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2023 (6) TMI 594 - SC - Money LaunderingMoney Laundering - refusal of the High Court to extend the time for completion of investigation - access of certain documents available on record in the Special Court trying the predicate offences - application seeking the constitution of a Special Investigation Team. Challenge to the order for de novo investigation - 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 than the Minister himself. Therefore, Devasagayam filed a petition seeking a direction to the Investigating Officer to conduct a de novo investigation - HELD THAT - The grounds on which Devasagayam sought de novo investigation were quite strange. In his petition seeking de novo investigation, Devasagayam stated that though his specific complaint was against one Baskar and nine others, the Final Report filed under Section 173(8) included other persons, who, according to Devasagayam, had no connection with the case. Devasagayam also stated in his petition seeking de novo investigation that Baskar and Kesavan against whom he made a specific complaint, are not shown as accused. In fact, the allegation made by Gopi in his petition before the High Court that Devasagayam had been won over by the accused, was not without substance, as can be seen from a few averments made by Devasagayam - It is not known whether Devasagayam was referring to the persons against whom he made a specific complaint as fictitious persons or whether he was calling the Minister and the person alleged to be his Secretary, named as accused in the Final Report as fictitious persons. 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. 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. But even according to the learned senior counsel for Devasagayam and learned senior counsel for the accused, the operative portion of the impugned order of the High Court need not be understood in such a manner. If that is so, all those phrases and expressions deserve to be removed. If they are removed, the life gets ebbed out of the impugned order, which in our opinion, it richly deserves. 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 - appeal on this issue allowed. Concerning proceedings by Enforcement Directorate - HELD THAT - It is seen from the impugned order that at least two out of three accused specifically argued before the High Court that their case was squarely covered by the decision of this Court in VIJAY MADANLAL CHOUDHARY ORS. VERSUS UNION OF INDIA ORS. 2022 (7) TMI 1316 - SUPREME COURT , but interestingly most of the arguments advanced before us turned out to be an attack on the correctness of the decision in Vijay Madanlal Choudhary. We are not suggesting that this defection from one point of view to the other is covered by Schedule X. 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 demerits of the proceedings initiated by the ED and the High Court left all the questions to be dealt with in appropriate proceedings. It is clear that the provisions of PMLA are in tune with the Model Law drafted by United Nations Office on Drugs and Crime (UNODC). Whether without identifying the proceeds of crime or a property representing the proceeds of crime and without identifying any process or activity connected to proceeds of crime as required by Section 3, which constitute the foundational/jurisdictional fact, ED can initiate an investigation and issue summons? - HELD THAT - It is true that there are some offences, which, though scheduled offences, may or may not generate proceeds of crime. For instance, the offence of murder punishable under Section 302 is a scheduled offence. Unless it is a murder for gain or murder by a hired assassin, the same may or may not generate proceeds of crime. It is in respect 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. 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 contention that the investigation by ED was triggered without any foundational/jurisdictional facts. In our view, the allegations in the FIR point out to (i) involvement of persons in criminal activity relating to scheduled offences; (ii) the generation as well as (iii) laundering of the proceeds of crime within the meaning of Section 3. This is in view of the fact that wherever there are allegations of corruption, there is acquisition of proceeds of crime which itself tantamount to money-laundering. Once an information relating to the acquisition of huge amount of illegal gratification in the matter of public employment has come into the public domain, it is the duty of the ED to register an Information Report. This is because acquisition is an activity amounting to money-laundering and the illegal gratification acquired by a public servant represents proceeds of crime, generated through a criminal activity in respect of a scheduled offence. Therefore, it does not require any expedition, much less a fishing expedition for someone to say that the receipt of bribe money is an act of money-laundering - the contention of Shri Sidharth Luthra that there was no explanation for the delay on the part of the ED in registering the Information Report, is a self-serving argument. If the ED registers an Information Report immediately upon the registration of a FIR for a predicate offence, ED will be accused of acting in haste. If they wait until the drama unfolds up to a particular stage, ED will be attacked as guilty of delay. The accused should be thankful to ED for giving a long rope from 2016 till 2021. Whether in the light of the fact that notice has been ordered in the review petition and a few interim orders have been passed in some proceedings, it is necessary for this Court to tag these appeals along with a review petition or defer the hearing of these matters until a decision is rendered in the review petition and other petitions? - HELD THAT - 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 the learned counsel for the accused is agreed upon and the appeals filed by ED are dismissed, 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. The accused is not entitled at all either to seek a reference to a larger Bench or to seek to defer the matter till a decision is rendered in the matters involving larger issues - Appeal allowed on this issue. Permission to ED to inspect the records of the Special Court trying the predicate offences - HELD THAT - The grievance of the appellant in this appeal is that the High Court has overlooked the provisions of Rule 231(3) of the Rules, 2019 and also Section 65B of the Indian Evidence Act, 1872 (the Evidence Act). But both the above contentions are without substance. Rule 231 primarily deals with the grant of certified copies of certain other documents to the accused, before filing of the Final Report. Rule 231(3) states that certified copies of unmarked documents shall not be given. The High Court has not passed any order directing the grant of certified copies of unmarked documents. All that the High Court has done is permitting the ED to have an inspection of the documents under Rule 237 and thereafter to file a proper copy application. This is not contrary to Rule 231(3). It is not understood how an argument revolving around Section 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 - there are no merits in the appeal - appeal on this issue dismissed. Extension of time to complete further investigation - HELD THAT - 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 time, it does not mean that the direction to conduct further investigation has become infructuous. On the contrary, a Final Report has already been filed under Section 173(8) of the Code on 08.03.2021 in CC No.3627 of 2017 and the same has now become CC No.24 of 2021 - Appeal on this issue dismissed. Application disposed off.
Issues Involved
1. De Novo Investigation 2. Proceedings by Enforcement Directorate (ED) 3. Permission to ED to Inspect Records 4. Extension of Time to Complete Investigation Summary Part-I: De Novo Investigation 1. Background: The High Court ordered de novo investigation based on a petition by Devasagayam, who initially lodged a complaint in 2015 but later sought de novo investigation after the inclusion of the Minister and others in the final report. 2. High Court's Decision: The High Court ordered reinvestigation to start ab initio, wiping out earlier investigations altogether. 3. Supreme Court's Analysis: The Supreme Court found the High Court's order problematic, as it was not based on the grounds raised in Devasagayam's petition. The Court highlighted that the High Court's order undermined judicial discipline and the principles laid down in Vinay Tyagi vs. Irshad Ali. 4. Conclusion: The Supreme Court set aside the High Court's order for de novo investigation, allowing further investigation to proceed without starting afresh. Part-II: Proceedings by Enforcement Directorate (ED) 1. Background: ED registered an Information Report and issued summons based on the final report under Section 173(8) of the Code, which included offences under the Prevention of Corruption Act (PC Act). 2. High Court's Decision: The High Court restrained ED from proceeding further until the disposal of related criminal cases. 3. Supreme Court's Analysis: The Supreme Court found that the High Court's decision was only a temporary reprieve. The Supreme Court emphasized that the foundational facts for ED's investigation were present, and the proceedings were not initiated without jurisdictional facts. 4. Conclusion: The Supreme Court allowed ED to proceed with its investigation, setting aside the High Court's order. Part-III: Permission to ED to Inspect Records 1. Background: ED sought certified copies of documents from the Special Court, which was partly allowed, but denied access to unmarked documents. 2. High Court's Decision: The High Court permitted ED to inspect documents under Rule 237 of the Criminal Rules of Practice, 2019. 3. Supreme Court's Analysis: The Supreme Court found no merit in the appeal against the High Court's order, as it did not contravene Rule 231(3) or Section 65B of the Indian Evidence Act. 4. Conclusion: The Supreme Court dismissed the appeal, allowing ED to inspect the records. Part-IV: Extension of Time to Complete Investigation 1. Background: A petition for extension of time to complete further investigation was rejected by the High Court. 2. Supreme Court's Analysis: The Supreme Court noted that the direction for further investigation was still valid, and a final report had already been filed. 3. Conclusion: The Supreme Court dismissed the appeal, directing the Investigation Officer to proceed with further investigation and file reports within two months. Contempt Petitions and Special Investigation Team (SIT) 1. Contempt Petitions: The petitions alleging willful disobedience by the State were dismissed, with the Supreme Court accepting the explanation provided by the State officials. 2. Special Investigation Team (SIT): The application for constituting an SIT was rejected, with liberty to file a substantial petition if future foul play is suspected. Final Outcome 1. De Novo Investigation: Appeals allowed, High Court's order set aside. 2. ED Proceedings: Appeals allowed, High Court's order set aside. 3. Inspection of Records: Appeal dismissed. 4. Extension of Time: Appeal dismissed. 5. Contempt Petitions and SIT: Both dismissed.
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