2024 (5) TMI 468 - SC - Money Laundering

Money laundering - scheduled offences or not - proceeds of crime - 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 - offences are scheduled offences within the meaning of clause (y) of sub-Section (1) of Section 2 of the PMLA or not - HELD THAT - The offence punishable under Section 120B of the IPC could become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule to the PMLA. In this case admittedly the offences alleged in the complaint except Section 120-B of IPC are not the scheduled offences. Conspiracy to commit any of the offences included in the Schedule has not been alleged in the complaint. ECIR/RPZO/11/2022 which is the subject matter of the complaint is based on the offences relied upon in the complaint. As the conspiracy alleged is of the commission of offences which are not the scheduled offences the offences mentioned in the complaint are not scheduled offences within the meaning of clause (y) of sub-Section (1) of Section 2 of the PMLA. There is no provision in the PMLA which overrides the provisions of Sections 200 to Sections 204 of Cr.PC. Hence the Special Court will have to apply its mind to the question of whether a prima facie case of a commission of an offence under Section 3 of the PMLA is made out in a complaint under Section 44(1)(b) of the PMLA. If the Special Court is of the view that no prima facie case of an offence under Section 3 of the PMLA is made out it must exercise the power under Section 203 of the Cr.PC to dismiss the complaint. If a prima facie case is made out the Special Court can take recourse to Section 204 of the Cr. PC. In this case no scheduled offence is made out the basis of the complaint as the offences relied upon therein are not scheduled offences. Therefore there cannot be any proceeds of crime. Hence there cannot be an offence under Section 3 of the PMLA. Therefore no purpose will be served by directing the Special Court to apply its mind in accordance with Section 203 read with Section 204 of the Cr.PC. That will only be an empty formality. Petition disposed off.

Summary

Issues involved: Challenge to complaint filed under Section 44(1)(b) of the Prevention of Money-Laundering Act, 2002 concerning ECIR/RPZO/11/2022.

Summary:
1. The challenge in the Writ Petitions was to the complaint filed by the Directorate of Enforcement under Section 44(1)(b) of the PMLA concerning ECIR/RPZO/11/2022.

2. The alleged scheduled offences were under various sections of the Income-tax Act, 1961, read with Sections 120B, 191, 199, 200, and 204 of the Indian Penal Code, 1860. Except for Section 120B of the IPC, none of the offences were scheduled offences under the PMLA.

3. The offence punishable under Section 120B of the IPC could become a scheduled offence only if the conspiracy alleged is of committing an offence specifically included in the Schedule to the PMLA. As the offences alleged were not scheduled offences, the complaint did not meet the criteria under the PMLA.

4. The existence of a scheduled offence is a condition precedent for the existence of proceeds of crime under the PMLA. Without a scheduled offence, there cannot be any proceeds of crime, thus the offence under Section 3 of the PMLA is not made out.

5. The Special Court had not taken cognizance based on the complaint. The provisions of the Cr.PC apply to proceedings before a Special Court, and the Court must decide if a prima facie case of an offence under Section 3 of the PMLA is made out before dismissing the complaint.

6. The petitioners not shown as accused in the complaint need not be entertained since the complaint itself was being quashed. The specific orders were passed for each petitioner's case accordingly.

7. The interim order dated 7th August 2023 was directed to continue for three weeks from the judgment date, keeping the rights and contentions of the parties open for further proceedings.