Summary
The Supreme Court quashed the PMLA complaint against the appellant because no qualifying scheduled offence existed. Section 120-B IPC is a scheduled offence only where the alleged conspiracy concerns an offence otherwise included in the PMLA Schedule. The Court rejected the separate contention that a money-laundering accused must also be named in the predicate case, and distinguished the evidence concerning the two properties.
Issues
- Whether a person not accused in the predicate offence can be prosecuted for money laundering.
- Whether Section 120-B IPC makes conspiracy to commit any offence a scheduled offence.
- Whether the two properties could be linked to proceeds of crime on the available record.
Provisions considered
- Sections 2(1)(u), 2(1)(y) and 3, Prevention of Money-laundering Act, 2002A scheduled offence and proceeds derived from related criminal activity are prerequisites. A person subsequently assisting dealings with those proceeds need not be an accused in the predicate offence. (¶ 11–16)
- Schedule, Part A, Paragraph 1: Section 120-B IPC entry, Prevention of Money-laundering Act, 2002The conspiracy entry applies only where its object is an offence otherwise covered by Parts A, B or C; it cannot convert every unscheduled offence into a predicate. (¶ 18–27)
- Sections 120-A and 120-B, Indian Penal Code, 1860The nature and punishment of conspiracy informed the Schedule’s construction; conspiracy does not by itself aggravate every unscheduled offence into a PMLA predicate. (¶¶ 19, 22–25)
Held
- Existence of proceeds of crime connected to a scheduled offence is essential to Section 3. Knowing assistance in concealment or use of those proceeds may be committed by someone unconnected with the original offence; absence of that person’s name from the predicate chargesheet is not a defence by itself. (¶¶ 11–16, 27(a))
- If all accused in the scheduled case are acquitted or discharged, or the proceedings are quashed in their entirety, the scheduled offence and related proceeds-of-crime foundation disappear. A money-laundering accused who was not charged in the predicate case also receives that benefit. (¶¶ 16, 27(b))
- The first property’s acquisition preceded the alleged criminal activity and had no demonstrated connection with its proceeds. For the second, available independent resources did not alone establish that untainted funds were used; the funding question required evidence. Valuation and validity of the sale deeds were not adjudicated. (¶¶ 17, 27(c)–(d))
- Treating Section 120-B as covering conspiracy to any offence would nullify Parliament’s selection of scheduled offences and the Schedule’s specific conditions. Penal ambiguity must generally be resolved against extending punishment. The conspiracy entry therefore requires an object that is itself a scheduled offence. (¶¶ 18–25, 27(e))
- The alleged predicate charges contained no conspiracy to commit an otherwise scheduled offence; Section 120-B could not independently supply that foundation. The appellant’s PMLA prosecution consequently could not continue. (¶¶ 26, 28)
Result
Appeal allowed. High Court order set aside and Special C.C. No.781 of 2022 quashed only insofar as the appellant was concerned.