Bribe whether proceed of crime under PMLA – Intent is important says Supreme Court

Bribe whether proceed of crime under PMLA – intent is important says Supreme Court

ABCAUS Case Law Citation
ABCAUS 3616 (2022) (11) SC

Bribe whether proceed of crime under PMLA ?

In the instant case, The Central Bureau of Investigation (the CBI) checked a car parked in front of the house of an Additional Commissioner of Income Tax (IRS) and recovered a sum of Rs. 50,00,000/-in cash.

During investigation, it came to light that the said sum was handed over to the said IRS by one person whose income tax file was pending with IRS for clearance and the said amount was paid as bribe to IRS Officer.

The both the above persons were found in the car at the time of CBI raid.

Since the case registered by the CBI disclosed the commission of  a ‘schedule offence’ under the Prevention of Money Laundering  Act, 2002 (the PML Act), the Enforcement Directorate (the ED) registered a case for the offences under Section  3r/w 4 of the PML Act.

The IRS appealed before the Delhi High Court and submitted the amount in question, as long as it was in the hands of respondent, could not be said to be tainted money; that it assumed such character only after it was received by the public servant; and as such the respondent could not be said to be connected with proceeds of crime and could not be proceeded against under the provisions of the PML Act.

The submission was accepted by the High Court and the proceedings in PML Act against the IRS was quashed.

The Division Bench headed by Hon’ble Chief Justice observed that though it is true that so long as the amount is in the hands of a bribe giver, and till it does not get impressed with the requisite intent and is actually handed over as a bribe, it would definitely be untainted money. If the money is handed over without such intent, it would be a mere entrustment. If it is thereafter appropriated by the public servant, the offence would be of misappropriation or species thereof but certainly not of bribe. 

The Hon’ble Supreme Court observed that the additional question to be answered is: whether the role played by respondent could come within the purview of Section 3 of the PML Act? The Court observed that Said Section 3 states, inter alia, that whoever knowingly assists or knowingly is a party or is actually involved in any processor activity connected with proceeds of crime including its concealment, possession, acquisition or use shall  be  guilty of offence of money-laundering (emphasis added by us)

The Bench went on to clarify that the crucial part therefore is the requisite intent to hand over the amount as bribe and normally such intent must necessarily be antecedent or prior to the moment the amount is handed over. Thus, the requisite intent would always be at the core before the amount is handed over. Such intent having been entertained well before the amount is actually handed over, the person concerned would certainly be involved in the process or activity connected with “proceeds of crime” including inter alia, the aspects of possession or acquisition thereof.

The Hon’ble Supreme Court pointed out that by handing over money with the intent of giving bribe, such person will be assisting or will knowingly be a party to an activity connected with the proceeds of crime. Without such active participation on part of the person concerned, the money would not assume the character of being proceeds of crime.  The relevant expressions from Section 3 of the PML Act are thus wide enough to cover the role played by such person.

The Hon’ble Supreme Court clarified that involvement of the IRS is prima facie in nature and the allegations made by the prosecution shall be considered purely on merits at the appropriate stage(s).

As a result, the Hon’ble Supreme Court allowed the appeal and set aside the judgment and order passed  by the High Court.

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