LI Network
Published on: November 29, 2023 at 12:43 IST
The Supreme Court clarified that an offense of criminal conspiracy under Section 120-B of the Indian Penal Code (IPC) can be considered a scheduled offense under the Prevention of Money Laundering Act (PMLA) only if the alleged conspiracy is directed towards committing an offense explicitly listed in the PMLA schedule.
The Court stated, ‘An offense punishable under Section 120-B will become a scheduled offense only if the conspiracy alleged is of committing an offense specifically included in the schedule. On that ground, we’ve quashed the proceedings.’
The judgment was delivered by the bench comprising Justice Abhay S. Oka and Justice Pankaj Mithal. It was part of an appeal against a Karnataka High Court decision that refused to quash proceedings related to a case pending before a Special Judge in Bangalore, involving charges of money laundering under the PMLA.
The case stemmed from an FIR filed for offenses under Sections 143, 406, 407, 408, 409, 149 IPC. The PMLA can only be invoked for ‘proceeds of crime’ linked to offenses listed in the schedule. Despite the absence of ‘scheduled offenses’ in this case, the Enforcement Directorate applied the PMLA by invoking Section 120B IPC, which itself is a scheduled offense.
This decision follows last week’s remarks by a special bench, suggesting that the ED cannot invoke Section 120B IPC when the criminal conspiracy is not linked to a scheduled offense.
In the specific case before the Supreme Court, the ED filed a complaint on March 7, 2022, against the former Vice-Chancellor of Alliance University. The charges under sections 44 and 45 of the PMLA cited offenses defined under section 3 read with sections 8(5) and 70, punishable under section 4 of the PMLA.
Allegations included a sham sale deed executed during the petitioner’s tenure, involving Alliance University properties, leading to money concealment.
The Special Judge proceeded with the case, prompting the petitioner to seek a quashing of proceedings in the Karnataka High Court under Section 482 of the Criminal Procedure Code (CrPC).
However, the High Court, relying on the Vijay Madanlal Choudhary judgment, held that one need not be accused in the principal offense to be subject to PMLA proceedings. The court emphasized that even assisting in the process constitutes a part of the money laundering crime.
Dissatisfied with the ruling, the appellant approached the Supreme Court. During the recent hearing, Senior Advocate Meenakshi Arora argued that her client was not named in the FIR or chargesheet and was accused for the first time under sections 44 and 45 of PMLA.
The Court engaged in a discussion on whether properties bought before a scheduled offense could be considered ‘Proceeds of Crime’ and whether Section 120-B IPC can be used independently by authorities under PMLA.
Case title: PAVANA DIBBUR v. THE DIRECTORATE OF ENFORCEMENT