2023 (12) TMI 49 - SC - Money Laundering

Money Launderng - scheduled offence or not - criminal conspiracy - proceeds of crime - facilitating the accused no.1 to use her bank accounts to siphon the university funds - attachment of first and second property - HELD THAT - The offence under Section 120B 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 120B of IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is otherwise a scheduled offence. Coming back to the facts of the case, 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. It is not necessary that a person against whom the offence under Section 3 of the PMLA is alleged, must have been shown as the accused in the scheduled offence - Even if an accused shown in the complaint under the PMLA is not an accused in the scheduled offence, he will benefit from the acquittal of all the accused in the scheduled offence or discharge of all the accused in the scheduled offence. Similarly, he will get the benefit of the order of quashing the proceedings of the scheduled offence - 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 offence punishable under Section 120B of the IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule. The impugned order dated 27th September 2022 is, hereby, quashed and set aside, and the complaint pending before the Special Court for PMLA cases, Bengaluru is, hereby, quashed only insofar as the present appellant is concerned - appeal allowed.

Summary

Issues Involved:
1. Whether the appellant's properties are tainted and constitute "proceeds of crime" under the PMLA.
2. Whether the appellant can be prosecuted under Section 3 of the PMLA without being an accused in the scheduled offences.
3. Interpretation of Section 120B of IPC in the context of the PMLA Schedule.

Summary:

1. Whether the appellant's properties are tainted and constitute "proceeds of crime" under the PMLA:

The appellant argued that the first property was acquired in 2013, before the alleged criminal activities in 2017, and thus cannot be linked to the proceeds of crime. For the second property, the appellant claimed she had sufficient funds from her declared income. The court noted that the first property could not be connected to the proceeds of crime as it was acquired before the alleged offences. However, the issue of whether tainted money was used to acquire the second property can only be determined at trial.

2. Whether the appellant can be prosecuted under Section 3 of the PMLA without being an accused in the scheduled offences:

The appellant contended that since she was not named in the chargesheets for the scheduled offences, she could not be prosecuted under the PMLA. The court clarified that an individual can be prosecuted under Section 3 of the PMLA even if they are not accused in the scheduled offence, provided the scheduled offence exists and there are proceeds of crime. The court rejected the appellant's argument, stating that the existence of a scheduled offence and proceeds of crime is sufficient to prosecute under the PMLA.

3. Interpretation of Section 120B of IPC in the context of the PMLA Schedule:

The appellant argued that Section 120B (criminal conspiracy) should only be a scheduled offence if the conspiracy is to commit an offence already included in the PMLA Schedule. The court agreed, stating that if the conspiracy is to commit an offence not listed in the Schedule, it would not qualify as a scheduled offence under the PMLA. The court emphasized that penal statutes must be strictly construed and that the legislative intent was not to make every offence a scheduled offence by simply applying Section 120B.

Conclusions:
a. A person can be prosecuted under Section 3 of the PMLA even if not named in the scheduled offence.
b. Such a person will benefit from the acquittal or discharge of all accused in the scheduled offence.
c. The first property is not connected to the proceeds of crime as it was acquired before the alleged offences.
d. The issue of whether tainted money was used to acquire the second property can only be determined at trial.
e. Section 120B of IPC will only be a scheduled offence if the conspiracy is to commit an offence included in the Schedule.

Final Decision:
The court quashed the impugned order dated 27th September 2022 and the complaint against the appellant, allowing the appeal.