In a pivotal judgment delivered today, the Supreme Court of India elucidated the intricate interplay between criminal conspiracy under Section 120-B of the Indian Penal Code (IPC) and its classification as a scheduled offense under the Prevention of Money Laundering Act (PMLA). The bench, consisting of Justice Abhay S. Oka and Justice Pankaj Mithal, ruled that for Section 120-B to be considered a scheduled offense under the PMLA, the alleged conspiracy must specifically target an offense listed In the PMLA schedule.

The case, titled PAVANA DIBBUR v. THE DIRECTORATE OF ENFORCEMENT , revolved around the former Vice-Chancellor of Alliance University, accused by the Enforcement Directorate (ED) under sections 44 and 45 of the PMLA. The charges implicated offenses outlined in section 3, coupled with sections 8(5) and 70, which are punishable under section 4 of the PMLA.

The core issue stemmed from the ED’s invocation of Section 120-B IPC, a scheduled offense, in a case where the underlying offenses (registered under Sections 143, 406, 407, 408, 409, 149 IPC) were not “scheduled offenses” under the PMLA. The petitioner argued against the application of PMLA, contending that her involvement was not directly linked to offenses listed in the Act’s schedule.

The Karnataka High Court, relying on the precedent set by Vijay Madanlal Choudhary v. Union of India & Ors., emphasized that even aiding or facilitating criminal activities could fall within the purview of money laundering, rejecting the petitioner’s plea to quash the proceedings.

During the Supreme Court hearing, Senior Advocate Meenakshi Arora, representing the petitioner, highlighted that her client was neither named in the FIR nor in subsequent chargesheets. Arora vehemently contended that the invocation of PMLA against her client was unjustified.

The crux of the debate revolved around three pivotal questions:

1. Whether properties acquired before the commission of a predicate scheduled offense could be deemed “Proceeds of Crime.”
2. Whether Section 120-B IPC could be independently utilized by authorities under PMLA or if it necessitated linkage with scheduled offenses.
3. The scenario where Section 120-B is the sole scheduled offense, prompting the authorities’ power to prosecute under PMLA.

Arora stressed that proceeds of crime must derive from activities related to scheduled offenses, opposing the stand of the Additional Solicitor General (ASG). She argued that Section 120-B must be interconnected with scheduled offenses under PMLA for its application.

In response to the hypothetical scenario posed by the Court regarding the absence of any scheduled offense other than Section 120-B, the ASG defended the authorities’ power to investigate, citing Section 2(y) of the PMLA Act.

However, citing Vijay Madanlal Choudhary v. Union of India & Ors., the petitioner’s counsel contended that the presence of proceeds of crime is pivotal, and PMLA authorities cannot intervene without their existence.

The Court’s ruling has far-reaching implications, setting a precedent for future cases involving the application of PMLA. It clarified that the mere invocation of Section 120-B IPC is insufficient; the alleged conspiracy must specifically target offenses listed in the PMLA schedule for it to qualify as a scheduled offense under the Act.

This judgment serves as a guiding light, delineating the parameters within which the PMLA can be invoked, aligning the application of Section 120-B IPC with scheduled offenses under the Act. It emphasizes the necessity of a direct nexus between the alleged conspiracy and offenses enumerated in the PMLA schedule for the invocation of the Act.

The decision, awaited by legal experts and practitioners, provides clarity on the interpretation and application of PMLA, ensuring a more nuanced understanding of the Act’s provisions and their interrelation with IPC offenses.

Case Details:

– Citation: Crl. A. No. 002779 / 2023
– Counsel for Petitioner: Meenakshi Arora, Senior Advocate, Ms. Ashima Mandla, Ms. Mandakini Singh, Mr. Surya Pratap Singh, Mr. Chandratanay Chaube, Ms. Nanakey Kalra, Ms. Ankita Chaudhary AOR
– Counsel for Respondent: Mr. S.V Raju, Ld. ASG, Mr. Mukesh Kumar Maroria, AOR

This groundbreaking ruling by the Supreme Court marks a pivotal moment in the interpretation and application of the Prevention of Money Laundering Act, setting a clear precedent on the nexus required between Section 120-B IPC and scheduled offenses under PMLA.

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