The appellant filed a petition before the High Court of Karnataka at Bengaluru under Section 482 of the Code of Criminal Procedure, 1973 (for short, ‘Cr.PC’) seeking the relief of quashing of the said complaint. By the impugned judgment and order dated 27th September 2022, the petition for quashing the complaint has been dismissed. (Para 1)
A First Information Report (FIR) was registered on the complaint of the Registrar of the Alliance University against accused no.1–Madhukar Angur, alleging that he collected a sum of Rs.107 crores from the students by claiming himself as the Chancellor of the Alliance University. The allegation was that he collected the said amount between January 2017 and November 2017, which was deposited in the account of Srivari Education Services. Subsequently, crores of rupees were transferred to the account of the accused no.1. (Para 3)
An Enforcement Case Information Report (ECIR) was registered on 16th October 2020 by the ED against accused nos.1, 2 and 3, namely Madhukar Angur, his wife Priyanka Angur and Mr Ravikumar, Partner, Srivari Education Services and other unknown accused alleging the commission of the offence of money laundering under Section 3 of the PMLA. (Para 4)
The allegation against the appellant in the complaint filed under the second proviso of Section 45(1) of the PMLA is that she has entered into a conspiracy with accused no.1– Madhukar Angur by getting executed nominal sale deeds in respect of the first and second properties in her name for the benefit of accused no.1. The allegation of the ED is that the appellant facilitated the accused no.1 to use her bank accounts to siphon the university funds, thereby, assisting the accused no.1 in the activity connected with the proceeds of crime. (Para 6)
Ms Meenakshi Arora, the learned senior counsel appearing for the appellant, firstly submitted that the first and second properties are not tainted properties and, therefore, the same are not covered by the definition of “proceeds of crime” under clause (u) of subsection (1) of Section 2 of the PMLA. The learned senior counsel pointed out that the first property was acquired on 1st July 2013, much prior to the commission of the first scheduled offence. The allegation in the FIR dated 11th November 2017 against accused no.1 is that he collected a sum of about Rs.107 crores from the students between January and November 2017 and transferred the said amount to his account. Therefore, the appellant’s acquisition of the first property can never be linked with the proceeds of the crime regarding the scheduled offence. (Para 7)
The second limb of the submissions of the learned senior counsel appearing for the appellant is that as the appellant has not been arraigned as an accused in the chargesheets filed pertaining to the alleged scheduled offences, she cannot be roped in as an accused for the offences punishable under Section 3 of the PMLA. She relied upon what is held in paragraphs 251 to 253 of the decision of this Court in the case of Vijay Madanlal Choudhary1. She submitted that in the decision, this Court held that if an accused in the scheduled/predicate offence is acquitted/discharged, he cannot be prosecuted for the offence punishable under the PMLA. She submitted that the appellant’s case stands on a better footing as she was not even shown as an accused in any scheduled/predicate offences. She would, therefore, submit that the cognizance of the crime under the PMLA could not have been taken against the appellant. (Para 8)
She contended that Section 120B of IPC alone, in the absence of any other scheduled offence, cannot sustain a charge under the PMLA. Unless there is an allegation regarding a conspiracy to commit any scheduled offence, the prosecution under the PMLA cannot lie. Relying upon the proviso to Section 120A of IPC, the learned senior counsel submitted that an illegal act or a legal act by illegal means, in furtherance of an agreement, committed by any person is a sine qua non for attracting the offence of conspiracy under Section 120B of IPC. If Section 120B of IPC can be treated as a standalone offence to attract prosecution under the PMLA, by that logic, a complaint under the PMLA can be filed where the allegation is of criminal conspiracy to commit an offence which is not a scheduled offence. Therefore, she submits that the complaint against the appellant deserves to be quashed. (Para 9)
Clause (v) of subsection (1) of Section 2 of the PMLA defines “property” to mean any property or assets of every description, whether corporeal or incorporeal, movable or immovable, tangible or intangible. To constitute any property as proceeds of crime, it must be derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence. The explanation clarifies that the proceeds of crime include property, not only derived or obtained from scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. Clause (u) also clarifies that even the value of any such property will also be the proceeds of crime. Thus, the existence of “proceeds of crime” is sine qua non for the offence under Section 3 of the PMLA. (Para 12)
Coming back to Section 3 of the PMLA, on its plain reading, an offence under Section 3 can be committed after a scheduled offence is committed. (Para 15)
Now, we turn to the Schedule to the PMLA. We find that many offences, which may generate proceeds of crime, have not been included in the Schedule. We are referring to only a few of such offences only by way of illustration (Para 20)
While giving effect to the legislature’s intention, if two reasonable interpretations can be given to a particular provision of a penal statute, the Court should generally adopt the interpretation that avoids the imposition of penal consequences. In other words, a more lenient interpretation of the two needs to be adopted. (Para 24)
The legislative intent which can be gathered from the definition of the scheduled offence under clause (y) of subSection (1) of Section 2 of the PMLA is that every crime which may generate proceeds of crime need not be a scheduled offence. Therefore, only certain specific offences have been included in the Schedule. Thus, if the submissions of the learned Additional Solicitor General are accepted, the Schedule will become meaningless or redundant. (Para 25)
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. As pointed out earlier, 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. (Para 26)
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; and
e. 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. (Para 27)
Accordingly, the impugned order dated 27th September 2022 is, hereby, quashed and set aside, and the complaint being Special C.C no.781 of 2022 pending before the Special Court for PMLA cases, Bengaluru is, hereby, quashed only insofar as the present appellant is concerned. (Para 28)
SUPREME COURT OF INDIA
2023 STPL(Web) 452 SC
[2023 INSC 1029]
Pavana Dibbur Vs. Directorate Of Enforcement
Criminal Appeal No. 2779 of 2023-Decided on 29-11-2023
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