Person accused u/s 3 of PMLA does not have to be charged with a Scheduled Offense: Supreme court [Read Judgement]

In a significant case, the Supreme Court held that a person accused under Section 3 of the Prevention of Money Laundering Act (PMLA) does not have to be charged with a scheduled offense. The ruling clarified that someone not involved in the scheduled offense but intentionally aiding in concealing criminal gains may still be charged with violating Section 3 of the PMLA.

The current case involves a complaint against the former vice-chancellor of Alliance University on March 7, 2022, filed by the Enforcement Directorate (ED). The ED has accused the petitioner, Pavana Dibbur, under sections 44 and 45 of the PMLA, invoking offenses outlined by Section 3 read with sections 8(5) and 70.

According to the charges, the petitioner, while serving as VC of the university from 2014 to 2016, plotted a fraudulent sale deed involving Alliance University properties and helped conceal money taken from the university. This case was filed under Sections 143, 406, 407, 408, 409, and 149 of the IPC for the predicate crime.

Taking the accusations seriously, the Special Judge continued the case, and the petitioner filed a request to halt the proceedings under Section 482 of the Criminal Procedure Code (CrPC) with the Karnataka High Court.

Nevertheless, the High Court stressed that the term used by the Apex Court is "any person" and not "any accused," citing the ruling in Vijay Madanlal Choudhary v. Union of India & Ors. The court decided that participation in the money laundering process or activity is itself a criminal.

The petitioner, displeased, went to the Supreme Court. The petitioner's counsel argued that if an accused in the scheduled/predicate offense is acquitted/discharged, he cannot be prosecuted for the offense punishable under the PMLA.

The Court underlined prerequisites for a PMLA Section 3 offense, emphasizing the occurrence of a scheduled offense and the existence of revenues from the crime connected to the scheduled offense. The court used a specific case involving extortion acts under IPC Sections 384 to 389 as an example.

One crucial aspect of the ruling was that if all accused in the planned offense are found not guilty or discharged, there would be no proceeds of crime, and no prosecution under Section 3 of the PMLA.

The court observed that if the prosecution for the scheduled offense ends in acquittal or discharge of all accused, there would be no proceeds of crime, and no one can be prosecuted under Section 3 of the PMLA. Similarly, if proceedings of the scheduled offense are quashed entirely, the scheduled offense gets the benefit of quashing.

The bench determined that in the chargesheets filed in the alleged scheduled offenses, there is no allegation of criminal conspiracy except for Section 120B of the IPC. Therefore, in this case, the scheduled offense does not exist, and the appellant cannot be prosecuted under Section 3 of the PMLA.

After reviewing the submissions, Justices Abhay S. Oka and Pankaj Mithal held that “It is not necessary that a person against whom the offense under Section 3 of the PMLA is alleged must have been shown as the accused in the scheduled offense.”

To Read the full text of the Order CLICK HERE

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