In a recent case of Y. Balaji vs Karthik Desari and Anr. Crl. Appeal No.1671-1673 of 2023, a two Judge Bench of the Supreme Court comprising of Justice Krishna Murari and Justice V. Ramasubramanian passed a Judgment dated 16-05-2023 and thereby, dismissed the challenges made by the Accused persons against the initiation of proceedings by the Enforcement Directorate in the Tamil Nadu Cash for Job Scam.
(1) In the present case, the Metropolitan Transport Corporation, wholly owned by the State of Tamil Nadu, issued 5 Advertisements in November 2014, thereby calling upon applications for appointment to the posts of drivers, conductors, tradesmen, engineers, etc.
(2) After the interviews were conducted on 24-12-2014 and the list of selected candidates was published, one, Devasagayam (Complainant) filed a Complaint dated 29-10-2015 with the Central Crime Branch (CCB), Chennai Police, against 10 individuals, thereby alleging that he paid Rs. 2,60,000/- to a Conductor, named Palani for getting the job of Conductor in the Transport Corporation for the Complainant’s son. However, his son did not get the job and when he confronted Palani, he was directed to approach various other persons. When the said efforts did not succeed, he demanded for refund of the money paid, but he did not get the same. Thus, he filed the aforesaid Complaint before the Chennai Police, CCB, which was registered as FIR No. 441 of 2015 for the offences under Section 406 of the Indian Penal Code 1860 (IPC) (Punishment for criminal breach of trust), 420 IPC (Cheating and dishonestly inducing delivery of property) read with Section 34 IPC (Acts done by several persons in furtherance of common intention).
(3) Similarly, one, Gopi approached the Commissioner of Police, Chennai on 07-03-2016, thereby, alleging that after the interviews for the post of Conductor, he was approached by certain persons including the Respondent No. 1-Karthik, who claimed to be the brother-in-law of the Minister Senthil Balaji and demanded a bribe of Rs. 2,40,000/- for securing Gopi’s appointment. But when the Police did not register FIR in his case, he filed a Petition in OP No.7503 of 2016 before the Madras High Court under Section 482 of the Code of Criminal Procedure 1973 (CrPC) (Saving of inherent power of High Court) seeking directions to the Commissioner of Police to register his Complaint and investigate the case.
(4) The High Court passed an Order dated 20-06-2016 in OP No.7503 of 2016 and noted that (i) along with Gopi, 81 other people have filed complaints in the aforesaid scam and (ii) that they will be listed as witnesses in the aforementioned FIR registered on the basis of the Complainant- Devasagayam’s Complaint. (iii) Further, the Police is bound to investigate the money trails and conduct a probe against all officers ranging from the lower ranks to the senior ranks. (iv) Also, the Chennai Police, CCB (Job Racketing) was directed to take over the investigation of the FIR and that the Deputy Commissioner of Police would monitor the same.
(5) However, the Police filed a Final Report dated 13-06-2017 before the Special Court in in Calendar Case No. 3627 of 2017 only against 12 individuals, which did not include the high-ranking officials, the Minister and his relatives, who were alleged to be involved in the Job Scam. Further, the offences made out against the other Accused persons were only those under IPC and not under Prevention of Corruption Act 1988.
(6) Meanwhile, a similar Complaint was filed by one, V. Ganesh Kumar, an employee of the Transport Corporation, against the Minister and other Accused persons on 09-09-2017 alleging that they took bribe of Rs. 95 Lakhs for appointments. The said Complaint was registered as FIR No. 298 of 2017 with the Chennai Police, CCB for offences committed under IPC and not under Prevention of Corruption Act 1988 (PC Act). The Police filed a Final Report dated 07-06-2018 against the Minister and other Accused persons before the Special Court in Calendar Case No. 19 of 2020.
(7) Similar other complaints were filed against the Minister and other Accused persons in the Job Scam, but the Police registered cases only under IPC and not the PC Act.
(8) Meanwhile, one, Arun Kumar filed a Petition under Section 482 CrPC before the High Court in O.P No.32067 of 2019 and stated that (i) the State Police has not probed the high-ranking officials in the Transport Corporation and (ii) various facts of the Minister accepting bribes have been suppressed by the investigating agency. Hence, the Police has violated the earlier High Court Order dated 20-06-2016 passed in Crl. OP No.7503 of 2016.
(9) The High Court, vide Order dated 27-11-2019, directed the Assistant Commissioner of Police, CCB (Job Racketing), to conduct further investigation in Calendar Case No. 3627 of 2017 and complete the same within 6 months.
(10) Meanwhile, a string of petitions were filed before the High Court with similar reliefs and the Minister and other Accused persons sought for discharge, etc in 2020-21.
(11) In the meantime, the Enforcement Directorate (ED) registered an Information Report on 29-07-2021 in ECIR/MDSZO/21/2021 and issued summons to the Minister. Thereafter, the ED filed Miscellaneous Petitions in CC Nos. 19/20, 24/21 and 25/21 before the Ld. Special Court seeking certified copies of the FIR, statements of witnesses, Final Report, etc. The Ld. Special Court allowed the same, vide Order dated 09-11-2021, but refused to issue certified copies of unmarked documents.
(12) Aggrieved by the Special Court Order dated 09-11-2021, the ED approached the High Court. The High Court, vide Order dated 30-03-2022, permitted the ED to conduct inspection of records in criminal proceedings under Rule 237 of the Criminal Rules of Practice 2019 (2019 Rules) (Inspection by officers of other departments) and to file applications for supply of copies of documents. The High Court further observed that the ED is entitled under Rule 238 of the 2019 Rules (Taking extracts) to take the extracts from the documents and thereby, held that ED can file applications in that regard before the Special Court.
(13) Meanwhile, the summons issued by the ED in respect of the Minister and other Accused persons, were quashed by the High Court, vide Order dated 01-09-2022 in WP/18213/2022, WP/18209/2022 and WP/12159/2022.
Supreme Court Observations
(i) Aggrieved by the aforementioned High Court Order dated 30-03-2022 allowing the ED to conduct inspection of records in criminal proceedings, various Criminal Appeals were filed by the Accused persons in the Supreme Court.
(ii) Aggrieved by the aforementioned High Court Order dated 01-09-2022 quashing the ED’s summons, Criminal Appeal(s) were filed by the ED in the Apex Court.
(iii) The Supreme Court passed a Judgment dated 16-05-2023 in the aforesaid Appeals and made the following observations:
1) That as per Section 3 of the Prevention of Money Laundering Act 2002 (PMLA) (Offence of money laundering), a public servant receiving illegal gratification say, in this case, for providing appointment to people in Public Transport Corporation, implies that such public servant is in possession of proceeds of crime, which constitutes the offence of money-laundering.
2) Further, the allegations in the FIRs indicated (a) the involvement of various persons in criminal activities under PMLA and (b) the generation and laundering of proceeds of crime in terms of Section 3 of PMLA. Hence, the investigation of ED was held to have triggered on foundational facts.
3) Once an information relating to the acquisition of huge amount of illegal gratification in the matter of public employment has come into the public domain, it is the duty of the ED to register an Information Report.
4) Thus, for proper investigation of the said Complaints and FIRs, the ED wanted authenticated copies of the documents filed in the criminal proceedings arising from such FIRs. Hence, the High Court Order dated 30-03-2022 permitting the ED to have an inspection of the documents under Rule 237 and thereafter to file a proper copy application was upheld and the challenges made by the Accused persons regarding the validity of proceedings initiated by ED were held completely unsustainable.
5) Furthermore, the High Court in its Order dated 01-09-2022 merely injuncted the ED from proceeding further against the Minister and the other Accused persons till the time the Criminal Revision Petition filed by the Minister against the Trial Court Order refusing to discharge him, and other proceedings pending before the High Court were disposed off. The same did not amount to quashing of summons issued by the ED. Hence, the Appeals filed by the ED against the High Court Order dated 01-09-2022 were allowed.
Thus, based on the aforesaid observations, the Apex Court upheld the High Court Order dated 30-03-2022 permitting the ED to have an inspection of the documents and further, set aside the High Court Order dated 01-09-2022 passed in WP/18213/2022, WP/18209/2022 and WP/12159/2022 and thereby, dismissed the challenges made by the Accused persons in the said Writ Petitions against the initiation of proceedings by ED.
The Indian Lawyer
 Section 3 of PMLA: 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 1 [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering.
Explanation.—For the removal of doubts, it is hereby clarified that,—
(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:—
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property, in any manner whatsoever;
(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.