PMLA - Curious Case of 'Schedule Offense' and Section 120B of IPC Criminal Conspiracy - Pavana Dibbur Case


In a recent judgement, the Supreme Court quashed PMLA proceedings against D K Shivakumar relying on an earlier order passed in November 2023 in the case of Pavana Dibbur.  So what was the Pavana Dibbur Case : 

CASE ANALYSIS

PAVANA DIBBUR -Vs- DIRECTORATE OF ENFORCEMENT

CRIMINAL APPEAL NO. 2779 OF 2023

Issues at hand:

1.  1. Whether the name of the appellant not being included in the charge sheet make him a part of the offence under the Prevention of Money laundering Act?

2.  2. Whether the properties purchased by the accused persons are covered under the definition of proceeds of crime?

3. 3. Whether an offence under section 120B IPC can be treated as a scheduled offence even if the criminal conspiracy alleged is to commit an offence which is not a part of the schedule and whether section 3 of PMLA can be attracted after the commission of the schedule offence?

FACTS OF THE CASE:

The Appellant had been charged in a complaint filed by the ED UNDER Section 45(1) of the PMLA before the special court in Bangalore. The Appellant moved a quashing petition before the High Cour of Karnataka which was dismissed vide impugned order dated 27.09.2022. that in 2011, Alliance Business School purchased a property in Bangalore worth Rs. 13.05 crores which has been described as the “first property” in the present case. The said property was purchased by the appellant by the Alliance business school for a consideration of 13.5 crores. Another property was purchased by one Madhukar Angur, accused no. 1 in the FIR, which was later purchased by the Appellant from Madhukar Angur for Rs. 2.47 crores. The FIR was lodged on a complaint initiated by the registrar of the alliance university against Madhur Angur for collecting a sum of Rs 107 crores from students of the alliance university by claiming himself to be the chancellor of the university. 

Subsequently, proceedings under PMLA was also registered against the accused persons which included Madhur Angur and other accused persons. During the investigation being carried out, the ED passed an order attaching the first and second properties purchased by the appellant and the appellant was pulled in as an accused person before the adjudicating authority.

The appellant had been alleged of conspiring with accused no. 1 to purchase the first and second properties and used her bank account to siphon off the funds thereby assisting the accused no. 1 in connection with proceeds of crime.

RULING:

The Hon’ble Apex Court while dealing with the first issue at hand explained in detail that existence of a scheduled offence is a condition precedent for the existence of proceeds of crime and relied on the judgement delivered in the case of Vijay Madanlal Choudhary (2022) SCC Online SC 929.

Dealing with the second issue at hand regarding the properties being purchased in order to siphon off the university funds using the bank account of the Appellant, the Apex Court explained that the first property at the face of it cannot be said to have any connection with the proceeds of crime as the scheduled offence was committed after the acquisition of the property. With regard to the second property the Apex Court did not have any substantial evidence to make a statement in this regard.

While dealing with the third issue at hand, the Hon’ble Apex Court reasoned that while giving effect to the legislature’s intent, if two reasonable interpretations can be given to a particular provision of a penal statue, the Court should generally adopt the interpretation that avoids imposition of penal consequences. A more lenient interpretation should be adopted. Therefore it was held that the offence under Section 120 B of IPC including 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.

CONCLUSION:

The Supreme Court on hearing the submissions of both parties rejected two of three contentions of the appellant and upheld the third submission that Section 120 B of IPC can become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the schedule of offences in the PMLA Act. The Apex Court held that it is not a mandate that the person alleged under Section 3 of PMLA must also be shown as an accused in the scheduled offence. Just like the benefit of being on the same footing is given to a co-accused on acquittal or discharge of other accused persons, similarly the same benefit shall be given on quashing of proceedings of the scheduled offence. On the said grounds the Appeal was allowed by the Hon’ble Apex Court.

                                                                                                                                                                                                     - Simran More, Advocate

www.asaadvocates.com


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