'Receipt Of Bribe Is An Act Of Money Laundering' : Supreme Court Says Registration Of FIR In Corruption Case Sufficient To Launch ED Probe

In a significant development increasing the jurisdictional remit of the Enforcement Directorate (ED), the Supreme Court has on Monday clarified that a criminal activity and the generation of the proceeds of crime are like ‘Siamese twins’ in the case of an offence of corruption and the acquisition of the proceeds of crime in such cases would itself tantamount to money laundering. The top court held: “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 the 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)…Wherever there are allegations of corruption, the acquisition of proceeds of crime itself tantamount to money laundering.” This observation was made by a bench of Justices Krishna Murari and V Ramasubramanian, while allowing a batch of appeals against an order of the Madras High Court directing a fresh enquiry into the cash-for-jobs scam, in which the Tamil Nadu minister and DMK MLA V Senthil Balaji, among others, has been accused of accepting bribes from job aspirants in exchange of appointments to the state transport corporation between 2011 and 2015. The top court also set aside a direction of the high court staying the proceedings in the money laundering case lodged by the Directorate of Enforcement. One of the central planks of the argument by the accused persons was that the jurisdictional facts necessary for the directorate to begin an investigation was the commission of an offence, together with the generation of the proceeds of crime with respect to that offence. Senior Advocate CA Sundaram submitted that the existence of identified property or ill-gotten gains in the hands of the accused were the sine qua non of an offence of money laundering. Senior Advocate Siddharth Luthra also raised a similar concern. Senior Advocate Kapil Sibal went one step further and said that an interpretation which removed the difference between the proceeds of crime and money laundering was constitutionally suspect, and only when any tainted property was integrated into the formal economy, should charges of money laundering be attracted. However, Solicitor-General for India Tushar Mehta responded to these contentions by saying, “The moment a predicate agency, be it a state agency or the Central Bureau of Investigation, registers an FIR which falls within the predicate offence list in the schedule annexed, the jurisdiction of the Enforcement Directorate starts.” The apex court was reluctant to accept the submissions made by the petitioners with respect to the requisite jurisdictional fact or lack thereof. Justice Ramasubramanian, who authored the judgement, wrote: “The common theme of the song of the learned counsel for the accused is that the mere registration of an FIR for a predicate offence, even if it is a scheduled offence, is not sufficient for the ED to register an Information Report and summon anyone. According to the learned counsel, the commission of the scheduled offence should have generated proceeds of crime and those proceeds of crime should have been laundered by someone, for the ED to step in. Going a step further, it was contended by the learned senior counsel that the ED should first identify some property as representing the proceeds of crime, before an Information Report is registered and a summon issued under Section 50(2). These contentions, in our opinion, if accepted, would amount to putting the cart before the horse. Unfortunately for the accused, this is not the scheme of the Act.” “It is no rocket science to know that a public servant receiving illegal gratification is in possession of the proceeds of a crime. The argument that the mere generation of proceeds of crime is not sufficient to constitute the offence of money-laundering, is actually preposterous,” the bench observed, after highlighting the scheme of act, with emphasis on Section 3 read with Section 2(1)(u). Section 3, which lays down the offence of money laundering, addresses three parameters, namely, the person, process or activity, and the product. Out of these three, the bench noted, the first two do not require any interpretation, but for the third aspect – the product – reference must be made to Section 2(1)(u), which defines ‘proceeds of crime’. It added: ...

'Receipt Of Bribe Is An Act Of Money Laundering' : Supreme Court Says Registration Of FIR In Corruption Case Sufficient To Launch ED Probe

Awstika Das

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'Receipt Of Bribe Is An Act Of Money Laundering' : Supreme Court Says Registration Of FIR In Corruption Case Sufficient To Launch ED Probe

Awstika Das

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