1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO S. OF 2023

(Arising out of SLP (Crl.) Nos.12779-12781 of 2022)

Y. BALAJI …APPELLANT(S)

VERSUS

KARTHIK DESARI & ANR. ETC. …RESPONDENT(S)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No.3941 OF 2022)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No.11396 of 2022)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No. 2023)

(Arising out of Diary No.40281 of 2022)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No. 11397 of 2022)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No. 2023)

(Arising out of Diary No.961 of 2023)

CRIMINAL APPEAL NO s. OF 2023

(Arising out of SLP (Crl.) Nos.1207-1208 of 2023)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No. of 2023)

(Arising out of Diary No.5361 of 2023)

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CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No.3747 of 2023)

CONTEMPT PETITION (C) NOS.750-751 OF 2023

(in Criminal Appeal Nos.1515-1516 of 2022)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No. of 2023)

(Arising out of Diary No.10217 of 2023)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP (Crl.) No. of 2023)

(Arising out of Diary No.10186 of 2023)

CRIMINAL APPEAL NO. OF 2023

(Arising out of SLP(Crl) No. of 2023)

(Arising out of Diary No. 5364 of 2023

J U D G M E N T

V. Ramasubramanian, J.

Permission to file special leave petition(s) is granted.

2. Delay condoned.

3. Leave granted.

4. Aggrieved by two independent orders, one passed by a learned

Judge of the Madras High Court on 31.10.2022 disposing of a batch of

criminal petitions and the other passed by the Division Bench of the

Madras High Court on 01.09.2022, putting on hold an investigation by

the Enforcement Directorate

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, various persons such as (i) the de-facto

complainants; (ii) third parties; (iii) the accused; and (iv) the ED have

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For short, “ED”

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come up with these batch of appeals. Other than the batch of appeals

arising out of the said two orders of the High Court, there are also two

appeals, one challenging the refusal of the High Court to extend the

time for completion of investigation and another challenging an order

passed by the Division Bench of the High Court granting limited relief

to the Enforcement Directorate to access certain documents available

on record in the Special Court trying the predicate offences. Apart

from these appeals, there are also two contempt petitions and an

application seeking the constitution of a Special Investigation Team.

5. We have heard Shri Tushar Mehta, learned Solicitor General

appearing for the ED, Shri Gopal Sankaranarayan, learned senior

counsel, Shri Prashant Bhushan and Shri Balaji Srinivasan, learned

counsel appearing for one set of parties (victims and a NGO), Shri

Kapil Sibal, Shri C.A. Sundaram, Shri Sidharth Luthra, Shri Mukul

Rohatgi, learned senior counsel appearing for another set of parties

(accused), Ms. V. Mohana and Shri Siddharth Agrawal, learned senior

counsel appearing for the de facto complainants and Shri Ranjit

Kumar, learned senior counsel appearing for the State of Tamil Nadu.

Background Facts

6. The background facts necessary to understand the complexities

of the batch of cases on hand are as follows:

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(i) In November 2014, the Metropolitan Transport Corporation,

wholly owned by the State of Tamil Nadu issued five Advertisements,

in Advertisement Nos.1/2014 to 5/2014, calling for applications for

appointment to various posts such as Drivers (746 posts), Conductors

(610 posts), Junior Tradesman (Trainee) (261 posts), Junior Engineer

(Trainee) (13 posts) and Assistant Engineer (Trainee) (40 posts);

(ii) After interviews were held on 24.12.2014 and the Select List

got published, one Devasagayam lodged a complaint on 29.10.2015

with the Chennai PS CCB against 10 individuals, alleging that he paid

a sum of Rs.2,60,000/- to a Conductor by name Palani for getting the

job of Conductor in the Transport Corporation for his son. However,

his son did not get a job and when he confronted Palani, he was

directed to several persons. When he demanded at least the refund of

money, he did not get it. Therefore, he lodged a complaint which was

registered as FIR No.441 of 2015 for alleged offences under Sections

406, 420 read with Section 34 of the Indian Penal Code, 1860

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. In this

complaint, the accused who are now before us, including the one who

is holding the post of Minister in the Government of Tamil Nadu were

not implicated.

(iii) Similarly, one Gopi gave a petition dated 07.03.2016 to the

Commissioner of Police claiming that he had applied for the post of

Conductor and that after the interviews, he was approached by one

Ashokan claiming to be the brother and one Karthik claiming to be the

brother-in-law of the Minister Senthil Balaji, demanding a bribe for

securing appointment and that he had paid a sum of Rs.2,40,000/- to

those persons. Complaining that the Police did not register his

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For short “IPC”

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complaint, the said Gopi filed a petition in Crl. OP No.7503 of 2016 on

the file of the High Court of Judicature at Madras under Section 482

of the Code of Criminal Procedure, 1973

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seeking a direction to the

Commissioner of Police to register his complaint and investigate the

same.

(iv) The said Crl. OP No.7503 of 2016 filed by Gopi was

disposed of by a learned Judge of the High Court by an Order dated

20.06.2016. In the said order, it was recorded that according to the

Additional Public Prosecutor, 81 persons had given similar complaints

to the Police and that the complaint given by Devasagayam had been

registered as FIR No.441 of 2015. The Additional Public Prosecutor

took a stand before the High Court in the said petition filed by Gopi

that all the 81 persons including Gopi will be enlisted as witnesses in

the complaint registered at the instance of Devasagayam.

(v) When it was stated by the Additional Public Prosecutor at

the time of hearing of the petition filed by Gopi that all 81 persons

including Gopi will be cited as witnesses, in the complaint filed by

Devasagayam, the petitioner Gopi objected to the same on the ground

that Devasagayam had already been won over by the accused. In fact,

it was pointed out that the Minister did not figure as an accused in the

complaint of Devasagayam. A specific grievance was projected by Gopi

that the Police are not going beyond the lower level officers. Accepting

his statement, the High Court passed an Order dated 20.06.2016 in

Crl. OP No.7503 of 2016 filed by Gopi, holding that the Police is duty

bound to probe beyond the lower level minions to find out where the

money had gone. After so holding, the Court directed the Assistant

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For Short “the Code”

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Commissioner of Police, Central Crime Branch (Job Racketing) to take

over the investigation in FIR No.441 of 2015 and also directing the

Deputy Commissioner of Police to monitor the same. The Court also

held that since a FIR has already been registered at the behest of

Devasagayam, it is not necessary to have another FIR registered on

the complaint/representation made by Gopi.

(vi) Despite the direction issued by the High Court on

20.06.2016 to the Police to go beyond lower level officers and find out

where the money trail ends (more than about 2 crores allegedly given

to the Minister during January and March, 2015) and despite Gopi

making specific averments against the brother and brother-in-law of

the Minister, the Police filed a Final Report on 13.06.2017 under

Section 173(2) of the Code, only against 12 individuals including those

10 persons named by Devasagayam. Upon the filing of the Final

Report, the case got numbered as Calendar Case No.3627 of 2017 in

FIR No.441 of 2015. Neither the Minister nor his brother or brother-in-

law, were cited as accused, in the Final Report. The accused named in

the Final Report were charged only for the offences under Sections

406, 420 and 419 read with Section 34 IPC and not under any

provisions of the Prevention of Corruption Act, 1988

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.

(vii) One V. Ganesh Kumar then lodged a criminal complaint in

FIR No.298 of 2017 on 09.09.2017 with the Chennai PS CCB, against

four persons including the Minister Senthil Balaji. It was stated in his

complaint that he was an employee of the Transport Department and

that one of his colleagues by name Annaraj and his friend R.

Sahayarajan were taken by one Prabhu (a relative of the Minister) to

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For short, “PC Act”

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the house of the Minister Senthil Balaji and that the Minister

instructed them to collect money from persons aspiring to get

appointment as Drivers and Conductors. It was further stated in the

complaint that as per the directions of the Minister, an amount

totaling to Rs.95 lakhs was collected during the period from

28.12.2014 to 10.01.2015 and that though the amount was given to

Prabhu and Sahayarajan, the persons who parted with money did not

get appointed. Therefore, persons who paid money started exerting

pressure upon V. Ganesh Kumar forcing him to lodge a complaint on

09.09.2017. Even this complaint, registered as FIR No.298 of 2017,

was only for offences under Sections 406, 420 and 506(1). A Final

Report was filed on 07.06.2018 in FIR No.298 of 2017, against the

Minister Senthil Balaji and three others, only for offences punishable

under Sections 420 and 506(1) read with Section 34 IPC. This Final

Report was filed before the Special Court and the case was numbered

as CC No.19 of 2020. Despite specific allegations, the offences under

the PC Act were not included.

(viii) Another complaint was lodged by one K. Arulmani, on

13.08.2018 with the Commissione r of Police, Chennai City,

complaining that a huge amount of Rs.40,00,000/ - was collected by

his friends who wanted to get employment in the Transport

Corporation and that the money was actually paid to Shanmugam, PA

to the Minister at the residence of the Minister in the first week of

January, 2015. It was further stated in the complaint that after money

was paid to Shanmugam, the complainant also met Ashok Kumar

(brother of the Minister) and Senthil Balaji (Minister) and that the

Minister assured to get appointment orders issued. This complaint

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was registered by Chennai CCB PS as FIR No.344 of 2018, again for

offences only under Section 406, 420 and 506(1) IPC. We do not

know why the State Police were averse to the idea of including

the offences punishable under the PC Act, in any of the three

FIRs. While one may be averse to corruption, one cannot be

averse to the PC Act.

(ix) As had happened in respect of the other two complaints, the

complaint in FIR No.344 of 2018 was also investigated (or not

investigated) and a Final Report was filed on 12.04.2019. Even this

Final Report, taken on record in Calendar Case No.25 of 2021 did not

include the offences under the PC Act.

(x) At this juncture, a person by name R.B. Arun Kumar, working

as a Driver in the Metropolitan Transport Corporation and who was

cited as witness LW 47 in the Final Report in CC No.3627 of 2017

arising out of FIR No.441 of 2015 (Devasagayam’s complaint) m oved

the Madras High Court by way of a petition under Section 482 of the

Code in Crl. O.P No.32067 of 2019, seeking further investigation in the

case, on the ground that the State Police have not acted as per the

directions issued by the High Court in its order dated 20.06.2016 in

Crl. O.P. No.7503 of 2016 to go beyond the lower level officers. In his

petition, R.B. Arun Kumar also pointed out that the specific allegation

of a huge amount of more than Rs.2 crores, having been paid to the

Minister Senthil Balaji, had been completely suppressed by the

investigating agency and that a dummy charge-sheet had been filed

against minions. Therefore, by an order dated 27.11.2019, the High

Court directed the Assistant Commissioner of Police, CCB ( Job

Racketing) to conduct further investigation in CC No.3627 of 2017 and

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to complete the same within six months.

(xi) Emboldened by the non-inclusion of the offences under the

PC Act in any of the three charge-sheets, Minister Senthil Balaji,

arrayed as Accused No.1 in CC No.19 of 2020 arising out of FIR

No.298 of 2017 lodged by V. Ganesh Kumar, filed a petition in

Criminal M.P. No.7968 of 2020 seeking his discharge in CC No.19 of

2020. But the Special Court dismissed the petition for discharge, by

an order dated 26.08.2020. Against the said order dismissing his

discharge petition, the Minister filed a criminal revision petition in Crl.

R.C. No.224 of 2021 on the file of the High Court.

(xii) But in the meantime, a Final (further) Report under Section

173(8) of the Code was filed in C.C.No. 24 of 2021 against 47 persons

including the Minister Senthil Balaji and Shanmugam (PA to the

Minister) in which the offences under the PC Act were included.

(xiii) Upon coming to know of the way in which the entire

recruitment of candidates to various posts in the Transport

Corporation had gone on, candidates who appeared for the selection

but did not get selected started filing writ petitions, challenging the

entire selection. A writ petition in WP No.9061 of 2021 was filed by one

A. Nambi Venkatesh seeking to set at naught, the appointment of

Junior Engineers. Similarly, one P. Dharmaraj and M. Govinda rasu

filed a writ petition in WP No.8991 of 2021, with regard to the post of

Assistant Engineers.

(xiv) In May, 2021 the political climate in the State

changed. Though the principal actors changed, the script

remained the same for the victims and the political fortunes of

the Minister continued, as he got a berth in the Cabinet, even in

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the new dispensation.

(xv) Thereafter, the person alleged to be the PA to the Minister,

namely, Shanmugam, who was arrayed as Accused No.3 in CC No.25

of 2021 arising out of FIR No.344 of 2018 lodged by Arulmani, filed a

petition in Crl.O.P No.13374 of 2021 on the file of the High Court

seeking to quash CC No.25 of 2021. He claimed in the said petition

that a compromise had been reached between the victims (Arulmani

and others and the accused) and that, therefore, the complaint may be

quashed. Following suit, R. Sahayarajan who was Accused No.3 in CC

No.19 of 2020 also filed a quash petition in Crl.O.P No.13914 of 2021,

enclosing a joint compromise memo seeking to quash CC No.19 of

2020. Similarly, one Vetrichelvan (Accused No.10) filed Crl. O.P

No.6621 of 2021 for quashing the proceedings in CC No.24 of 2021.

(xvi) By an order dated 30.07.2021, the High Court quashed CC

No.25 of 2021 on the basis of the Joint Compromise Memo. This order

was passed completely overlooking the nature of the allegations, the

offences for which the accused ought to have been charged as well as

the previous orders passed by the High Court itself.

(xvii) Just a day before the High Court passed orders quashing

CC No.25 of 2021, the ED registered an Information Report on

29.07.2021 in ECIR/MDSZO/21/2021 and issued summons to the

Minister Senthil Balaji.

(xviii) At this stage, Devasagayam who filed the first complaint in

FIR No.441 of 2015 and in whose case a Final Report was filed in CC

No.3627 of 2017, filed a very strange petition on the file of the High

Court in Crl.O.P. No.15122 of 2021 seeking de novo investigation in

CC No.24 of 2021. It must be recalled at this stage that

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Devasagayam’s complaint was registered as FIR No.441 of 2015 dated

29.10.2015 and a Final Report was filed therein on 13.06.2017 leading

to Calendar Case No.3627 of 2017. But by the orders of the High

Court, the complaint of Gopi and others got clubbed with the

investigation in Devasagayam’s case leading to the registration of a

separate Calendar Case in CC No.24 of 2021. The clubbing actually

happened after an allegation was made before the High Court by Gopi,

(petitioner in Crl. O.P No.7503 of 2016) to the effect that Devasagayam

had been won over. While ordering the complaint of Gopi to be

clubbed with the investigation in FIR No.441 of 2015, the High Court

did not perhaps realize that it may enable Devasagayam to

derail (incidentally he had retired from Railways and the word

“derail” suits him) even the proceedings in CC No.24 of 2021.

(xix) Finding that the offences under the PC Act were included

only in one of the cases and not in others and that it had enabled the

High Court even to quash one of the four calendar cases on the basis

of a Joint Compromise Memo, candidates who were unsuccessful in

the recruitment and who had filed writ petitions in the High Court

challenging the process of selection, filed impleadment petitions, both

in the quash petitions in other cases as well as in the petition filed by

Devasagayam for de novo investigation.

(xx) At this stage, ED filed miscellaneous petitions in CC Nos.

19/20, 24/21 and 25/21 before the Tri al Court seeking certified

copies of the FIR, statements of witnesses, Final Report, etc. By an

order dated 09.11.2021, the Trial Court directed the supply of certified

copies of the FIRs, complaints and the statements under Sections 161

and 164 of the Code. However, the Trial Court refused to issue

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certified copies of unmarked documents.

(xxi) As against the order dated 30.07.2021 passed by the

Madras High Court quashing CC No.25 of 2021 on the basis of the

Joint Compromise Memo, a special leave petition was filed by one P.

Dharmaraj. It may be recalled that he was one of the unsuccessful

candidates and he had filed a writ petition seeking to quash the entire

selection.

(xxii) An NGO by name Anti-Corruption Movement also filed a

special leave petition against the order of the High Court quashing CC

No.25 of 2021.

(xxiii) Aggrieved by one portion of the order of the Trial Court

refusing to grant certified copies of unmarked documents, the ED filed

petitions before the High Court. By an order dated 30.03.2022 the

High Court permitted ED to conduct an inspection under Rule 237 of

the Criminal Rules of Practice, 2019

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and thereafter to make third

party copy applications for supply of copies of documents. The High

Court also noted that under Rule 238, ED was entitled even to take

extracts and thereafter file a fresh third party copy application before

the Special Court. Challenging the limited relief granted by the High

Court to ED in its order dated 30.03.2022, a person who is Accused

No.3 in CC No.3627 of 2017 (CC No.24/2021) has come up with a

special leave petition which forms part of the present batch of cases.

(xxiv) Thereafter, three writ petitions came to be filed, one by

Minister Senthil Balaji and another by Shanmugam, alleged to be his

Secretary and the third by Ashok Kumar (brother of the Minister),

challenging the summons issued by ED. These writ petitions were

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For short “Rules, 2019”

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allowed by the High Court by an order dated 01.09.2022, primarily on

the ground that one of the four calendar cases had already been

quashed by the High Court by order dated 30.07.2021 on the basis of

a Joint Compromise Memo and that further proceedings in the other

calendar cases had been stayed by the High Court.

(xxv) But by a Judgment dated 08.09.2022, this Court

overturned the order of the High Court dated 30.07.2021 and not only

restored the calendar cases back to file but also directed the inclusion

of the offences under the PC Act.

(xxvi) Despite the Judgment of this Court dated 08.09.2022, the

High Court passed an order dated 31.10.2022 allowing the petition

filed by Devasagayam and ordered a de novo investigation.

(xxvii) Therefore, challenging the order of the High Court dated

01.09.2022 quashing the summons issued by the m, ED has come up

with three appeals and the candidate who was unsuccessful in the

selection and who has filed a writ petition before the High Court has

come up with one appeal.

(xxviii) Challenging the order of the High Court dated 31.10.2022

directing de novo investigation, the ED has come up with one appeal,

two candidates who were unsuccessful in the selection have come up

with two separate appeals, Anti-Corruption Movement has come up

with one appeal, the person who compromised the matter with the

accused and supported the accused before the High Court for

quashing the complaint has come up with one appeal and one of the

accused has come up with another appeal.

(xxix) In other words, we have four appeals on hand arising out of

the order of the High Court dated 01.09.2022 quashing the summons

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issued by ED. Similarly, we have six appeals challenging the order

dated 31.10.2022 passed by the High Court directing de novo

investigation.

(xxx) We have two more appeals, which do not form part of the

main stream. One of them is by an accused challenging the order of

the High Court dated 30.03.2022, permitting the ED to conduct an

inspection of the documents before the Trial Court under Rule 237 of

the Rules, 2019. Another appeal is filed by the unsuccessful candidate

challenging an order passed by the High Court dismissing a petition

for extension of time to complete investigation.

(xxxi) Thus, we have on hand 12 appeals, four of them

challenging the quashing of summons issued by ED, six of them

challenging the order for de novo investigation, one of them

challenging an order permitting ED to have inspection of documents

and the last arising out of the order refusing to grant further time for

completion of investigation.

(xxxii) Other than the appeals, we also have two contempt

petitions filed by the Anti-Corruption Movement, complaining willful

disobedience by the State of the directions issued by this Court in the

order dated 08.09.2022 in Criminal Appeal Nos.1515-1516 of 2022.

(xxxiii) We also have an application in IA No.26527 of 2023 filed

by the appellant in one of these appeals, who is an unsuccessful

candidate. The prayer in this application is for the constitution of a

Special Investigation Team to undertake a comprehensive investigation

into the entire scam and for the appointment of a senior lawyer of

repute as the Special Public Prosecutor to prosecute the accused.

This application is taken out on the ground that a similar prayer made

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in Criminal Appeal Nos.1514-1516 of 2022 was turned down by this

Court, in the order dated 08.09.2022, in the hope that the State Police

would act fairly and impartially. According to the applicant/appellant,

the State Police had belied the hope expressed by this Court and that

therefore it is now time to constitute a Special Investigation Team.

7. Since the batch of appeals on hand (not including the contempt

petitions and the application for constitution of a Special Investigation

Team) arise out of four different orders of the High Court, let us divide

this Judgment into four parts, the first dealing with the challenge to

the order for de novo investigation; the second dealing with the

challenge to the order setting aside the summons issued by ED; the

third dealing with the order permitting the ED to have inspection of

the records of the Trial Court; and the fourth dealing with an order

refusing to grant extension of time to complete investigation.

Part-I (Challenge to the order for de novo investigation)

8. As we have pointed out earlier, de novo investigation has been

ordered by the High Court by its decision dated 31.10.2022 at the

instance of one Devasagayam, who was the first person to lodge a

complaint way back on 29.10.2015 alleging that one C. Palani working

in the Transport Corporation received a sum of Rs.2,60,000/- for

securing the job of a Conductor for his son and that he and his

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accomplices committed offences punishable under Sections 406 and

420 read with Section 34 IPC. This complaint was registered as FIR

No.441 of 2015. Despite the fact that the allegations of Devasagayam

related to payment of money to an employee of the Transport

Corporation for procuring a job for his son, the offences under the PC

Act were not included in the FIR. Interestingly, Devasagayam is a

retired employee of the Railways. While he was happy about paying

illegal gratification for procuring employment for his son, he

was not unhappy about the Police not including the offences

under the PC Act in FIR No.441 of 2015.

9. This attitude of Devasagayam was responsible for an allegation

being made against Devasagayam in a petition filed by another victim

by name Gopi, in Criminal O.P. No.7503 of 2016, that Devasagayam

had been won over by the accused.

10. On Devasagayam’s complaint, the Investigating Officer filed a

Final Report on 13.06.2017, which led to the registration of a

Calendar Case in CC No.3627 of 2017. Even in this Final Report, the

offences under the PC Act were not included. Devasagayam did not

bother to question the Police or move the Court as to why the offences

under the PC Act were not included.

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11. But fortunately, pursuant to the order passed by the High Court

in the petition filed by Gopi, another Calendar Case came to be

registered in CC No.24 of 2021, on a further Report submitted by the

Police under Section 173(8) of the Code. In this CC No.24 of 2021, the

Minister and his accomplices were included as accused and the

offences under the PC Act were included.

12. This further Report under Section 173(8) of the Code which

culminated in the registration of CC No.24 of 2021 was filed on

08.03.2021.

13. The inclusion of the name of the Minister and his accomplices in

the Final Report submitted under Section 173(8) and the inclusion of

the offences under the PC Act seems to have bothered Devasagayam

more than the Minister himself. Therefore, Devasagayam filed a

petition in Criminal O.P. No.15122 of 2021 in CC No.24 of 2021

seeking a direction to the Investigating Officer to conduct a de novo

investigation.

14. The grounds on which Devasagayam sought de novo investigation

were quite strange. In his petition seeking de novo investigation,

Devasagayam stated that though his specific complaint was against

one Baskar and nine others, the Final Report filed under Section

173(8) included other persons, who, according to Devasagayam, had

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no connection with the case. Devasagayam also stated in his petition

seeking de novo investigation that Baskar and Kesavan against whom

he made a specific complaint, are not shown as accused. In fact, the

allegation made by Gopi in his petition before the High Court that

Devasagayam had been w on over by the accused, was not without

substance, as can be seen from a few averments made by

Devasagayam in his petition Criminal O.P. No.15122 of 2021. For

instance, in paragraph 7 of his petition seeking de novo investigation,

he stated as follows:

“It is crystal clear that the Petitioner and his son has made a

specific complaint against one Baskar and Kesavan. The

fictitious persons namely Baskar and Kesavan was arrayed as

Accused No.1 and 2. …”

15. It is not known whether Devasagayam was referring to the

persons against whom he made a specific complaint as fictitious

persons or whether he was calling the Minister and the person alleged

to be his Secretary, named as accused in the Final Report as fictitious

persons.

16. In paragraph 9 of his petition seeking de novo investigation,

Devasagayam even relied upon a judicial precedent and contended in

paragraph 10 that the Final Report under Section 173(8) had been

filed without issuing notice to him and that the charges contained in

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the Report against the other accused are irrelevant to the facts of his

own case. Paragraphs 28 to 30 of Devasagayam’s petition seeking de

novo investigation show that he had gone to the extent of pleading the

case of the main culprits. These paragraphs read as follows:

“28. The gross violation and the irregularity in concluding the

final report, with all the above it is pertinent to state that the

final report did not warrant any commission of offence against

anybody and the crime registered is motivated. A Court

proceeding ought not to be permitted to degenerate into a

weapon of harassment of prosecution.

29. The allegations made in the Final report are so absurd and

inherently Improbable on the basis of which no prudent

person can ever reach a just conclusion that there is sufficient

ground for proceeding against the accused, but may escape

from the clutches of law.

30. The present criminal proceeding is manifestly attended

with mala fide and/or the proceeding is maliciously instituted

with an ulterior motive for wreaking vengeance on the accused

and with a view to spite him due to private and personal

grudge.”

17. It appears that Devasagayam, originally seems to have had

a genuine grievance against the culprits at the bottom of the

layer, but he later turned out to be a Trojan horse, willing to

sabotage the investigation against influential persons . This fact

is borne out more by his pleadings in paragraph 31 of the petition in

Criminal O.P. No.15122 of 2021. The relevant portion of paragraph 31

reads as follows:

“31. …Where criminal proceedings are initiated based on

illicit material collected on search and arrest which are

per se illegal and vitiate not only a conviction and

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sentence based on such material but also the trial itself, the

proceedings cannot be allowed to go on as it cannot but

amount to abuse of the process of the court; in such a case

not quashing the proceedings would perpetuate abuse of

the process of the court resulting in great hardship and

injustice to the accused. In our opinion, exercise of power

under section 482 Cr.P.C. to quash proceedings in a case like

the one on hand, would indeed secure the ends of justice.”

18. It is seen from the above averment of Devasagayam, that he was

virtually pleading the case of the accused and seeking de novo

investigation. But alas, Devasagayam was not the only one to be

blamed. He had a silent partner in the prosecution which we

shall see now. If Devasagayam leapfrogged several miles to

protect the actual culprits, the High Court seems to have gone

one step further by ordering de novo investigation on a point not

canvassed in the petition filed by Devasagayam. In fact, in the

main paragraph 21 of the impugned order of the High Court dated

31.10.2022, the High Court has discussed elaborately the contentions

advanced on behalf of Devasagayam in support of his plea for de novo

investigation. These contentions were in sync with the averments

contained in his petition in Criminal O.P. No.15122 of 2021.

19. Though the original petition and the arguments recorded in

paragraph 21 of the impugned order do not reflect one particular

ground, the operative portion of the impugned order allows de novo

investigation on a ground not raised in the petition. In paragraph 55 of

21

the impugned order, it was recorded by the High Court that as per the

affidavit filed by the Investigating Officer, the investigating agency had

seized the register used for entering interview marks and sent the

same to the Forensic Department for analysis to find out the

manipulations and that the Final Report under Section 173(8) of the

Code was filed even before the receipt of the report of the Forensic

Department. It is on this contention that the High Court thought fit to

order de novo investigation not only in the case in which Devasagayam

sought de novo investigation but also in all the criminal cases. What

is interesting is that the order directing de novo investigation in

all the three cases, has actually inured to the benefit of the

accused, but the High Court put it on the ground that the

credibility of the investigation should not be eroded. In fact, the

accused did not seek de novo investigation on the ground of

slackness on the part of the Investigating Officer, but it was

Devasagayam who sought it , with the able assistance of the

Investigating Officer.

20. The fact that Devasagayam’s petition was intended to help the

accused is also borne out by one more fact. His original complaint

dated 29.10.2015 which led to the registration of FIR in Crime No.441

of 2015 was against ten persons and the offences registered therein

22

were only under Sections 406 and 420 read with Section 34 IPC. On

this complaint, a Final Report was filed under Section 173(2) of the

Code on 13.06.2017 and this resulted in the registration of Calendar

Case in CC No.3627 of 2017. Devasagayam was happy with the fact

that the Report filed under Section 173(2) did not include the offences

under the PC Act. Devasagayam was not bothered at that time about

the fact that the register for entering the interview marks, sent to the

Forensic Department had not been received. Sudd enly, he became

worked up after the filing of the Report under Section 173(8) leading to

the registration of Calendar Case No.24 of 2021 including the offences

under the PC Act.

21. What is shocking is that the High Court directed

reinvestigation to be started ab initio, wiping out the earlier

investigation altogether. One saving grace in this case is that

even the learned senior counsel appearing for Devasagayam and

the learned senior counsel appearing for the accused could not

support the operative portion o f the impugned order dated

31.10.2022, in Criminal O.P. No.15122 of 2021. Paragraphs 79 to

81 of the impugned order dated 31.10.2022, needs to be extracted.

They read as follows:

“79. Therefore, I am of the view that reinvestigation to be

23

started ab-initio wiping out the earlier investigation

altogether and to collect fresh evidence and material in the

above criminal cases. Hence, I allowed the Crl.O.P.No. 15122

of2021 in C.C.No.24 of 2021 for de-novo investigation along

with C.C.No.19 of 2021.

80. Therefore, it is directed the investigation should be

conducted ab-initio comprehensively without reference to

the earlier investigation on record covering all the aspects

in relation C.C.No.19 of 2020 and C.C.No.24 of 2021

including whether the offence under Prevention of

Corruption Act, 1988 are made out against the accused.

The special Court before which C.C.No.19 of 2020 and

C.C.No.24 of 2021 are pending will be at liberty to exercise

power under Section 216 Cr.P.C, if there is any reluctance on

the part of the State/investigating Officer.

81.Further, on completion of investigation, if the

investigating agency makes out a case for cognizance of

offence against the accused then the investigating agency of

the predicate offence shall provide the relevant

materials/documents to the Directorate of Enforcement so as

to enable it to invoke its jurisdiction to commence its enquiry

under the P.M.L.A Act thereafter.”

22. By issuing the aforesaid direction, the High Court not only

directed the wiping out of the investigation carried out so far ,

but virtually wiped out even the judgment of this Court dated

08.09.2022 passed in Criminal Appeal Nos.1514 -1516 of 2022.

Hail judicial discipline!

23. Shri Kapil Sibal, learned senior counsel appearing for the

accused and Shri Siddharth Aggarwal, learned senior counsel for

Devasagayam, contended before us that the problem reflected in

paragraphs 79 to 81 of the impugned order is one of language

and not of law. According to them, the expression “wiped out” had

24

been used out of context and that what was sought to be removed by

the High Court was only the conclusions reached by the Investigating

Officer on the basis of the materials already collected. In other words,

their contention was that the investigation so far made and the

materials so far collected can never be thrown into the dustbin but

that the conclusions reached by the Investigating Officer on the basis

of those materials alone required to be wiped out.

24. It is true that English is not our mother tongue. It is also

true that some allowance (or discount ranging from 0 to 90% )

can be given at times to the use of certain loose expressions. But

the expressions used in paragraphs 79 to 81 of the i mpugned

order do not reflect a mere deficiency in language or law, but

something more. As rightly pointed out by Shri Gopal

Sankaranarayanan, learned senior counsel, the High Court has used

in the impugned order, several words and expressions such as,

(i) reinvestigation to be started ab initio, (ii) wiping out the earlier

investigation altogether; (iii) collect fresh evidence and material; and

(iv) without reference to the earlier investigation on record.

25. Apart from the usage of the above words and phrases ,

which in our opinion, not merely opened up a small loophole in

the law but opened up a huge black hole in the galaxy, the High

25

Court issued one more direction in paragraph 80. This direction is

to the investigating agency to find out whether the offences under the

PC Act are made out against the accused or not. Such a direction

stares at what this Court has said in paragraph 45 of the decision

dated 08.09.2022 in Criminal Appeal Nos.1514 -1516 of 2022. This

Court has said “We are constrained to say that even a novice in

Criminal Law would not have left the offences under the PC Act, out of

the final report.” Ignoring the said opinion of this Court, the High

Court has directed the Investigating Officer to find out afresh whether

the offences under the PC Act are made out or not. Therefore, the

problem with the impugned order is not merely one of improper usage

of language, as sought to be diluted by the learned senior counsel for

the accused and the complainant, but something more.

26. Even while supporting the impugned order, the learned senior

counsel for the accused and the learned senior counsel for

Devasagayam, requested us to read down paragraphs 79 to 81 of the

impugned order and go by its intent. But it is easier said than done

since we have had preceden ts of this Court reading down

statutes but never one of reading down a judgment. In view of the

stand so taken even by the counsel for the accused and counsel for

Devasagayam, it may not be strictly necessary to deal with the law

26

relating to de novo investigation. Yet we would make a useful reference

to the decision in Vinay Tyagi vs. Irshad Ali alias Deepak

6

.

27. Vinay Tyagi (supra) arose out of certain peculiar facts. The

Special Cell of Delhi Police registered a First Information Report

against two persons under some provisions of the Explosive

Substances Act, 1908, a few provisions of the IPC and Section 25 of

the Arms Act. The accused filed a petition in the High Court of Delhi

seeking a transfer of investigation to CBI on the ground that they were

working as Informers for the Intelligence Agencies and that they have

been falsely implicated. Though the High Court entertain ed the

petition, no stay was granted. Therefore, the Special Cell of Delhi

Police proceeded with the investigation and filed a charge -sheet.

Thereafter, the High Court passed an order directing the CBI to

undertake an inquiry and submit a report to the Court. Accordingly,

CBI undertook an inquiry and file d a report stating that the

investigation carried out by Delhi Police did not inspire confidence and

that further investigation was needed. Thereafter, CBI filed a closure

report. On the basis of the same, the accused sought discharge. Since

discharge was not ordered, they approached the High Court, but the

High Court remanded the matter back to the Sessions Court. It is the

6

(2013) 5 SCC 762

27

said order of remand that was challenged by the Investigating Officer

before this Court. This Court framed two questions as arising for

consideration in Vinay Tyagi. They read as follows:-

“Question 1

1.1. Whether in exercise of its powers under Section 173 of

the Code of Criminal Procedure, 1973 (for short “the Code”), the

trial court has the jurisdiction to ignore any one of the reports,

where there are two reports by the same or different

investigating agencies in furtherance of the orders of a court? If

so, to what effect?

Question 2

1.2. Whether the Central Bureau of Investigation (for short

“CBI”) is empowered to conduct “fresh”/ “reinvestigation” when

the cognizance has already been taken by the court of

competent jurisdiction on the basis of a police report under

Section 173 of the Code?”

28. While dealing with the First Question, this Court pointed out that

investigation can be of three kinds namely, (i) initial investigation;

(ii) further investigation; and (iii) fresh or de novo or reinvestigation.

After exploring the meaning of “initial investigation” in paragraph 21

and the meaning of “further investigation” in paragraph 22, this Court

recorded in paragraph 23, what a fresh

investigation/reinvestigation/de novo investigation is and the

circumstances under which the same can be ordered. Paragraph 23 of

the decision reads as follows:-

“23. However, in the case of a “fresh investigation”,

“reinvestigation” or “de novo investigation” there has to be a

definite order of the court. The order of the court

unambiguously should state as to whether the previous

28

investigation, for reasons to be recorded, is incapable of being

acted upon. Neither the investigating agency nor the Magistrate

has any power to order or conduct “fresh investigation”. This is

primarily for the reason that it would be opposed to the scheme

of the Code. It is essential that even an order of “fresh”/“de

novo” investigation passed by the higher judiciary should

always be coupled with a specific direction as to the fate of the

investigation already conducted. The cases where such

direction can be issued are few and far between. This is based

upon a fundamental principle of our criminal jurisprudence

which is that it is the right of a suspect or an accused to have a

just and fair investigation and trial. This principle flows from

the constitutional mandate contained in Articles 21 and 22 of

the Constitution of India. Where the investigation ex facie is

unfair, tainted, mala fide and smacks of foul play, the courts

would set aside such an investigation and direct fresh or de

novo investigation and, if necessary, even by another

independent investigating agency. As already noticed, this is a

power of wide plenitude and, therefore, has to be exercised

sparingly. The principle of the rarest of rare cases would

squarely apply to such cases. Unless the unfairness of the

investigation is such that it pricks the judicial conscience of the

court, the court should be reluctant to interfere in such

matters to the extent of quashing an investigation and directing

a “fresh investigation”.

29. In paragraphs 43 and 45, this Court held that the power to order

de novo investigation vests only with superior courts and that the

same has to be exercised sparingly in exceptional cases. In paragraph

46, this Court pointed out that while ordering de novo investigation,

there are two options open to the superior court namely, (i) to direct

the report already prepared or the investigation so far conducted, not

to form part of the records of the case; or (ii) to direct the report

already prepared or the investigation so far conducted to form part of

the record. If the superior court is silent on this aspect, the report

29

already prepared or the investigation so far conducted will form part of

the record. In other words, if the superior court intended that the

investigation so far conducted and the report already filed should not

form part of the record, it should specifically say so.

30. In the order impugned in these appeals, the High Court has

indicated by using four different expressions and phrases that the

investigation so far conducted shall not form part of the record. But

even according to the learned senior counsel for Devasagayam

and learned senior counsel for the accused, the operative portion

of the impugned order of the High Court need not be understood

in such a manner. If that is so, all those phrases and

expressions deserve to be removed. If they are removed, the life

gets ebbed out of the impugned order , which in our opinion, it

richly deserves.

31. Before we wind up our discussion in Part-I, it may be necessary

to deal with a few preliminary objections raised on behalf of the

accused to the very maintainability of these appeals. The question of

maintainability is raised on the basis of the status of the parties.

Therefore, it is essential to take stock of the status of parties who have

filed appeals against the order of the Madras High Court for de novo

investigation. For easy appreciation, the status of parties who are the

30

appellants in the appeals arising out of the order for de novo

investigation and a brief indication of who they are, are presented in a

tabular column as follows:-

Civil Appeals arising

out of Special Leave

Petitions and Diary

Numbers

Name of

appellant

Brief description of who he is

and how he is aggrieved by the

order of de novo investigation

SLP (Crl.) Nos.1207-

1208 of 2023

Director,

Enforcement

ED is aggrieved because any

shadow cast on the investigation of

the predicate offence, is taken

advantage of by the accused to

thwart the investigation of the

offence of money laundering.

SLP (Crl.) No.11396 of

2022

Y. Balaji He was one of the aspirants for the

post of Assistant Engineer in the

Transport Corporation. His

grievance is that he did not get

selected on account of the corrupt

practices adopted by the Minister

and others. He has also filed writ

petition in WP No.24275 of 2021

seeking a direction to the Director,

Vigilance and Anti-corruption to

conduct further investigation in CC

No.19 of 2020. The writ petition is

pending.

SLP (Crl.) No.11397 of

2022

S. Prithvirajan He is one of the aspirants for the

post of Junior Engineer. He claims

that his marks were tampered to

accommodate less meritorious

candidates who indulged in corrupt

practices.

SLP (Crl.) D.No.961 of

2023

Anti-Corruption

Movement

A NGO interested in combating

corruption.

SLP(Crl.)D.No. 10217

of 2023

V. Ganesh

Kumar

He was the complainant in FIR

No.298 dated 09.09.2017,

registered against (i) Minister

Senthil Balaji; (ii) Prabhu; (iii)

Sahayarajan; and (iv) Annaraj, for

offences under Sections 406, 420

and 506(1) IPC. Interestingly, he

entered into a compromise with the

accused and supported them in

31

their petition for quashing of the

FIR. Now he is aggrieved by the

order for de novo investigation for

obvious reasons.

SLP(Crl.)D.No. 10186

of 2023

R.Sahayarajan He is one of the accused in the

complaint given by V. Ganesh

Kumar and he filed a petition

before the High Court seeking to

quash the FIR and the charge -

sheet on the ground of a

compromise.

32. Shri Mukul Rohatgi, Shri Kapil Sibal, Shri Sidharth Luthra, and

Shri C.A. Sundaram, learned senior counsel appearing for different

accused, uniformly raised a chorus, vociferously objecting to the

maintainability of the appeals by each of those appellants, against the

order of de novo investigation. Their contention is that investigation of

a criminal offence cannot be a free-for-all exercise and that one must

have locus to challenge the proceedings. According to the learned

counsel, some of the appellants who are strangers, have not only come

to court without any locus, but are also guilty of coming with unclean

hands as can be seen from the fact that they have managed even to

obtain copies of the confession statements recorded under Section 164

of the Code. It is also contended that some of the appellants before us

are obviously set up by a rival political party and that therefore, this

Court should not entertain the appeals filed by persons who have no

locus standi.

32

33. It is true that criminal jurisprudence recognizes a limited role for

victims and it is the State which is entrusted with the onerous

responsibility of prosecuting the accused and getting them punished.

But we must remember that certain theories of law were

developed at a time when the process of administration of the

criminal justice system was in the hands of honest and

responsible Police officials and the stream remained largely

unpolluted. Today the situation is different. In cases of this

nature, where some of the complainants and the accused have

come together to form an unholy alliance, the victims of crime

cannot be left at the mercy of such partnerships. We have seen in

this case, persons aspiring to secure public employment, paying illegal

gratification, through persons who are public servants, to persons in

power and later coming to the Court supporting the accused on the

basis of an out of Court settlement. What was compromised

between the complainant and accused is not just their disputes,

but justice, fair-play, good conscience and the funda mental

principles of criminal jurisprudence. In fact, the case on hand is

one where there are two teams just for the purpose of record, but

no one knows who is playing for which team and where the

match was fixed.

33

34. As a matter of fact, very vocal submissions were made on the

question of locus in the previous round of litigation in P. Dharamaraj

vs. Shanmugam

7 in Criminal Appeal Nos.1514-1516 of 2022. But the

objections relating to maintainability were rejected by this Court in the

very same proceedings in the first round. Therefore, the accused

cannot raise the question of locus again and again. But for the fact

that the victims came to this Court in the first round of litigation, a

huge scam would have been buried on the basis of a compromise.

35. One more objection was raised about the locus of Y. Balaji, the

appellant in one of these appeals, on the ground that he had already

filed a writ petition in WP No.24275 of 2021 on the file of the High

Court seeking further investigation and that, therefore, he must

pursue his remedies only in that writ petition. But this argument

seeks to sweep under the carpet, the actual reality that by virtue of the

impugned order dated 31.10.2022 directing de novo investigation, the

writ petition filed by Y. Balaji for further investigation has been

rendered infructuous. Therefore, if such a person who participated in

the selection but who did not get appointment due to the corrupt

practices adopted by the concerned persons and who had already filed

a writ petition seeking further investigation, does not have locus

7

2022 SCC OnLine SC 1186

34

standi, we do not know who else will have.

36. The investigation and trial of a criminal case cannot be

converted by the complainant and the accused into a friendly

match. If they are allowed to do so, it is the Umpire who will lose

his wicket.

37. Much ado was made about some of the appellants filing copies of

the confession statements under Section 164 of the Code, as part of

the paper book in the appeals. It was contended by the learned senior

counsel that the confession statements recorded before the Magistrate

are sacrosanct and that the copies of the same cann ot be made

available to third parties and that at any rate, the appellants have not

even explained as to whether they filed third party copy applications

as stipulated in the Rules, 2019 and obtained these copies officially.

38. Reliance was placed upon Rule 2 07(12) and Rule 210 of the

Rules, 2019 in support of his contention. Rule 207(12) and Rule 210

read as follows:-

“207(12) After recording the confession statement of an

accused, the Magistrate shall arrange to take two

photocopies of the same under his direct supervision and

certify the same as true copies. The confession statement in

original shall be sent in a sealed cover to the jurisdictional

Court through a special messenger or by Registered Post

with Acknowledgment Due. One certified copy of the

confession statement shall be immediately furnished to the

Investigating Officer free of cost with a specific direction to

use it only for the purpose of investigation and not to make

35

its contents public until the investigation is completed and

final report filed. The other certified copy of the confession

statement shall be kept in a sealed cover in safe custody of

the Magistrate.

210. Application for copies by third parties. – Application

for the grant of copies of judgment or order o r any

proceeding or document in the custody of a Court by a third

party to the proceeding shall be allowed only by order of the

Court obtained on a petition supported by an affidavit

setting forth the purpose for which the copy is required.”

39. It is clear from Rule 207(12) that a confession statement is a

confidential document till the time investigation is complete and Final

Report filed. The relevant portion of Rule 207(12) states “… not to

make its contents public until the investigation is completed and final

report filed”.

40. Rule 210 extracted above enables “third parties to apply to the

Court for the grant of copies of Judgment or order or any proceeding or

document in the custody of a Court”. Therefore, it is not as though the

appellants have filed something to which they could have never had

any access. It is an irony that persons who are victims of a huge

jobs-for-cash scam are alleged to have come to Court with

unclean hands by persons whose hands were allegedly tainted

with corruption money.

41. As a matter of fact, right from the time when Gopi approached

the High Court with a petition in Crl. O. P. No. 7503 of 2016, there

36

have been several proceedings before the High Court where the parties

have filed copies of several documents. There were also writ petitions

filed by unsuccessful candidates challenging the selection. The

counter filed by the Investigating Officer in those cases have been

extracted by this Court in the Judgment dated 08.09.2022 in

Dharmaraj vs. Shanmugam

8. Therefore, many of the documents

have started appearing in the public domain at the instance of several

persons. Hence, it is futile to contend that the appeals are liable to be

thrown out on the ground that the appellants have come up with

documents to which they could not have had any access.

42. Though Shri Gopal Sankaranarayanan, learned senior counsel

appearing for the appellant in one of these appeals refrained from

giving any political colour to the case on hand, it was contended by

Shri Kapil Sibal, learned senior counsel that the appellant had been

obviously set up by a rival political party. In support of his contention,

he relied upon the timeline of events that began after the lodging of the

first complaint in FIR No.441 of 2015. Though we did not wish to go

into these details, we are compelled at least to touch the peripheries,

lest we shall be held guilty of not dealing with an argument advanced

across the Bar. The timeline of events provided by Shri Kapil Sibal,

8

Criminal Appeal Nos.1514-1516 of 2022

37

learned senior counsel is as follows:-

29.10.2015 Complaint of Devasagayam against 10

individuals but not the Minister.

7/8.03.2016 Complaint of one Gopi alongwith several others

alleging that the Minister, his brother and his

brother-in-law demanded illegal gratification for

making appointments.

20.06.2016 Criminal OP No.7503 of 2016 filed by Gopi was

allowed by the High Court.

13.06.2017 A report under Section 173(2) of the Code was

filed in the FIR lodged by Devasagayam, only for

offences under Sections 406, 419 and 420

against 12 persons. The Minister was not named

there.

22.08.2017 Minister Senthil Balaji formed part of the group

of 18 MLAs who submitted a letter to the

Governor.

09.09.2017 FIR No.298 of 2017 registered on the complaint

of one V Ganesh Kumar against the Minister and

three others.

18.09.2017 The Minister was disqualified.

13.06.2018 Cognizance was taken in CC No.19 of 2020

arising out of FIR No.298 of 2017 against the

Minister and three others.

13.08.2018 A complaint is lodged by one Arulmani, naming

the Minister, his brother Ashok Kumar and his

PA Shanmugam. This results in the registration

of FIR No.344 of 2018, albeit only for offences

under Sections 406, 420 and 506 IPC

14.12.2018 The Minister defected to another political party.

12.04.2019 Final report filed in FIR No.344 of 2018 (becomes

Calendar Case No.25 of 2021).

23.05.2019 Minister Senthil Balaji wins the by-elections, as a

candidate of the party which he joined in 2018.

27.11.2019 Cognizance was taken in CC No.25 of 2021

arising out of FIR No.344 of 2018.

26.08.2020 The petition filed by Senthil Balaji for discharge

is dismissed.

26.02.2021 General Elections to the State Assembly are

announced.

08.03.2021 A final report under Section 173(8) of the Code is

filed against the Minister and others, not only for

the offences under the IPC but also for offences

under the PC Act.

01.04.2021 Cognizance is taken in CC No.24 of 2021

38

02.05.2021 Results of the general election to the State

Assembly are declared, the party in power is

voted out, a new dispensation forms the

Government and he becomes a Minister in the

new regime.

July, 2021 A quash petition is filed and a compromise is

reached.

30.07.2021 The High Court quashes CC No.25 of 2021 on

the basis of the Joint Compromise Memo.

43. On the basis of the above timeline of events, it is contended by

Shri Kapil Sibal that the Minister was implicated in the case on

08.03.2021, for offences under the PC Act immediately after the

announcement of the elections to the Legislative Assembly, as he had

switched over from the party in power to another. Therefore, it is

claimed that the appellant is obviously set up by the political

opponents in hot pursuit of the Minister.

44. But all that we could make out of the above timeline of events is

that trouble started for the Minister, even when he was a Minister in a

different political dispensation and even before he became part of a

group of 18 MLAs in August, 2017. It must be remembered that the

allegations in Criminal O.P. No.7503 of 2016, disposed of by the High

Court on 20.06.2016, were made at a time when he was still a

Minister in the previous regime and it happened more than a year

before he became part of a splinter group. In the order dated

20.06.2016, it was recorded as a contention of the counsel for the

39

petitioner in paragraph 6 that the Police had seen to it that the name

of the Minister did not figure in the complaint, in order to shield him.

That the Investigation Officer did not choose to include the

offences under the PC Act from the year 2015 till 08.03.2021,

cannot be taken to the credit of the Minister, but should be taken

as a discredit of the prosecution. If the shield of office protected

him from 2015 till he formed part of the splinter group and the

shield stood temporarily removed for a brief period of time until

he again became a Minister in the next regime, the same cannot

be said to be a case of political vendetta. We do not know whether

the complainants would have entered into a compromise in July, 2021

if he had not become a Minister again in the new regime.

45. The decisions in Janata Dal vs. H.S. Chowdhary

9

and

Simranjit Singh Mann vs. Union of India

10

, relied upon by the

learned senior counsel for questioning the locus standi of the

appellants, will not go to their rescue. This Court has already dealt

with the question of locus in its Judgment dated 08.09.2022 in

Criminal Appeal Nos.1514-1516 of 2022 in P. Dharamaraj (supra).

46. Interestingly, we have two appeals challenging the correctness of

the order of the High Court dated 31.10.2022 directing de novo

9

(1992) 4 SCC 305

10

(1992) 4 SCC 653

40

investigation, one of which is by the complainant V. Ganesh Kumar in

FIR No.298 of 2017 and other by the accused R. Sahayarajan , who

was arrayed as Accused No.3 in the complaint of the V. Ganesh

Kumar. Both of them entered into a compromise and successfully

trapped the High Court to quash the proceedings on the basis of the

compromise. Fortunately, the order quashing the complaint was

reversed by this Court. Yet both of them have the audacity to come

before this Court attacking the order of de novo investigation.

47. What is worrisome is the fact that V. Ganesh Kumar is an

employee of the Transport Corporation. In the charge-sheet filed on his

complaint, which has been taken on file as CC No.19 of 2020, this V.

Ganesh Kumar is stated to have collected amounts ranging from

Rs.2,00,000/- to Rs.4,50,000/- for every post of Driver, Conductor or

Mechanic, as the case may be. We do not know whether the

Transport Corporation has at least placed him under suspension

and initiated departmental proceedings. If they have not done so

far, the Corporation should initiate disciplinary action against

this V. Ganesh Kumar not only for being party to a job -for-cash

scam but also for turning turtle and supporting the accused and

thereafter coming to this Court to assail the order of de novo

investigation, despite being an employee of the Corporation .

41

Interestingly, his attack on the order of de novo investigation is not to

achieve the same purpose as the victims want to achieve, by assailing

the same order. The victims assail the order of de novo investigation

for the purpose of ensuring that the offences under the PC Act are

properly investigated and tried. But the object of V. Ganesh Kumar is

not the same.

48. This is why we made repeated queries to Ms. V. Mohana, learned

senior counsel appearing for V. Ganesh Kumar as to what V. Ganesh

Kumar eventually wants. The only answer that we got to this question

was that the power to order de novo investigation should be exercised

sparingly and that this is not the case where the power requires to be

exercised. Thus, it is clear that V. Ganesh Kumar is in a different

camp as of now.

49. Therefore, the appeals challenging the impugned order of the

High Court dated 31.10.2022 insofar as they are traceable to Criminal

O.P. No.15122 of 2021 are concerned, deserve to be allowed.

Accordingly, these appeals are allowed and the order dated

31.10.2022 passed in Criminal O.P.No.15122 of 2021 is set aside.

Criminal O.P.No.15122 of 2021 shall stand dismissed.

42

Part-II (Concerning proceedings by Enforcement Directorate)

50. As we have narrated in the sequence of events, ED registered an

Information Report on 29.07.2021, only after filing of a Final Report

under Section 173(8) of the Code., in CC No.24 of 2021, including the

offences punishable under the PC Act. This Final Report was in FIR

No.441 of 2015, which was originally registered as CC No.3627 of

2017 (it became CC No.24 of 2021). The Final Report filed under

Section 173(8) of the Code on 08.03.2021, named Shri V. Senthil

Balaji (Minister) as Accused No.1 and the offences charged against the

accused were under Sections 406, 419, 420 read with Section 34 and

120B, 465, 467, 471 and 201 IPC read with Sections 7, 12, 13(2) read

with Section 13(1)(d) of the PC Act and Section 109 of IPC. Since the

offences under Sections 120B, 419, 420, 467 and 471 of IPC and

Sections 7 and 13 of the PC Act are included in The Schedule to the

Prevention of Money-laundering Act, 2002

11

, the registration of the

Information Report by ED on 29.07.2021 cannot be faulted.

51. After registration of the Information Report, the ED started

issuing summons to the accused. ED also filed petitions before the

Special Court (in seisin of the predicate offences) seeking copies of

documents. These petitions were partly allowed by the Trial Court by

11

For short “PMLA”

43

an order dated 09.11.2021. As against the portion of the order of the

Trial Court disentitling ED to certified copies of the unmarked

documents, ED filed petitions under Section 482 of the Code before

the High Court. The petitions were partly allowed by the High Court by

an order dated 30.03.2022 permitting the ED to follow the procedure

of conducting inspection under Rule 237 of Rules, 2019 and thereafter

by filing a fresh third-party copy application before the Special Court.

52. Thereafter, ED sent fresh summons to the Minister and others in

April, 2022. Immediately, the Minister and two others filed three

separate writ petitions seeking the quashing of the summons issued

by ED.

53. In the writ petition filed by the Minister in W.P. No.18213 of 2022

for quashing the summons issued by the ED, he contended inter-alia: -

(i) that he was falsely implicated in FIR Nos.441 of 2015, 15 of

2016, 298 of 2017 and 344 of 2018;

(ii) that FIR No.15 of 2016 had already been quashed;

(iii) that FIR Nos.441 of 2015 and 298 of 2017 were stayed by

the High Court;

(iv) that FIR No.344 of 2018 was quashed by the High Court;

(v) that in view of the above, the mandatory requirements of

Section 2(1)(y) and Section 3 of the PMLA, are not attracted;

(vi) that the registration of ECIR was based upon th ose

complaints;

44

(vii) that since those complaints are the subject matter of

scrutiny in the quash petitions, there is nothing for ED to proceed;

(viii) that Section 63 of the PMLA prescribes a punishment for

false information or failure to give information and hence the

summons issued under Section 50 will force him to give statement s

incriminating himself in the cases for the predicate offences, thereby

infringing upon his rights under Article 20(3) of the Constitution;

(ix) that ED had not identified any proceeds of crime with the

accused, so as to enable them to proceed with the investigation;

(x) that before the Trial Court and the High Court, ED wanted

copies of documents available with the State Police, on the ground

that without the copies of such documents, it was not possible for ED

to proceed;

(xi) that the initiation of investigation by the ED is vitiated by

malafide;

(xii) that without any material being available with the ED either

about the proceeds of crime or about the act of money-laundering on

the part of the accused, ED cannot proceed; and

(xiii) that without having any incriminating material against the

accused about money-laundering, ED cannot proceed further.

54. The focus in the writ petitions challenging the summons issued

by the ED was primarily on: -

(i) the stay of further proceedings in two criminal cases for the

predicate offences;

(ii) the quashing of one criminal case for a predicate offence;

and

45

(iii) the attempt of the ED to proceed with the investigation in

wilderness, after getting copies of the basic documents from the

Special Court, without actually identifying the proceeds of crime.

However, certain legal arguments were developed before the High

Court in the course of oral hearing.

55. The arguments advanced before the High Court in the course of

arguments, revolved around:-

(i) the law laid down by this Court in Vijay Madanlal

Choudhary vs. Union of India

12

;

(ii) the necessity for the existence of jurisdictional facts before

an authority or officer assumes jurisdiction;

(iii) the absence of a combination of criminal activity amounting

to a scheduled offence, the generation of proceeds of crime therefrom

and the act of money-laundering, which form the jurisdictional fact for

ED to step in; and

(iv) the danger of allowing the ED to go on a fishing expedition

without any material.

56. It is of interest to note that the accused argued before the High

Court that their case was squarely covered by the decision in Vijay

Madanlal Choudhary (supra) . It will be worthwhile to extract the

relevant portions of the order of the High Court dated 01.09.2022, in

which the counsel for each of the accused is stated to have relied upon

the decision in Vijay Madanlal Choudhary .

12

(2022 SCC OnLine SC 929

46

57. The argument of the counsel for R.V. Ashok Kumar, brother of

the Minister is extracted by the High Court in paragraph 3 as follows:-

“3. Mr.Aryama Sundaram, learned Senior Counsel appearing

for the petitioner in Writ Petition No.l8209 of 2022 pleaded at

the outset that his client's case is squarely covered by the

judgment of the Hon'ble Supreme Court in Vijay Madanlal

Choudhury and others case (supra) in his favour, again

proceeding further contended that Mr.R. V.Ashok Kumar is the

brother of Mr.V.Senthil Balaji, who was the former Transport

Minister during the period from 2011 to 2015…”

58. The argument of the counsel appearing for Shanmugam (Accused

No.3) is extracted by the High Court as follows:-

“2. … there is no basis for proceeding against the

petitioner under the Prevention of Money-laundering Act,

because the Hon'ble Supreme Court in Vijay Madanlal

Chaudhary and others v. Union of India and others, 2022

(10) SCALE 577 has held that in the absence of proceeds of

crime, the authorities under the Prevention of Money -

laundering Act cannot step in or initiate any prosecution,

therefore, the writ petition deserves to be allowed, by

quashing the impugned proceedings.

59. Thus, it is seen from the impugned order that at least two out of

three accused specifically argued before the High Court that their case

was squarely covered by the decision of this Court in Vijay Madanlal

Choudhary, but interestingly most of the argumen ts advanced

before us turned out to be an attack on the correctness of the

decision in Vijay Madanlal Choudhary. We are not suggesting

that this defection from one point of view to the other is covered

47

by Schedule X. We are just recording this fact to show that most of

the arguments were actually arguments of convenience.

60. Keeping in mind what the accused argued before the High Court,

let us now see what the High Court did. In paragraph 13 of the

impugned order, the High Court took note of Vijay Madanlal

Choudhary with particular reference to paragraph 187(v)(d). In

paragraph 14, the High Court took note of the quashing of the

complaint for the predicate offence in one case and the stay of further

proceedings in the other two cases relating to predicate offences. In

paragraph 15, the High Court addressed the question as to what is the

effect of a stay order. The High Court concluded that if proceedings

under the PMLA are permitted to go on during the operation of the

stay order in respect of predicate offences, it will cause damage to the

reputation and goodwill of the parties and that therefore investigation

by the ED cannot proceed. In paragraph 16 of the impugned order, the

High Court recorded that other than the three FIRs, the ED was not in

possession of anything else to proceed under the PMLA. In paragraph

17, the High Court recorded the contention rel ating to the non-

existence of jurisdictional facts and referred to the decision in Arun

48

Kumar vs. Union of India

13

in paragraph 19. Thereafter, the High

Court came to the conclusion in paragraph 20 that the quashing of

the complaint in one criminal case and the stay of proceedings in

other two Calendar Cases, showed that there was no jurisdictional fact

or cause of action for the ED to initiate proceedings.

61. Since lot of arguments were advanced before us as though the

ED proceeded without the existence of jurisdictional facts, it is

necessary to extract paragraph 20 of the impugned order to show what

the High Court thought to be a jurisdictional fact. Hence, paragraph

20 of the impugned order is extracted as follows:

“20. A mere perusal of the above judgment clearly shows that

the existence of jurisdictional fact is a condition precedent for

the exercise of power by a Court of limited jurisdiction.

Therefore, in the cases on hand, when there is no cause of

action, since the proceeding in one of the calendar cases was

quashed by the order dated 30.07.2021 in Criminal Original

Petition No.13374 of 2021 and the proceedings in two other

calendar cases have been stayed by this Court, there is no

jurisdictional fact or cause of action for the

respondent/department to initiate any proceedings during the

period of order of stay operating against the two FIRs. Viz.

C.C.No.l9/2020 and C.C.No.24 of 2021.”

62. Again, in paragraph 22, the High Court recorded an opinion that

the grant of stay would amount to eclipsing the proceedings.

Therefore, on this sole ground, the High Court concluded in paragraph

22 of the impugned order that the ED has to await the outcome of the

13

(2007) 1 SCC 732

49

proceedings for quashing the criminal complaints, in which a stay

order was in force. But the High Court made it clear that it was not

entering upon the merits and demerits of the proceedings initiated by

the ED and the High Court left all the questions to be dealt with in

appropriate proceedings.

63. Eventually, the High Court concluded in paragraph 23 of the

impugned order as follows:

“23. … Therefore, as we have concluded that in view of the

quashing of the proceedings in C.C.No.25 of 2021 and staying

of the proceedings in C.C.No.l9 of 2020 & C.C.No.24 of 2021

as highlighted above, the scheduled offence for the present is

eclipsed, suspended or stop operating during the period of

stay, the respondent Department has to await the finality of

the said proceedings. Needless to mention, if the proceedings

in C.C.No.l9 of 2020 and C.C.No.24 of 2021 are quashed

pursuant to the orders in the applications filed by the

respective persons to quash the proceedings, in which event,

the respondent cannot step in or initiate any proceedings

under the Prevention of Money-laundering Act, as held by the

Hon'ble Supreme Court in Vijay Madanlal Chaudhary and

others and in Parvathi Kollur and another v. State by

Directorate of Enforcement, 2022 LiveLaw (SC) 688 cited

supra. Therefore, the respondent is hereby refrained from

proceeding any further pursuant to the impugned

proceedings in ECIR/MDSZO/21/2021, till the disposal of

the Criminal Revision Case No.224 of 2021, Criminal

Original Petition No.15122 of 2021 and the SLP (Crl)

Diary No.9957 of 2022 (SLP (Crl) No.3841 of 2022) .”

64. Irrespective of the correctness of the reasonings given by the High

Court in the impugned order, the conclusion of the High Court was

only this, namely, that the ED cannot proceed, till the disposal of

(i) Criminal Revision Case No.224 of 2021 filed by Minister-Senthil

50

Balaji against the order of the Trial Court refusing to discharge him;

and (ii) Criminal O.P. No.15122 of 2021, filed by Devasagayam seeking

de novo investigation.

65. Therefore, it is as clear as crystal, that the High Court, in the

impugned order dated 01.09.2022 has given only a temporary reprieve

to the accused against the summons issued by the ED. Today,

Criminal Revision Case No.224 of 2021 filed by the Minister against

the dismissal of his discharge petition, has been rejected by the High

Court by its order dated 31.10.2022. Though Criminal O.P. No.15122

of 2021, filed by Devasagayam has been allowed by the High Court, by

the very same order dated 31.10.2022, the said order has be en set

aside by us in Part-I of this judgment.

66. Insofar as the SLP (Crl.) No.3941 of 2022 @ Diary No.9957 of

2022 is concerned, it arises out of the order of the High Court dated

30.03.2022, which again is the subject matter of the present appeals.

67. In other words, the High Court has not quashed the

summons issued by ED. The High Court had merely injuncted ED

from proceeding further till the clog on the cases relating to the

predicate offences is removed.

51

68. Interestingly, none of the accused has come up with any appeal

challenging the order of the High Court dated 01.09.2022, on the

ground that the High Court ought to have quashed the sum mons

issued by the ED in total, on other grounds. Instead, the accused

appeared through counsel only to defend the impugned order dated

01.09.2022.

69. Therefore, in law, (i) once the dismissal of the petition for

discharge has attained finality with the dismissal of Criminal Revision

Case No.224 of 2021; (ii) once the order for de novo investigation in

Criminal O.P. No.15122 of 2021 is set aside; (iii) once the order of the

High Court dated 30.03.2022 relating to right of the ED to secure the

copies of documents is dealt with; (iv) once the order of the High Court

dated 30.07.2021 quashing one of the criminal cases is set aside; and

(v) once the stay operating in two of the criminal cases for predicate

offences is vacated, then the temporary reprieve that has been granted

by the High Court to the accused in the impugned order would

automatically go. Realising this difficulty in law, the accused changed

the theme of the song completely before us, despite the fact that they

were ordained as respondents in the appeals only to support the

impugned order of the High Court.

52

70. In fact, all the learned senior counsel appearing for all the

accused in the PMLA case, advanced arguments for the grant of larger

reliefs than what they got under the impugned order , without even

filing any appeal against the same. It is possible in law for a successful

party (though in civil proceedings) to support the decree without

supporting the judgment. But what the accused sought to do before us

was to support the judgment and seek an enlargement of the decree,

without independently filing appeals. Since they took a chance by

adopting such a course, they may not even be able to challenge the

impugned order hereafter, once the seal of approval on the same is

affixed by this Court and the doctrine of merger comes into play.

71. We may look at this from another angle also. Suppose we dismiss

all the appeals challenging the order of the High Court dated

01.09.2022, then the other portion of our order dealing with the

challenge to the order of the High Court dated 31.10.2022 would

automatically result in lifting the injunction imposed by the Division

Bench of the High Court in the ED case by its order dated 01.09.2022.

Therefore, it is not even necessary for us to deal with the contentions

53

raised on behalf of the accused for the purpose of getting larger reliefs.

But we do not wish to adopt this route. Therefore, we shall address the

contentions raised.

72. The contentions of Shri Kapil Sibal, learned senior counsel are:

(i) that to constitute the offence of money-laundering, one

must have involved in any process or activity connected to the

proceeds of crime;

(ii) that none of the three FIRs which formed the basis for the

registration of an Information Report contained any allegation of

generation of proceeds of crime or the offence of money-laundering;

(iii) that the ED was never in possession of any material to suspect

that the accused did any activity connected with the proceeds of

crime;

(iv) that this is why the ED filed applications before the Special

Court seeking copies of documents to find out if something could be

found;

(v) that under Section 66(2) of PMLA, the flow of information

can be only from the ED to the other authorities about the

contravention of the provisions of any other law and not the other way

about;

(vi) that there are lot of inherent contradictions in the way the

provisions of the PMLA were interpreted in Vijay Madanlal

Choudhary;

(vii) that though Section 50(2) of PMLA empowers the Director

and his subordinates to summon any person whether to give evidence

or to produce any record during the course of investigation, this Court

54

held in Vijay Madanlal Choudhary that it is not investigation in the

real sense;

(viii) that the power under Section 50(2) of PMLA is akin to the

power of the Police Officer under Section 160 of the Code;

(ix) that with the amendment of PMLA by Finance (No.2) Act,

2019 w.e.f. 01.08.2019, the requirement of mens rea was done away

with and the Explanation inserted by the amendment made all

processes or activities such as concealment, possession, acquisition,

use, projecting as untainted property and claiming as untainted

property, available in the alternative. In other words, while the main

part of Section 3 uses the conjunction “and”, the Explanation under

Section uses the expression disjunction “or”;

(x) that the amendment of Section 3 goes completely contrary

to the law laid down in Bihta Co-operative Development and Cane

Marketing Union Ltd. vs. Bank of Bihar

14

, to the effect that an

Explanation cannot widen the scope of the main Section;

(xi) that it is only where proceeds of crime are laundered that

the PMLA comes into play, though the existence of proceeds of crime is

a sine qua non for the commission of an offence under PMLA;

(xii) that if the ED were to have jurisdiction to investigate solely

on the basis of information that a predicate offence has been

committed, involving the proceeds of crime, it would amount to

empowering the ED to enter the domain of the State Police, thereby

causing fissures in the federal structure;

(xiii) that the mere existence of proceeds of crime without the

quantum of proceeds being specified /identified and without the

14

AIR 1967 SC 389

55

proceeds of crime being laundered, an offence of money-laundering

cannot be made out;

(xiv) that it was wrongly decided in Vijay Madanlal Choudhary

that it was not a penal statute, though the object of the Act is to

prosecute and punish a person for the offence of money-laundering;

(xv) that the procedural safeguards available under the Code are

also not available and hence Vijay Madanlal Choudhary has not

been correctly decided. The learned counsel also drew our attention to

several passages such as paragraphs 159, 163, 168 and 172 in the

decision in Vijay Madanlal Choudhary and it was contended that it

was wrongly decided.

73. According to Shri Kapil Sibal, learned senior counsel, certain

fundamental questions arise in the present proceedings. They are:-

❖ What are the jurisdictional prerequisites for the ED to

initiate investigation under the PMLA?

❖ Does the ED have the power to s eek information from

authorities investigating the predicate offence merely on the basis that

investigation of a predicate offence is ongoing, even without receiving

any information that a cognizable offence under the PMLA has

occurred and being in possession of material that indicates the offence

of money-laundering has taken place?

❖ Can the mere existence of proceeds of crime confer

jurisdiction upon the ED to initiate investigation?

❖ What are the elements of “money-laundering”?

❖ What conditions need to be satisfied before the ED is

empowered to issue summons under Section 50 of the PMLA?

56

❖ Can a summons under Section 50 PMLA be issued to a

person who is in the nature of an accused under the PMLA or in the

predicate offence?

❖ Do Sections 50 and 63 of the PMLA violate the

constitutional safeguards under Art.20(3) and 21 of the Constitution?

74. Admitting the inevitable position in law that as a Two Member

Bench, we are bound by the decision of the Three Member Bench in

Vijay Madanlal Choudhary, Shri Kapil Sibal argued that the matter

may be placed before a Three Member Bench for resolving the

conundrum created by the PMLA. In this connection, he drew our

attention to paragraph 113 of the decision of another Three Member

Bench in Union of India vs. Ganpati Dealcom Private Limited

15

,

wherein this Court expressed an opinion that the ratio laid down in

Vijay Madanlal Choudhary with respect to confiscation proceedings

under Section 8 of the PMLA, required further exposition in an

appropriate case and that without such exposition, much scope is left

for arbitrary application. Learned senior counsel also drew our

attention to an order passed by another Two Member Bench of this

Court in a writ petition being Writ Petition (Crl.) No.65 of 2023,

challenging some of the provisions of the PMLA. By an order dated

03.03.2023, a Two Member Bench of this Court directed the said writ

15

(2023) 3 SCC 315

57

petition to be placed when the Bench would be sitting in a

combination of three Judges. After it was so placed before a Three

Member Bench, notice was ordered in the writ petition. Therefore, he

contended that the present appeals arising out the proceedings

initiated by ED may be placed before a larger Bench.

75. In sum and substance, all the above arguments of Shri Kapil

Sibal, learned senior counsel are aimed at convincing us that Vijay

Madanlal Choudhary was wrongly decided and that therefore we

may refer it to a larger Bench.

76. Shri Sidharth Luthra, learned senior counsel appearing for one of

the accused contended: -

(i) that when ECIR was registered, ED did not have requisite

foundational materials, as admitted by them in their own counter

affidavit;

(ii) that there has been a long delay both in the registration of

FIRs for the predicate offence and the ECIR;

(iii) that the period of the commission of offence, according to

the de-facto complainants was between December, 2014 and January,

2015 but the FIRs other than those filed by Devasagayam were of the

year 2017 and 2018 and the ECIR was registered in the year 2021;

(iv) that there is no explanation on the part of the ED for such a

delay;

(v) that to make out an offence of money-laundering even prima

facie, three things are essential, namely (i) the commission of a crime,

58

which is a scheduled offence, (ii) generation of proceeds of crime; and

(iii) the laundering of those proceeds, and that none of these three

foundational facts are present in this case.

77. The arguments of Shri Sidharth Luthra, learned senior counsel is

actually two-fold, namely, (i) that in the absence of a jurisdictional

fact, which is a sine qua non or condition precedent for the exercise of

power by ED, the summons issued by ED should go; or alternatively

(ii) that in view of inherent contradictions contained in the decision in

Vijay Madanlal Choudhary and in view of this Court having ordered

notice in the review petition, the appeals on hand should also be

referred to a larger Bench.

78. In support of his contention that the existence of a jurisdictional

fact is a condition precedent for the exercise of power by ED, the

learned senior counsel relies upon the decisions in Shauqin Singh vs.

Desa Singh

16 and Arun Kumar vs. Union of India

17.

79. To demonstrate that there are inherent contradictions in the

decision in Vijay Madanlal Choudhary, the learned senior counsel

relies upon the decision of the Delhi High Court in Enforcement

Directorate vs. Gagandeep Singh

18 and Parvathi Kollur vs. State

16

(1970) 3 SCC 881

17

(2007) 1 SCC 732

18

2022 SCC Online Del 514

59

through ED

19.

80. To show that a petition for review has been entertained by this

Court, the learned senior counsel relies upon the record of

proceedings of this Court dated 25.08.2022 in Review Petition (Crl.)

No.219 of 2022 in Karti P. Chidambaram vs. The Directorate of

Enforcement.

81. Lastly, it is contended that when certain questions of law are

referred to a larger Bench, all subsequent matters should be tagged or

deferred. In support of this contention, the learned senior counsel

relies upon the orders passed by this Court in Jairam Ramesh vs.

Union of India

20, Thomas Franco Rajendra Dev

21 vs. Union of

India, Kantaru Rajeevaru (Right to Religion, In re-9 J.) vs. Indian

Young Lawyers Association

22, Asgar Ali vs. State of Jammu and

Kashmir

23 and Central Board of Dawoodi Bohra Community vs.

State of Maharashtra

24.

82. Contending that when the very initiation of proceedings by the

ED was without the existence of jurisdictional facts, all subsequent

actions, like a pack of cards should fall, the learned senior counsel

relies upon the latin maxim sublato fundamento cadit opus meaning

19

Crl. Appeal No.1254/2022 dt.16.08.2022

20

SLP (C) No.13103 of 2019

21

WP (C) No.366/2022 dated 12.05.2022

22

(2020) 9 SCC 121

23

2022 SCC Online SC 3095

24

2023 SCC Online SC 129

60

that “if initial action is not in consonance with law, all subsequent and

consequential proceedings fall through”. In support of this contention,

the learned senior counsel has relied upon the following decisions:

(i) Badrinath vs. Government of Tamil Nadu

25; (ii) State of Kerala

vs. Puthenkavu N.S.S. Karayogam

26; and (iii) State of Punjab vs.

Davinder Pal Singh Bhullar

27.

83. Shri C.A. Sundaram, learned senior counsel appearing for one of

the accused, adopted a different line of argument. Instead of attacking

the correctness of Vijay Madanlal Choudhary, the learned senior

counsel contended:-

(i) that the object of PMLA is to prevent money-laundering;

(ii) that to constitute an offence of money-laundering, a person

should have involved himself in any process or activity connected with

the proceeds of crime;

(iii) that ED can assume jurisdiction only after identification of

the proceeds of crime;

(iv) that the mandate of ED does not extend to the prosecution

of any one for offences other than money-laundering;

(v) that this is why Section 66(2) obliges the Director to share

the information available with him with other authorities, whenever

such information discloses the contravention of the provisions of any

other law;

25

(2000) 8 SCC 395

26

(2001) 10 SCC 191

27

(2011) 14 SCC 770

61

(vi) that without the identification of a property which

represents the proceeds of crime, a jurisdictional fact for the initiation

of proceedings does not get triggered;

(vii) that no summons can be issued under Section 50 without

registering an information report;

(viii) that the power to issue summons under Section 50(2) can

be exercised only during the course of any investigation or proceeding

under the Act;

(ix) that in the case on hand, no property representing the

proceeds of crime has been identified;

(x) that this is why the High Court questioned the ED as to how

Section 3 got invoked; and

(xi) that therefore the initiation of proceedings by the ED cannot

be sustained even within the contours of law interpreted in Vijay

Madanlal Choudhary.

84. Lastly, it is contended by Shri C.A. Sundaram, learned senior

counsel for one of the accused that though the High Court allowed the

prayer of the accused for reasons other than those argued now, the

party successful before High Court can always seek to sustain the

judgment, on grounds other than those stated in the impugned order.

In support of this contention, the learned senior counsel relies upon

the decision of this Court in Management of the Northern Railway

Co-operative Credit Society Ltd., Jodhpur vs. Industrial Tribunal,

62

Rajasthan, Jaipur

28.

85. In response to the above submissions, it was argued by Shri

Tushar Mehta, learned Solicitor General:

(i) that the offence of money-laundering is treated by the global

community as an offence of international implication, affecting the

economies of Nations;

(ii) that the law could be traced to Palermo and Vienna

Conventions;

(iii) that the Conventions led to the establishment of Financial

Action Task Force

29

;

(iv) that for a long time after the above Conventions and the

formation of FATF, India was found to be lacking in curbing money-

laundering and hence certain recommendations were made for the

Mutual Evaluation of Anti-Money Laundering and Combating the

Financing of Terrorism;

(v) that the recommendations made by them were carried into

effect by making suitable amendments to the Act;

(vi) that the historical perspective of the Act and the

amendments thereto are discussed in detail in Vijay Madanlal

Choudhary;

(vii) that almost all provisions of the PMLA were challenged in

Vijay Madanlal Choudhary and every ground of attack to each of the

provisions is dealt with in extenso by the Three Member Bench;

(viii) that there cannot be repeated attempts to have several bites

at the cherry;

28

(1967) 2 SCR 476

29

For short, “FATF”

63

(ix) that by doubting the correctness of the decision of a larger

Bench, a cloud of uncertainty cannot be created on the application of

a law;

(x) that the decision in Vijay Madanlal Choudhary is a

binding precedent and the doctrine of stare decisis should be given

meaning and value;

(xi) that the English precedents on the doctrine of stare decisis,

such as those in Street Tramways vs. London County Council

30

and

Redcliffe vs. Ribble Motor Services

31, have been followed by our

Courts;

(xii) that as laid down by this Court in Sakshi vs. Union of

India

32, the doctrine of stare decisis gives certainty to law and guides

people to mould their affairs in the future;

(xiii) that as held by this Court in Central Board of Dawoodi

Bohra Community vs. State of Maharashtra

33

, a Bench of lesser

coram cannot express disagreement with or question the correctness

of the view taken by a Bench of larger coram;

(xiv) that as opined by Chief Justice John Roberts of the

Supreme Court of the United States, ‘it is a jolt to the legal system

when you overrule a precedent’;

(xv) that the ratio laid down by a larger Bench should not

become suspect merely because another view is possible;

(xvi) that in any case, Vijay Madanlal Choudhary has taken

note of different views of several High Courts including the High

30

(1898) AC 375 (378)

31

(1939) AC 215 (245)

32

(2004) 5 SCC 518

33

(2005) 2 SCC 673

64

Courts of Bombay, Delhi, Jharkhand and Punjab and Haryana, etc.;

and

(xvii) that unsettling the law laid down in Vijay Madanlal

Choudhary at a time when the ranking of the country in curbing the

menace of money-laundering has improved, will derail the whole

process.

86. We have carefully considered the rival contentions. A careful

analysis of the arguments advanced by all the three learned senior

counsel appearing for the accused namely Shri Kapil Sibal, Shri C.A.

Sundaram and Shri Sidharth Luthra would show that a three-pronged

strategy has been formulated in their attack on the initiation of

proceedings by the ED. This three-pronged strategy goes as follows:

(i) questioning the correctness of the decision in Vijay Madanlal

Choudhary and seeking a reference to larger Bench (by Shri Kapil

Sibal);

(ii) accepting the decision in Vijay Madanlal Choudhary as correct

and trying to demonstrate how the initiation of proceedings in the

present case falls foul of the ratio in Vijay Madanlal Choudhary (by

Shri C.A. Sundaram); and

(iii) relying upon some portions, but attacking some other portions of

Vijay Madanlal Choudhary so that any one of these provide an

escape route (by Shri Luthra).

65

87. In terms of issues, the arguments advanced by all the three

learned senior counsel can be crystallized and formulated into two

fundamental questions that may have to be addressed by us. These

questions are:-

(i) Whether without identifying the proceeds of crime or a

property representing the proceeds of crime and without identifying

any process or activity connected to proceeds of crime as required by

Section 3, which constitute the foundational/ jurisdictional fact, ED

can initiate an investigation and issue summons?

(ii) Whether in the light of the fact that notice has been ordered

in the review petition and a few interim orders have been passed in

some proceedings, it is necessary for this Court to tag these appeals

along with a review petition or defer the hearing of these matters until

a decision is rendered in the review petition and other petitions?

88. Before we find an answer to these two questions, it is necessary

to take note of how and why PMLA came into existence and what

geopolitical circumstances compelled India to bring the law. According

to United Nations Office on Drugs and Crime

34

, South Asia, corruption

is recognized as a crucial governance and security challenge in South

Asia region. UNODC has estimated that corruption costs more than

5% of global GDP (US$2.6 trillion) annually, with estimates of global

money-laundering at around $500 billion (works out to INR 40 lakhs

34

For short, “UNODC”

66

crores) annually. Based upon a study conducted by Pune based

Forensic Accounting Company by name “Indiaforensic” way back in

the year 2011 on “Ascertaining size of Corruption in India with respect

to money laundering”, the Economic Times reported in its Edition

dated 17.07.2011 that money laundered out of India in the decade

2001-2010 could be pegged at Rs.18,86,000 crores. This is why in

May 2011, India became party to the United Nations Convention

against Corruption (UNCAC) joining over 160 other countries who were

party to this UN Convention.

89. The history of the legislation on money-laundering is almost six

decades old. In brief, this history can be traced as follows:

(i) In 1961, United Nations Convention on Narcotic Drugs was

adopted and it was amended by the protocol of the year 1972.

(ii) In 1971, United Nations Convention on Psychotropic

Substances was made.

(iii) In 1974, a bank known as Herstatt Bank in Germany was

forced into liquidation by the Regulators. On the day on which it

happened, a number of banks had released payments to Herstatt in

exchange for US dollars to be delivered in New York. But due to the

time zone differences, Herstatt ceased operations between the times of

the respective payments. As a result, payments were not made in New

York. Therefore, a Standing Committee which came to be known as

Basel Committee on Banking Supervision (BCBS) was formed by G-10

countries namely Belgium, Canada, France, Germany, Italy, Japan,

67

Netherlands, Sweden, Switzerland, UK and USA.

(iv) In December 1988, two things happened . One was the

adoption of a Convention by name UN Convention Against Illicit Traffic

in Narcotic Drugs and Psychotropic Substances (popularly known as

Vienna Convention). The second was that at about the same time, the

Basel Committee issued a general statement of ethical principles

which encourages banks’ management to put in place effective

procedures to ensure that all persons conducting business with their

institutions are properly identified, that transactions that do not

appear legitimate are to be discouraged and that cooperation with law

enforcement agencies is achieved.

(v) In 1989, the FATF was established at the G-7 summit held

at Paris, as an inter-governmental body by the member countries

namely Canada, France, Germany, Italy, Japan, UK and USA. Now

FATF consists of 39 members including India and over 200

jurisdictions around the world have committed to the FATF

recommendations.

(vi) In 1990, the Member States of the Council of Europe signed

and ratified a Convention known as The Convention on Laundering,

Search, Seizure and Confiscation of the Proceeds from Crime, also

known as the Strasbourg Convention or CETS 141. Interestingly,

Australia though not a Member of the Council of Europe, also signed

and ratified this Convention. The Convention sought to facilitate

international co-operation and mutual assistance in investigating

crime and tracking down, seizing and confiscating the proceeds

thereof. The purpose of bringing the States together was to assist them

in attaining a similar degree of efficiency even in the absence of full

68

legislative harmony.

(vii) As part of United Nations office on Drugs and Crime, a

Global Programme against Money Laundering (GPML) was established

in 1987 to assist Member States to comply with UN Conventions and

other instruments that deal with money-laundering and terrorism

financing.

(viii) On 15.11.2000, the UN General Assembly adopted the

United Nations Convention against Transnational Organized Crime

and it opened for signature by Member States at a high level political

Conference convened at Palermo, Italy in December 2000 (now known

as Palermo Convention).

(ix) On October 31, 2003, the United Nations General Assembly

adopted the UN Convention against corruption and the Convention

came into force in 2005.

(x) Pursuant to the political Declaration adopted by the special

session of the United Nations General Assembly held between 8th to

10th June 1998 (of which India is one of the signatories) calling upon

member States to adopt Anti Money Laundering Legislation &

Programme, the Parliament has enacted a special law called the

‘Prevention of Money Laundering Act, 2002’ (PMLA 2002). The Act has

come into force with effect from 1st July 2005. It has been

substantially amended, by way of enlarging its scope, in 2009 (w.e.f.

01.06.2009), by enactment of Prevention of Money Laundering

(Amendment) Act, 2009. The Act was further amended by Prevention

of Money-Laundering (Amendment) Act, 2012 (w.e.f. 15-02-2013).

(xi) As part of the effort to assist jurisdictions prepare or

upgrade their legislative framework to conform with international

69

standards and best practices to implement anti -money laundering

measures and combating the financing of terrorism, UNODC issued in

2003, “Model Money-Laundering, Proceeds of Crime and Terrorist

Financing Bill”.

90. The Commonwealth Secretariat of the UNO DC released in April

2009 an updated version of the “Model Provisions on Money

Laundering, Terrorist Financing, Preventive Measures and Proceeds of

Crime”. Some of the provisions of the UN Model Law 2009 show that

PMLA has been brought in tune with the Model Law.

91. The Drafting Note on self-laundering, contained in the Model Law

deals with the question whether a person should necessarily be

implicated in the predicate offence so as to be an accused in the

offence of money-laundering. It reads as follows:

“Self-laundering:

“As the section refers to “any person,” this includes both the

person who committed the predicate offence and third party

launderers. Although generally not an issue in States in the

common law tradition, there can be a question whether the

offence should be extended to the person who also committed

the predicate offence.

The Vienna and Palermo Conventions provide an exception to

the general principle that both the predicate offender and third

parties should be liable for money laundering where

fundamental principles of domestic law require that it not apply

to the person who committed the predicate offence. In some

countries, constitutional principles prohibit prosecuting a person

both for money laundering and a predicate offence. In the case

of most common law countries, there do not appear to be

fundamental principles that prohibit the application of the

money laundering offence to self-launderers. However, if an

70

exception is necessary, an additional provision, as “[t]he offence

of money laundering shall not apply to persons who have

committed the predicate offence” should be incorporated.

If drafters believe that there is a need for additional clarity

beyond the reference to “any person” to ensure that those who

launder their own proceeds are covered, a provision can be

added as “[t]he offences set forth in Section 3(2) - (5) shall also

apply to the person who has committed the offence(s), other

than money laundering, that generated the proceeds of crime.”

92. Similarly, the portion of the Drafting Note in the Model Law,

enlisting the kind of activities that may constitute the offence of money

laundering reads as follows:

“Kinds of Offences: As the UN’s Legislative Guide to the

Palermo Convention and Legislative Guide for the

Implementation of the United Nations Convention Against

Corruption make clear, there are four general kinds of conduct

that should be criminalized. The minimum requirements for

each are:

1. Conversion or transfer of proceeds of crime. This includes

“instances in which financial assets are converted from one

form or type to another, for example, by using illicitly generated

cash to purchase precious metals or real estate or the sale of

illicitly acquired real estate, as well as instances in which the

same assets are moved from one place or jurisdiction to another

or from one bank account to another.” (See, e.g., paragraph

231, in Legislative Guide for the implementation of the UN

Corruption Convention). Regarding mental elements, the

conversion or transfer must be intentional, the accused must

have knowledge at the time of conversion or transfer that the

assets are criminal proceeds, and the act must be done for

either one of the two purposes stated – concealing or disguising

criminal origin or helping any person (whether one’s self or

another) to evade criminal liability for the crime that generated

the proceeds.

2. Concealment or disguise of proceeds of crime. There are

many aspects noted in the provision as to which there can be

concealment or disguise – almost any aspect of, or information

about, the property, so this section is broad. The concealment or

disguise must be intentional and the accused must have

knowledge that the property constitutes proceeds of crime at

71

the time of the act. This provision deals with the intentional

deception of others. This will include the intentional deception of

law enforcement authorities. True nature may be the essential

quality of it having been derived from criminal activity. Origin

may be the physical origin, or its origin in criminality. For this

second offence, there should not be a requirement of proof that

the purpose of the concealment or disguise is to frustrate the

tracing of the asset or to conceal its true origin. Although as a

general matter this will be the purpose of the concealing or

disguising, the applicable UN Conventions require that there be

criminalization that is not dependent upon a showing of such

purpose.

3. Acquisition, possession or use of proceeds. This section

imposes liability on recipients who acquire, possess or use

property, and contrasts with the two provisions above that deal

with liability for those who provide illicit proceeds. There must

be intent to acquire, possess or use, and the accused must have

knowledge at the time of acquisition or receipt that the property

was proceeds.

4. Participation in, association with or conspiracy to commit,

attempts to commit and aiding, abetting, facilitating and

counselling. There are varying degrees of complicity or

participation other than physical commission of the offence:

assistance (aiding and abetting, facilitating) and

encouragement (counselling). In addition, attempts are to be

criminalized. Finally, this section includes conspiracy, a

common law concept, or as an alternative, an association of

persons working together to commit an offence.

Knowledge: The variants suggested are first, the basic one of

knowledge that the property is proceeds of crime (which

knowledge may be inferred from objective factual

circumstances); and secondly a more flexible standard of

knowledge or suspicion that the property is proceeds of crime.”

Therefore, it is clear that the provisions of PMLA are in tune with the

Model Law drafted by UNODC . Keeping this in mind, let us now

search for an answer to the two questions.

Question 1: Whether without identifying the proceeds of crime or

a property representing the proceeds of crime and without

identifying any process or activity connected to proceeds of

72

crime as required by Section 3, which constitute the

foundational/jurisdictional fact, ED can initiate an investigation

and issue summons?

93. The common theme of the son g of the learned counsel for the

accused is that the mere registration of a FIR for a predicate offence,

even if it is a scheduled offence, is not sufficient for the ED to register

an Information Report and summon anyone. According to the learned

counsel, the commission of the scheduled offence should have

generated proceeds of crime and those proceeds of crime should have

been laundered by someone , for the ED to step in. Going a step

further, it was contended by the learned senior counsel that the ED

should first identify some property as representing the proceeds of

crime, before an Information Report is registered and a summon

issued under Section 50(2).

94. These contentions, in our opinion, if accepted, would amount to

putting the cart before the horse. Unfortunately for the accused, this

is not the scheme of the Act.

95. Section 3 of the Act which defines the offence of money -

laundering reads as follows:

“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 including

its concealment, possession, acquisition or use and

projecting or claiming it as untainted property shall be

73

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.”

96. If the main part of Section 3 is dissected with forensic precision,

it will be clear that Section 3 addresses itself to three things (we may

call them 3 ‘P’s) namely, (i) person; (ii) process or activity; and

(iii) product. Insofar as persons covered by Section 3 are concerned,

they are, (i) those who directly or indirectly attempt to indulge; or

(ii) those who knowingly assists; or (iii) those who are knowingly a

party; or (iv) those who are actually involved. Insofar as process is

concerned, the Section identifies six different activities, namely (i)

concealment; (ii) possession; (iii) acquisition; (iv) use; (v) projecting; or

(vi) claiming as untainted property, any one of which is sufficient to

constitute the offence. Insofar as product is concerned, Section 3

74

identifies “proceeds of crime” or the property representing the proceeds

of crime as the product of the process or activity.

97. Out of the three things that Section 3 ad dresses, namely

(i) person; (ii) process; and (iii) product, the first two do not require

any interpretation or definition. The third aspect namely “product”,

which Section 3 refers to as “proceeds of crime” requires a definition

and hence it is defined in Section 2(1)(u) as follows:-

“2. Definitions. — (1) In this Act, unless the context

otherwise requires, —

xxx xxx xxx

(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 or where such property is taken or

held outside the country, then the property equivalent in

value held within the country or abroad;

Explanation.—For the removal of doubts, it is hereby

clarified that "proceeds of crime" including property not

only derived or obtained from the scheduled offence but

also any property which may directly or indirectly be

derived or obtained as a result of any criminal activity

relatable to the scheduled offence;”

98. Keeping in mind these essential elements that make up the

molecular structure of Section 3, if we go back to the case on hand, we

will find (i) that the offences under Sections 120B, 419, 420, 467 and

471 IPC are scheduled offences included in paragraph 1 of the

Schedule; and (ii) that the offences under Sections 7 and 13 of the PC

Act are included in paragraph 8 of the Schedule.

75

99. All the three FIRs allege that the accused herein had committed

offences included in the Schedule by taking illegal gratification for

providing appointment to several persons in the Public Transport

Corporation. In one case it is alleged that a sum of more than Rs.2

crores had been collected and in another case a sum of Rs.95 lakhs

had been collected. It is this bribe money that constitutes the

‘proceeds of crime’ within the meaning of Section 2(1)(u). It is no

rocket science to know that a public servant receiving illeg al

gratification is in possession of proceeds of crime. The argument

that the mere generation of proceeds of crime is not sufficient to

constitute the offence of money-laundering, is actually preposterous.

As we could see from Section 3, there are six processes or activities

identified therein. They are, (i) concealment; (ii) possession;

(iii) acquisition; (iv) use; (v) projecting as untainted property; and (vi)

claiming as untainted property. If a person takes a bribe, he acquires

proceeds of crime. So, the activity of “acquisition” takes place. Even if

he does not retain it but “uses” it, he will be guilty of the offence of

money-laundering, since “use” is one of the six activities mentioned in

Section 3.

100. The FIRs for the predicate offences identify all the three

components of Section 3, namely, (i) persons; (ii) process; and

76

(iii) product. Persons accused in the FIRs are those who have indulged

in the process or activity. The illegal gratification that they have taken,

represents the proceeds of crime. The (i) acquisition of such illegal

gratification in the first instance; (ii) the possession of the tainted

money before putting it to use; and (iii) today projecting it as

untainted money, is the process or activity in which the accused have

indulged. The corruption money represents the proceeds of crime.

101. Therefore, all the argum ents as though there are no

foundational facts or jurisdictional facts, are simply aimed at

hoodwinking the Court.

102. It is true that there are some offences, which, though

scheduled offences, may or may not generate proceeds of crime.

For instance, the offence of murder punishable under Section

302 is a scheduled offence. Unless it is a murder for gain or

murder by a hired assassin, the same may or may not generate

proceeds of crime. It is in respect of such types of offences that

one may possibly argue that mere commission of the crime is not

sufficient but the generation of proceeds of crime is necessary.

In the case of an offence of corruption, the criminal activity and

the generation of the proceeds of crime are like Siamese twins.

77

103. In fact, PMLA defines the word “property” in Section 2(1)(v) as

follows:

“2. Definitions.—(1) In this Act, unless the context

otherwise requires,—

xxx xxx xxx

(v) “property” means any property or assets of every

description, whether corporeal or incorporeal, movable or

immovable, tangible or intangible and includes deeds and

instruments evidencing title to, or interest in, such property

or assets, wherever located;

Explanation.—For the removal of doubts, it is hereby

clarified that the term “property” includes property of any

kind used in the commission of an offence under this Act or

any of the scheduled offences;”

104. Therefore, even if an intangible property is derived as a result of

criminal activity relating to a scheduled offence, it becomes proceeds

of crime under Section 2(1)(u). In view of the above, we are not

impressed with the contention that the investigation by ED was

triggered without any foundational/jurisdictional facts. In our view,

the allegations in the FIR point out to (i) involvement of persons in

criminal activity relating to scheduled offences; (ii) the generation as

well as (iii) laundering of the proceeds of crime within the meaning of

Section 3. This is in view of the fact that wherever there are allegations

of corruption, there is acquisition of proceeds of crime which itself

tantamount to money-laundering.

105. A lot of heat and dust was generated about the ED registering

an Information Report on 29.07.2021 without any material whatsoever

78

and thereafter indulging in a fishing expedition both by summoning

the respondents and by seeking copies of various documents from the

Special Court before which the complaints relating to the predicate

offences are pending. But we do not see any substance in these

arguments. The reason why we say so will be understood if we rewind

and go back to a few facts.

106. On 29.10.2015, Devasagayam made a complaint. It was against

ten different persons, but not against the Minister, his brother and his

Secretary. But on 07/08.03.2016, one Gopi made a complaint naming

the brother of the Minister and claimed that a total amount of more

than Rs.2 crores was paid. Gopi then filed Criminal O.P. No.7503 of

2016 on the file of the High Court in which the High Court passed an

order on 20.06.2016, to expand the investigation and go against the

real culprits. But a Final Report under Section 173(2) of the Code was

filed on 13.06.2017. This was followed by another complaint filed by V.

Ganesh Kumar on 09.09.2017 in FIR No.298 of 2017. In this FIR , a

Final Report was filed on 07.06.2018. Similarly, one Arulmani filed a

complaint on 13.08.2018 in FIR No.344 of 2018 in which a Final

Report was filed on 12.04.2019.

107. Subsequently, at the instance of one R.B. Arun Kumar, further

investigation was ordered in FIR No.441 of 2015, by an order of the

79

High Court dated 27.11.2019. Thereafter, a discharge petition was

filed by the Minister in one of those cases and after the same was

dismissed, he filed a revision before the High Court. During the

pendency of the revision, a Final Report was filed under Section 173(8)

in one of those cases.

108. Around the same time, writ petitions were filed pointing out that

there was a huge jobs-for-cash scam. In those writ petitions, the

Assistant Commissioner of Police filed counter affidavits.

109. Thus, the information about all complaints, the nature of

the complaints, the amount of money allegedly collected to wards

illegal gratification had all come into public domain. To say

that the ED should have adopted an Ostrich like approach,

without trying to find out where and to whom the huge money

generated in the scam had gone, is something unheard of.

110. In fact, ED was not trying to access any document which was

inaccessible. In several proceedings before the High Court, such as

(i) petitions for further investigation; (ii) writ petitions; and (iii) quash

petitions, some of the documents whose certified copies were sought

by the ED were already annexed. All that the ED wanted was

authenticated copies of those documents and nothing more.

80

111. In fact, the FIRs as well as Final Reports are now uploaded in

the websites of the Police Department in some of the States. In the

State of Tamil Nadu, Police started uploading FIRs online, way back in

2016. In all Police Stations, a Crime and Criminal Tracking Network

and Systems, popularly known as ‘CCTNS’ is installed. Therefore, the

information relating to FIRs is in the public domain.

112. 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. This is because “acquisition” is an activity

amounting to money-laundering and the illegal gratification acquired

by a public servant represents “proceeds of crime,” generated through

a criminal activity in respect of a scheduled offence. Therefore, it

does not require any expedition, much less a fishing expedition

for someone to say that the receipt of bribe money is an act of

money-laundering.

113. The contention of Shri Sidharth Luthra that there was no

explanation for the delay on the part of the ED in registering the

Information Report, is a self -serving argument. If the ED

registers an Information Report immediately upon the

registration of a FIR for a predicate offence, ED will be accused

81

of acting in haste. If they wait until the drama unfolds up to a

particular stage, ED will be attacked as guilty of delay. The

accused should be thankful to ED for giving a long rope from

2016 till 2021.

114. Therefore, all the arguments on facts and all the legal

contentions emanating from some portions of the judgment in Vijay

Madanlal Choudhary , to challenge the validity of the proceedings

initiated by ED are completely unsustainable.

Question No. 2: Whether in the light of the fact that notice has

been ordered in the review petition and a few interim orders have

been passed in some proceedings, it is necessary for this Court to

tag these appeals along with a review petition or defer the hearing

of these matters until a decision is rendered in the review

petition and other petitions?

115. Now let us come to the contention revolving around the

correctness of some portions of the decision in Vijay Madanlal

Choudhary.

116. First of all, we should point out that a notice ordered in the

review petition being Review Petition (Crl.) No.219 of 2022, will not

destroy or diminish the precedential value of Vijay Madanlal

Choudhary. The argument of the learned counsel for the accused, if

accepted, will not only destroy the principles of judicial discipline and

the doctrine of stare decisis, but also bring to a grinding halt, all

82

pending investigation in the country. In fact, the order dated

25.08.2022 passed in Review Petition (Crl.) No.219 of 2022 discloses

that prima facie the Court was of the view that at least two of the

issues raised in the review petition require consideration. Though it is

not precisely spelt out in the order, those two issues relate to (i) not

providing the accused with a copy of the ECIR; and (ii) reversal of the

burden of proof and presumption of innocence. The points that the

respondents are canvasing in this case, have nothing to do with those

two issues. Therefore, the accused cannot have a piggyback ride on

the review petition.

117. In fact, as we have pointed out elsewhere, the accused have not

come up with any appeal challenging the order of the High Court

dated 01.09.2022. Therefore, they are entitled at the maximum, to

argue only for the dismissal of the appeals filed by ED and others

against the said decision. Suppose we agree with the learned counsel

for the accused and dismiss the appeals filed by ED, even then they

cannot have an escape route since the impugned order of the High

Court protects them only till the other proceedings are kept at bay.

118. Therefore, the accused is not entitled at all either to seek a

reference to a larger Bench or to seek to defer the matter till a decision

is rendered in the matters involving larger issues.

83

119. In view of the above, the appeals arising out of the order of the

Division Bench of the High Court are liable to be allowed. Accordingly,

these appeals are allowed and the order of the Division Bench of the

Madras High Court dated 01.09.2022 is set aside. ED will now be

entitled to proceed further from the stage at which their hands were

tied by the impugned order.

PART-III (Permission to ED to inspect the records of the Special

Court trying the predicate offences)

120. To recapitulate, ED registered an Information Report on

29.07.2021. Thereafter, ED filed applications before the Special Court

seeking certified copies of the FIR, statements of witnesses, etc. By an

order dated 09.11.2021, the Special Court allowed the application

partly and directed the issue of certified copies of FIR, complaint,

statements, etc., but refused to provide certified copies of unmarked

documents.

121. As against the said order, ED moved the High Court under

Section 482 of the Code. These petitions were partly allowed by the

High Court by an order dated 30.03.2022, permitting ED to have

inspection of the documents under Rule 237 of the Rules, 2019 and

thereafter, to file a fresh third party copy application. It is against this

order that one of the accused by name M. Karthikeyan (Accused No.3)

84

in the Final Report filed under Section 173(8) of the Code in CC No.24

of 2021 has come up with an appeal.

122. The grievance of the appellant in this appeal is that the High

Court has overlooked the provisions of Rule 231(3) of the Rules, 2019

and also Section 65B of the Indian Evidence Act, 1872

35

. But both the

above contentions are without substance. Rule 231 primarily deals

with the grant of certified copies of certain other documents to the

accused, before filing of the Final Report. Rule 231(3) states that

certified copies of unmarked documents shall not be given. The High

Court has not passed any order directing the grant of certified copies

of unmarked documents. All that the High Court has done is

permitting the ED to have an inspection of the documents under Rule

237 and thereafter to file a proper copy application. This is not

contrary to Rule 231(3).

123. We do not know how an argument revolving around Section 65B

of the Evidence Act is raised. Section 65B concerns the admissibility of

electronic records. Without certification, ED may not be able to use

those electronic records in evidence, in the prosecution under PMLA.

But it does not mean that they cannot even have a look at the

electronic record.

35

For short “the Evidence Act”

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124. Therefore, we find no merits in the appeal. Hence, the appeal

challenging the order of the High Court dated 30.03.2022 passed in

Criminal O.P. No.5726 of 2022 is dismissed.

PART – IV (Extension of time to complete further investigation)

125. There is one appeal filed by Y. Balaji, whose status is indicated

by us in a tabular column elsewhere. His appeal challenges an order

passed by the High Court originally on 27.11.2019 directing the

prosecution to complete further investigation in CC No.3627 of 2017

within six months. When a petition for extension of time was moved,

the Court rejected it by an order dated 01.11.2021 on the ground that

the prayer had become infructuous. Therefore, worried about the fate

of further investigation, the victim has come up with the above appeal.

But the worry of the appellant is baseless. Merely because the High

Court has not granted extension of time, it does not mean that the

direction to conduct further investigation has become infructuous. On

the contrary, a Final Report has already been filed under Section

173(8) of the Code on 08.03.2021 in CC No.3627 of 20 17 and the

same has now become CC No.24 of 2021.

126. Therefore, the appeal challenging the orders dated 27.11.2019

and 01.11.2021 is dismissed.

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Contempt Petitions

127. Anti Corruption Movement has come up with petitions seeking

the initiation of contempt proceedings against the Police Officials who

are in-charge of the investigation, on the ground (i) that the offences

under the PC Act have not been included in CC No.25 of 2021; (ii) that

steps were not taken to have the interim stay vacated in two criminal

cases; and (iii) that a misleading picture was projected before the High

Court as though the investigation was incomplete.

128. Shri Ranjit Kumar, learned senior counsel appearing for th e

State and Shri Tiwari, learned AAG for the State submitted that there

was no willful disobedience of the orders passed by this Court and

that the State actually took steps to vacate the stay. According to the

learned senior counsel, the hands of the investigating agency were tied

due to the stay order and that once the appeals arising out of the two

substantial orders of the High Court dated 01.09.2022 and

31.10.2022 are disposed of, the State will take expeditious steps.

129. For the present, we would accep t the explanation offered

by the alleged contemnors. This is for the reason that the

alleged contemnors alone are not to be blamed for where we are.

The entire case turned out to be a match where it became

impossible to identify who was playing for which team. Despite

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this Court’s order dated 08.09.2022, the High Court passed the order

dated 31.10.2022, which practically has the effect of wiping out the

directions issued by this Court. In its order dated 31.10.2022, the

High Court referred to our order at various places and eventually

destroyed the effect of the order of this Court. Therefore, the Police

Officers alone cannot be held guilty of wilful disobedience. Hence, the

contempt petitions are dismissed. However, if the future course of

investigation shows any disobedience of the orders of this Court, it will

always be open to the petitioner to come up again. With th is

observation, the contempt petitions are dismissed.

I.A.No. 26257 of 2023

130. This is an application taken out by Y. Balaji, appellant in some

of these appeals, seeking the constitution of a Special Investigation

Team and the appointment of a Special Public Prosecutor. This

application is filed on the ground that the hope expressed by this

Court in its order dated 08.09.2022 that the State Police would do a

proper job, has been belied by subsequent events. Therefore, the

applicant prays that time is now ripe for the constitution of a Special

Investigation Team.

131. The application is opposed on the ground, (i) that a prayer of

this nature cannot be made by way of an interlocutory application;

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and (ii) that the allegation of the prosecution being influenced by the

Minister does not stand substantiated.

132. As we have pointed out while dealing with the contempt

petitions, the entire blame for this fiasco cannot be laid at the

doorstep of the Police alone. We find several coparceners . Hence,

we reject this I.A. at this stage with liberty to the applicant to come

back with a substantial petition seeking such a prayer, at a later point

of time, when a foul play is suspected. Accordingly, I.A. No.26257 of

2023 is dismissed with the above liberty.

Results summed up

133. The result of the entire discussion is summed up as follows:

(i) The appeals arising out of the order for de novo investigation are

allowed. That portion of the order of the High Court dated 31.10.2022

passed in Criminal O.P. No. 15122 of 2021 is set aside. The directions

issued in the said original petition for de novo investigation are set

aside. The Investigation Officer shall proceed with further investigation

in all cases by including the offences under the PC Act. Any let up on

the part of the Investigation Officer in this regard will pave the way for

this Court to consider appointing a Special Investigation Team in

future.

(ii) The appeals arising out of the order of the Division Bench of the

High Court dated 01.09.2022 are allowed. The order dated 01.09.2022

is set aside. All the three writ petitions challenging the initiation of

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proceedings by ED shall stand dismissed.

(iii) The appeal arising out of the order of the High Court dated

30.03.2022 is dismissed.

(iv) The appeal challenging the orders dated 27.11.2019 and

01.11.2021 of the High Court relating to extension of time for

completion of investigation is dismissed. The Investigation Officer shall

proceed with further investigation and file Further/Final Reports

within two months.

(v) The Contempt Petitions and I.A. No. 26257 of 2023 are dismissed.

Application for impleadment is dismissed.

Pending application(s), if any, shall also stand disposed of.

.…………………..….......................J.

(KRISHNA MURARI )

………… …………… .......................J.

(V. RAMASUBRAMANIAN)

NEW DELHI;

MAY 16, 2023