SC rejects ED’s interpretation of conspiracy as scheduled offence under PMLA
NEW DELHI: The Supreme Court has rejected a contention by the Enforcement Directorate that as Section 120B of IPC is included in Part A to the schedule, even if the allegation is of making a criminal conspiracy to commit an offence which is not a part of the schedule, the offence becomes a scheduled offence.
“The interpretation suggested by the ED will defeat the legislative object of making only a few selected offences as scheduled offences. If we accept such an interpretation, the statute may attract the vice of unconstitutionality for being manifestly arbitrary. It cannot be the legislature's intention to make every offence not included in the Schedule a scheduled offence by applying Section 120B," a bench of Justices Abhay S Oka and Pankaj Mithal said.
The top court held that the offence of criminal conspiracy punishable under Section 120 B of the Indian Penal Code (IPC), will become a scheduled offence only if it is related to an offence, which is specifically included in the schedule of the Prevention of Money Laundering Act.
The court underscored that the interpretation conspiracy suggested by the Enforcement Directorate (ED) will defeat the legislative object of making only a few selected offences as scheduled offences.
“Conspiracy is an agreement between the accused to commit an 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," the bench said.
The bench said 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 court did not agree to the contention of Additional Solicitor General S V Raju for the Enforcement Directorate.
The bench said the offence under Section 120 B of IPC included in Part A of the Schedule will become a scheduled offence only if the criminal conspiracy is to commit any offence already included in Parts A, B or C of the Schedule.
“In other words, an offence punishable under Section 120B of IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is otherwise a scheduled offence," the bench said.
The court highlighted there are many offences under Chapter XVII of IPC which are not included in Parts A and B, but they become scheduled offences only if those have cross-border implications.
The bench said the legislative intent which can be gathered from the definition of the scheduled offence under clause (y) of sub-section (1) of Section 2 of the PMLA is that every crime which may generate proceeds of crime need not be a scheduled offence. Therefore, only certain specific offences have been included in the Schedule, it added.
“Thus, if the submissions of the Additional Solicitor General are accepted, the Schedule will become meaningless or redundant. The reason is that even if an offence registered is not a scheduled offence, the provisions of the PMLA and, in particular, Section 3 will be invoked by simply applying Section 120B,” the bench said.
The bench said that if the ED’s argument is accepted, 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.
"This cannot be the intention of the legislature," the bench added.
The court found that the Supreme Court earlier had not dealt with the instant when in July, 2022 in the Vijay Madanlal Choudhary case, it had upheld the constitutional validity of the provisions of PMLA.
Acting on an appeal by Pavana Dibbur, the court set aside the Karnataka High Court order of September 2022, which dismissed her petition for quashing the complaint.
ED had filed a complaint under the second proviso to Section 45(1) of the Prevention of Money Laundering Act, 2002, before the Special Court for PMLA cases at Bengaluru. The appellant was shown as accused no.6 in the said complaint.
She was sought to be prosecuted for money laundering on the basis of criminal conspiracy for purchasing two properties in Bengaluru, one from Alliance Business School for Rs 13.05 Cr and another from Madhukar Angur for Rs 2.47 Cr.
The court noted that in the chargesheets filed in the alleged scheduled offences, there is no allegation of the commission of criminal conspiracy to commit any of the offences included in the Schedule. “Except for Section 120B of the IPC, no other offence in the schedule has been applied. Therefore, in this case, the scheduled offence does not exist at all. Hence, the appellant cannot be prosecuted for the offences punishable under Section 3 of the PMLA," the bench said.
The court pointed out 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 it was acquired. It added that whether the appellant used tainted money forming part of the proceeds of crime for acquiring the second property can be decided only at the time of trial.