Conspiracy to be scheduled offence under PMLA only if offence specifically mentioned: SC

New Delhi: The Supreme Court on Wednesday held that the offence of criminal conspiracy punishable under Section 120-B of the Indian Penal Code 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.

A bench of Justices Abhay S Oka and Pankaj Mithal rejected an argument by Additional Solicitor General S V Raju on behalf of the Enforcement Directorate that as Section 120-B of IPC is included in Part A to the Schedule, even if the allegation is of making a criminal conspiracy to commit an that which is not a part of the Schedule, the offence becomes a scheduled offence.

"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 120 B of IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is otherwise a scheduled offence," the court said.

The bench pointed out that there are many offences under Chapter XVII of the IPC which are not included in Parts A and B, but they become scheduled offences only if they have cross-border implications.    

If the argument by the ED 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 120-B of the IPC, though the offence is not a part of the Schedule, the bench said, adding, "This cannot be the intention of the legislature".

Maintaining that the penal laws are to be construed strictly, the bench said, "If the submissions of the Additional Solicitor General are accepted, the Schedule will become meaningless or redundant".

"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 120¬B" the bench said.   

The court explained the legal position while noting that this issue did not arise for consideration before the Supreme Court when it had, in the July 2022 in the Vijay Madanlal Choudhary case, upheld the constitutional validity of the provisions of PMLA.

The matter before the top court arose out of an appeal filed by Pavana Dibbur, who 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.

"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 also said 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 issue 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, it pointed out.

In its judgement, the court also declared it is not necessary that a person against whom the offence of money laundering under Section 3 of the PMLA is alleged, must have been shown as the accused in the scheduled offence.