevant portion of paragraph 31 reads as follows: "31. ...Where criminal proceedings are initiated based on illicit material collected on search and arrest which are per se illegal and vitiate not only a conviction and se....
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.... of the investigation should not be eroded. In fact, the accused did not seek de novo investigation on the ground of slackness on the part of the Investigating Officer, but it was Devasagayam who sought it, with the able assistance of the Investigating Officer. 20. The fact that Devasagayam's petition was intended to help the accused is also borne out by one more fact. His original complaint dated 29.10.2015 which led to the registration of FIR in Crime No.441 of 2015 was against ten persons and the offences registered therein were only under Sections 406 and 420 read with Section 34 IPC. On this complaint, a Final Report was filed under Section 173(2) of the Code on 13.06.2017 and this resulted in the registration of Calendar Case in CC No.3627 of 2017. Devasagayam was happy with the fact that the Report filed under Section 173(2) did not include the offences under the PC Act. Devasagayam was not bothered at that time about the fact that the register for entering the interview marks, sent to the Forensic Department had not been received. Suddenly, he became worked up after the filing of the Report under Section 173(8) leading to the registration of Calendar Case No.24 of 2021 i....
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.... them, the expression "wiped out" had been used out of context and that what was sought to be removed by the High Court was only the conclusions reached by the Investigating Officer on the basis of the materials already collected. In other words, their contention was that the investigation so far made and the materials so far collected can never be thrown into the dustbin but that the conclusions reached by the Investigating Officer on the basis of those materials alone required to be wiped out. 24. It is true that English is not our mother tongue. It is also true that some allowance (or discount ranging from 0 to 90%) can be given at times to the use of certain loose expressions. But the expressions used in paragraphs 79 to 81 of the impugned order do not reflect a mere deficiency in language or law, but something more. As rightly pointed out by Shri Gopal Sankaranarayanan, learned senior counsel, the High Court has used in the impugned order, several words and expressions such as, (i) reinvestigation to be started ab initio, (ii) wiping out the earlier investigation altogether; (iii) collect fresh evidence and material; and (iv) without reference to the earlier investigation o....
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....t. Thereafter, the High Court passed an order directing the CBI to undertake an inquiry and submit a report to the Court. Accordingly, CBI undertook an inquiry and filed a report stating that the investigation carried out by Delhi Police did not inspire confidence and that further investigation was needed. Thereafter, CBI filed a closure report. On the basis of the same, the accused sought discharge. Since discharge was not ordered, they approached the High Court, but the High Court remanded the matter back to the Sessions Court. It is the said order of remand that was challenged by the Investigating Officer before this Court. This Court framed two questions as arising for consideration in Vinay Tyagi. They read as follows:- "Question 1 1.1. Whether in exercise of its powers under Section 173 of the Code of Criminal Procedure, 1973 (for short "the Code"), the trial court has the jurisdiction to ignore any one of the reports, where there are two reports by the same or different investigating agencies in furtherance of the orders of a court? If so, to what effect? Question 2 1.2. Whether the Central Bureau of Investigation (for short "CBI") is empo....
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.... in such matters to the extent of quashing an investigation and directing a "fresh investigation". 29. In paragraphs 43 and 45, this Court held that the power to order de novo investigation vests only with superior courts and that the same has to be exercised sparingly in exceptional cases. In paragraph 46, this Court pointed out that while ordering de novo investigation, there are two options open to the superior court namely, (i) to direct the report already prepared or the investigation so far conducted, not to form part of the records of the case; or (ii) to direct the report already prepared or the investigation so far conducted to form part of the record. If the superior court is silent on this aspect, the report already prepared or the investigation so far conducted will form part of the record. In other words, if the superior court intended that the investigation so far conducted and the report already filed should not form part of the record, it should specifically say so. 30. In the order impugned in these appeals, the High Court has indicated by using four different expressions and phrases that the investigation so far conducted shall not form part of the record. B....
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....egistered against (i) Minister Senthil Balaji; (ii) Prabhu; (iii) Sahayarajan; and (iv) Annaraj, for offences under Sections 406, 420 and 506(1) IPC. Interestingly, he entered into a compromise with the accused and supported them in their petition for quashing of the FIR. Now he is aggrieved by the order for de novo investigation for obvious reasons. SLP(Crl.)D.No. 10186 of 2023 R.Sahayarajan He is one of the accused in the complaint given by V. Ganesh Kumar and he filed a petition before the High Court seeking to quash the FIR and the charge-sheet on the ground of a compromise. 32. Shri Mukul Rohatgi, Shri Kapil Sibal, Shri Sidharth Luthra, and Shri C.A. Sundaram, learned senior counsel appearing for different accused, uniformly raised a chorus, vociferously objecting to the maintainability of the appeals by each of those appellants, against the order of de novo investigation. Their contention is that investigation of a criminal offence cannot be a free-for-all exercise and that one must have locus to challenge the proceedings. According to the learned counsel, some of the appellants who are strangers, have not only come to court without any locus, but are also guilty ....
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....petition in WP No.24275 of 2021 on the file of the High Court seeking further investigation and that, therefore, he must pursue his remedies only in that writ petition. But this argument seeks to sweep under the carpet, the actual reality that by virtue of the impugned order dated 31.10.2022 directing de novo investigation, the writ petition filed by Y. Balaji for further investigation has been rendered infructuous. Therefore, if such a person who participated in the selection but who did not get appointment due to the corrupt practices adopted by the concerned persons and who had already filed a writ petition seeking further investigation, does not have locus standi, we do not know who else will have. 36. The investigation and trial of a criminal case cannot be converted by the complainant and the accused into a friendly match. If they are allowed to do so, it is the Umpire who will lose his wicket. 37. Much ado was made about some of the appellants filing copies of the confession statements under Section 164 of the Code, as part of the paper book in the appeals. It was contended by the learned senior counsel that the confession statements recorded before the Magistrate are ....
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....ime when Gopi approached the High Court with a petition in Crl. O. P. No. 7503 of 2016, there have been several proceedings before the High Court where the parties have filed copies of several documents. There were also writ petitions filed by unsuccessful candidates challenging the selection. The counter filed by the Investigating Officer in those cases have been extracted by this Court in the Judgment dated 08.09.2022 in Dharmaraj vs. Shanmugam Criminal Appeal Nos.1514-1516 of 2022. Therefore, many of the documents have started appearing in the public domain at the instance of several persons. Hence, it is futile to contend that the appeals are liable to be thrown out on the ground that the appellants have come up with documents to which they could not have had any access. 42. Though Shri Gopal Sankaranarayanan, learned senior counsel appearing for the appellant in one of these appeals refrained from giving any political colour to the case on hand, it was contended by Shri Kapil Sibal, learned senior counsel that the appellant had been obviously set up by a rival political party. In support of his contention, he relied upon the timeline of events that began after the lodging o....
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....declared, the party in power is voted out, a new dispensation forms the Government and he becomes a Minister in the new regime. July, 2021 A quash petition is filed and a compromise is reached. 30.07.2021 The High Court quashes CC No.25 of 2021 on the basis of the Joint Compromise Memo. 43. On the basis of the above timeline of events, it is contended by Shri Kapil Sibal that the Minister was implicated in the case on 08.03.2021, for offences under the PC Act immediately after the announcement of the elections to the Legislative Assembly, as he had switched over from the party in power to another. Therefore, it is claimed that the appellant is obviously set up by the political opponents in hot pursuit of the Minister. 44. But all that we could make out of the above timeline of events is that trouble started for the Minister, even when he was a Minister in a different political dispensation and even before he became part of a group of 18 MLAs in August, 2017. It must be remembered that the allegations in Criminal O.P. No.7503 of 2016, disposed of by the High Court on 20.06.2016, were made at a time when he was still a Minister in the previous regime and it happened....
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....sport Corporation has at least placed him under suspension and initiated departmental proceedings. If they have not done so far, the Corporation should initiate disciplinary action against this V. Ganesh Kumar not only for being party to a job-for-cash scam but also for turning turtle and supporting the accused and thereafter coming to this Court to assail the order of de novo investigation, despite being an employee of the Corporation. Interestingly, his attack on the order of de novo investigation is not to achieve the same purpose as the victims want to achieve, by assailing the same order. The victims assail the order of de novo investigation for the purpose of ensuring that the offences under the PC Act are properly investigated and tried. But the object of V. Ganesh Kumar is not the same. 48. This is why we made repeated queries to Ms. V. Mohana, learned senior counsel appearing for V. Ganesh Kumar as to what V. Ganesh Kumar eventually wants. The only answer that we got to this question was that the power to order de novo investigation should be exercised sparingly and that this is not the case where the power requires to be exercised. Thus, it is clear that V. Ganesh K....
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....writ petitions seeking the quashing of the summons issued by ED. 53. In the writ petition filed by the Minister in W.P. No.18213 of 2022 for quashing the summons issued by the ED, he contended inter-alia: - (i) that he was falsely implicated in FIR Nos.441 of 2015, 15 of 2016, 298 of 2017 and 344 of 2018; (ii) that FIR No.15 of 2016 had already been quashed; (iii) that FIR Nos.441 of 2015 and 298 of 2017 were stayed by the High Court; (iv) that FIR No.344 of 2018 was quashed by the High Court; (v) that in view of the above, the mandatory requirements of Section 2(1)(y) and Section 3 of the PMLA, are not attracted; (vi) that the registration of ECIR was based upon those complaints; (vii) that since those complaints are the subject matter of scrutiny in the quash petitions, there is nothing for ED to proceed; (viii) that Section 63 of the PMLA prescribes a punishment for false information or failure to give information and hence the summons issued under Section 50 will force him to give statements incriminating himself in the cases for the predicate offences, thereby infringing upon his rights under Article 20....
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....ision in Vijay Madanlal Choudhary. 57. The argument of the counsel for R.V. Ashok Kumar, brother of the Minister is extracted by the High Court in paragraph 3 as follows:- "3. Mr.Aryama Sundaram, learned Senior Counsel appearing for the petitioner in Writ Petition No.l8209 of 2022 pleaded at the outset that his client's case is squarely covered by the judgment of the Hon'ble Supreme Court in Vijay Madanlal Choudhury and others case (supra) in his favour, again proceeding further contended that Mr.R. V.Ashok Kumar is the brother of Mr.V.Senthil Balaji, who was the former Transport Minister during the period from 2011 to 2015..." 58. The argument of the counsel appearing for Shanmugam (Accused No.3) is extracted by the High Court as follows:- "2. ... there is no basis for proceeding against the petitioner under the Prevention of Money-laundering Act, because the Hon'ble Supreme Court in Vijay Madanlal Chaudhary and others v. Union of India and others, 2022 (10) SCALE 577 has held that in the absence of proceeds of crime, the authorities under the Prevention of Money-laundering Act cannot step in or initiate any prosecution, therefore, the writ peti....
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....e, paragraph 20 of the impugned order is extracted as follows: "20. A mere perusal of the above judgment clearly shows that the existence of jurisdictional fact is a condition precedent for the exercise of power by a Court of limited jurisdiction. Therefore, in the cases on hand, when there is no cause of action, since the proceeding in one of the calendar cases was quashed by the order dated 30.07.2021 in Criminal Original Petition No.13374 of 2021 and the proceedings in two other calendar cases have been stayed by this Court, there is no jurisdictional fact or cause of action for the respondent/department to initiate any proceedings during the period of order of stay operating against the two FIRs. Viz. C.C.No.l9/2020 and C.C.No.24 of 2021." 62. Again, in paragraph 22, the High Court recorded an opinion that the grant of stay would amount to eclipsing the proceedings. Therefore, on this sole ground, the High Court concluded in paragraph 22 of the impugned order that the ED has to await the outcome of the proceedings for quashing the criminal complaints, in which a stay order was in force. But the High Court made it clear that it was not entering upon the merits and de....
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....said order has been set aside by us in Part-I of this judgment. 66. Insofar as the SLP (Crl.) No.3941 of 2022 @ Diary No.9957 of 2022 is concerned, it arises out of the order of the High Court dated 30.03.2022, which again is the subject matter of the present appeals. 67. In other words, the High Court has not quashed the summons issued by ED. The High Court had merely injuncted ED from proceeding further till the clog on the cases relating to the predicate offences is removed. 68. Interestingly, none of the accused has come up with any appeal challenging the order of the High Court dated 01.09.2022, on the ground that the High Court ought to have quashed the summons issued by the ED in total, on other grounds. Instead, the accused appeared through counsel only to defend the impugned order dated 01.09.2022. 69. Therefore, in law, (i) once the dismissal of the petition for discharge has attained finality with the dismissal of Criminal Revision Case No.224 of 2021; (ii) once the order for de novo investigation in Criminal O.P. No.15122 of 2021 is set aside; (iii) once the order of the High Court dated 30.03.2022 relating to right of the ED to secure the copies of document....
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....i) that the ED was never in possession of any material to suspect that the accused did any activity connected with the proceeds of crime; (iv) that this is why the ED filed applications before the Special Court seeking copies of documents to find out if something could be found; (v) that under Section 66(2) of PMLA, the flow of information can be only from the ED to the other authorities about the contravention of the provisions of any other law and not the other way about; (vi) that there are lot of inherent contradictions in the way the provisions of the PMLA were interpreted in Vijay Madanlal Choudhary; (vii) that though Section 50(2) of PMLA empowers the Director and his subordinates to summon any person whether to give evidence or to produce any record during the course of investigation, this Court held in Vijay Madanlal Choudhary that it is not investigation in the real sense; (viii) that the power under Section 50(2) of PMLA is akin to the power of the Police Officer under Section 160 of the Code; (ix) that with the amendment of PMLA by Finance (No.2) Act, 2019 w.e.f. 01.08.2019, the requirement of mens rea was done away ....
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....thout receiving any information that a cognizable offence under the PMLA has occurred and being in possession of material that indicates the offence of money-laundering has taken place? ❖ Can the mere existence of proceeds of crime confer jurisdiction upon the ED to initiate investigation? ❖ What are the elements of "money-laundering"? ❖ What conditions need to be satisfied before the ED is empowered to issue summons under Section 50 of the PMLA? ❖ Can a summons under Section 50 PMLA be issued to a person who is in the nature of an accused under the PMLA or in the predicate offence? ❖ Do Sections 50 and 63 of the PMLA violate the constitutional safeguards under Art.20(3) and 21 of the Constitution? 74. Admitting the inevitable position in law that as a Two Member Bench, we are bound by the decision of the Three Member Bench in Vijay Madanlal Choudhary, Shri Kapil Sibal argued that the matter may be placed before a Three Member Bench for resolving the conundrum created by the PMLA. In this connection, he drew our attention to paragraph 113 of the decision of another Three Member Bench in Union of Indi....
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.... a sine qua non or condition precedent for the exercise of power by ED, the summons issued by ED should go; or alternatively (ii) that in view of inherent contradictions contained in the decision in Vijay Madanlal Choudhary and in view of this Court having ordered notice in the review petition, the appeals on hand should also be referred to a larger Bench. 78. In support of his contention that the existence of a jurisdictional fact is a condition precedent for the exercise of power by ED, the learned senior counsel relies upon the decisions in Shauqin Singh vs. Desa Singh (1970) 3 SCC 881 and Arun Kumar vs. Union of India (2007) 1 SCC 732. 79. To demonstrate that there are inherent contradictions in the decision in Vijay Madanlal Choudhary, the learned senior counsel relies upon the decision of the Delhi High Court in Enforcement Directorate vs. Gagandeep Singh 2022 SCC Online Del 514 and Parvathi Kollur vs. State through ED Crl. Appeal No.1254/2022 dt.16.08.2022. 80. To show that a petition for review has been entertained by this Court, the learned senior counsel relies upon the record of proceedings of this Court dated 25.08.2022 in Review Petition (Crl.) No.219 of 2022 ....
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....resents the proceeds of crime, a jurisdictional fact for the initiation of proceedings does not get triggered; (vii) that no summons can be issued under Section 50 without registering an information report; (viii) that the power to issue summons under Section 50(2) can be exercised only during the course of any investigation or proceeding under the Act; (ix) that in the case on hand, no property representing the proceeds of crime has been identified; (x) that this is why the High Court questioned the ED as to how Section 3 got invoked; and (xi) that therefore the initiation of proceedings by the ED cannot be sustained even within the contours of law interpreted in Vijay Madanlal Choudhary. 84. Lastly, it is contended by Shri C.A. Sundaram, learned senior counsel for one of the accused that though the High Court allowed the prayer of the accused for reasons other than those argued now, the party successful before High Court can always seek to sustain the judgment, on grounds other than those stated in the impugned order. In support of this contention, the learned senior counsel relies upon the decision of this Court in Management of th....
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....w taken by a Bench of larger coram; (xiv) that as opined by Chief Justice John Roberts of the Supreme Court of the United States, 'it is a jolt to the legal system when you overrule a precedent'; (xv) that the ratio laid down by a larger Bench should not become suspect merely because another view is possible; (xvi) that in any case, Vijay Madanlal Choudhary has taken note of different views of several High Courts including the High Courts of Bombay, Delhi, Jharkhand and Punjab and Haryana, etc.; and (xvii) that unsettling the law laid down in Vijay Madanlal Choudhary at a time when the ranking of the country in curbing the menace of money-laundering has improved, will derail the whole process. 86. We have carefully considered the rival contentions. A careful analysis of the arguments advanced by all the three learned senior counsel appearing for the accused namely Shri Kapil Sibal, Shri C.A. Sundaram and Shri Sidharth Luthra would show that a three-pronged strategy has been formulated in their attack on the initiation of proceedings by the ED. This three-pronged strategy goes as follows: (i) questioning the correctness of the decision....
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....s Convention against Corruption (UNCAC) joining over 160 other countries who were party to this UN Convention. 89. The history of the legislation on money-laundering is almost six decades old. In brief, this history can be traced as follows: (i) In 1961, United Nations Convention on Narcotic Drugs was adopted and it was amended by the protocol of the year 1972. (ii) In 1971, United Nations Convention on Psychotropic Substances was made. (iii) In 1974, a bank known as Herstatt Bank in Germany was forced into liquidation by the Regulators. On the day on which it happened, a number of banks had released payments to Herstatt in exchange for US dollars to be delivered in New York. But due to the time zone differences, Herstatt ceased operations between the times of the respective payments. As a result, payments were not made in New York. Therefore, a Standing Committee which came to be known as Basel Committee on Banking Supervision (BCBS) was formed by G-10 countries namely Belgium, Canada, France, Germany, Italy, Japan, Netherlands, Sweden, Switzerland, UK and USA. (iv) In December 1988, two things happened. One was the adoption of a Convention b....
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.... General Assembly held between 8th to 10th June 1998 (of which India is one of the signatories) calling upon member States to adopt Anti Money Laundering Legislation & Programme, the Parliament has enacted a special law called the 'Prevention of Money Laundering Act, 2002' (PMLA 2002). The Act has come into force with effect from 1st July 2005. It has been substantially amended, by way of enlarging its scope, in 2009 (w.e.f. 01.06.2009), by enactment of Prevention of Money Laundering (Amendment) Act, 2009. The Act was further amended by Prevention of Money-Laundering (Amendment) Act, 2012 (w.e.f. 15-02-2013). (xi) As part of the effort to assist jurisdictions prepare or upgrade their legislative framework to conform with international standards and best practices to implement anti-money laundering measures and combating the financing of terrorism, UNODC issued in 2003, "Model Money-Laundering, Proceeds of Crime and Terrorist Financing Bill". 90. The Commonwealth Secretariat of the UNODC released in April 2009 an updated version of the "Model Provisions on Money Laundering, Terrorist Financing, Preventive Measures and Proceeds of Crime". Some of the provisions of the UN ....
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.... includes "instances in which financial assets are converted from one form or type to another, for example, by using illicitly generated cash to purchase precious metals or real estate or the sale of illicitly acquired real estate, as well as instances in which the same assets are moved from one place or jurisdiction to another or from one bank account to another." (See, e.g., paragraph 231, in Legislative Guide for the implementation of the UN Corruption Convention). Regarding mental elements, the conversion or transfer must be intentional, the accused must have knowledge at the time of conversion or transfer that the assets are criminal proceeds, and the act must be done for either one of the two purposes stated - concealing or disguising criminal origin or helping any person (whether one's self or another) to evade criminal liability for the crime that generated the proceeds. 2. Concealment or disguise of proceeds of crime. There are many aspects noted in the provision as to which there can be concealment or disguise - almost any aspect of, or information about, the property, so this section is broad. The concealment or disguise must be intentional and the accused must ....
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...., which constitute the foundational/jurisdictional fact, ED can initiate an investigation and issue summons? 93. The common theme of the song of the learned counsel for the accused is that the mere registration of a FIR for a predicate offence, even if it is a scheduled offence, is not sufficient for the ED to register an Information Report and summon anyone. According to the learned counsel, the commission of the scheduled offence should have generated proceeds of crime and those proceeds of crime should have been laundered by someone, for the ED to step in. Going a step further, it was contended by the learned senior counsel that the ED should first identify some property as representing the proceeds of crime, before an Information Report is registered and a summon issued under Section 50(2). 94. These contentions, in our opinion, if accepted, would amount to putting the cart before the horse. Unfortunately for the accused, this is not the scheme of the Act. 95. Section 3 of the Act which defines the offence of money-laundering reads as follows: "3. Offence of money-laundering.-Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingl....
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.... requires a definition and hence it is defined in Section 2(1)(u) as follows:- "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" including 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;" 98. Keeping in mind these essential elements that make up the molecular structure of Section 3, if we go back to the case on hand, we will find (i) that the offences under Sections 120B, 419, 420, 467 and 471 IPC are scheduled offences included in paragraph 1 of the Schedule; and (ii) that the offences under Sections 7 and 13 of the PC Act a....
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....espect of such types of offences that one may possibly argue that mere commission of the crime is not sufficient but the generation of proceeds of crime is necessary. In the case of an offence of corruption, the criminal activity and the generation of the proceeds of crime are like Siamese twins. 103. In fact, PMLA defines the word "property" in Section 2(1)(v) as follows: "2. Definitions.-(1) In this Act, unless the context otherwise requires,- xxx xxx xxx (v) "property" means any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located; Explanation.-For the removal of doubts, it is hereby clarified that the term "property" includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences;" 104. Therefore, even if an intangible property is derived as a result of criminal activity relating to a scheduled offence, it becomes proceeds of crime under Section 2(1)(u). In view of the above, we are not impressed with the con....
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.... those writ petitions, the Assistant Commissioner of Police filed counter affidavits. 109. Thus, the information about all complaints, the nature of the complaints, the amount of money allegedly collected towards illegal gratification had all come into public domain. To say that the ED should have adopted an Ostrich like approach, without trying to find out where and to whom the huge money generated in the scam had gone, is something unheard of. 110. In fact, ED was not trying to access any document which was inaccessible. In several proceedings before the High Court, such as (i) petitions for further investigation; (ii) writ petitions; and (iii) quash petitions, some of the documents whose certified copies were sought by the ED were already annexed. All that the ED wanted was authenticated copies of those documents and nothing more. 111. In fact, the FIRs as well as Final Reports are now uploaded in the websites of the Police Department in some of the States. In the State of Tamil Nadu, Police started uploading FIRs online, way back in 2016. In all Police Stations, a Crime and Criminal Tracking Network and Systems, popularly known as 'CCTNS' is installed. Therefore, the i....
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....d 25.08.2022 passed in Review Petition (Crl.) No.219 of 2022 discloses that prima facie the Court was of the view that at least two of the issues raised in the review petition require consideration. Though it is not precisely spelt out in the order, those two issues relate to (i) not providing the accused with a copy of the ECIR; and (ii) reversal of the burden of proof and presumption of innocence. The points that the respondents are canvasing in this case, have nothing to do with those two issues. Therefore, the accused cannot have a piggyback ride on the review petition. 117. In fact, as we have pointed out elsewhere, the accused have not come up with any appeal challenging the order of the High Court dated 01.09.2022. Therefore, they are entitled at the maximum, to argue only for the dismissal of the appeals filed by ED and others against the said decision. Suppose we agree with the learned counsel for the accused and dismiss the appeals filed by ED, even then they cannot have an escape route since the impugned order of the High Court protects them only till the other proceedings are kept at bay. 118. Therefore, the accused is not entitled at all either to seek a referenc....
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....65B of the Evidence Act is raised. Section 65B concerns the admissibility of electronic records. Without certification, ED may not be able to use those electronic records in evidence, in the prosecution under PMLA. But it does not mean that they cannot even have a look at the electronic record. 124. Therefore, we find no merits in the appeal. Hence, the appeal challenging the order of the High Court dated 30.03.2022 passed in Criminal O.P. No.5726 of 2022 is dismissed. PART - IV (Extension of time to complete further investigation) 125. There is one appeal filed by Y. Balaji, whose status is indicated by us in a tabular column elsewhere. His appeal challenges an order passed by the High Court originally on 27.11.2019 directing the prosecution to complete further investigation in CC No.3627 of 2017 within six months. When a petition for extension of time was moved, the Court rejected it by an order dated 01.11.2021 on the ground that the prayer had become infructuous. Therefore, worried about the fate of further investigation, the victim has come up with the above appeal. But the worry of the appellant is baseless. Merely because the High Court has not granted extension of ....
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....257 of 2023 130. This is an application taken out by Y. Balaji, appellant in some of these appeals, seeking the constitution of a Special Investigation Team and the appointment of a Special Public Prosecutor. This application is filed on the ground that the hope expressed by this Court in its order dated 08.09.2022 that the State Police would do a proper job, has been belied by subsequent events. Therefore, the applicant prays that time is now ripe for the constitution of a Special Investigation Team. 131. The application is opposed on the ground, (i) that a prayer of this nature cannot be made by way of an interlocutory application; and (ii) that the allegation of the prosecution being influenced by the Minister does not stand substantiated. 132. As we have pointed out while dealing with the contempt petitions, the entire blame for this fiasco cannot be laid at the doorstep of the Police alone. We find several coparceners. Hence, we reject this I.A. at this stage with liberty to the applicant to come back with a substantial petition seeking such a prayer, at a later point of time, when a foul play is suspected. Accordingly, I.A. No.26257 of 2023 is dismissed with the abov....