Case Note & Summary
The Supreme Court considered four writ petitions challenging a complaint filed by the Directorate of Enforcement under Section 44(1)(b) of the Prevention of Money-Laundering Act, 2002 (PMLA) concerning ECIR/RPZO/11/2022. The complaint was based on alleged scheduled offences under various sections of the Income-tax Act, 1961 read with Sections 120B, 191, 199, 200, and 204 of the Indian Penal Code, 1860 (IPC). It was undisputed that except for Section 120B IPC, none of the offences were scheduled offences under Section 2(1)(y) of the PMLA. The Court relied on its earlier decision in Pavana Dibbur v. Directorate of Enforcement, which held that Section 120B IPC becomes a scheduled offence only if the conspiracy is to commit an offence specifically included in the Schedule. Since the conspiracy alleged was to commit non-scheduled offences, no scheduled offence was made out. Consequently, there could be no proceeds of crime under Section 2(1)(u) PMLA, and the offence under Section 3 PMLA was not attracted. The Court noted that although cognizance had not been taken by the Special Court, directing it to apply its mind under Sections 200-204 CrPC would be an empty formality. Accordingly, the Court quashed the complaint against the petitioners who were shown as accused (Anwar Dhebar and Arun Pati Tripathi) and disposed of the petitions filed by those not shown as accused. The interim protection was extended for three weeks to enable recourse to appropriate remedies. The Court left open all contentions regarding any future PMLA proceedings based on a different FIR involving a scheduled offence.
Headnote
A) Criminal Law - Prevention of Money-Laundering - Scheduled Offence - Condition Precedent - Section 2(1)(y), Section 3, Section 44(1)(b) Prevention of Money-Laundering Act, 2002 - The existence of a scheduled offence is a condition precedent for the existence of proceeds of crime and for the offence under Section 3 PMLA. Where the complaint is based on offences that are not scheduled offences, and the conspiracy under Section 120B IPC is to commit such non-scheduled offences, no scheduled offence is made out, and consequently, no proceeds of crime exist. The complaint is liable to be quashed. (Paras 3-4, 7) B) Criminal Law - Prevention of Money-Laundering - Cognizance - Procedure - Section 44(1)(b), Section 46 Prevention of Money-Laundering Act, 2002 read with Sections 200-204 Code of Criminal Procedure, 1973 - The Special Court must apply its mind under Sections 200 to 204 CrPC before taking cognizance of a complaint under PMLA. If no prima facie case under Section 3 PMLA is made out, the complaint must be dismissed under Section 203 CrPC. However, where the complaint is manifestly without basis, quashing by the High Court or Supreme Court is appropriate to avoid empty formality. (Paras 6-7) C) Criminal Law - Prevention of Money-Laundering - Conspiracy - Scheduled Offence - Section 120B Indian Penal Code, 1860 read with Section 2(1)(y) Prevention of Money-Laundering Act, 2002 - The offence under Section 120B IPC becomes a scheduled offence under PMLA only if the conspiracy alleged is to commit an offence specifically included in the Schedule to the PMLA. Conspiracy to commit non-scheduled offences does not make Section 120B a scheduled offence. (Para 3, relying on Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586)
Issue of Consideration
Whether a complaint under Section 44(1)(b) of the Prevention of Money-Laundering Act, 2002 can be sustained when the alleged scheduled offences are not included in the Schedule to the PMLA, and whether the offence under Section 120B IPC can be treated as a scheduled offence when the conspiracy is to commit non-scheduled offences.
Final Decision
The Supreme Court quashed the complaint based on ECIR/RPZO/11/2022 against the second petitioner in W.P.(Crl.) No.208/2023 (Anwar Dhebar) and the petitioner in W.P.(Crl.) No.216/2023 (Arun Pati Tripathi). The petitions filed by those not shown as accused (W.P.(Crl.) Nos.153/2023 and 217/2023) were disposed of. The interim order dated 7th August 2023 was directed to continue for three weeks. No order as to costs.
Law Points
- Scheduled offence is condition precedent for proceeds of crime
- Section 120B IPC becomes scheduled offence only if conspiracy is to commit a scheduled offence
- Special Court must apply mind under CrPC Sections 200-204 before taking cognizance
- Complaint can be quashed if no prima facie offence under PMLA
