Binod Kumar vs State Of Jharkhand & Ors

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.

1 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.

8 (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.

9 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.

1 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.

1 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.

1 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

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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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