The Supreme Court has held that it is with the active participation of the person offering the bribe that the money becomes tainted and qualifies as “proceeds of crime” and therefore, it is only fair to prosecute the said person under Prevention of Money Laundering Act, 2002.
Brief Facts:
A writ petition was filed by the Respondent seeking the quashing of proceedings initiated against him under the Prevention of Money Laundering Act, 2002 (hereinafter referred to as “PMLA”).
It was alleged that the Respondent had handed over a sum of Rupees fifty lakhs to a public servant. Pursuant to this, one FIR was filed, and subsequently, the case was registered by the Enforcement Directorate against the Respondent under Sections 3 and 4 of the PMLA.
The Madras High Court quashed the proceedings against the Respondent under PMLA. Therefore, the present appeal is filed against the judgment passed by the Madras High Court
Contentions of the Respondent:
The Respondent contended that the money was tainted only when it was received by the public servant and not before that and therefore when the money was in his hands it could not have been classified as “proceeds of crime”. Based on this he argued that he was not connected with the “proceeds of crime” and thereby, he cannot be prosecuted under the PMLA.
Observations of the Court:
The Court explained the definition of “proceeds of crime” and expounded that any property which is derived because of the consequence of a criminal activity relating to the offenses as provided under the Schedule will qualify as “proceeds of crime”. Upon examining Section 3 of the PMLA, the Court pointed out that when the amount is in the hands of the bribe giver, it would not be tainted. If the said amount is handed over without the intent of a bribe, then such a transaction would merely be an entrustment. If the said amount is appropriated by the public servant, then it would qualify as misappropriation and not a bribe. The court propounded that for a bribe, the most crucial ingredient is that there should be an intent to hand over the amount as a bribe and normally this intent is present before the actual handing over takes place. Therefore, when the person intends to offer money as a bribe such a person will be said to be involved in the process connected with “proceeds of crime” as the intention is present to offer money as a bribe. Such a person knowingly becomes a part of the transaction connected with “proceeds of crime”. It was also observed that had it not been for the active participation of the such person, the money would never be tainted and qualify as “proceeds of crime”.
The decision of the Court:
The Court propounded that the language of Section 3 is wide enough to cover a bribe giver under its ambit and therefore, based on the reasons abovementioned the Respondent shall be prosecuted under PMLA, and accordingly, the judgment of the HC was set aside.
Cause Title: Directorate of Enforcement v. Padmanabhan Kishore
Citation: SLP (Crl.) No. 2668 of 2022
Bench: Hon’ble Mr. Justice Uday Umesh Lalit, Hon’ble Mrs. Justice Bela M. Trivedi
Decided on: October 31st, 2022
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