# Y. BALAJI v. KARTHIK DESARI & ANR. ETC

- **Citation:** [2023] 8 S.C.R. 1026
- **Court:** Supreme Court of India
- **Decided:** 2023-05-16
- **Case number:** Criminal Appeal Nos. 1671-1673 of 2023
- **Bench:** Krishna Murari, V. Ramasubramanian
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/y-balaji-v-karthik-desari-anr-etc-37539
- **Pages:** 72

## Headnote

Prevention of Money Laundering Act, 2002 - ss.3, 2(1)(u) -
Offence of Money Laundering - Prevention of Corruption Act, 1988
- Jobs-for-cash scam in the State of Tamil Nadu - Whether without
identifying the proceeds of crime/a property representing the
proceeds of crime and any process or activity connected to proceeds
of crime as required by s.3, which constitute the foundational/
jurisdictional fact, can ED initiate an investigation and issue
summons - Held: All the three FIRs alleged that the accused had
committed offences included in the schedule by taking illegal
gratification for providing appointment to several persons in the
Public Transport Corporation - It is the bribe money that constitutes
the proceeds of crime u/s.2(1)(u) - A public servant receiving illegal
gratification is in possession of proceeds of crime - Mere generation
of proceeds of crime is sufficient to constitute the offence of moneylaundering - In s.3 there are 6 activities or process and one of them
is "acquisition" - If a person takes a bribe, he acquires proceeds
of crime, hence, activity of "acquisition" takes place - Even if he
does not retain it but "uses" it, he will be guilty of offence of moneylaundering, since "use" is one of the activities mentioned in s.3 -
The FIRs for the predicate offences identify all the three components
of s.3, persons; process; and product - Corruption money represents
the proceeds of crime - In the case of an offence of corruption, the
criminal activity and the generation of the proceeds of crime are
like Siamese twins - The contention that the investigation by ED
was triggered without any foundational/jurisdictional facts are aimed
at hoodwinking the Court - Wherever there are allegations of
corruption, there is acquisition of proceeds of crime which itself
tantamount to money-laundering - Once an information relating to
the acquisition of huge amount of illegal gratification in the matter
of public employment has come in the public domain, it is the duty
of the ED to register an Information Report - This is because
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"acquisition" is an activity amounting to money-laundering and
the illegal gratification acquired by a public servant represents
"proceeds of crime", generated through a criminal activity in respect
of a scheduled offence - Receipt of bribe money is an act of moneylaundering - All the arguments on facts and all the legal contentions
emanating from some portions of the judgment in Vijay Madanlal
Choudhary, to challenge the validity of the proceedings initiated by
ED are completely unsustainable.
Criminal Law - Matters pertaining to Jobs-for-cash scam in
the State of Tamil Nadu - Impugned order allowed de novo
investigation on a ground not raised in the petition - Held: 'D',
whose original complaint led to the registration of FIR in Crime
No.441 of 2015 seems to have had a genuine grievance against the
culprits at the bottom of the layer, but he later turned out to be a
Trojan horse, willing to sabotage the investigation against influential
persons - Order directing de novo investigation in all the three cases,
actually inured to the benefit of the accused, but the High Court
put it on the ground that the credibility of the investigation should
not be eroded - In fact, the accused did not seek de novo investigation
on the ground of slackness on the part of the Investigating Officer,
but it was 'D' who sought it, with the able assistance of the
Investigating Officer - What is shocking is that the High Court
directed reinvestigation to be started ab initio, wiping out the earlier
investigation altogether - By issuing the said direction, the High
Court not only directed the wiping out of the investigation carried
out so far, but virtually wiped out even the judgment of Supreme
Court dtd.08.09.2022 passed in the previous round of litigation -
The problem with the impugned order is not merely one of improper
usage of language, as sought to be diluted by the accused and the
complainant, bu

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SUPREME COURT REPORTS
[2023] 8 S.C.R.
 [2023] 8 S.C.R. 1026
1026
Y. BALAJI
v.
KARTHIK DESARI & ANR. ETC.
(Criminal Appeal Nos. 1671-1673 of 2023)
MAY 16, 2023
[KRISHNA MURARI AND V. RAMASUBRAMANIAN, JJ.]
Prevention of Money Laundering Act, 2002 - ss.3, 2(1)(u) -
Offence of Money Laundering - Prevention of Corruption Act, 1988
- Jobs-for-cash scam in the State of Tamil Nadu - Whether without
identifying the proceeds of crime/a property representing the
proceeds of crime and any process or activity connected to proceeds
of crime as required by s.3, which constitute the foundational/
jurisdictional fact, can ED initiate an investigation and issue
summons - Held: All the three FIRs alleged that the accused had
committed offences included in the schedule by taking illegal
gratification for providing appointment to several persons in the
Public Transport Corporation - It is the bribe money that constitutes
the proceeds of crime u/s.2(1)(u) - A public servant receiving illegal
gratification is in possession of proceeds of crime - Mere generation
of proceeds of crime is sufficient to constitute the offence of moneylaundering - In s.3 there are 6 activities or process and one of them
is "acquisition" - If a person takes a bribe, he acquires proceeds
of crime, hence, activity of "acquisition" takes place - Even if he
does not retain it but "uses" it, he will be guilty of offence of moneylaundering, since "use" is one of the activities mentioned in s.3 -
The FIRs for the predicate offences identify all the three components
of s.3, persons; process; and product - Corruption money represents
the proceeds of crime - In the case of an offence of corruption, the
criminal activity and the generation of the proceeds of crime are
like Siamese twins - The contention that the investigation by ED
was triggered without any foundational/jurisdictional facts are aimed
at hoodwinking the Court - Wherever there are allegations of
corruption, there is acquisition of proceeds of crime which itself
tantamount to money-laundering - Once an information relating to
the acquisition of huge amount of illegal gratification in the matter
of public employment has come in the public domain, it is the duty
of the ED to register an Information Report - This is because
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"acquisition" is an activity amounting to money-laundering and
the illegal gratification acquired by a public servant represents
"proceeds of crime", generated through a criminal activity in respect
of a scheduled offence - Receipt of bribe money is an act of moneylaundering - All the arguments on facts and all the legal contentions
emanating from some portions of the judgment in Vijay Madanlal
Choudhary, to challenge the validity of the proceedings initiated by
ED are completely unsustainable.
Criminal Law - Matters pertaining to Jobs-for-cash scam in
the State of Tamil Nadu - Impugned order allowed de novo
investigation on a ground not raised in the petition - Held: 'D',
whose original complaint led to the registration of FIR in Crime
No.441 of 2015 seems to have had a genuine grievance against the
culprits at the bottom of the layer, but he later turned out to be a
Trojan horse, willing to sabotage the investigation against influential
persons - Order directing de novo investigation in all the three cases,
actually inured to the benefit of the accused, but the High Court
put it on the ground that the credibility of the investigation should
not be eroded - In fact, the accused did not seek de novo investigation
on the ground of slackness on the part of the Investigating Officer,
but it was 'D' who sought it, with the able assistance of the
Investigating Officer - What is shocking is that the High Court
directed reinvestigation to be started ab initio, wiping out the earlier
investigation altogether - By issuing the said direction, the High
Court not only directed the wiping out of the investigation carried
out so far, but virtually wiped out even the judgment of Supreme
Court dtd.08.09.2022 passed in the previous round of litigation -
The problem with the impugned order is not merely one of improper
usage of language, as sought to be diluted by the accused and the
complainant, but something more - Prevention of Money Laundering
Act, 2002 -Prevention of Corruption Act, 1988.
Doctrines/Principles - Doctrine of stare decisis - Whether in
the light of the fact that notice has been ordered in the review petition
and a few interim orders have been passed in some proceedings, it
is necessary for this Court to tag these appeals along with a review
petition or defer the hearing of these matters until a decision is
rendered in the review petition and other petitions - Held: A notice
ordered in the review petition will not destroy or diminish the
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precedential value of Vijay Madanlal Choudhary - The argument of
the counsel for the accused, if accepted, will not only destroy the
principles of judicial discipline and the doctrine of stare decisis, but
also bring to a grinding halt, all pending investigation in the country
- Accused is not entitled at all either to seek a reference to a larger
Bench or to seek to defer the matter till a decision is rendered in the
matters involving larger issues - Appeals arising out of the order of
the Division Bench of the High Court are allowed - Order of the
Division Bench of the High Court dtd. 01.09.2022 is set aside - ED
entitled to proceed further from the stage at which their hands were
tied by the impugned order - Prevention of Money Laundering Act,
2002 -Prevention of Corruption Act, 1988 - Criminal Law.
Prevention of Money Laundering Act, 2002 - History of -
Discussed.
Criminal Rules of Practice, 2019 - rr.231(3), 237 - Appellant
contended that the High Court overlooked the provisions of r.231(3)
and also s.65B, Evidence Act - Held: Both the contentions are without
substance - r.231 primarily deals with the grant of certified copies
of certain other documents to the accused, before filing of the Final
Report - It states that certified copies of unmarked documents shall
not be given - High Court has not passed any order directing the
grant of certified copies of unmarked documents - It has only
permitted the ED to have an inspection of the documents u/r.237
and thereafter to file a proper copy application - This is not contrary
to r.231(3) - Further, it is not known how an argument revolving
around s.65B, Evidence Act is raised - s.65B concerns the
admissibility of electronic records - Without certification, ED may
not be able to use those electronic records in evidence, in the
prosecution under PMLA - But it does not mean that they cannot
even have a look at the electronic record - Evidence Act, 1872 -
s.65B - Prevention of Money Laundering Act, 2002 -Prevention of
Corruption Act, 1988 - Criminal Law.
Criminal Law - Matters pertaining to Jobs-for-cash scam in
the State of Tamil Nadu - Objection to the maintainability of the
appeals by appellants, against the order of de novo investigation -
Held: Criminal jurisprudence recognizes a limited role of victims
and it is the state which is entrusted with the onerous responsibility
of prosecuting the accused and getting them punished - These
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theories of law were developed when process of administration of
criminal justice system was largely unpolluted - However, where
some of the complainants and the accused have come together to
form an unholy alliance, victims cannot be left at the mercy of such
partnerships - What was compromised between the complainant
and accused is not just their disputes, but justice, fair play, good
conscience and the fundamental principles of criminal jurisprudence
- Investigation trail of a criminal case cannot be converted by the
complainant and accused into a friendly match - Further,
submissions made on the question of locus in the previous round of
litigation in were rejected by Supreme Court in the very same
proceedings in the first round - Therefore, the accused cannot raise
the question of locus again and again.
Criminal Rules of Practice, 2019 - rr.207(12), 210 - Some of
the appellants filed copies of the confession statements u/s.164,
CrPC, as part of the paper book in the appeals - It was contended
that the confession statements recorded before the Magistrate are
sacrosanct and that the copies of the same cannot be made available
to third parties - Held: It is clear from r.207(12) that a confession
statement is a confidential document till the time investigation is
complete and Final Report filed - r. 210 enables "third parties to
apply to the Court for the grant of copies of Judgment or order or
any proceeding or document in the custody of a Court" - Therefore,
it is not as though the appellants have filed something to which they
could have never had any access - Further, many of the documents
had started appearing in the public domain at the instance of several
persons - Hence, it is futile to contend that the appeals are liable to
be thrown out on the ground that the appellants came up with
documents to which they could not have had any access - Code of
Criminal Procedure, 1973 - s.164.
Criminal Law - Matters pertaining to Jobs-for-cash scam in
the State of Tamil Nadu - Political vendetta alleged - On the basis
of the timeline of events, it was alleged the Minister was implicated
in the case on 08.03.2021, for offences under the PC Act immediately
after the announcement of the elections to the Legislative Assembly,
as he had switched over from the party in power to another - Held:
That the Investigation Officer did not choose to include the offences
under the PC Act from the year 2015 till 08.03.2021, cannot be
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taken to the credit of the Minister, but should be taken as a discredit
of the prosecution - If the shield of office protected him from 2015
till he formed part of the splinter group and the shield stood
temporarily removed for a brief period of time until he again became
a Minister in the next regime, the same cannot be said to be a case
of political vendetta - Prevention of Corruption Act, 1988.
Practice and Procedure - For all the accused in the PMLA
case, arguments were advanced for the grant of larger reliefs than
what they got under the impugned order, without even filing any
appeal against the same - Held: It is possible in law for a successful
party (though in civil proceedings) to support the decree without
supporting the judgment - But what the accused sought to do before
Supreme Court was to support the judgment and seek an enlargement
of the decree, without independently filing appeals - Since they
took a chance by adopting such a course, they may not even be
able to challenge the impugned order hereafter, once the seal of
approval on the same is affixed by this Court and the doctrine of
merger comes into play - Prevention of Money Laundering Act,
2002 - Doctrines/Principles - Doctrine of merger.
Disposing of the appeals, the Court
HELD: 1. The order directing de novo investigation in all
the three cases, has actually inured to the benefit of the accused,
but the High Court put it on the ground that the credibility of the
investigation should not be eroded. In fact, the accused did not
seek de novo investigation on the ground of slackness on the
part of the Investigating Officer, but it was 'D' who sought it,
with the able assistance of the Investigating Officer. The fact that
'D's petition was intended to help the accused is also borne out
by one more fact. His original complaint dated 29.10.2015 which
led to the registration of FIR in Crime No.441 of 2015 was against
ten persons and the offences registered therein were only under
Sections 406 and 420 read with Section 34 IPC. On this complaint,
a Final Report was filed under Section 173(2) of the Code on
13.06.2017 and this resulted in the registration of Calendar Case
in CC No.3627 of 2017. 'D' was happy with the fact that the Report
filed under Section 173(2) did not include the offences under the
PC Act. 'D' was not bothered at that time about the fact that the
register for entering the interview marks, sent to the Forensic
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Department had not been received. Suddenly, he became worked
up after the filing of the Report under Section 173(8) leading to
the registration of Calendar Case No.24 of 2021 including the
offences under the PC Act. What is shocking is that the High
Court directed reinvestigation to be started ab initio, wiping out
the earlier investigation altogether. One saving grace in this case
is that even the learned senior counsel appearing for 'D' and the
learned senior counsel appearing for the accused could not
support the operative portion of the impugned order dated
31.10.2022, in Criminal O.P. No.15122 of 2021. By issuing the
aforesaid direction, the High Court not only directed the wiping
out of the investigation carried out so far, but virtually wiped out
even the judgment of this Court dated 08.09.2022 passed in
Criminal Appeal Nos.1514-1516 of 2022. This Court has said in
paragraph 45 of the decision dated 08.09.2022 in Criminal Appeal
Nos.1514-1516 of 2022 "We are constrained to say that even a
novice in Criminal Law would not have left the offences under
the PC Act, out of the final report." Ignoring the said opinion of
this Court, the High Court has directed the Investigating Officer
to find out afresh whether the offences under the PC Act are
made out or not. Therefore, the problem with the impugned order
is not merely one of improper usage of language, as sought to be
diluted by the learned senior counsel for the accused and the
complainant, but something more. [Paras 19-22, 25][1054-B-G;
1055-D; 1056-C-D]
2. It is true that criminal jurisprudence recognizes a limited
role for victims and it is the State which is entrusted with the
onerous responsibility of prosecuting the accused and getting
them punished. But we must remember that certain theories of
law were developed at a time when the process of administration
of the criminal justice system was in the hands of honest and
responsible Police officials and the stream remained largely
unpolluted. Today the situation is different. In cases of this nature,
where some of the complainants and the accused have come
together to form an unholy alliance, the victims of crime cannot
be left at the mercy of such partnerships. We have seen in this
case, persons aspiring to secure public employment, paying illegal
gratification, through persons who are public servants, to persons
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in power and later coming to the Court supporting the accused
on the basis of an out of Court settlement. What was compromised
between the complainant and accused is not just their disputes,
but justice, fair-play, good conscience and the fundamental
principles of criminal jurisprudence. In fact, the case on hand is
one where there are two teams just for the purpose of record,
but no one knows who is playing for which team and where the
match was fixed. As a matter of fact, very vocal submissions were
made on the question of locus in the previous round of litigation
in P. Dharamaraj vs. Shanmugam in Criminal Appeal Nos.15141516 of 2022. But the objections relating to maintainability were
rejected by this Court in the very same proceedings in the first
round. Therefore, the accused cannot raise the question of locus
again and again. [Paras 33, 34][1060-D-H; 1061-A]
3. It is clear from Rule 207(12) that a confession statement
is a confidential document till the time investigation is complete
and Final Report filed. The relevant portion of Rule 207(12) states
"... not to make its contents public until the investigation is
completed and final report filed". Rule 210 extracted above
enables "third parties to apply to the Court for the grant of copies
of Judgment or order or any proceeding or document in the
custody of a Court". Therefore, it is not as though the appellants
have filed something to which they could have never had any
access. Many of the documents have started appearing in the
public domain at the instance of several persons. Hence, it is
futile to contend that the appeals are liable to be thrown out on
the ground that the appellants have come up with documents to
which they could not have had any access. [Paras 39-41][1062-DE, G-H;]
4. That the Investigation Officer did not choose to include
the offences under the PC Act from the year 2015 till 08.03.2021,
cannot be taken to the credit of the Minister, but should be taken
as a discredit of the prosecution. If the shield of office protected
him from 2015 till he formed part of the splinter group and the
shield stood temporarily removed for a brief period of time until
he again became a Minister in the next regime, the same cannot
be said to be a case of political vendetta. [Para 44][1064-D-F]
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Janata Dal vs. H.S. Chowdhary (1992) 4 SCC 305 :
[1992] 1 Suppl. SCR 226; Simranjit Singh Mann vs.
Union of India (1992) 4 SCC 653 - held inapplicable.
5. What is worrisome is the fact that V. Ganesh Kumar is an
employee of the Transport Corporation. In the charge-sheet filed
on his complaint, which has been taken on file as CC No.19 of
2020, this V. Ganesh Kumar is stated to have collected amounts
ranging from Rs.2,00,000/- to Rs.4,50,000/- for every post of
Driver, Conductor or Mechanic, as the case may be. We do not
know whether the Transport Corporation has at least placed him
under suspension and initiated departmental proceedings. If they
have not done so far, the Corporation should initiate disciplinary
action against this V. Ganesh Kumar not only for being party to a
job-for-cash scam but also for turning turtle and supporting the
accused and thereafter coming to this Court to assail the order
of de novo investigation, despite being an employee of the
Corporation. [Para 47][1065-C-D]
6. ED registered an Information Report on 29.07.2021, only
after filing of a Final Report under Section 173(8) of the Code., in
CC No.24 of 2021, including the offences punishable under the
PC Act. This Final Report was in FIR No.441 of 2015, which was
originally registered as CC No.3627 of 2017 (it became CC No.24
of 2021). The Final Report filed under Section 173(8) of the Code
on 08.03.2021, named Shri V. Senthil Balaji (Minister) as Accused
No.1 and the offences charged against the accused were under
Sections 406, 419, 420 read with Section 34 and 120B, 465, 467,
471 and 201 IPC read with Sections 7, 12, 13(2) read with Section
13(1)(d) of the PC Act and Section 109 of IPC. Since the offences
under Sections 120B, 419, 420, 467 and 471 of IPC and Sections
7 and 13 of the PC Act are included in The Schedule to the
Prevention of Money-laundering Act, 200211, the registration of
the Information Report by ED on 29.07.2021 cannot be faulted.
[Para 50][1066-B-D]
7. The High Court has not quashed the summons issued by
ED. The High Court had merely injuncted ED from proceeding
further till the clog on the cases relating to the predicate offences
is removed. Interestingly, none of the accused has come up with
any appeal challenging the order of the High Court dated
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01.09.2022, on the ground that the High Court ought to have
quashed the summons issued by the ED in total, on other grounds.
Instead, the accused appeared through counsel only to defend
the impugned order dated 01.09.2022. Therefore, in law, (i) once
the dismissal of the petition for discharge has attained finality
with the dismissal of Criminal Revision Case No.224 of 2021; (ii)
once the order for de novo investigation in Criminal O.P.
No.15122 of 2021 is set aside; (iii) once the order of the High
Court dated 30.03.2022 relating to right of the ED to secure the
copies of documents is dealt with; (iv) once the order of the High
Court dated 30.07.2021 quashing one of the criminal cases is set
aside; and (v) once the stay operating in two of the criminal cases
for predicate offences is vacated, then the temporary reprieve
that has been granted by the High Court to the accused in the
impugned order would automatically go. Realising this difficulty
in law, the accused changed the theme of the song completely
before us, despite the fact that they were ordained as respondents
in the appeals only to support the impugned order of the High
Court. In fact, all the learned senior counsel appearing for all the
accused in the PMLA case, advanced arguments for the grant of
larger reliefs than what they got under the impugned order,
without even filing any appeal against the same. It is possible in
law for a successful party (though in civil proceedings) to support
the decree without supporting the judgment. But what the accused
sought to do before us was to support the judgment and seek an
enlargement of the decree, without independently filing appeals.
Since they took a chance by adopting such a course, they may not
even be able to challenge the impugned order hereafter, once
the seal of approval on the same is affixed by this Court and the
doctrine of merger comes into play. [Paras 67-70][1072-A-F]
8.1 If the main part of Section 3 is dissected with forensic
precision, it will be clear that Section 3 addresses itself to three
things (we may call them 3 'P's) namely, (i) person; (ii) process
or activity; and (iii) product. Insofar as persons covered by Section
3 are concerned, they are, (i) those who directly or indirectly
attempt to indulge; or (ii) those who knowingly assists; or (iii)
those who are knowingly a party; or (iv) those who are actually
involved. Insofar as process is concerned, the Section identifies
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six different activities, namely (i) concealment; (ii) possession;
(iii) acquisition; (iv) use; (v) projecting; or (vi) claiming as
untainted property, any one of which is sufficient to constitute
the offence. Insofar as product is concerned, Section 3 identifies
"proceeds of crime" or the property representing the proceeds
of crime as the product of the process or activity. Out of the three
things that Section 3 addresses, namely (i) person; (ii) process;
and (iii) product, the first two do not require any interpretation
or definition. The third aspect namely "product", which Section
3 refers to as "proceeds of crime" requires a definition and hence
it is defined in Section 2(1)(u). [Paras 96 and 97][1088-A-D]
8.2 All the three FIRs allege that the accused herein had
committed offences included in the Schedule by taking illegal
gratification for providing appointment to several persons in the
Public Transport Corporation. In one case it is alleged that a
sum of more than Rs.2 crores had been collected and in another
case a sum of Rs.95 lakhs had been collected. It is this bribe
money that constitutes the 'proceeds of crime' within the meaning
of Section 2(1)(u). It is no rocket science to know that a public
servant receiving illegal gratification is in possession of proceeds
of crime. The argument that the mere generation of proceeds of
crime is not sufficient to constitute the offence of moneylaundering, is actually preposterous. As we could see from Section
3, there are six processes or activities identified therein. They
are, (i) concealment; (ii) possession; (iii) acquisition; (iv) use;
(v) projecting as untainted property; and (vi) claiming as untainted
property. If a person takes a bribe, he acquires proceeds of crime.
So, the activity of "acquisition" takes place. Even if he does not
retain it but "uses" it, he will be guilty of the offence of moneylaundering, since "use" is one of the six activities mentioned in
Section 3. The FIRs for the predicate offences identify all the
three components of Section 3, namely, (i) persons; (ii) process;
and (iii) product. Persons accused in the FIRs are those who
have indulged in the process or activity. The illegal gratification
that they have taken, represents the proceeds of crime. The (i)
acquisition of such illegal gratification in the first instance; (ii)
the possession of the tainted money before putting it to use; and
(iii) today projecting it as untainted money, is the process or
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activity in which the accused have indulged. The corruption money
represents the proceeds of crime. [Paras 99, 100][1089-A-F]
8.3 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 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. 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). In view of the above, we are not impressed
with the contention that the investigation by ED was triggered
without any foundational/jurisdictional facts. In our view, the
allegations in the FIR point out to (i) involvement of persons in
criminal activity relating to scheduled offences; (ii) the generation
as well as (iii) laundering of the proceeds of crime within the
meaning of Section 3. This is in view of the fact that wherever
there are allegations of corruption, there is acquisition of
proceeds of crime which itself tantamount to money-laundering.
[Paras 102, 104][1089-G-H; 1090-A, E-F]
8.4 Once an information relating to the acquisition of huge
amount of illegal gratification in the matter of public employment
has come into the public domain, it is the duty of the ED to register
an Information Report. This is because "acquisition" is an activity
amounting to money-laundering and the illegal gratification
acquired by a public servant represents "proceeds of crime,"
generated through a criminal activity in respect of a scheduled
offence. Therefore, it does not require any expedition, much less
a fishing expedition for someone to say that the receipt of bribe
money is an act of money-laundering. The contention that there
was no explanation for the delay on the part of the ED in
registering the Information Report, is a self-serving argument.
If the ED registers an Information Report immediately upon the
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registration of a FIR for a predicate offence, ED will be accused
of acting in haste. If they wait until the drama unfolds up to a
particular stage, ED will be attacked as guilty of delay. The
accused should be thankful to ED for giving a long rope from
2016 till 2021. Therefore, all the arguments on facts and all the
legal contentions emanating from some portions of the judgment
in Vijay Madanlal Choudhary, to challenge the validity of the
proceedings initiated by ED are completely unsustainable. [Paras
112-114][1092-B-F]
9. A notice ordered in the review petition being Review
Petition (Crl.) No.219 of 2022, will not destroy or diminish the
precedential value of Vijay Madanlal Choudhary. The argument
of the learned counsel for the accused, if accepted, will not only
destroy the principles of judicial discipline and the doctrine of
stare decisis, but also bring to a grinding halt, all pending
investigation in the country. In fact, the order dated 25.08.2022
passed in Review Petition (Crl.) No.219 of 2022 discloses that
prima facie the Court was of the view that at least two of the
issues raised in the review petition require consideration. Though
it is not precisely spelt out in the order, those two issues relate
to (i) not providing the accused with a copy of the ECIR; and (ii)
reversal of the burden of proof and presumption of innocence.
The points that the respondents are canvasing in this case, have
nothing to do with those two issues. Therefore, the accused cannot
have a piggyback ride on the review petition. In fact, as we have
pointed out elsewhere, the accused have not come up with any
appeal challenging the order of the High Court dated 01.09.2022.
Therefore, they are entitled at the maximum, to argue only for
the dismissal of the appeals filed by ED and others against the
said decision. Suppose we agree with the learned counsel for the
accused and dismiss the appeals filed by ED, even then they
cannot have an escape route since the impugned order of the
High Court protects them only till the other proceedings are kept
at bay. Therefore, the accused is not entitled at all either to seek
a reference to a larger Bench or to seek to defer the matter till a
decision is rendered in the matters involving larger issues. In
view of the above, the appeals arising out of the order of the
Division Bench of the High Court are liable to be allowed.
Y. BALAJI v. KARTHIK DESARI & ANR. ETC.
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Accordingly, these appeals are allowed and the order of the
Division Bench of the Madras High Court dated 01.09.2022 is
set aside. ED will now be entitled to proceed further from the
stage at which their hands were tied by the impugned order. [Paras
116-119][1093-A-F]
Vijay Madanlal Choudhary vs. Union of India 2022
SCC OnLine SC 929 - referred to.
10. The grievance of the appellant in this appeal is that the
High Court has overlooked the provisions of Rule 231(3) of the
Rules, 2019 and also Section 65B of the Indian Evidence Act,
1872. But both the above contentions are without substance. Rule
231 primarily deals with the grant of certified copies of certain
other documents to the accused, before filing of the Final Report.
Rule 231(3) states that certified copies of unmarked documents
shall not be given. The High Court has not passed any order
directing the grant of certified copies of unmarked documents.
All that the High Court has done is permitting the ED to have an
inspection of the documents under Rule 237 and thereafter to
file a proper copy application. This is not contrary to Rule 231(3).
We do not know how an argument revolving around Section 65B
of the Evidence Act is raised. Section 65B concerns the
admissibility of electronic records. Without certification, ED may
not be able to use those electronic records in evidence, in the
prosecution under PMLA. But it does not mean that they cannot
even have a look at the electronic record. Therefore, we find no
merits in the appeal. Hence, the appeal challenging the order of
the High Court dated 30.03.2022 passed in Criminal O.P. No.5726
of 2022 is dismissed. [Paras 122-124][1094-C-F]
11. The appeals arising out of the order for de novo
investigation are allowed. That portion of the order of the High
Court dated 31.10.2022 passed in Criminal O.P. No. 15122 of
2021 is set aside. The directions issued in the said original petition
for de novo investigation are set aside. The Investigation Officer
shall proceed with further investigation in all cases by including
the offences under the PC Act. Any let up on the part of the
Investigation Officer in this regard will pave the way for this Court
to consider appointing a Special Investigation Team in future. (ii)
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The appeals arising out of the order of the Division Bench of the
High Court dated 01.09.2022 are allowed. The order dated
01.09.2022 is set aside. All the three writ petitions challenging
the initiation of proceedings by ED shall stand dismissed. (iii)
The appeal arising out of the order of the High Court dated
30.03.2022 is dismissed. (iv) The appeal challenging the orders
dated 27.11.2019 and 01.11.2021 of the High Court relating to
extension of time for completion of investigation is dismissed.
The Investigation Officer shall proceed with further investigation
and file Further/Final Reports within two months. (v) The
Contempt Petitions and I.A. No. 26257 of 2023 are dismissed.
[Para 133][1096-F-H; 1097-A-C]
P. Dharamaraj vs. Shanmugam 2022 SCC OnLine SC
1186; Dharmaraj vs. Shanmugam 2022(13) SCALE
142; Vinay Tyagi vs. Irshad Ali alias Deepak (2013) 5
SCC 762 : [2012] 13 SCR 1005; Arun Kumar vs. Union
of India (2007) 1 SCC 732 : [2006] 6 Suppl. SCR 290;
Bihta Co-operative Development and Cane Marketing
Union Ltd. vs. Bank of Bihar AIR 1967 SC 389 : [1967]
SCR 848; Union of India vs. Ganpati Dealcom Private
Limited (2023) 3 SCC 315; Shauqin Singh vs. Desa
Singh (1970) 3 SCC 881; Enforcement Directorate vs.
Gagandeep Singh 2022 SCC Online Del 514; Parvathi
Kollur vs. State through ED Crl. Appeal No.1254/2022
dt.16.08.2022; Jairam Ramesh vs. Union of India SLP
(C) No.13103 of 2019; Thomas Franco Rajendra Dev
vs. Union of India WP (C) No.366/2022 dated
12.05.2022; Kantaru Rajeevaru (Right to Religion, In
re-9 J.) vs. Indian Young Lawyers Association (2020) 9
SCC 121; Asgar Ali vs. State of Jammu and Kashmir
2022 SCC Online SC 3095; Central Board of Dawoodi
Bohra Community vs. State of Maharashtra 2023 SCC
Online SC 129; Badrinath vs. Government of Tamil
Nadu (2000) 8 SCC 395 : [2000] 3 Suppl. SCR 573;
State of Kerala vs. Puthenkavu N.S.S. Karayogam
(2001) 10 SCC 191; State of Punjab vs. Davinder Pal
Singh Bhullar (2011) 14 SCC 770: [2011] 15 SCR 540;
Management of the Northern Railway Co-operative
Y. BALAJI v. KARTHIK DESARI & ANR. ETC.
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SUPREME COURT REPORTS
[2023] 8 S.C.R.
Credit Society Ltd., Jodhpur vs. Industrial Tribunal,
Rajasthan, Jaipur (1967) 2 SCR 476; Sakshi vs. Union
of India (2004) 5 SCC 518 : [2004] 2 Suppl. SCR 723;
Central Board of Dawoodi Bohra Community vs. State
of Maharashtra (2005) 2 SCC 673 : [2004] 6 Suppl.
SCR 1054 - referred to.
Street Tramways vs. London County Council (1898) AC
375 (378); Redcliffe vs. Ribble Motor Services (1939)
AC 215 (245) - referred to.
Case Law Reference
[2012] 13 SCR 1005
referred to
para 26
[1992] 1 Suppl. SCR 226
held inapplicable
para 45
(1992) 4 SCC 653
referred to
para 45
[2006] 6 Suppl. SCR 290
referred to
para 60
[1967] SCR 848
referred to
para 72
(2023) 3 SCC 315
referred to
para 74
(1970) 3 SCC 881
referred to
para 78
[2006] 6 Suppl. SCR 290
referred to
para 78
(2020) 9 SCC 121
referred to
para 81
[2000] 3 Suppl. SCR 573
referred to
para 82
(2001) 10 SCC 191
referred to
para 82
[2011] 15 SCR 540
referred to
para 82
[1967] 2 SCR 476
referred to
para 84
[2004] 2 Suppl. SCR 723
referred to
para 85
[2004] 6 Suppl. SCR 1054
referred to
para 85
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
Nos.1671-1673 of 2023.
From the Judgment and Order dated 01.09.2022 of the High Court
of Judicature at Madras in WP Nos.18213, 18209 and 12159 of 2022.
With
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Criminal Appeal Nos.1674, 1677, 1675-1676, 1678, 1658-1661,
1663-1664, 1662, 1679 of 2023, Contempt Petition (C) Nos.750-751 of
2023 And Criminal Appeal Nos.1680, 1681-1682, 1665 of 2023
Tushar Mehta, Solicitor General, Ms. Aishwarya Bhati, A.S.G.,
Amit Anand Tiwari, A.A.G., Gopal Sankaranarayan, C.A. Sundaram,
Mukul Rohatgi, Kapil Sibal, Sidharth Luthra, Siddharth Dave, Siddharth
Agarwal, Ranjit Kumar, Ms. V. Mohana, Sr. Advs., A. Lakshminarayanan,
B. Karunakaran, Nar Hari Singh, Balaji Srinivasan, Ms. Gauri Pasricha,
Ms. Aakriti Priya, Shiva K., Devamshu Behl, Rohan Dewan, Lakshmi
Rao, Ms. Jhanvi Dubey, D. Raghu, K. Sathiresan, Scv Vimal Pani, Ms.
Garima Jain, Balaji Srinivasan, Ms. Misha Rohatgi, Nakul Mohta, Ms.
Riya Dhingra, Devansh Srivastava, Bharat Monga, Ms. Rohini, Zafar,
Mukesh Kumar Maroria, Prashant Bhushan, N Subramaniyan, Pranav
Sachdeva, Jatin Bhardwaj, Ms. Neha Rathi, Ms. Aakriti, S. Senthil, C.
Pandian, M. Thangathurai, Aditya Kishor Tyagi, T.S. Nanda Kumar,
Yusuf, Dr. Ram Sankar, N. Bharani Kumar, Ms. Anusha Nagarajan,
Ms. Rupali Samuel, Ms. Sumedha Roy Sarkar, Anand Kumar V., G. Jai
Singh, M/s. Ram Sankar & Co, Senthil Jagadeesan, Sajal Jain, Ms.
Anasuya Choudhury, Rudraditya Khare, Ms. Misha Rohatgi, Nakul
Mohta, Ms. Riya Dhingra, Bharat Monga, Ms. Alina Merin Mathew,
Samyak Jain, Mohd. Owais, Aakash Kumar, Gaurav Agrawal, Mayank
Pandey, Ashish Kumar Pandey, Arkaj Kumar, Madhav Sinhal, Ms.
Deepabali Dutta, Kanu Agarwal, Vivek Gupta, Zoheb Hussain, Dr. Joseph
Aristotle S., Ms. Devyani Gupta, Shobhit Dwivedi, Ms. Vaidehi Rastogi,
Kanu Agarwal, Vivek Gupta, Sarad Kumar Singhania, Zoheb Hussain,
Ms. Bhavya Pande, Ms. Sneha Botwe, Advs. for the appearing parties.
The Judgment of the Court was delivered by
V. RAMASUBRAMANIAN, J.
Permission to file special leave petition(s) is granted.
2. Delay condoned.
3. Leave granted.
4. Aggrieved by two independent orders, one passed by a learned
Judge of the Madras High Court on 31.10.2022 disposing of a batch of
criminal petitions and the other passed by the Division Bench of the
Madras High Court on 01.09.2022, putting on hold an investigation by
the Enforcement Directorate1, various persons such as (i) the de-facto
1 For short, "ED"
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[2023] 8 S.C.R.
complainants; (ii) third parties; (iii) the accused; and (iv) the ED have
come up with these batch of appeals. Other than the batch of appeals
arising out of the said two orders of the High Court, there are also two
appeals, one challenging the refusal of the High Court to extend the time
for completion of investigation and another challenging an order passed
by the Division Bench of the High Court granting limited relief to the
Enforcement Directorate to access certain documents available on record
in the Special Court trying the predicate offences. Apart from these
appeals, there are also two contempt petitions and an application seeking
the constitution of a Special Investigation Team.
5. We have heard Shri Tushar Mehta, learned Solicitor General
appearing for the ED, Shri Gopal Sankaranarayan, learned senior counsel,
Shri Prashant Bhushan and Shri Balaji Srinivasan, learned counsel
appearing for one set of parties (victims and a NGO), Shri Kapil Sibal,
Shri C.A. Sundaram, Shri Sidharth Luthra, Shri Mukul Rohatgi, learned
senior counsel appearing for another set of parties (accused), Ms. V.
Mohana and Shri Siddharth Agrawal, learned senior counsel appearing
for the de facto complainants and Shri Ranjit Kumar, learned senior
counsel appearing for the State of Tamil Nadu.
Background Facts
6. The background facts necessary to understand the complexities
of the batch of cases on hand are as follows:
(i) In November 2014, the Metropolitan Transport Corporation,
wholly owned by the State of Tamil Nadu issued five Advertisements, in
Advertisement Nos.1/2014 to 5/2014, calling for applications for
appointment to various posts such as Drivers (746 posts), Conductors
(610 posts), Junior Tradesman (Trainee) (261 posts), Junior Engineer
(Trainee) (13 posts) and Assistant Engineer (Trainee) (40 posts);
(ii) After interviews were held on 24.12.2014 and the Select List
got published, one Devasagayam lodged a complaint on 29.10.2015 with
the Chennai PS CCB against 10 individuals, alleging that he paid a sum
of Rs.2,60,000/- to a Conductor by name Palani for getting the job of
Conductor in the Transport Corporation for his son. However, his son
did not get a job and when he confronted Palani, he was directed to
several persons. When he demanded at least the refund of money, he
did not get it. Therefore, he lodged a complaint which was registered as
FIR No.441 of 2015 for alleged offences under Sections 406, 420 read
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with Section 34 of the Indian Penal Code, 18602.