Binod Kumar v. State of Jharkhand & Ors (2011)

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DALVEER BHANDARI, J.

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 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 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 no
   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 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?
9. 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?
10. Whether the High Court was right in brushing aside all the allegations
    against the PIL and directing investigation by the CBI?”
11. 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.
12. Mr. Venugopal submitted that the PML Act is a self-contained Code while the Act
    constituting the CBI is limited.
13. 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
    national money-laundering legislation and programmes. (Preamble to the PML Act).
14. Learned counsel for the appellant submitted that the Delhi Special Police
    Establishment Act, 1946, 1946 („DPSE Act‟) is limited to investigating offences in
    Delhi and the Union Territories.
15. 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 DPSE
    Act.
16. 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 (Chapter VII), Authorities and their powers (Chapter
    VIII) and International arrangements (Chapter IX).
17. 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.
18. Learned counsel for the appellant also contended that the CBI is comprised only
    of the police officers and does not have 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.
19. 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.
    (iv) As the allegations in the case related to FERA offences outside India, and the
    DSPE Act 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”.
20. Learned counsel further submitted that in addition to the above, this court
    in Enforcement Directorate & Another v. M. Samba Siva Rao & 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 wideranging.
21. 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.
22. 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.
23. 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 the Narcotic Drugs and 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.
24. 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.
25. 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 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.
26. 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.
27. 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 under IPC or the 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.
28. Section 2(p) defines Money Laundering as: „money-laundering‟ has the meaning
    assigned to it in section 3.
29. Section 2(ra) defines offence of cross border implications: “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. 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 MoneyLaundering (Amendment) Act, 2009.
30. Section 2(u) defines proceeds of crime: (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;
31. Section 2(x) defines Schedule: “Schedule” means the Schedule to this Act”.
32. Section 2(y) defines Scheduled Offences: (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.
33. Section 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.
34. Punishment for money-laundering.– Whoever commits the offence of moneylaundering 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.”
35. 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 standalone offence within the meaning of the said Act and its
    investigation alone is in the exclusive domain of the Enforcement Directorate.
36. 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.
37. 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.
38. 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.
39. 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.
40. 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 Section 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.
41. 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.
42. 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.
43. 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 Directorate. Mr.
    Raval submitted that the trial of the scheduled offence is distinct and different from
    investigation under the PML Act.
44. 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
    PML 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.
45. 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.
46. 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.
47. 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 circumstances, the appellant is not entitled to any relief as
    contended.
48. 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.
49. 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 powers by the
    Central Government under Section 45 (1-A) of the said Act.
50. 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. The appeal
    being devoid of any merit is accordingly dismissed.
51. The appeal being devoid of any merit is accordingly dismissed.
52. In the facts and circumstances of the case, we direct the parties to bear their own
    costs.