TMI Blog2023 (12) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngur. 3. For a period of five years, i.e. from 2010 to 2015, the appellant s husband Dr Ayyappa Dore, was the ViceChancellor of the Alliance University. The appellant also acted as the ViceChancellor of the Alliance University for a brief period. On 11th November 2017, 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. 4. 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. The ECIR was based on four FIRs, the details of which are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of a Bench of three Hon ble Judges of this Court in the case of Vijay Madanlal Choudhary Ors. v. Union of India Ors. (2022) SCC Online SC 929 . SUBMISSIONS OF THE APPELLANT 7. 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. She submitted that regarding the acquisition of the second property, the appellant had her own resources available to acquire the same. The learned senior counsel relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. SUBMISSIONS OF THE RESPONDENT 10. Shri S.V. Raju, the learned Additional Solicitor General appearing for the ED, submitted that even assuming that the appellant had monetary capacity to acquire the second property, one cannot conclude that the funds siphoned by the accused no.1, which constitute proceeds of crime, were not used by the appellant for acquiring the second property. He submits that this issue can be gone into only at the time of trial. Regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever. On a plain reading of Section 3, unless proceeds of crime exist, there cannot be any money laundering offence. Clause (u) of subsection (1) of Section 2 of the PMLA defines proceeds of crime , which reads thus: 2. Definition (1) In this Act, unless the context otherwise requires,.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . (u) proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad; Explanation. For the removal of doubts, it is hereby clarified that proceeds of crime include property not only derived or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression derived or obtained is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for moneylaundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. This interpretation alone can be countenanced on the basis of the provisions of the 2002 Act, in particular Section 2(1)(u) read with Section 3. Taking any other view would be rewriting of these provisions and disregarding the express language of definition clause proceeds of crime , as it obtains as of now. (underline supplied) In paragraphs 269 and 270, this Court held thus: 269. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of moneylaunderin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all. (underline supplied) 15. 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. For example, let us take the case of a person who is unconnected with the scheduled offence, knowingly assists the concealment of the proceeds of crime or knowingly assists the use of proceeds of crime. In that case, he can be held guilty of committing an offence under Section 3 of the PMLA. To give a concrete example, the offences under Sections 384 to 389 of the IPC relating to extortion are scheduled offences included in Paragraph 1 of the Schedule to the PMLA. An accused may commit a crime of extortion covered by Sections 384 to 389 of IPC and extort money. Subsequently, a person unconnected with the offence of extortion may assist the said accused in the concealment of the proceeds of extortion. In such a case, the person who assists the accused in the scheduled offence for concealing the proceeds of the crime of extortion can be guilty of the offence of money laundering. Therefore, it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the accused no.1 to use her bank accounts to facilitate siphoning the proceeds of the crime. Another allegation is that both the first and second properties have been acquired out of the proceeds of crime. The first property, exfacie, cannot be said to have any connection with the proceeds of crime as the acts constituting the scheduled offence took place after its acquisition. The case of the appellant is that she possessed a substantial amount, as can be seen from the declaration made by her under the Income Declaration Scheme, 2016 in September 2016 and therefore, at the time of the acquisition of the second property, more than sufficient money was available with her to acquire the second property. The issue of whether the appellant used tainted money to acquire the second property can be decided only after the evidence is adduced. This is not a case where any material is placed on record to show that the sale consideration was paid from a particular Bank Account of the appellant. Therefore, it is not possible to record a finding at this stage that the Second property was not acquired by using the proceeds of crime. We also make it clear that we have considered the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pose threat to the economic stability, sovereignty and integrity of the country and thus, grouped them together for reckoning it as an offence of moneylaundering, is a matter of legislative policy. It is not open to the Court to have a second guess at such a policy. 455. Needless to underscore that the 2002 Act is intended to initiate action in respect of moneylaundering activity which necessarily is associated with the property derived or obtained by any person, directly or indirectly, as a result of specified criminal activity. The prosecution under this Act is not in relation to the criminal activity per se but limited to property derived or obtained from specified criminal activity. Resultantly, the inclusion of criminal activity which has been regarded as noncognizable, compoundable or minor offence under the concerned legislation, should have no bearing to answer the matter in issue. In that, the offence of moneylaundering is an independent offence and the persons involved in the commission of such offence are grouped together as offenders under this Act. There is no reason to make distinction between them insofar as the offence of moneylaundering is concerned. In ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in part A of the Schedule, the offence punishable under Section 379 of committing theft and the offence punishable under Section 380 of theft in a dwelling house are not made a part of parts A and B of the Schedule. The theft of both categories can be of a very large amount running into crores. The said two offences become scheduled offences by virtue of clause (3) of part C of the Schedule only if the offences have cross border implications; c. The offence punishable under Section 403 of dishonest misappropriation of property does not form part of the Schedule. The said offence becomes a scheduled offence by virtue of clause (3) of part C of the Schedule only if the offence has crossborder implications; d. The offence under Section 405 of criminal breach of trust, which is punishable under Section 406, is not a part of the Schedule The said offence becomes a scheduled offence by virtue of clause (3) of part C of the Schedule only if the offence has crossborder implications; e. Though the offence under Section 417 of cheating has been made a scheduled offence, the more stringent crime of forgery for the purposes of cheating under Section 468 is not a part of the Schedule, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not included in Parts A, B and C of the Schedule but if the conspiracy to commit the offence is alleged, the same will become a scheduled offence. A crime punishable under Section 132 of the Customs Act is made a scheduled offence under Part B, provided the value involved in the offence is Rupees One Crore or more. But if Section 120B of IPC is applied, one who commits such an offence having a value of even Rs.1 lac can be brought within the purview of the PMLA. By that logic, a conspiracy to commit any offence under any penal law which is capable of generating proceeds, can be converted into a scheduled offence by applying Section 120B of the IPC, though the offence is not a part of the Schedule. This cannot be the intention of the legislature. 23. The penal statutes are required to be strictly construed. It is true that the penal laws must be construed according to the legislative intent as expressed in the enactment. In Chapter 1 of GP Singh s Principles of Statutory Interpretation (15th Edition), it is observed that: The intention of the Legislature, thus, assimilates two aspects: In one aspect it carries the concept of meaning , i.e. what the words mean and in anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itutes the offence. Conspiracy is an agreement between the accused to commit an offence. If we look at the punishments provided under Section 120B, it becomes evident that it is not an aggravated offence. It only incorporates the principle of vicarious liability. If no specific punishment is provided in the Statute for conspiracy to commit a particular offence, Section 120B treats a conspirator of the main accused as an abettor for the purposes of imposing the punishment. The interpretation suggested by the ED will defeat the legislative object of making only a few selected offences as scheduled offences. If we accept such an interpretation, the statute may attract the vice of unconstitutionality for being manifestly arbitrary. It cannot be the legislature's intention to make every offence not included in the Schedule a scheduled offence by applying Section 120B. Therefore, in our view, 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 sch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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