IMPORTANT POINTS
(1) Money laundering – Existence of proceeds of crime is a condition precedent for applicability of Section 3 of PMLA – If there are no proceeds of crime, offence under Section 3 of PMLA is not made out.
(2) Money laundering – Only mode by which cognizance of offence under Section 3, punishable under Section 4 of PMLA, can be taken by Special Court is upon a complaint filed by Authority authorized on this behalf – Once a complaint is filed before Special Court, provisions of Sections 200 to 204 of Cr.P.C. will apply to Complaint – There is no provision in PMLA which overrides provisions of Sections 200 to Sections 204 of Cr.P.C.

JUDGMENT :

ABHAY S. OKA, J.

1. Taken up for final hearing as notice has already been issued on the petitions. In substance, in these Writ Petitions, the only challenge that survives is to the complaint filed by the Directorate of Enforcement under Section 44(1)(b) of the Prevention of Money-Laundering Act, 2002 (for short “the PMLA”) concerning ECIR/RPZO/11/2022.

2. It is not in dispute that the alleged scheduled offences on which the complaint is based are under various sections of the Income-tax Act, 1961, read with Sections 120B, 191, 199, 200 and 204 of the Indian Penal Code, 1860 (for short “the IPC”). It is also not in dispute that except for Section 120B of the IPC, none of the offences are scheduled offences within the meaning of clause (y) of Sub-Section (1) of Section 2 of the PMLA. This Court, in the decision in the case of Pavana Dibbur vs. Directorate of Enforcement, 2023 SCC Online SC 1586 recorded its conclusions in paragraph 31, which reads thus:

“CONCLUSIONS

31. While we reject the first and second submissions canvassed by the learned senior counsel appearing for the appellant, the third submission must be upheld. Our conclusions are:

(a) 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.

(b) 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.

(c) 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.

(d) The issue of whether the appellant has used tainted money forming part of the proceeds of crime for acquiring the second property can be decided only at the time of trial.

(e) The offence punishable under Section 120-B 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.”

(Underline supplied)

3. Hence, 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.

4. In paragraph 15 of the decision in the case of Pavana Dibbur (supra), this Court held that:

“The condition precedent for the existence of proceeds of crime is the existence of a scheduled offence.”

Therefore, in the absence of the scheduled offence, as held in the decision mentioned above of this Court, there cannot be any proceeds of crime within the meaning of clause (u) of Sub-Section (1) of Section 2 of the PMLA. If there are no proceeds of crime, the offence under Section 3 of the PMLA is not made out. The reason is that existence of the proceeds of crime is a condition precedent for the applicability of Section 3 of the PMLA.

5. There is some controversy about whether the Special Court has taken cognizance on the basis of the complaint. The learned ASG, on instructions, states that cognizance has not been taken. The learned ASG submits that as the cognizance is not taken, this Court should not entertain the prayer for quashing th