'Bribe Giver' Is A Party Connected To 'Proceeds Of Crime' ; Can Be Prosecuted Under PMLA : Supreme Court

The Supreme Court set aside a Madras High Court judgment which quashed PMLA proceedings initiated against a 'bribe giver'.

"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.", the bench of CJI UU Lalit and Justice Bela M. Trivedi observed.

Padmanabhan Kishore (A2) allegedly handed over a sum of Rs.50,00,000/- (Rupees fifty lakhs only) to a public servant. An FIR was registered under Section 120B, Indian Penal Code and Sections 7, 12, 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988. Later, a case was registered by the Enforcement Directorate against the accused including Padmanabhan Kishore under Sections 3 and 4 of the PML Act. Later, the Madras High Court allowed the writ petition and quashed the PMLA proceedings against him. According to High Court, the sum of Rs.50,00,000/- as long as it was in the hands of Padmanabhan Kishore (A2) could not have been stated as a tainted money because it is not the case of the CBI that he 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, it said.

In appeal, the Apex Court bench noted the following definitions under PMLA :

1. 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".
2. Section 3 states, inter alia, that whoever knowingly assists or knowingly is a party or is actually involved in any 8 process or activity connected with proceeds of crime including its concealment, possession, acquisition or use shall be guilty of offence of money-laundering

The bench, referring to the above definitions, observed that the relevant expressions from Section 3 of the PML Act are thus wide enough to cover the role played by a person in the instant case:

"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 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.

Observing that Padmanabhan Kishore was prima facie involved in the activity connected with the proceeds of crime, the bench set aside the High Court judgment and restored the PMLA proceedings.

Case details

Directorate of Enforcement vs Padmanabhan Kishore | 2022 LiveLaw (SC) 896 | SLP (Crl.) No. 2668 OF 2022 | 31 October 2022 | CJI UU Lalit and Justice Bela M. Trivedi

Headnotes

Prevention of Money Laundering Act, 2002 ; Section 3 -  Appeal against High Court quashed PMLA proceedings against 'Bribe Giver' - Allowed - 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 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.

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