Case BriefsSupreme Court

Supreme Court: In a case relating to Prevention of Corruption Act, the 3-judge bench of Ashok Bhushan, R. Subhash Reddy and M.R. Shah*, JJ has partly allowed the appeal regarding quantum of sentence, while concurrent order of conviction by the Courts below was confirmed.

The appellant was convicted for offences under Sections 7, 13(2) read with 13(1) (d) of the Prevention of Corruption Act, 1988 whereby the Special Judge had sentenced him to undergo rigorous imprisonment for a period of two years with fine of Rs 5,000; which was confirmed by the High Court of judicature at Madras.

Aggrieved and dissatisfied, the appellant contended that he was a senior citizen aged about 69/70 years and had been already dismissed from service on being convicted for the offences under the Prevention of Corruption Act. Therefore, it was prayed to reduce the sentence imposed to the sentence already undergone.

Considering the fact that, out of two years sentence imposed by the Special Court, confirmed by the High Court, the appellant had already undergone approximately one year and one month and that the appellant was a senior citizen aged about 70 years who had been already dismissed from service, the Court stated,

“The ends of justice would be met if the sentence of two years rigorous imprisonment as imposed by the learned Special Court, confirmed by the High Court, is reduced to that of one year and one month rigorous imprisonment.”[S. Sundara Kumar v. State, 2021 SCC OnLine SC 21, decided on 13-01-2021]


*Justice M.R. Shah has penned this judgment

Op EdsOP. ED.

Introduction

The Prevention of Money-Laundering Act, 2002[1] (PMLA) is a pro-active legislation keen on curbing money-laundering and bringing violators to justice. Such a legislation is definitely the need of the hour considering the number of scams this country has seen in its past and a strong law securing the 4 walls of justice for offenders is welcomed by the people at large. However, off-late, criminal law practitioners (defense lawyers) have found it challenging to deal with PMLA for the fact that the 4 ends securing the 4 walls of ‘presumed’ justice is far too airtight even for genuine non-offenders to escape its clutches, if caught by sheer happenstance. This article deals with one such scenario.

PMLA punishes an individual for the offence of money-laundering under Sections 3 and 4 which read as follows:

3. Offence of money-laundering.— Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. 

[Explanation. – For the removal of doubts, it is hereby clarified that,

(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely,

(a) concealment; or

(b) possession; or

(c) acquisition; or

(d) use; or

(e) projecting as untainted property; or

(f) claiming as untainted property, in any manner whatsoever;

 (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever].

  1. Punishment for money-laundering.— Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine:

Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words which may extend to seven years, the words which may extend to ten years had been substituted.

On a bare reading of these two provisions, any money that is construed to be ‘proceeds of crime’ is liable to be punished under PMLA. ‘Proceeds of crime’ is defined under Section 2(1)(u) as any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence[2]. It is my contention that an offence under the PMLA cannot be a stand-alone offence, as an offence is required to be committed (under the Schedule) for the monies/properties to be deemed ‘proceeds of crime’. Without commission of a crime, there exists no proceeds from crime.

The Karnataka High Court in K. Sowbaghya v. Union of India[3] has observed that:

having regard to the meaning attributed to ‘proceeds of crime’ under PMLA, whereby crime contemplated is the alleged scheduled offence, the ‘proceeds of crime’ contemplated under Sections 3 and 4 are clearly and inextricably linked to the scheduled offence and it is not possible to envision an offence under PMLA as a stand-alone offence without the guilt of the offender in the scheduled offence being established.

Therefore, on a logical reasoning of the said proposition, only if an offence under the Schedule to PMLA is committed, then the question of proceeds of crime arises.

Coming to the thesis or central question for discussion in this article, there are various offences under various statutes that have been adduced as scheduled offences under the PMLA, and for the major part of the Schedule, I have no quarrel with the intention of the legislature. For example, an offence under Section 25 of the Arms Act (which is a scheduled offence under the PMLA) punishes the individual who possesses or sells unlicensed arms and ammunition. The PMLA, rightly so, punishes the individual for the proceeds he/she has made or property acquired through such possession or sale. Taking another example, certain offences under the Penal Code, 1860 such as Sections 364-A (kidnapping for ransom), 384 to 389 (extortion), 392 to 402 (robbery and dacoity) etc are also scheduled offences under the PMLA. Similar to the previous example, IPC punishes the accused for the offences of kidnapping, extortion or robbery/dacoity whereas the PMLA punishes the accused for the money made or property acquired from the commission of such crimes.

The problem arises when considering offences under the Prevention of Corruption Act, 1988[4] (the PC Act), particularly Section 13. Offences under Section 13 (criminal misconduct by a public servant), also a scheduled offence under PMLA, punishes a public servant for receiving illegal gratification by using his/her public office, misappropriating property or owning/possessing property worth beyond known sources of income or illicit enrichment of wealth (general overview). Contrary to the argument that the PC Act only punishes a person for being corrupt or misusing his public office and PMLA punishes the monies made or properties acquired from such misconduct, I argue that the PC Act collectively performs the functions of the PMLA as well.

The object of PMLA is to prevent money-laundering and to provide for confiscation of property derived from money-laundering. Therefore, the function of PMLA is to seize/confiscate the properties so enjoyed by individuals who have acquired such property by commission of one or more offences which can be acted upon under the Act, apart from punishment for holding such property. The PC Act on the other hand, not only punishes an individual for being corrupt and holding tainted property, it also takes away any property/money derived from such abuse of power/criminal misconduct for the same reason that such property was acquired through illegal means.

The Supreme Court while dealing with a case under the PC Act in Yogendra Kumar Jaiswal v. State of Bihar[5] held that:

If a person acquires property by means which are not legally approved, the State would be perfectly justified to deprive such person of the enjoyment of such ill-gotten wealth. There is a public interest in ensuring that persons who cannot establish that they have legitimate sources to acquire the assets held by them, do not enjoy such wealth.  Such a deprivation would certainly be consistent with the requirement of Articles 300-A and 14 of the Constitution which prevent the State from arbitrarily depriving a person of his property.

When the PC Act inclusively curbs and confiscates “proceeds of crime”, would prosecution for the same under PMLA not amount to double jeopardy?

Provisions of the PC Act examined

An analysis of Section 13 of the PC Act will shed further light on this theory. Section 13 reads as follows:

13. Criminal Misconduct by a Public Servant. [(1) A public servant is said to commit the offence of criminal misconduct,

(a) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or any property under his control as a public servant or allows any other person so to do; or

(b) if he intentionally enriches himself illicitly during the period of his office.

Explanation 1.- A person shall be presumed to have intentionally enriched himself illicitly if he or any person on his behalf, is in possession of or has, at any time during the period of his office, been in possession of pecuniary resources or property disproportionate to his known sources of income which the public servant cannot satisfactorily account for.

Explanation 2.- The expression known sources of income means income received from any lawful sources.]

(2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than [four years] but which may extend to [ten years] and shall also be liable to fine.[6]

Most cases pending or newly charged are predominantly under the provisions prior to the 2018 amendment due to the check period and hence, emphasis will also be placed on Sections 13(1)(a) to (e), as they were, prior to the amendment. However, the following explanation would be squarely applicable to Section 13 as it is subsequent to the amendment also.

Provision

(Before Amendment)

Key Word/Phrase
13(1)(a) Gratification other than legal remuneration
13(1)(b) Valuable thing
13(1)(c) Misappropriates property entrusted to him or under his control
13(1)(d) Valuable thing or pecuniary advantage
13(1)(e) Pecuniary resources or property disproportionate to known sources of income
(After amendment) Key Word/Phrase
13(1)(a) Misappropriates property entrusted to him or under his control
13(1)(b) Intentionally enriches himself illicitly

All these provisions have a key word or a phrase within which the alleged actions have to fit into for them to be charged with one of the above offences (all of which are scheduled offences under PMLA). At this point, it is also pertinent to examine the definition of ‘property’ as under Section 2(1)(v) of PMLA:

(v) “property” means any property or asset of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible and includes deeds and instruments evidencing title to, or interest in, such property or assets, wherever located;

Explanation.– For the removal of doubts, it is hereby clarified that the term “property” includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences;”

A bare reading of this definition would show that all keywords/phrases for making one liable under Section 13 of the PC Act also (on interpretation) fall under the definition of Section 2(1)(v) of PMLA. Apart from jail time, the objective of Sections 3 and 4 of PMLA are to confiscate any property that is construed to be from proceeds of crime as the person holding the said property has not obtained and enjoyed them through legal means. This, in its very essence is what Section 13 is also trying to accomplish. The Oxford English Dictionary defines the word “pecuniary” as “of or in money”, thereby making construction of the term ‘pecuniary advantage’ to also fall under the definition of property under Section 2(1)(v) of PMLA. This comparison is only to show that cumulatively, Section 13 of the PC Act and Sections 3 and 4 of PMLA are trying to achieve the same goal and have the same objectives. Therefore, initiating action against an individual under both the provisions of law for the same offence or transaction, would amount to double jeopardy.

It is agreed as stated by the Andhra Pradesh High Court in B. Rama Raju v. Union of India[7] that punishment under Sections 3 and 4 of PMLA are distinct proceedings from Section 5 which is attachment of property and subsequent confiscation. However, in a PC Act case, the trial court (CBI Court in most jurisdictions) passes an order of attachment of tainted property or property under presumption that it is through illegal gratifications during the pendency of trial. This is where Section 5 of PMLA comes in conflict with the proceedings already pending before the trial court. Once the properties are already attached and since the PMLA also permits an order of attachment under Section 5, the Enforcement Directorate making an application to transfer all properties from CBI to ED is prima facie posing a direct threat to the investigation conducted by CBI.[8] Both the agencies are looking into the same properties for offences committed and further, only if an offence is established by CBI can it be treated as ‘proceeds of crime’ by ED.

The Supreme Court in Kanhaiyalal v. D.R. Banaji[9] had held that:

 “If a court has exercised its power to appoint a receiver of a certain property, it has done so with a view to preserving the property for the benefit of the rightful owner as judicially determined. If other courts or tribunals of coordinate or exclusive jurisdiction were to permit proceedings to go independently of the court which was placed the custody of the property in the hands of the receiver, there was a likelihood of confusion in the administration of justice and possible conflict of jurisdiction.

Even though the observations made therein were in a civil case, the same principles are to be applied to criminal cases also, as attachment of property in these matters are quasi civil in nature. If the Enforcement Directorate were to interfere with pending proceedings conducted by CBI, then there would arise a conflict of jurisdiction since both are on the basis of the same offence and properties possessed therein.

The most essential ingredient for an offence under Section 3 of PMLA is the existence of property that is deemed to be a proceed of crime and Section 13 of the PC Act, quintessentially performs the twin function by making the accused public servant liable for abusing his/her office, possessing such property as well as confiscating the said property since it is a proceed of a ‘crime’ committed by the public servant. To makes things more convincing, punishment under Section 13(2) of the PC Act is much more severe than Section 4 of PMLA, thereby justifying its twin purpose.

Double Jeopardy explained

The concept of double jeopardy has been known to mankind from time immemorial. Dating back to 355 BC in Athens, Greece, the law forbids the same man to be tried twice on the same issue. Double jeopardy or non bis in idem is a procedural defense that prevents a person from being tried again on the same or similar charges following a valid conviction or acquittal. The principle of double jeopardy in India existed prior to the drafting and enforcement of the Constitution. It was first enacted in Section 403(1) of the Criminal Procedure Code, 1898 which is now Section 300 of the amended Criminal Procedure Code, 1973. A partial protection against double jeopardy is a Fundamental Right guaranteed under Article 20 (2) of the Constitution of India, which states “No person shall be prosecuted and punished for the same offence more than once”.

In Thomas Dana v. State of Punjab[10], a Constitutional Bench of 5 Judges laid down 3 requirements for double jeopardy i.e. prosecution, punishment and same offence. If these 3 are complied with, then the protection under Article 20(2) is guaranteed.

Section 300 of the Code of Criminal Procedure also protects a person from being tried again where he/she has already been tried and acquitted/convicted for the same offence. Section 26 of the General Clauses Act states that:

 “Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offence.

This is further enumerated by the Supreme Court in Manipur Administration v. Thokchom Bira Singh[11], that for Article 20(2) and Section 26 of the General Clauses Act to act as a bar for second prosecution and its consequential punishment thereunder, it must be for the same offence that is, an offence whose ingredients are the same. Applying the principles of Section 26 of the General Clauses Act, Article 20(2) and the above decision of the  Supreme Court to the present question at hand, it can be stated that since the offence for which PMLA is invoked is essentially the same offence as under the PC Act, the above provisions will get attracted. Therefore, ingredients, occurrences and circumstances are the same for an offence under Section 13 of the PC Act and Sections 3 and 4 of PMLA (including evidence, both oral and documentary) i.e. money/properties acquired through commission of an offence, it is to be concluded that prosecution under PMLA is a second trial for the same offence when the PC Act proceedings are pending or have attained finality.

Conclusions

I have, in this article, tried to give an outline that prima facie, Section 13 of the PC Act and Sections 3 and 4 of PMLA do not harmoniously gel with each other. On the one hand, only if the primary or scheduled crime is made out can a prosecution under PMLA be maintainable (there are certain lines of thought which state, offence under PMLA is stand-alone and is not dependent on any other offence being proved/committed) and on the other hand, even on the existence of an offence under Section 13 of PC Act, the PC Act is a self-sufficient Act which punishes the accused for both abusing the position of being a public servant, as well as having acquired or being in possession of illegal gratification or property that is either misappropriated or disproportionate to known sources of income. Hence, a subsequent action under  PMLA is nothing but a violation of the constitutionally protected fundamental right against double jeopardy. In concluding remarks, it would be pertinent to note that the Schedule to PMLA is to be revisited and pros and cons are to be considered by the Courts having jurisdiction as to whether the provisions of the PC Act (not restricted to Section 13) are to be considered scheduled offences under PMLA.


*Advocate, Madras High Court

[1] Prevention of Money Laundering Act, 2002

[2]Indian Bank v. Government of India, 2012 SCC Online Mad 2526  

[3] 2016 SCC Online Kar 282

[4] Prevention of Corruption Act, 1988

[5](2016) 3 SCC 183

[6]Prior to the 2018 amendment, Section 13(1) reads as follows;

  1. Criminal misconduct by a public servant.—(1) A public servant is said to commit the offence of criminal misconduct,—

(a) if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person any gratification other than legal remuneration as a motive or reward such as is mentioned in section 7; or

(b) if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or for a consideration which he knows to be inadequate from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned; or

(c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do; or

(d) if he,—

(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing

or pecuniary advantage; or

(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or

(iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest; or

(e) if he or any person on his behalf, is in possession or has, at any time during the period of his office, been in possession for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income.

Explanation.—For the purposes of this section, “known sources of income” means income received from any lawful source and such receipt has been intimated in accordance with the provisions of any law, rules or orders for the time being applicable to a public servant.

[7] 2011 SCC OnLine AP 152

[8] I take this stand being fully aware of the fact that Section 18-A of the PC Act, pursuant to the 2018 amendment, has paved way and given priority to provisions of PMLA (with respect to attachment) over the Criminal Law (Amendment) Ordinance, 1944 under provisions of which attachment and confiscation are usually made under the PC Act. This bereft of the fact that if attachment in PMLA takes precedence over the PC Act, then the whole idea of establishing proceeds of crime would become null as the procedure for trial are different under both Acts and trial under PMLA is much more accelerated due to its narrow scope for the offence of proceeds of crime.

[9] 1959 SCR 333

[10] 1959 Supp (1) SCR 274

[11] (1964) 7 SCR 123 

Case BriefsHigh Courts

Karnataka High Court: John Michael Cunha J., while rejecting the present petition, recorded no error or infirmity in the challenged order warranting interference under Articles 226 and 227 of the Constitution of India.

 Brief Facts

The Petitioner in the present case has filed this writ petition under Articles 226 and 227 of the Constitution of India, seeking to quash proceedings registered for the offences punishable under Section 120B read with Sections 409 and 420 of the Indian Penal Code, 1860, and Section 13(2) read with Section 13(1)(c) and (d) of the Prevention of Corruption Act, 1988. It is pleaded by the petitioner that, he is sought to be prosecuted for the alleged offences in his individual capacity whereas the material produced by the Investigating Agency on the face of it reveals that the entire transaction was entered into by the firm of which the petitioner was a nominal partner.  

Issue

Whether the charges framed against the petitioner are valid and sustainable in the eyes of law?

Observation

The Court, pursuant to its decision, cited relevant cases and made the following observations;

Sham Sunder v. State of Haryana, (1989) 4 SCC 630, “(…)The essential characteristic of a firm is that each partner is a representative of other partners. Each of the partners is an agent as well as a principal.  He is  an agent insofar as he can bind the other partners by his acts within the scope of the partnership agreement. He is a principal to the extent that he  is bound by acts of other partners. In fact, every partner is liable for an act of the firm. Section 2(a) of the Partnership Act defines as “act of a firm” to mean any act or omission by all the partners, or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm.”

Standard Chartered Bank v. Directorate of Enforcement, (2005) 4 SCC 530, “(…) The corporate bodies, such as a firm or company undertake a series of activities that affect the life, liberty and property of the citizens. Large-scale financial irregularities are done by various corporations. The corporate vehicle now occupies such a large portion of the industrial, commercial and sociological sectors that amenability of the corporation to a criminal law is essential to have a peaceful society with stable economy.”

Sunil Bharti Mittal v. CBI, (2015) 4 SCC 609,

“The Penal Code, 1860 save and except in some matters does not contemplate any vicarious liability on the part of a person. Commission of an offence by raising a legal fiction or by creating a vicarious liability in terms of the provisions of a statute must be expressly stated. The Managing Director or the Directors of the Company, thus, cannot be said to have committed an offence only because they are holders of offices. The learned Additional Chief Metropolitan Magistrate, therefore, in our opinion, was not correct in issuing summons without taking into consideration this aspect of the matter. The Managing Director and the Directors of the Company should not have been summoned only because some allegations were made against the Company.”

The Court further observed that, “The argument of learned counsel for petitioner that the contract entered into between Sri Lakshmi Venkateshwara Minerals (accused 2), of which petitioner is one of the partners, and Shree Mallikarjuna Shipping Pvt. Ltd., (accused 4) (Annexure- ‘H’) was concluded much before the seizure of the property is totally misplaced”

Decision

While dismissing the present petition, the Court said, the allegations made in the charge sheet clearly go to show that in addition to the Firm, petitioner 1 is implicated in the alleged offences in his individual capacity as is evident from the allegations found in the charge sheet.” [K. Mahesh Kumar v. State of Karnataka,  2020 SCC OnLine Kar 1637, decided on 16-10-2020]


Sakshi Shukla, Editorial Assistant has put this story together

Case BriefsSupreme Court

Supreme Court: Clarifying the legal position on expiry of stay, the 3-judge bench of RF Nariman, Navin Sinha and KM Joseph, JJ said

“Whatever stay has been granted by any court including the High Court automatically expires within a period of six months, and unless extension is granted for good reason, within the next six months, the trial Court is, on the expiry of the first period of six months, to set a date for the trial and go ahead with the same.”

The order of the Court came after the Additional Chief Judicial Magistrate, Pune, stated in an order that the Complainant should move an application before the High Court to resume the trial. The order of the Magistrate further read that the lower Court cannot pass any order which has been stayed by the Hon’ble High Court, Bombay. The Supreme Court had, in Asian Resurfacing of Road Agency Pvt. Ltd. v. Central Bureau of Investigation, 2018 SCC OnLine SC 310, held,

“35. … …. In cases where stay is granted in future, the same will end on expiry of six months from the date of such order unless similar extension is granted by a speaking order. The speaking order must show that the case was of such exceptional nature that continuing the stay was more important than having the trial finalized. The trial Court where order of stay of civil or criminal proceedings is produced, may fix a date not beyond six months of the order of stay so that on expiry of period of stay, proceedings can commence unless order of extension of stay is produced.”

The Court, hence, reminded the Magistrates all over the country that in our pyramidical structure under the Constitution of India, the Supreme Court is at the Apex, and the High Courts, though not subordinate administratively, are certainly subordinate judicially.

“This kind of orders fly in the face of para 35 of our judgment. We expect that the Magistrates all over the country will follow our order in letter and spirit.”

Stating that the mandate of speedy justice applies to the Prevention of Corruption Act, 1947 cases as well as other cases where at trial stage proceedings are stayed by the higher court i.e. the High Court or a court below the High Court, as the case may be, the Court, hence, directed:

The directions issued by the Supreme Court in Asian Resurfacing of Road Agency Pvt. Ltd. v. Central Bureau of Investigation, 2018 SCC OnLine SC 310 are:

  • In cases where stay is granted in future, the same will end on expiry of six months from the date of such order unless similar extension is granted by a speaking order.
  • The speaking order must show that the case was of such exceptional nature that continuing the stay was more important than having the trial finalized.
  • The trial Court where order of stay of civil or criminal proceedings is produced, may fix a date not beyond six months of the order of stay so that on expiry of period of stay, proceedings can commence unless order of extension of stay is produced.

[Asian Resurfacing of Road Agency Pvt. Ltd. v. Central Bureau of Investigation, MISCELLANEOUS APPLICATION NO. 1577 OF 2020, order dated 15.10.2020]


Read detailed report on the 2018 verdict in Asian Resurfacing of Road Agency Pvt. Ltd. v. Central Bureau of Investigation2018 SCC OnLine SC 310,  here.

Case BriefsHigh Courts

Jharkhand High Court: Anubha Rawat Choudhary, J., dismissed the criminal petition seeking exoneration from criminal proceedings.

In the present case, the petitioner was caught red-handed with bribe money. The petitioner herein seeks to quash all the criminal proceedings in connection with Vigilance Case No. 39/2017 arising out of A.C.B. P.S. Case No. 06/2016 lodged under Section 7/13(2) read with Section 13 (1) (d) of the Prevention of Corruption Act.

The advocate representing the petitioner, Mahesh Tewari, submitted that the petitioner has already been exonerated in the departmental proceedings on the same set of allegations. The advocate also relied on judgments passed by the Supreme Court and submitted that considering the aforesaid judgments, the entire criminal proceeding against the petitioner is fit to be set aside.

The advocate for the State,  T. N. Verma contended that the petitioner was caught red-handed with bribe money of Rs 4,500 and the present criminal case arises out of a trap case. The advocate further contended that the allegation in contention in with the departmental proceeding has nothing to do with the trap case and the judgments relied upon by the petitioner, P.S. Rajya v. State of Bihar, (1996) 9 SCC 1  and Lokesh Kumar Jain v. State of Rajasthan, (2013) 11 SCC 130 does not relate to the facts and circumstances of the instant case.

The Court upon perusal of the circumstances and materials placed on record stated that the allegation levelled against the petitioner in the criminal proceeding has nothing to do with any departmental proceedings and also the allegation regarding the trap case has nothing to do with the departmental proceedings.

The Court also stated that the judgments relied upon by the petitioner will not be applicable to the present case since in P.S. Rajya v. State of Bihar, (1996) 9 SCC 1  there was no dispute that the allegation which was there in the departmental proceeding was identical with that of the criminal case and in Lokesh Kumar Jain v. State of Rajasthan, (2013) 11 SCC 130 the petitioner was exonerated in the departmental proceeding and in the criminal case, the records were not available due to which the investigation was delayed and there was no likelihood of tracing out the records and considering the totality of the facts and circumstances of the case, the Supreme Court had quashed the criminal proceeding against the accused of the said case. [Lal Babu v. State of Jharkhand, 2020 SCC OnLine Jhar 195, decided on 17-02-2020]

Case BriefsHigh Courts

Patna High Court: Birendra Kumar, J. dismissed a criminal miscellaneous application filed by the petitioner challenging the order of cognizance passed against him under various Sections of IPC and Prevention of Corruption Act, 1988. 

In the instant petition the accused in connection with Vigilance P.S. Case of 2013 registered under Sections  409, 420, 467, 468, 471, 477A and 120B of the Penal Code as well as under Section 13(2) read with Section 13(1) (d) of the Prevention of Corruption Act, 1988. The petitioner, when worked as an Executive Engineer, was alleged to pass false measurement report of Government schemes and uncompleted worked which was marked as completed in the aforementioned reports. It was further alleged that the reports were submitted in collusion with the Assistant Engineer. 

It was averred by the petitioner that allegation made in the FIR on their face value did not disclose a cognizable offence made out against the petitioner and even if any non-cognizable offence is made out, investigation of the same was not permissible, except under order of the Magistrate.

The Court observed that no cognizable offence was disclosed in the FIR against the petitioner though the apparent allegation of embezzlement of public money was there. It was stated that, petitioner was a Government servant having a specific allegation of submission of measurement report which showed completion of the work whereas the work was not completed at all in respect of Government schemes. Hence, prima facie material was there against the petitioner for proceeding with the trial. [Md. Zahoorul Haque v. State Of Bihar, 2019 SCC OnLine Pat 1017, decided on 25-06-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Appellate Tribunal, Prevention of Money Laundering Act (New Delhi): A Coram of Manmohan Singh (Chairman), J. and G.C. Mishra (Member) allowed an appeal under Section 26 of the Prevention of Money Laundering Act, 2002 against an order passed by the Adjudicating Authority for attaching property.

In the instant case the CBI registered a criminal case under Section 120-B of Penal Code, 1860 read with Sections 7, 12, 13(2) and 13(1)(d) of Prevention of Corruption Act, 1988 against one Joint Director of Enforcement Directorate (ED) wherein it was alleged that he assisted the appellant (herein), indulging in corrupt practices in an investigation. It was also alleged that they had taken a huge amount of bribes as quid-pro-quo for acts of omission and commission during the said investigation. As a result, the appellant was arrested by CBI and a charge sheet was filed against him. On the basis of the registration of the case by CBI, a Prevention of Money Laundering Act, 2002 (PMLA) case was also recorded at New Delhi. The ED provisionally attached the immovable property of the appellant which was confirmed by the Adjudicating Authority.

The respondent’s counsel, Shilpi Satyapriya Satyam, contended that the aforesaid property was attached as a “value thereof” in accordance with provision made under Section 2(1)(u) read with Section 2(1)(v) of the PMLA. The counsel for the appellant, R.K. Handoo, drew the attention of the Tribunal to the provision in Section 8(3)(a) of PMLA, 2002 as amended by Act 13 of 2018 which reads as, “a) continue during [investigation for a period not exceeding ninety days or] the pendency of the proceedings relating to any [offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be. On the basis of this the counsel contended that the confirmation order of attachment passed by the Adjudicating Authority did not survive. Also, no prosecution complaint was filed against the appeal, and hence the appeal be allowed.

The Tribunal found, “It is strange to note here that an immovable property of a person has been made part of a prosecution complaint for confiscation without making that person as a party and affording that person an opportunity to defend his case.” It was further noted, “Section 8(3)(a) of PMLA has been amended by the Act 13 of 2018, wherein a limitation period has been provided for continuation of attachment or retention of property or record post confirmation of attachment/retention and it is the intention of the legislature not to allow the Investigating Authority to get the property attached or retained the record/documents/items indefinitely in the name of investigation.”

Thus, the appeal was allowed. The Tribunal directed the appellant to move to the concerned Special Court for an appropriate remedy, wherein the Prosecution Complaint was pending and his property was made part and parcel of that complaint.[Sanjay Kumar v. Deputy Director Directorate of Enforcement, New Delhi, 2019 SCC OnLine ATPMLA 9, decided on 12-04-2019]

Case BriefsHigh Courts

Bombay High Court: B.P. Dharmadhikari, J. allowed a criminal appeal and acquitted the appellant who was convicted and sentenced by the trial court for commission of an offence punishable under Section 12 (punishment for abetment of offences) of the Prevention of Corruption Act, 1988.

The appellant was charged with aiding the main accused, an Assistant Sub-Inspector, in accepting a bribe from the complainant and thereby committing an offence under Section 12. The main accused died during the pendency of the trial and therefore the case against him abated. The appellant, however, was convicted by the trial court.

A.H. Jamal, Advocate, representing the appellant contended that any offence under Section 7 or Section 13 itself having not been established, there was no question of offence of abetment under Section 12. Per contra, N.R. Patil, Assistant Government Pleader, appearing for the State supported the trial court’s Judgment.

Relying on the decision of the Supreme Court in Sadashiv Mahadeo Yavaluje v. State of Maharashtra, (1990) 1 SCC 299 and CBI v. V.C. Shukla, (1988) 3 SCC 410, the High Court noted: “It was never the case of the prosecution that the appellant instigated complainant to pay bribe or then engaged himself and conspired to facilitate receipt of bribe. In fact, there is no charge of conspiracy at all. The only remaining part, therefore, is of aiding and, the provisions of Clause (iii) of Section 107 IPC (which defines abetment) show that aiding has to be with intention.” In Court’s view, the facts necessary to demonstrate that the appellant was dwelling under such intention were not brought on record. Prosecution only established the payment of Rs 1500 by the complainant to the appellant. However, its nature as a bribe could not be established. Therefore, it was held that the appellant’s conviction under Section 12 was unsustainable. the appeal was allowed and the appellant was acquitted. [Abdul Mannan Mohd. Yusuf v. State of Maharashtra, 2019 SCC OnLine Bom 824, decided on 16-05-2019]

Case BriefsHigh Courts

Patna High Court: The Bench of Ahsanuddin Amanullah, J. quashed criminal proceedings filed under the Prevention of Corruption Act, 1988 against a Panchayat Secretary, on the ground that the same lacked proper sanction of the competent authority.

Petitioner moved the Court under Section 482 of the Code of Criminal Procedure, 1973 praying for quashing of complaint case registered for offences under Sections 420 and 406 of the Penal Code, 1860 and Sections 13(2) and 13(1) (d) of PC Act. Petitioner, who at the relevant time was posted as Panchayat Secretary, was alleged to have committed irregularity in the purchase of solar panels.

Counsel for the petitioner Mr S. R. C. Pandey submitted that a complaint filed by a private person under PC Act against a public servant cannot proceed unless there is proper sanction by the competent authority. Petitioners, being Panchayat Secretary, were public servants under Section 2(c) of the Act, and were thus protected from prosecution without the previous sanction of the State Government in terms of Section 19(1)(b) of the Act.

Counsel for the respondent Mr Anjani Kumar agreed with the petitioner’s submission and submitted that both for preliminary enquiry as well as for lodging of FIR under the PC Act, prior sanction of the Competent Authority is required.

In view of the above, the instant application was allowed. [Rama Prasad Singh v. State of Bihar, 2019 SCC OnLine Pat 423, Order dated 29-03-2019]

Legislation UpdatesStatutes/Bills/Ordinances

The Rajya Sabha on Thursday passed the Prevention of Corruption (Amendment) Bill, 2013 by a voice vote, that seeks to punish bribe givers for the first time with imprisonment of up to a maximum of seven years. In the House debate, Minister for Personnel and Public Grievances Dr. Jitendra Singh said, the legislation against the corruption has been made wide based. He said the Bill has been brought in the House after it was deliberated in the Standing Committee, Law Commission and finally after holding consultations in the Select Committee. The Bill introduces the offence of giving a bribe as a direct offence. However, a person who is compelled to give a bribe will not be charged with the offence if he reports the matter to law enforcement authorities within seven days. The Bill has many provisions to ensure speedy trial of corruption cases besides providing protection to bureaucrats, even after their retirement, from malicious complaints.

Highlights of the Bill

  • The Act covers the offence of giving a bribe to a public servant under abetment.  The Bill makes specific provisions related to giving a bribe to a public servant, and giving a bribe by a commercial organisation.
  • The Bill redefines criminal misconduct to only cover misappropriation of property and possession of disproportionate assets.
  • The Bill modifies the definitions and penalties for offences related to taking a bribe, being a habitual offender and abetting an offence.
  • Powers and procedures for the attachment and forfeiture of property of public servants accused of corruption have been introduced in the Bill.
  • The Act requires prior sanction to prosecute serving public officials.  The Bill extends this protection to former officials, including those retired.
  • The Bill has included commercial organisation into its ambit.

The Bill will be tabled in the Lok Sabha.

Case BriefsSupreme Court

Supreme Court: The Bench comprising of Ranjan Gogoi and R. Banumathi, JJ. reversed the decision of the Gujarat High Court which had acquitted the accused of the charges under Prevention of Corruption Act, 1988.

The accused were working in the Non-Agriculture Department. The complainant was a businessman who wanted to start a new firm. Permission for non-agricultural use of the land was sought from the Department. The accused were alleged to have demanded bribe for expediting the process. Rs 500 were paid to the Accused 1 through Accused 2, who was caught red-handed in the trap laid by the ACB. They were tried for the offences punishable under Sections 7 and 13(1)(d) of the Act. The trial court convicted the accused and sentenced them accordingly. However, on appeal, the High Court acquitted the accused holding that the case was not proved against the accused. Aggrieved by this decision, the State preferred the instant appeal.

At the outset, the Supreme Court observed that to prove the offence of bribe, the demand and acceptance of illegal gratification was sine qua non. On the facts of the case, the Court found that statements of PWs 1 and 2 along with the recovery of bribe amount after following proper procedure by the ACB, proved the case against the accused. Further, it was observed that the presumption against the accused under Section 20 is a rebuttable one and the degree of proof is the preponderance of probabilities. However, in the present case, the accused were not able to give any explanation to rebut that presumption. In such circumstances, the Supreme Court was of the opinion that the High Court ought not to interfere with the decision of the trial court that suffered from no infirmity. Hence, the impugned judgment of the Gujarat High Court was set aside and that of the trial court was reaffirmed. However, considering that the matter was almost 27 years old, the sentence of the accused was reduced from 2 years to 1 year. [State of Gujarat v. Navinbhai Chandrakant Joshi,2018 SCC OnLine SC 699, dated 17-07-2018]

Case BriefsHigh Courts

Bombay High Court: A Single Judge Bench comprising of Prakash D. Naik, J. answered a reference made by the Additional Chief Metropolitan Magistrate in a case where the co-accused, who were not public servants, were tried under the provisions of Prevention of Corruption Act 1988 (PC Act) even after the death of main accused, a public servant.

The main accused (now deceased) was a postman in the Post office, and thus a public servant. He was alleged to have misappropriated to his own use, along with other co-accused, several shares of a private company which he was to deliver in furtherance of his official duty. The main accused died before framing of charges and hence criminal proceedings against him stood abated. The remaining co-accused (not public servants) were however tried by the Sessions Judge for the charges framed under PC Act along with charges under Penal Code. The main issue inter alia contended by the respondents was that since the main accused was dead, the Sessions Court was divested of the powers of the trial of the co-accused under PC Act.

The High Court referred to various decisions of the Supreme Court and other High Courts and finally reached a conclusion that there was no infirmity in the trial of the co-accused under the Act even after the death of the main accused who was the public servant. The Court perused Section 4(3) of the PC Act which provides that a Sessions Judge was vested with powers of trying non-public servants for charges under the Act along with charges framed under other statutes. The Court noted the fact that none of the co-accused being tried under PC Act was a public servant and the main accused who was the only public servant was dead. However, having noted thus, the Court observed that death of the main accused does not result in abatement of trial as regards the other co-accused. While answering the reference in affirmative, the Court directed the learned Sessions Judge to proceed with the case in accordance with the law. [State of Maharashtra, In re, 2018 SCC OnLine Bom 1125, dated 04-06-2018]

Case BriefsSupreme Court

Supreme Court: In order to ensure that the civil or criminal proceedings do not remain pending for unduly period at the trial stage, the 3-judge bench of A.K. Goel, Navin Sinha and R.F. Nariman, JJ directed that in all pending cases where stay against proceedings of a civil or criminal trial is operating, the same will come to an end on expiry of six months from today unless in an exceptional case by a speaking order such stay is extended.

The order of the Court came after it noticed that at times, proceedings are adjourned sine die on account of stay and even after stay is vacated, intimation is not received and proceedings are not taken up. Hence, remedy is required not only for corruption cases but for all civil and criminal cases where on account of stay, civil and criminal proceedings are held up.

Stating that the mandate of speedy justice applies to the Prevention of Corruption Act, 1947 cases as well as other cases where at trial stage proceedings are stayed by the higher court i.e. the High Court or a court below the High Court, as the case may be, the Court, hence, directed:

 “In all pending matters before the High Courts or other courts relating to PC Act or all other civil or criminal cases, where stay of proceedings in a pending trial is operating, stay will automatically lapse after six months from today unless extended by a speaking order on above parameters. Same course may also be adopted by civil and criminal appellate/revisional courts under the jurisdiction of the High Courts. The trial courts may, on expiry of above period, resume the proceedings without waiting for any other intimation unless express order extending stay is produced.”

The directions issued by the Court for future cases are:

  • In cases where stay is granted in future, the same will end on expiry of six months from the date of such order unless similar extension is granted by a speaking order.
  • The speaking order must show that the case was of such exceptional nature that continuing the stay was more important than having the trial finalized.
  • The trial Court where order of stay of civil or criminal proceedings is produced, may fix a date not beyond six months of the order of stay so that on expiry of period of stay, proceedings can commence unless order of extension of stay is produced.

The Court was hearing the issue relating to the interpretation of Section 19(3)(c) of the Prevention of Corruption Act, 1947, and whether superior constitutional courts, namely, the High Courts in this country, are bound to follow Section 19(3)(c) in petitions filed under Articles 226 and 227 of the Constitution of India. Another question that the Court had to decide was whether the inherent powers of High Courts are available to stay proceedings under the Act under Section 482 of the Code of Criminal Procedure.

Answering the questions, the Court said:

“the order framing charge is not purely an interlocutory order nor a final order. Jurisdiction of the High Court is not barred irrespective of the label of a petition, be it under Sections 397 or 482 Cr.P.C. or Article 227 of the Constitution. However, the said jurisdiction is to be exercised consistent with the legislative policy to ensure expeditious disposal of a trial without the same being in any manner hampered.”

The Court concluded by stating that the challenge to an order of charge should be entertained in a rarest of rare case only to correct a patent error of jurisdiction and not to reappreciate the matter. Even where such challenge is entertained, and stay is granted, the matter must be decided on day-to-day basis so that stay does not operate for an unduly long period. Though no mandatory time limit may be fixed, the decision may not exceed two-three months normally. If it remains pending longer, duration of stay should not exceed six months, unless extension is granted by a specific speaking order. [Asian Resurfacing of Road Agency Pvt. Ltd. v. Central Bureau of Investigation, 2018 SCC OnLine SC 310, decided on 28.03.2018]

Hot Off The PressNews

Supreme Court: The 3-judge bench of Dipak Misra, CJ and AM Khanwilkar and Dr DY Chandrachud, JJ  listed the appeal by BJP leader Ajay Kumar Agarwal, challenging the 2005 Delhi High Court order quashing charges against Europe-based industrialists Hinduja brothers in the politically-sensitive Rs 64 crore Bofors pay-off case, for hearing in the week commencing from October 30 this year.

Here is the timeline of the events:

  • March, 1986: India and the Swedish arms manufacturer AB Bofors enter into Rs 1,437 crore deal for the supply of 400 155mm Howitzer guns for the Indian Army.
  • April, 1987: Swedish Radio claims that the company had paid bribes to top Indian politicians and defence personnel.
  • January, 1990: CBI registers case for alleged offences of criminal conspiracy, cheating, forgery under the Penal Code and other sections of Prevention of Corruption Act against Martin Ardbo, the then President of AB Bofors, alleged middleman Win Chadda and Hinduja brothers.
  • October, 1990: First charge-sheet is filed against Win Chadda, Italain businessman Ottavio Quattrocchi, then Defence Secretary SK Bhatnagar, Ardbo, the Bofors company and Hinduja brothers
  • July, 1993:  Ottavio Quattrocchi flees India and has never appeared before any court in India to face prosecution.
  • May, 2005: Justice R S Sodhi of the Delhi High Court, since retired, quashes all charges against the three Hinduja brothers, Srichand, Gopichand and Prakashchand, and the Bofors company and castigates the CBI for its handling of the case saying it had cost the exchequer about Rs 250 crore.
  • October, 2005: Ajay Agarwal files appeal before the Supreme Court after the CBI failes to approach the top court with the appeal within the 90-day deadline following the High Court verdict.
  • March, 2011: Special CBI Court discharges Ottavio Quattrocchi from the case saying the country cannot afford to spend hard-earned money on his extradition which has already cost Rs 250 crore.
  • 4 accused, namely, Ottavio Quattrocchi, SK Bhatnagar, Martin Ardbo and Win Chadda, have died pending trial.

In the matter that is pending before the Supreme Court since last 12 years, the Court had heard the matter on 01.12. 2016 after a gap of almost six years since 12.08.2010. The matter was last listed on 28.02.2017 when it was adjourned. The judge bench has now agreed to hear the 12 year old plea from the Month of October.

Source: PTI

 

Case BriefsSupreme Court

Supreme Court: While deciding a criminal appeal preferred against the judgment of the High Court of Punjab and Haryana, a Bench comprising of Amitava, J., set aside the judgment and order of the High Court which had convicted a police officer of taking bribes. The appellant (now deceased and represented by legal heirs) was a Station House Officer at a Police Station. He was accused of taking a bribe from the respondent and complaint for the same was filed with the DSP. The DSP, Chandigarh had laid down a trap to catch the appellant red handed and eventually the trap was claimed to be a success by the respondents. They filed a case against him in trial court and the appellant was held liable under Sections 7 and 13(2) of the Prevention of Corruption Act, 1988. Aggrieved by the decision, the appellant filed an appeal in the High Court, which affirmed the decision of trial court. During the pendency of the case the appellant died and the case was then represented by his legal representative. Aggrieved by the order of High Court a criminal appeal was filed.

The learned counsel on behalf of appellant argued that the evidence on record was visibly deficient to prove the demand, receipt and recovery of any amount of illegal gratification as alleged and if the conviction was allowed it would be a gross travesty of justice. The counsel referred to P. Satyanarayan Murthy v. District Inspector Of Police, State of Andhra Pradesh, (2015) 10 SCC 152   and submitted that mere recovery by itself of the amount said to have been paid by way of illegal gratification would not prove the charges against the accused and in absence of any evidence to prove payment of bribe or to show that the accused had voluntarily accepted the money knowing it to be bribe, the conviction cannot be sustained.

The Court after examining the facts allowed the appeal and the judgment and order of the High Court affirming the decision of the trial court was set aside. [Mukhtiar Singh v. State of Punjab, 2017 SCC OnLine SC 742, decided on 14.07.2017]

 

Case BriefsSupreme Court

Supreme Court: Writing down a hefty 570-page judgement, the Bench of P.C. Ghose and Amitava Roy, JJ restored the conviction order of the trial court against Sasikala Natarajan, V.N. Sudhakaran and J. Elavarasi for holding disproportionate assets. All 3 were awarded the sentence of 4 years each by the Trial Court.

The judgement where the Court said that the present case demonstrates a deep rooted conspiratorial design to amass vast assets without any compunction and hold the same through shell entities to cover up the sinister trail of such illicit acquisitions and deceive and delude the process of law, came at the time when Sasikala was eyeing the post of Chief Minister of Tamil Nadu.

The Court noticed that J. Jayalalitha, who was the Tamil Nadu Chief Minister at the relevant time had come into possession of assets worth Rs.53,60,49,954.00, disproportionate to the known sources of her income during the check period and had got the same dispersed in the names of Sasikala, Sudhakaran and Elavarasi and the firms & companies involved to hold these on her behalf with a masked front.

The trial court had held that private individuals can be prosecuted by the Court on the ground that they have abetted the act of criminal misconduct falling under Section 13(1)(e) of the Prevention of Corruption Act, 1988 committed by the public servant. Setting aside the decision of the Karnataka High Court in Selvi J. Jayalalitha v. State, 2015 SCC OnLine Kar 124, decided on 11.05.2015, where the respondents were acquitted of all criminal charges, the Court held that the Trial Court is correct in the face of the overwhelming evidence indicating the circumstances of active abetment and conspiracy by Sasikala, Sudhakaran and Elavarasi in the commission of the offences under Section 13(1)(e) of the 1988 Act.

The Court further said that corruption is a vice of insatiable avarice for self-aggrandizement by the unscrupulous, taking unfair advantage of their power and authority and those in public office also, in breach of the institutional norms, mostly backed by minatory loyalists. Both the corrupt and the corrupter are indictable and answerable to the society and the country as a whole. [State of Karnataka v. Selvi. J. Jayalalitha, 2017 SCC OnLine SC 134, decided on 14.02.2017]