2022 (11) TMI 53 - SC - Money Laundering

Smuggling - proceeds of crime - Scheduled offences - conspiracy to commit offences punishable under Sections 7, 12, 13(1)(d) read with Section 13(2) of the PC Act - HELD THAT - 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 . Whether the role played by respondent could come within the purview of Section 3 of the PML Act? - HELD THAT - 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 - 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. Appeal allowed.

Summary

Issues:
Challenge to judgment quashing proceedings under the Prevention of Money Laundering Act, 2002.

Analysis:
The respondent sought to quash proceedings under the Prevention of Money Laundering Act, 2002 (PML Act) initiated against him. The case stemmed from a bribery incident where the respondent allegedly handed over a sum of Rs.50,00,000 to a public servant, leading to criminal charges under various acts. The High Court accepted the respondent's argument that the money became tainted only after being accepted as a bribe by the public servant, not while in the respondent's possession. The High Court quashed the PML Act proceedings against the respondent based on this reasoning.

The main contention was whether the respondent could be held liable under the PML Act for his involvement in the bribery case. The PML Act defines "proceeds of crime" as any property obtained as a result of criminal activity related to a scheduled offence. The respondent was charged with conspiracy under the Prevention of Corruption Act, and the question was whether his actions fell under the purview of the PML Act.

Section 3 of the PML Act criminalizes any involvement in processes connected with proceeds of crime, including concealment, possession, acquisition, or use. The Supreme Court held that the respondent's intent to hand over the money as a bribe was crucial, and such intent must precede the actual transfer of money. By knowingly participating in the activity connected with proceeds of crime, the respondent could be held liable under the PML Act.

The Court concluded that the respondent was prima facie involved in activities connected with the proceeds of crime based on the Enforcement Directorate's complaint. The High Court's decision to quash the proceedings under the PML Act was deemed incorrect. The Court allowed the appeal, setting aside the High Court's judgment and directing the respondent to be proceeded against in accordance with the law under the PML Act.

In summary, the Supreme Court ruled in favor of allowing the appeal, overturning the High Court's decision, and directing the respondent to continue to be proceeded against under the Prevention of Money Laundering Act, 2002.