PARVATHI KOLLUR vs. STATE BY DIRECTORATE OF ENFORCEMENT, 2022

Payal Saini,

Bharati Vidyapeeth New Law College, Pune

Case Name	Parvathi Kollur vs. State by Directorate of Enforcement, 2022
Court	Supreme Court
Date Of  Order	16-08-2022
Bench:	Justices Dinesh Maheshwari and Krishna Murari, JJ
Citation:	SLP (Crl) No. 4258 of 2021, order dated 16.08.2022

Facts

• The individuals appealants in this instance were the spouse and son of the accused no. 1, who was alleged to have accumulated wealth exceeding his legitimate sources of income by Rs.42,25,859/- during his term as Deputy Revenue Officer.

• In accordance with Sections 13(2) and 13(1)(e) of the Prevention of Corruption Act, 1988, a complaint was filed by the Lokayukta Police. The Directorate of Enforcement brought a case involving the first accused and the appellants before the Special Court to prosecute the infringement under Section 3 of the 2002 Act.

• The Special Judge (Lokayukta) absolved the first accused of the aforementioned charges under the 1988 Act, citing insufficiency of prosecution evidence for a conviction.

• The accused and current appellants subsequently submitted a request under Section 277 of the Criminal Procedure Code, 1973, for exemption in the case related to the Act of 2002.The accused died before the application was considered and decided.

• Subsequently, the Trial Court approved the application and exempted the appellants from the charges, noting that the commission of a scheduled offence was the basic condition for giving way to "proceeds of crime," and that the commission of a scheduled offence was a prerequisite for proceeding under the Act of 2002.

• Unhappy with the exemption ruling, the Directorate lodged a revision plea with the High Court. In turn, the High Court annulled the exemption ruling, noting that the accusations in the complaint and the evidence put forth established prima facie reasons for prosecuting the appellants for violations under the Act of 2002.

Issues:

1. Whether the acquittal of the accused No. 1 under the Prevention of Corruption Act negates the basis for proceedings under the PMLA against the appellants?

2. Whether the High Court was correct in setting aside the discharge order passed by the Trial Court?

Arguments          

Appellant

1. Learned Counsel representing the appellants argued that the matter under consideration is no longer res integra, especially in view of the stance taken by a 3-Judge Bench of this Court in the case of Vijay Madanlal Choudhary & Ors. vs. Union Of India & Ors. decided on 27.07.2022, which clearly delineated the consequences of failing to prosecute for the scheduled offense.

2. The ruling stipulated that in the event of the individual's eventual acquittal for the scheduled offense or if the criminal case against them is annulled by a Court with appropriate jurisdiction, no charges of money laundering would be levied against them or against any party claiming ownership of assets associated with the aforementioned scheduled offense through them.

Respondent

It was contended that the accusations and evidence presented initially established a substantial basis for advancing legal action under the Prevention of Money Laundering Act. The legal stance articulated by the Supreme Court in the case of Vijay Madanlal Choudhary & Ors. vs. Union Of India & Ors. was not contested.

Provisions

• Section 3 of the PMLA 2000

It states that anyone who is directly or indirectly found guilty of concealing, disguising, converting, transferring, or disposing of proceeds of a criminal activity in violation of the Act, shall be liable for punishment.

• Section 13(1)(e), Prevention of Corruption Act, 1988

Where any public servant, or any other person acting on his behalf, holds or has held money or any other valuable property, to any extent greater than the sum or value of any money or property which he knows or has reasonable grounds to believe to be his own, at any time while he is in office, and he fails to account for such money or property to the satisfaction of the court, he shall be deemed to have committed criminal misconduct.

• Section 277, Code of Criminal Procedure, 1973

This section mandates that the judge, after perusing the records and the documents accompanying the case, and after hearing the prosecution and the accused, if he considers that there is not sufficient evidence to proceed against the accused, he shall make a record of his reasons for such discharge. He will then discharge the accused.

Judgment      

The court declared that, in this instance, the Trial Court's ruling was appropriate and that the High Court erred in nullifying the discharge order, even though the accused had already been found not guilty of the scheduled offense and the present appellants had not been charged with any scheduled offense.

The court stated that the Enforcement Directorate may only file a complaint under the Prevention of Money Laundering Act in order to look into claims of fraudulent proceeds of crime. However, the individual's commission of a distinct criminal offense (a scheduled offence) must be connected to these proceeds.