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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