A Supreme Court Bench has ruled that if there is no allegation of criminal conspiracy to commit any of the offences included in the Schedule of Prevention of Money Laundering Act (PMLA), 2002, a person could not be prosecuted under the PMLA by simply invoking Section 120-B of the IPC.
ON Wednesday, the Supreme Court ruled that the offence under Section120B (conspiracy to commit an offence) under the Indian Penal Code (IPC) would become a scheduled offence under thePrevention of Money Laundering Act (PMLA), 2002 only if the conspiracy alleged is of committing an offence which is included in the Schedule to the PMLA.
A Bench comprising Justices Abhay S. Oka and Pankaj Mithal passed a ruling to this effect while quashing a complaint filed by the ED against the petitioner.
The Bench was ruling on a Karnataka High Court judgment refusing to quash a complaint filed by the Enforcement Directorate (ED) against the petitioner Pavana Dibbur.
The Bench ruled that in the chargesheets filed in the alleged scheduled offences, there was no allegation of the commission of criminal conspiracy to commit any of the offences included in the Schedule and, thus, the petitioner could not be prosecuted under the PMLA by simply invoking Section 120-B of the IPC.
The allegation against the petitioner in the complaint filed under the second proviso of Section45(1) of the PMLA was that she had entered into a conspiracy with accused no. 1, Madhukar Angur, by getting executed nominal sale deeds in respect of the two properties in her name for the benefit of accused no. 1.
The allegation of the ED was that the petitioner facilitated accused no.1 to use her bank accounts to siphon off university funds, thereby assisting the accused no.1 in the activity connected with the proceeds of crime.
The PMLA has listed scheduled offence in the Schedule annexed to it. The Schedule comprises Part A, Part B and Part C.
Part B of the Schedule includes only one offence under Section 132 of theCustoms Act, 1962. The offence under Section 132 of the Customs Act, of making a false declaration, etc., becomes a scheduled offence in view of the sub-clause (ii) of clause (y) of sub-section (1) of Section 2 of the PMLA only if the total value involved in the offence is ₹1 crore or more.
Part C of the Schedule provides that any offence specified in Part A having cross-border implications becomes a part of Part C.
Additional Solicitor General S.V. Raju, for the ED, sought to argue that as Section 120B of the IPC is included in Part A of the Schedule, even if the allegation was of making a criminal conspiracy to commit an offence which was not a part of the Schedule, the offence became a scheduled offence.
The Bench rejected the argument and held that if the argument of the ED were accepted, the Schedule to the PMLA would become redundant and meaningless.
The Bench pointed out that many offences under Chapter XVII (offence against property) of the IPC are not included in Parts A and B of the PMLA Schedule. They become scheduled offences, the Bench noted, only if they have cross-border implications.
“Thus, the offences of dishonest misappropriation of property or criminal breach of trust or theft can become a scheduled offence, provided they have cross-border implications.
“If the argument of the learned Additional Solicitor General is accepted, if there is a conspiracy to commit offences under Section 403 or Section 405, though the same have no cross-border implications, the offence under Section 120B of conspiracy to commit offences under Sections 403 and 405 will become a scheduled offence,” the Bench highlighted.
The Bench gave another illustration to show the fallacy of the ED’s argument. It said if any offence is not included in Parts A, B and C of the Schedule but if the conspiracy to commit the offence is alleged, the same will become a scheduled offence.
Adding further, the Bench said a crime punishable under Section 132 of the Customs Act is made a scheduled offence under Part B, provided the value involved in the offence is ₹1 crore or more. But if Section 120B of IPC is applied, if the ED’s argument were to be accepted, one who commits such an offence having a value of even ₹1 lakh can be brought within the purview of the PMLA.
“By that logic, a conspiracy to commit any offence under any penal law which is capable of generating proceeds can be converted into a scheduled offence by applying Section 120B of the IPC, though the offence is not a part of the Schedule,” the Bench highlighted.
This, the Bench said, could not be the intention of the legislature. Speaking of Section 120B IPC, the Bench opined that only because there is a conspiracy to commit an offence, the same does not become an aggravated offence.
“If we look at the punishments provided under Section 120B, it becomes evident that it is not an aggravated offence. It only incorporates the principle of vicarious liability.
“If no specific punishment is provided in the statute for conspiracy to commit a particular offence, Section 120B treats a conspirator of the main accused as an abettor for the purposes of imposing the punishment,” the Bench said.
The Bench also warned that the interpretation suggested by the ED may attract the vice of unconstitutionality for being manifestly arbitrary.
On other questions, the Bench ruled that it was 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 a scheduled offence.
The Bench explained it by giving an example of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of the crime.
In that case, the Bench held that he could be held guilty of committing an offence under Section 3 of the PMLA.
The Bench further illustrated it by saying that the offences under Sections 384 to 389 of the IPC relating to “extortion” are scheduled offences included in Paragraph 1 of the Schedule to the PMLA.
“An accused may commit a crime of extortion covered by Sections 384 to 389 of the IPC and extort money. Subsequently, a person unconnected with the offence of extortion may assist the said accused in the concealment of the proceeds of extortion.
“In such a case, the person who assists the accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering,” the Bench held.
The Bench, thus, declared 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.
The Bench, however, added that even if an accused shown in the complaint under the PMLA is not an accused in the scheduled offence, he will benefit from the acquittal of all the accused in the scheduled offence or discharge of all the accused in the scheduled offence.
Similarly, he will get the benefit of the Order to quash the proceedings of the scheduled offence.