Delhi High Court Rules Profits from Bribery-Linked Investments as Criminal Earnings

Court's Stance on Bribery and Money Laundering

The Delhi High Court has declared that profits earned from investments made with bribery funds will be classified as income derived from criminal activities, thus constituting a money laundering offense. The court emphasized that even if an individual invests bribery money, the increase in value does not cleanse the illegal source of those funds, and the augmented amount remains linked to the illicit origin.

A bench comprising Justice Anil Khetarpal and Justice Harish Vaidyanathan Shankar stated in a ruling on November 3 that money laundering is an ongoing crime, extending beyond the initial act of acquiring illegal funds to encompass various transactions involving that money. They illustrated this by noting that if a government official accepts a bribe and invests it in the stock market, real estate, or drug trade, the illegality of the funds persists, making the entire amount subject to seizure.

The court further clarified that if bribery money is invested in the stock market and its value rises due to market conditions, the entire increased amount will still be considered as income from criminal activities. This ruling was made in response to an appeal by the Enforcement Directorate (ED), which challenged a single judge's order related to the allocation of the Fatehpur coal block.

ED's Actions Against Fraudulent Allocations

The ED had previously seized approximately ₹122.74 crores in assets, asserting that the company M/S Prakash Industries Limited fraudulently obtained coal block allocations and artificially inflated share prices by providing misleading information.