The Supreme Court held that if a person hands over money to a public servant with the intention of bribing him, then the person is said to be a party connected to the 'proceeds of crime' and is liable to be booked under the Prevention of Money Laundering Act (PMLA).

The division bench comprising CJI UU Lalit and Justice Bela M. Trivedi stated, "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. 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 Court further said that without such active participation on the part of the person concerned, the money would not assume the character of being proceeds of crime.

"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 Court held.

The bench further states that any property derived or obtained by any person as a result of criminal activity relating to a scheduled offence is considered proceeds of crime.

It further noted that Section 3 of the PMLA, under which Kishore was booked, states that whoever knowingly assists or knowingly is a party or is actually involved in any process or activity connected with proceeds of crime, including its concealment, possession, acquisition or use, shall be guilty of the offence of money-laundering.

The bench cited the definition of "proceeds of crime" under the PMLA law, which states that any property derived or obtained by any person as a result of criminal activity relating to a scheduled offence is proceeds of crime.

"The definition of "proceeds of crime" in PML Act, inter alia, means any property derived or obtained by any person as a result of criminal activity relating to a scheduled offence. The offences punishable under Sections 7, 12 and 13 are scheduled offences, as is evident from paragraph 8 of Part-A of the Schedule to the PML Act. Any property thus derived as a result of criminal activity relating to offence mentioned in said paragraph 8 of Part-A of the Schedule would certainly be "proceeds of crime"."

It was also noted that Section 3 of the PMLA, under which Kishore was charged, states that anyone who knowingly assists or is a party to, or is actually involved in, any process or activity involving proceeds of crime, including their concealment, possession, acquisition, or use, is guilty of money-laundering.

Padmanabhan Kishore allegedly gave a public servant a sum of Rs. 50, 00,000/- (Fifty lakhs only). An FIR was filed under Section 120B of the Indian Penal Code, as well as Sections 7, 12, 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988. The Enforcement Directorate later filed a case against the accused, including Padmanabhan Kishore, under Sections 3 and 4 of the PML Act. The Madras High Court later granted the writ petition and halted the PMLA proceedings against him. According to the High Court, the sum of Rs. 50,00,000/-could not have been stated as tainted money as long as it was in the hands of Padmanabhan Kishore because it is not the CBI's case that he mobilized Rs. 50,00,000/-through criminal activity. Only when Andasu Ravinder accepted it as a bribe did the sum of Rs. 50, 00,000/-become the proceeds of crime. The CBI intervened and seized the money in the car on August 29, 2011, even before Andasu Ravinder could project the sum of Rs. 50, 00,000/-as untainted money, it said.

Case Details:-

Directorate of Enforcement vs Padmanabhan Kishore