Criminal Conspiracy to Commit an Offence Which is Not a Scheduled Offence is Not Prosecutable u/s 3 of PMLA | SC

Case Details: Pavana Dibbu v. Directorate of Enforcement - [2023] 157 taxmann.com 10 (SC)

Judiciary and Counsel Details

• • Abhay S. Oka & Pankaj Mithal, JJ.

Facts of the Case

In the present case, the Supreme Court was tasked with determining whether criminal conspiracy to commit an offense, which is not classified as a Scheduled Offense, is subject to prosecution under Section 3 of the Prevention of Money Laundering Act, 2002.

In the present case, the appellant had purchased the property via a registered sale deed for Rs 13.05 crores. Thereafter, she purchased second property in 2019. The appellant’s husband was the Vice Chancellor of the Alliance University. Later, an FIR was registered alleging that he collected a sum of Rs. 107 crores from the students claiming himself as the Chancellor of the University.

In 2021, the ED passed an order under Section 5 of the PMLA and it was alleged that the appellant entered into a conspiracy with the accused. The Special Court took cognizance of the complaint filed against the appellant and he filed a petition before the Karnataka High Court under Section 482 of the Criminal Procedure Code (CrPC) seeking relief of quashing the said complaint. However, the said petition was dismissed by the Court. Hence, the matter was before the Apex Court.

Supreme Court Held

The Apex Court observed that it is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged, must have been shown as the accused in the scheduled offence.

Further, even if an individual accused in a complaint under the Prevention of Money Laundering Act (PMLA) is not implicated in the scheduled offense, they stand to gain from the acquittal or discharge of all accused in the scheduled offense. Likewise, they would derive benefits from any order quashing the proceedings related to the scheduled offense.

Similarly, the first property cannot be said to have any connection with the proceeds of the crime as the acts constituting scheduled offence were committed after the property was acquired.

The Apex Court held that the issue of whether the appellant has used tainted money forming part of the proceeds of crime for acquiring the second property can be decided only at the time of trial.

Further, the offence punishable under Section 120B of the IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule.