Person handing over money with intent to bribe public servant can be booked under PMLA: Supreme Court

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The Supreme Court on Monday held that if a person hands over money to a public servant with an intention to bribe him, then the person is said to be a party connected to the ‘proceeds of crime’ and is liable to be booked under the Prevention of Money Laundering Act (PMLA) [Directorate of Enforcement vs Padmanabhan Kishore].

A division bench of Chief Justice UU Lalit and Justice Bela M Trivedi said that the intention on the part of the person handing over the money as bribe is what is relevant.

“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,” the bench held in its order passed on October 31.

The Court said that 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 added.

The bench, therefore, set aside a decision of the Madras High Court which had quashed the proceedings against one Padmanabhan Kishore booked under the PMLA.

He was booked initially by the Central Bureau of Investigation (CBI) in August 2011 for paying ₹50 lakh bribe to an Additional Commissioner of Income tax, Chennai, who was to assess his income. The CBI had booked him and the other officers under the relevant provisions of the Prevention of Corruption Act.

The central agency then filed a chargesheet against the accused including Kishore, which disclosed a scheduled offence and, therefore, the ED came into picture and registered a case against the accused in 2016.

The accused argued that the amount in question, as long as it was in his hands, could not be said to be tainted money.

Such money assumes tainted character only after it is received by the public servant and as such he could not be said to be connected with proceeds of crime.

Hence, he could not be proceeded against under the PMLA, it was contended.

The bench referred to the definition of ‘proceeds of crime’ under the PMLA law, which states that any property derived or obtained by any person as a result of criminal activity relating to a scheduled offence is a proceed of crime.

It further noted that Section 3 of the PMLA, under which Kishore was booked, states that whoever knowingly assists or knowingly is a party or is actually involved in any process or activity connected with proceeds of crime including its concealment, possession, acquisition or use shall be guilty of offence of money-laundering.

“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 Court observed.

It then referred to the complaint registered by the ED against Kishore and said that its bare perusal made it clear that Kishore was prima facie involved in the activity connected with the proceeds of crime.

“The view taken by the Madras High Court that he cannot be held liable for the offence under the PML Act is thus completely incorrect,” the Court held.

The Court, however, clarified that the observations in the judgment are prima facie in nature and for considering whether the allegations made by the prosecution if accepted to be true at this stage, would make out an offence or not.

Therefore, the court quashed the orders of the Madras High Court and ordered ED to again array Kishore as an accused in its case.

Additional Solicitor General Balbir Singh represented the ED.

Senior Advocate S Nagamuthu appeared for the Accused.

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