BINOD KUMAR Vs STATE OF JHARKHAND .
Bench: DALVEER BHANDARI,DEEPAK VERMA, , ,
Case number: C.A. No.-002689-002689 / 2011
Diary number: 25692 / 2010
Advocates: MUSHTAQ AHMAD Vs
ARVIND KUMAR SHARMA
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2689 OF 2011 (Arising out of SLP (Civil) No.24211 of 2010)
Binod Kumar … Appellant
Versus
State of Jharkhand & Others … Respondents
J U D G M E N T
Dalveer Bhandari, J.
1. Leave granted.
2. This appeal is directed against the judgment and order
dated 04.08.2010 passed in Writ Petition (PIL) No.4700 of
2008 by the High Court of Jharkhand at Ranchi.
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3. In the impugned judgment, it is mentioned that the basic
allegation is amassing of illicit wealth by various former
Ministers, including a former Chief Minister of the State. The
money alleged to have been so earned is of unprecedented
amounts. However, there is no clear allegation so far about its
laundering in the sense mentioned above, but there is an
allegation of its investment in property, shares etc. not only in
India but also abroad.
4. The basic investigation requires determining whether
money has been acquired by an abuse of the official position
amounting to an offence under the Prevention of Corruption
Act and under the Indian Penal Code, the persons by whom
this has been done, the amount which has been so earned and
places where it has been invested.
5. The amount is alleged to run into several hundred crores.
The investigations done so far allege that the amount
unearthed so far in one case is about one and a half crore and
in another case is about six and a half crores, which would
appear to be merely the tip of the iceberg. The investments
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having been made not only in various States of the country
outside the State of Jharkhand, but also in other countries
means that the investigation called for is not only multi-state
but also multi-national.
6. The matter on the face of it requires a systematic,
scientific and analysed investigation by an expert investigating
agency, like the Central Bureau of Investigation. It is
incorporated in the affidavit that 32 companies have to be
investigated and the money acquired by illegal means being
invested in Bangkok (Thailand), Dubai (UAE), Jakarta
(Indonesia), Sweden and Libya. It is also mentioned that there
are several companies in other countries in which there are
huge investments by the accused or with the help of their
accomplices in foreign countries. The list of countries and
companies indicate prima facie that the amount involved could
not be a mere few crores, but would be nearer a few hundred
crores.
7. The High Court in the impugned judgment has also
mentioned that it is neither possible nor desirable at this stage
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to give a positive finding about how much of the crime
proceeds have been ‘projected as untainted’. Therefore, there
is an area of overlap and the same cannot be allowed to form a
tool in the hands of the accused to scuttle the investigation.
Looking to the gravity and magnitude of the matter, after
hearing learned counsel for the parties, the Division Bench of
the High Court referred the matter to the Central Bureau of
Investigation. The High Court also observed that the Central
Government should exercise the powers under section 45(1A)
of the Prevention of Money Laundering Act, 2002 (for short
“the PML Act”) for transferring investigation from the
Enforcement Directorate to the CBI. If such an order is not
passed by the Central Government, any material found by the
CBI during investigation, which leads to an inference of money
laundering within the PML Act will be shared by the CBI with
the Enforcement Directorate from time to time, to enable the
Enforcement Directorate to take such action, as may be
necessary.
8. The appellant, aggrieved by the said judgment preferred
this appeal before this court. Shri K.K. Venugopal, the learned
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senior counsel appearing on behalf of the appellant formulated
following substantial questions of law concerning the
impugned judgment and the interpretation of the PML Act.
“1. Whether the PML Act is a self-occupied Code while the Act constituting the CBI is limited?
2. Whether, in light of Section 45(1A) read with Sections 43 and 44 of the PML Act, the CBI has any authority to investigate offences which are the sole domain of the Enforcement Directorate?
3. Whether the High Court was right in brushing aside all the allegations against the PIL and directing investigation by the CBI?”
9. According to the learned counsel for the appellant, the
offence of money laundering, under section 4 of the PML Act
may be investigated only by the Enforcement Directorate and
tried only by the Special Court under the Act.
10. Mr. Venugopal submitted that the PML Act is a self-
contained Code while the Act constituting the CBI is limited.
11. Mr. Venugopal further submitted that the PML Act was
enacted pursuant to the Political Declaration adopted by the
Special Session of the United Nations General Assembly on 8th
to 10th June, 1998, which called upon member States to adopt
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national money-laundering legislation and programmes.
(Preamble to the PML Act).
12. Learned counsel for the appellant submitted that the
Delhi Special Police Establishment Act, 1946 (‘DPSE Act’) is
limited to investigating offences in Delhi and the Union
Territories.
13. Mr. Venugopal submitted that the PML Act was enacted
pursuant to Article 253 of the Constitution and would prevail
over any inconsistent State enactment. Reliance has been
placed on Maganbhai Ishwarbhai Patel Etc. v. Union of
India and Another (1970) 3 SCC 400 at para 81 and S.
Jagannath v. Union of India and Others (1997) 2 SCC 87 at
para 48. This is however not the case with the DSPE Act.
14. Learned counsel for the appellant also submitted that the
PML Act is a special legislation enacted by Parliament and not
only sets out the ‘Offences’ (Chapter II) but also the ‘manner of
investigation’, attachment and adjudication (Chapter III), the
power to summon, search, seizure and arrest (Chapter V),
establishment of Tribunals (Chapter VI), Special Courts
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(Chapter VII), Authorities and their powers (Chapter VIII) and
International arrangements (Chapter IX).
15. Mr. Venugopal contended that the Act establishes a
specialized agency which consists of Police Officials, Revenue
Officials, Income Tax Officials and various specialized officials
drawn from various departments. It also empowers the
Enforcement Directorate under Section 54 to call on
assistance of officials from:
(a) Customs and Excise Department;
(b) Under the NDPS Act;
(c) Income Tax’
(d) Stock Exchange;
(e) RBI;
(f) Police;
(g) Under FEMA;
(h) SEBI; or
(i) Any Body Corporate established under an Act or by the Central Government
16. Learned counsel for the appellant also contended that the
CBI is comprised only of the police officers and does not have
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the expertise or wherewithal to deal with the offences under
the PML Act. In addition, as specifically defined in Section
55 (c) of the PML Act, the ED is empowered internationally to
trace the proceeds of crime, with great freedom accorded to the
ED when the nexus is established with a contracting state.
The CBI does not possess such an advantage.
17. Mr. Venugopal placed reliance on the judgment of this
Court in Central Bureau of Investigation v. State of
Rajasthan & Others (1996) 9 SCC 735 where the identical
issue arose of the CBI seeking to investigate offences under
the FERA, which was the sole domain of the ED, the Court
held as follows:
(i) The officers of the ED are empowered to exercise the powers under the FERA as per Sections 3 & 4, and no other authority has been empowered except as the Central Government may empower from time to time.
(ii) FERA is a special and a central legislation enacted later in time than the DSPE Act, and Section 4(2) of the Cr.P.C. makes it clear that only in the absence of any provision in any other law relating to investigation will a member of the police force be authorized to investigate the offence.
(iii) The FERA Act is a complete code in itself.
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(iv) As the allegations in the case related to FERA offences outside India, and the DSPE under Sections 1 and 2 are authorized only to investigate offences inside India, the DSPE member is “not clothed with the authority to investigate offences committed outside India”.
18. Learned counsel further submitted that in addition to the
above, this court in Enforcement Directorate and Another
v. M. Samba Siva Rao and Others (2000) 5 SCC 431 at para
5 reiterated that the provisions of the FERA constitute a
complete code. The provisions of the PML Act are identical,
and in some ways more wide-ranging.
19. Learned counsel for the appellant further submitted that
as the allegations in the complaint against the appellant relate
to so-called national and trans-national offences, the only
authority which is legally and factually equipped to investigate
the offences is the Enforcement Directorate.
20. Mr. Venugopal further submitted that in the light of
section 45 (1A) read with sections 43 and 44 of the PML Act,
the CBI has no authority to investigate the offences which are
the sole domain of the Enforcement Directorate.
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21. Mr. Venugopal referred various sections of the PML Act to
demonstrate that only the Enforcement Directorate can
investigate the matter. He also submitted that the conduct of
investigation by the CBI is therefore contrary to both the
intent of the Legislature as well as the Executive and further if
the plea of CBI is put to test it leads to absurdity. It is
submitted that in order to convict a person of an offence
punishable under section 4 of the PML Act, the Enforcement
Directorate has to first rule that the scheduled offence is
committed which can be an offence under the Indian Penal
Code or the Prevention of Corruption Act or Narcotics, Drugs,
Psychotropic Substances Act or any other offence given in any
other Act in the schedule in the PML Act. Once this first part
is proved then the Enforcement Directorate has to prove how
much money or what property was derived from committing
the scheduled offence and lastly how was it being projected as
untainted. The appellant prayed that the investigation by the
CBI of Vigilance FIR No.09/09 registered at Ranchi be set
aside and the appellant be released from illegal detention
forthwith.
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22. The written submissions have also been filed on behalf of
the CBI and the Directorate of Enforcement. It is mentioned
in the written submissions that the Vigilance P.S. Case
No.09/2009 dated 02.07.2009 is instituted inter alia alleging
commission of offence under sections 409, 420, 423, 424, 465,
120-B of IPC and Sections 7, 10, 11, 13(2) read with Section
13(1)(e) of the Prevention of Corruption Act, 1988. The said
complaint was registered on directions of the Special Judge,
Vigilance, Ranchi, who exercised powers under Section 156(3)
of the Cr.P.C. It named Shri Madhu Koda, former Chief
Minister, Shri Kamlesh Singh, former Minister, Shri Bhanu
Prasad Shah, former Minister and Bandhu Tirky, former
Minister of Jharkhand.
23. During the course of investigation into the said complaint
by the Vigilance, P.S., State of Jharkhand, involvement of the
appellant Binod Kumar Sinha had surfaced. The FIR also
contains clear allegations against the appellant. The Central
Bureau of Investigation is investigating into the commission of
these offences alone and is not investigating any offence under
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the PML Act, 2002 since the investigation under the said Act is
solely and exclusively within the jurisdiction and domain of
the Enforcement Directorate, which is of course subject to the
exercise of powers by the Central Government under section
45 (1-A) of the said Act.
24. In the written submissions, comprehensive information
about investigation has been submitted. It is also incorporated
that the appellant, who was an absconder and evaded arrest,
is not entitled to any relief in exercise of discretionary
jurisdiction of this court under Article 136 of the Constitution
of India. It is also prayed that this appeal which challenges
the order transferring investigation of Vigilance P.S. No.
09/2009 to the CBI deserves to be dismissed.
25. It is also incorporated that the appellant is involved in a
multi crore scam – corruption in the matter of grant of iron ore
mine leases and other acts as more particularly set out. It is
incorporated in the affidavit that a perusal of various
provisions of the Act would show that the said Act does not
empower the Enforcement Directorate to investigate offences
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under IPC or Prevention of Corruption Act, 1988 or any of the
scheduled offences. It is the PML Act which authorizes the
Enforcement Directorate only to investigate offences of money
laundering as defined under Section 3 and punishable under
Section 4 thereof. It also provides attachment, adjudication
and confiscation of the property involved in money laundering
and setting up of Special Courts.
26. Section 2(p) defines Money Laundering as under:
“money-laundering” has the meaning assigned to it in section 3”
27. Section 2(ra) defines offence of cross border implications
and the same is reproduced hereunder:-
"offence of cross border implications", means--
(i) any conduct by a person at a place outside India which constitutes an offence at that place and which would have constituted an offence specified in Part A, Part B or Part C of the Schedule, had it been committed in India and if such person remits the proceeds of such conduct or part thereof to India; or
(ii) any offence specified in Part A, Part B or Part C of the Schedule which has been committed in India and the proceeds of crime, or part thereof have been transferred to a place outside India or any attempt has been made to transfer the proceeds of crime, or part thereof from India to a place outside India.
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Explanation.-- Nothing contained in this clause shall adversely affect any investigation, enquiry, trial or proceeding before any authority in respect of the offences specified in Part A or Part B of the Schedule to the Act before the commencement of the Prevention of Money-laundering (Amendment) Act, 2009.
28. Section 2(u) defines proceeds of crime and the same is
reproduced hereunder:
(u) "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property;
29. Section 2(x) defines Schedule and the same is reproduced
hereunder :
“Schedule” means the Schedule to this Act”.
30. Section 2(y) defines Scheduled Offences and the same is
reproduced hereunder :-
(2y) "scheduled offence" means--
(i) the offences specified under Part A of the Schedule; or
(ii) the offences specified under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more; or
(iii) the offences specified under Part C of the Schedule.
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31. Sections 3 and 4 are reproduced hereunder:-
“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 and projecting it as untainted property shall be guilty of offence of money-laundering.
“4. 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 which may extend to five lakh rupees:
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.”
32. Mr. H.P. Raval, learned Additional Solicitor General
appearing for the C.B.I. submitted that a bare perusal of the
above provisions makes it clear that the offence of money
laundering is a stand alone offence within the meaning of the
said Act and its investigation alone is in the exclusive domain
of the Enforcement Directorate.
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33. He also submitted that the provisions of the said Act do
not contemplate the investigation of any of the Indian Penal
Code, Prevention of Corruption Act or any of the scheduled
offences by the Enforcement Directorate.
34. Mr. Raval contended that having regard to the
terminology of section 3, any process or activity connected
with the proceeds of the crime and projecting it as untainted
property is the offence of money laundering which is made
punishable under section 4.
35. Mr. Raval submitted that section 5 (1) of the said Act
provides that the Director or Authorised Officer has reason to
believe, to record in writing on the basis of material in his
possession that any person is in possession of any proceeds of
crime, that such person has been charged of having
committed the scheduled offence and such proceeds of crime
are likely to be conceded, transfer or dealt with in any manner
which may result in frustrating any proceedings relating to
confiscation of such proceeds of crime under Chapter III of the
said Act, then by an order in writing such property may be
provisionally attached for a period not exceeding 150 days. 1
36. According to Mr. Raval, a bare reading of the said
provision makes it clear that the jurisdiction to initiate action
of attachment has to be founded on a reasonable belief of a
person being in possession of any proceeds of the crime and
not on a concluded investigation of the person being in
possession of the proceeds of the crime. The distinction is
clear and it follows from Section 5(1)(b) that the second
condition for initiation of action of attachment of property
involved in money laundering is that such person in respect of
whom there is reason to believe that he is in possession of any
proceeds of the crime, has been charged of having committed a
scheduled offence.
37. Mr. Raval contended that if the contentions of the
appellant were true, then the sections of the said Act would
have been differently worded. He also submitted that the
contention of the appellant on the basis of provisions of
sections 43 to 45 that any of the scheduled offences can only
be investigated exclusively by the Enforcement Directorate is
not justified and tenable at law.
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38. Mr. Raval submitted that the embargo from taking
cognizance by the Special Court of any offence as provided in
the second proviso of sub section (1) of section 45 is only with
respect to an offence punishable under section 4. It is only in
respect of an offence punishable under section 4 of the
Prevention of Money Laundering Act that cognizance is barred
to be taken by the Special Court except on a complaint in
writing as provided in sub clause (1) and (2) thereof.
39. He also submitted that this provision cannot be
construed to mean that the Enforcement Directorate has the
exclusive jurisdiction to investigate any of the scheduled
offences.
40. Mr. Raval contended that the contention of the appellant
that merely because under section 44 of the PML Act, the
Special Court constituted in the area in which the offence has
been committed, has been authorized statutorily to try the
scheduled offence and the offence punishable under section 4
is equally unsustainable in law since nothing in the said
provision of section 44 of the said Act envisages the exclusive
investigation of the scheduled offences by the Enforcement 1
Directorate. Mr. Raval submitted that the trial of the
scheduled offence is distinct and different from investigation
under the PML Act.
41. The above contention of the respondent is buttressed
having regard to provisions contained in Section 43(2) which
provides that while trying an offence under the Prevention of
Money Laundering Act (which means the offence of Money
Laundering alone) the Special Court shall also try an offence
other than referred to sub section (1) of section 43 with which
the accused under the Code of Criminal Procedure be charged
at the same trial.
42. He contended that the scheme of the Act would,
therefore, not construe the submission of the appellant that in
case of there being an allegation of offence of money
laundering, the scheduled offence also has to be exclusively
investigated by the Enforcement Directorate. Such a
contention is not supported by the provisions of the Act since
there is no provision restricting the investigation of offence
other than that of money laundering by any appropriate
investigating agency. 1
43. Mr. Raval submitted that the money alleged to have been
so earned is of unprecedented amounts. It is further recorded
that, however, there is no clear allegation so far about its
laundering in the sense mentioned in the PML Act. It is
further observed that there is an allegation of his investment
in the property, shares etc. not only in India, but, also abroad.
Having so observed it is recorded that therefore the basic
investigation requires determining whether money has been
acquired by abuse of official position amounting to an offence
under the Prevention of Corruption Act and under the Indian
Penal Code and persons by whom the same has been done the
amount of money which has been so earned and the places
where it has been invested.
44. According to the learned counsel for the respondents, the
High Court in the impugned order has recorded cogent
reasons for directing the investigation by the Central Bureau
of Investigation. Even this court while issuing notice vide
order dated 01.09.2010 has directed the CBI to continue to
investigate as directed by the High Court. Under the
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circumstances, the appellant is not entitled to any relief as
contended.
45. Mr. Raval informed the Court that the charge sheet in
fact has been filed on 12.11.2010 before the Court of
Competent Jurisdiction alleging inter alia commission of
offence under section 120-B IPC, Section 9, Section 13 (2) read
with section 13(1) (d) of the Prevention of Corruption Act, 1988
against various accused including the appellant Shri Binod
Kumar Sinha. It is further submitted that the investigation is
still on and subsequent charge sheets may be filed as and
when during investigation sufficient material surfaces on other
aspects.
46. In written submission it is categorically stated that the
Central Bureau of Investigation is investigating into the
commission of these offences alone and presently is not
investigating any offence under the PML Act as the
investigation under the PML Act is solely and exclusively
within the jurisdiction and domain of the Enforcement
Directorate, which is of course subject to the exercise of
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powers by the Central Government under Section 45 (1-A) of
the said Act.
47. We have heard the learned counsel for the parties at
length and perused the written submissions filed by them. On
consideration of the totality of the facts and circumstances, we
are clearly of the view that no interference is called for.
48. The appeal being devoid of any merit is accordingly
dismissed.
49. In the facts and circumstances of the case, we direct the
parties to bear their own costs.
….……………........................J. (DALVEER BHANDARI)
…..…………….......................J. (DEEPAK VERMA)
New Delhi; March 29, 2011.
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