2024 (3) TMI 645 - SCH - Money Laundering

Quashing of summons dismissed - whether Section 120-B IPC is a standalone scheduled offence for invocation of provisions under the Prevention of Money Laundering Act, 2002? - HELD THAT - The High Court, vide the impugned judgment, has held that Section 120-B IPC is a standalone scheduled offence on the basis of which provisions of PMLA can be invoked - the reasons assigned by the High Court in the impugned judgment cannot be sustained. Appeal allowed.

Summary

Issues:
The judgment deals with the challenge to the summons issued by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002 (PMLA) based on Section 120-B IPC as a scheduled offence.

Issue 1: Invocation of PMLA based on Section 120-B IPC

The High Court of Karnataka dismissed writ petitions seeking to quash summons issued by the Directorate of Enforcement, based on the question of whether Section 120-B IPC is a standalone scheduled offence for invoking provisions under the PMLA. The enforcement actions under Section 132 of the Income Tax Act led to raids where funds linked to proceeds of crime were discovered. The Income Tax Authorities sought prosecution under Sections 276-278 of the Income Tax Act and Section 120-B IPC. The Directorate of Enforcement registered ECIRs against the appellants, who challenged this action by filing writ petitions. The High Court held that Section 120-B IPC is a standalone scheduled offence under the PMLA, allowing the Enforcement Directorate to invoke PMLA provisions.

Issue 2: Decision and Interim Direction

The Supreme Court granted leave and issued an interim direction preventing coercive action against the appellants. The Court noted that a previous decision in Pavana Dibbur vs. Directorate of Enforcement clarified that an offence under Section 120-B IPC becomes a scheduled offence only if the conspiracy is for an offence specifically listed in the Schedule under PMLA. The Court found that the reasoning of the High Court in the impugned judgment could not be upheld based on the cited decision.

Issue 3: Disposition and Review Petition

The Supreme Court allowed the appeals, quashing the proceedings initiated under the PMLA against the appellants. However, it permitted the Directorate of Enforcement to seek a review/recall of the order based on a pending Review Petition in the Pavana Dibbur case. A separate Writ Petition was disposed of as not pressed, and in a Special Leave Petition, the Additional Solicitor General of India was granted time to file a counter affidavit, with the matter scheduled for hearing on a specific date.