# CASE DETAILS PAVANA DIBBUR v. THE DIRECTORATE OF ENFORCEMENT

- **Citation:** 2023 INSC 1029
- **Court:** Supreme Court of India
- **Decided:** 2023-11-29
- **Case number:** Criminal Appeal No. 2779 of 2023
- **Bench:** Abhay S. Oka, Pankaj Mithal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/case-details-pavana-dibbur-v-the-directorate-of-enforcement-36607
- **Pages:** 22

## Headnote

Issue for consideration: Whether the off ence u/s.120B, IPC included
in Paragraph 1 of the Schedule to the Prevention of Money Laundering Act,
2002, can be treated as a scheduled off ence even if the criminal conspiracy
alleged is to commit an off ence which is not a part of the Schedule.
Prevention of Money Laundering Act, 2002 - Paragraph 1 of the
Schedule - Penal Code, 1860 - s.120B - Appellant purchased the fi rst
property from Alliance Business School and the second property from
accused no.1 against whom an FIR was registered alleging that he
collected Rs.107 crores from the students by claiming himself as the
Chancellor of the Alliance University - Four FIRs, ECIR registered -
Complaint fi led against the appellant-accused alleging that she entered
into a conspiracy with accused no.1 by getting executed nominal sale
deeds in respect of the fi rst and second properties in her name for the
benefi t of accused no.1 and facilitated him to use her bank accounts to
siphon the university funds, assisting him in the activity connected with
the proceeds of crime - Petition for quashing the complaint fi led by the
appellant, dismissed by High Court - Appellant pleaded that out of the
four scheduled/predicate off ences, chargesheets were fi led in the case
of three off ences wherein only one off ence covered by the Schedule to
the PMLA was mentioned- It was thus contended that s.120B of IPC
alone, in the absence of any other scheduled off ence cannot sustain a
charge under the PMLA and unless there is an allegation regarding a
conspiracy to commit any scheduled off ence, the prosecution under the
PMLA cannot lie:
1050
SUPREME COURT REPORTS
[2023] 13 S.C.R.
Held: The off ence punishable u/s.120B of the IPC will become a
scheduled off ence only if the conspiracy alleged is of committing an off ence
which is specifi cally included in the Schedule - In the present case, in the
chargesheets fi led in the alleged scheduled off ences, there is no allegation
of the commission of criminal conspiracy to commit any of the off ences
included in the Schedule - Except for s.120B, IPC, no other off ence in
the schedule was applied - Therefore, in this case, the scheduled off ence
does not exist at all - Hence, the appellant cannot be prosecuted for the
off ences punishable u/s.3, PMLA - Impugned order quashed and set aside
- Complaint pending before the Special Court for PMLA cases, Bengaluru
quashed as regards the present appellant - Code of Criminal Procedure,
1973 - s.482. [Paras 26, 27]
Prevention of Money Laundering Act, 2002 - s.3 - Plea of the
appellant that as she was not arraigned as an accused in the chargesheets
fi led pertaining to the alleged scheduled off ences, she cannot be roped
in as an accused for the off ences punishable u/s.3:
Held: In a given case, if the prosecution for the scheduled off ence
ends in the acquittal of all the accused or discharge of all the accused or
the proceedings of the scheduled off ence are quashed in its entirety, the
scheduled off ence will not exist, and therefore, no one can be prosecuted for
the off ence punishable u/s.3 of the PMLA as there will not be any proceeds
of crime - Thus, in such a case, the accused against whom the complaint
u/s.3 of the PMLA is fi led will benefi t from the scheduled off ence ending by
acquittal or discharge of all the accused - Similarly, he will get the benefi t of
quashing the proceedings of the scheduled off ence - However, an accused
in the PMLA case who comes into the picture after the scheduled off ence
is committed by assisting in the concealment or use of proceeds of crime
need not be an accused in the scheduled off ence - Such an accused can still
be prosecuted under PMLA so long as the scheduled off ence exists - An
off ence u/s.3 can be committed after a scheduled off ence is committed - It
is not necessary that a person against whom the off ence u/s.3 is alleged
must have been shown as the accused in the scheduled off ence - Plea of
the appellant reject

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[2023] 13 S.C.R. 1049 : 2023 INSC 1029
1049
CASE DETAILS
PAVANA DIBBUR
v.
THE DIRECTORATE OF ENFORCEMENT
(Criminal Appeal No. 2779 of 2023)
NOVEMBER 29, 2023
[ABHAY S. OKA AND PANKAJ MITHAL, JJ.]
HEADNOTES
Issue for consideration: Whether the off ence u/s.120B, IPC included
in Paragraph 1 of the Schedule to the Prevention of Money Laundering Act,
2002, can be treated as a scheduled off ence even if the criminal conspiracy
alleged is to commit an off ence which is not a part of the Schedule.
Prevention of Money Laundering Act, 2002 - Paragraph 1 of the
Schedule - Penal Code, 1860 - s.120B - Appellant purchased the fi rst
property from Alliance Business School and the second property from
accused no.1 against whom an FIR was registered alleging that he
collected Rs.107 crores from the students by claiming himself as the
Chancellor of the Alliance University - Four FIRs, ECIR registered -
Complaint fi led against the appellant-accused alleging that she entered
into a conspiracy with accused no.1 by getting executed nominal sale
deeds in respect of the fi rst and second properties in her name for the
benefi t of accused no.1 and facilitated him to use her bank accounts to
siphon the university funds, assisting him in the activity connected with
the proceeds of crime - Petition for quashing the complaint fi led by the
appellant, dismissed by High Court - Appellant pleaded that out of the
four scheduled/predicate off ences, chargesheets were fi led in the case
of three off ences wherein only one off ence covered by the Schedule to
the PMLA was mentioned- It was thus contended that s.120B of IPC
alone, in the absence of any other scheduled off ence cannot sustain a
charge under the PMLA and unless there is an allegation regarding a
conspiracy to commit any scheduled off ence, the prosecution under the
PMLA cannot lie:
1050
SUPREME COURT REPORTS
[2023] 13 S.C.R.
Held: The off ence punishable u/s.120B of the IPC will become a
scheduled off ence only if the conspiracy alleged is of committing an off ence
which is specifi cally included in the Schedule - In the present case, in the
chargesheets fi led in the alleged scheduled off ences, there is no allegation
of the commission of criminal conspiracy to commit any of the off ences
included in the Schedule - Except for s.120B, IPC, no other off ence in
the schedule was applied - Therefore, in this case, the scheduled off ence
does not exist at all - Hence, the appellant cannot be prosecuted for the
off ences punishable u/s.3, PMLA - Impugned order quashed and set aside
- Complaint pending before the Special Court for PMLA cases, Bengaluru
quashed as regards the present appellant - Code of Criminal Procedure,
1973 - s.482. [Paras 26, 27]
Prevention of Money Laundering Act, 2002 - s.3 - Plea of the
appellant that as she was not arraigned as an accused in the chargesheets
fi led pertaining to the alleged scheduled off ences, she cannot be roped
in as an accused for the off ences punishable u/s.3:
Held: In a given case, if the prosecution for the scheduled off ence
ends in the acquittal of all the accused or discharge of all the accused or
the proceedings of the scheduled off ence are quashed in its entirety, the
scheduled off ence will not exist, and therefore, no one can be prosecuted for
the off ence punishable u/s.3 of the PMLA as there will not be any proceeds
of crime - Thus, in such a case, the accused against whom the complaint
u/s.3 of the PMLA is fi led will benefi t from the scheduled off ence ending by
acquittal or discharge of all the accused - Similarly, he will get the benefi t of
quashing the proceedings of the scheduled off ence - However, an accused
in the PMLA case who comes into the picture after the scheduled off ence
is committed by assisting in the concealment or use of proceeds of crime
need not be an accused in the scheduled off ence - Such an accused can still
be prosecuted under PMLA so long as the scheduled off ence exists - An
off ence u/s.3 can be committed after a scheduled off ence is committed - It
is not necessary that a person against whom the off ence u/s.3 is alleged
must have been shown as the accused in the scheduled off ence - Plea of
the appellant rejected. [Paras 15, 16]
Interpretation of Statutes - Prevention of Money Laundering
Act, 2002 - Paragraph 1 of the Schedule - Penal Code, 1860 - s.120B:
1051
Held: The penal statutes are required to be strictly construed - The
penal laws must be construed according to the legislative intent as expressed
in the enactment - While giving eff ect 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 - A more lenient interpretation of the two
needs to be adopted - The legislative intent which can be gathered from
the defi nition of the scheduled off ence under clause (y) of sub Section (1)
of s.2 of the PMLA is that every crime which may generate proceeds of
crime need not be a scheduled off ence - Therefore, only certain specifi c
off ences have been included in the Schedule - Thus, if the submission of
the ED that as s.120B, IPC is included in Part A to the Schedule even if
the allegation is of making a criminal conspiracy to commit an off ence
which is not a part of the Schedule, the off ence becomes a scheduled
off ence, is accepted, the Schedule will become meaningless or redundant
- Reason explained - Interpretation suggested by the ED will defeat the
legislative object of making only a few selected off ences as scheduled
off ences - If such an interpretation is accepted, the statute may attract the
vice of unconstitutionality for being manifestly arbitrary - It cannot be the
legislature's intention to make every off ence not included in the Schedule
a scheduled off ence by applying s.120B - Therefore, the off ence u/s.120-B
included in Part A of the Schedule will become a scheduled off ence only
if the criminal conspiracy is to commit any off ence already included in
Parts A, B or C of the Schedule. [Paras 23-25]
LIST OF CITATIONS AND OTHER REFERENCES
Vijay Madanlal Choudhary & Ors. vs. Union of India & Ors. (2022)
SCC Online SC 929 - referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No.2779 Of 2023
From the Judgment and Order dated 27.09.2022 of the High Court of
Karnataka at Bengaluru in CRLP No.3542 of 2022.
PAVANA DIBBUR v. THE DIRECTORATE OF
ENFORCEMENT
1052
SUPREME COURT REPORTS
[2023] 13 S.C.R.
Appearances:
Ms. Meenakshi Arora, Sr. Adv., Ms. Ashima Mandla, Ms. Mandakini
Singh, Surya Pratap Singh, Ms. Ankita Chaudhary, Advs. for the Appellant.
S. V. Raju, ASG, Mukesh Kumar Maroria, Ms. Alka Agarwal, Annam
Venktesh, Ms. Sairica Raju, Zoheb Hussain, Advs. for the Respondent.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
ABHAY S. OKA, J.
OVERVIEW
1. The respondent-the Directorate of Enforcement (for short, 'ED'),
fi led a complaint under the second proviso to Section 45(1) of the Prevention
of Money Laundering Act, 2002 (for short, 'the PMLA') before the Special
Court for PMLA Cases at Bengaluru. The appellant-Pavana Dibbur was
shown as accused no.6 in the said complaint. By the order dated 17th
March 2022, the Special Court took cognisance of the said complaint. The
appellant fi led 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.
2. In the year 2011, Alliance Business School (for short, 'ABS')
purchased a property bearing Khata no.37/22 at Gollahalli Village, Jigani
Hobli, Anekal Taluk, Bengaluru for the consideration of Rs.13.05 crores.
The area of the said property is approximately fi ve acres. For the sake of
convenience, we are describing the said property as 'the First Property'.
On 1st July 2013, the appellant purchased the fi rst property from ABS by
a registered sale deed for a consideration of Rs.13.5 crores. The accused
no.1-Madhukar Angur, purchased a property measuring 4 acres and 0.4
Guntas bearing survey nos.61, 62 and 63 at Karpur Village, Kasaba Hobli,
Anekal Taluk, Bengaluru. For the sake of convenience, we are describing
this property as 'the Second Property'. The appellant purchased the second
property by a registered sale deed on 29th June 2019 for a consideration of
Rs.2.47 crores from accused no.1-Madhukar Angur.
1053
3. For a period of fi ve years, i.e. from 2010 to 2015, the appellant's
husband-Dr Ayyappa Dore, was the Vice-Chancellor of the Alliance
University. The appellant also acted as the Vice-Chancellor 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 off ence of money laundering under Section 3 of the
PMLA. The ECIR was based on four FIRs, the details of which are as under:
Sl.
No.
FIR No.
Sections in
FIR
Chargesheet
Sections under
which the
Chargesheet
was fi led
1.
119 of 2016
(PS Jayaprakash
Nagar)
376, 420 and
506 of IPC
B-Report fi led/
Closure Report
fi led on 2nd
February 2017
Closure Report
accepted
2.
730 of 2016
(PS Madiwala)
143, 144,
147, 148,
149, 506 and
120-B of IPC
Chargesheet
fi led on 4th July
2017 in which
the appellant is
not named as the
accused
Chargesheet
is fi led under
Sections 143,
144, 147, 148,
149, 506, 120-B
of IPC
3.
52 of 2017
(PS
Shankarpura)
506, 504,
143, 149 and
420 of IPC
Chargesheet fi led
on 25th March
2018 in which
the appellant is
not named as the
accused
Chargesheet fi led
under Sections
504, 506, 120-B
read with 34 of
IPC
PAVANA DIBBUR v. THE DIRECTORATE OF
ENFORCEMENT [ABHAY S. OKA, J.]
1054
SUPREME COURT REPORTS
[2023] 13 S.C.R.
4.
188 of 2017
(PS Anekal)
143, 406,
407, 408, 409
and 149 of
IPC
Chargesheet
fi led on 18th June
2019 in which
the appellant is
not named as the
accused
Chargesheet fi led
under Section
406, 408, 408,
447, 204, 120-B
read with 34 of
IPC
5. On 27th September 2021, the ED passed an order under Section 5 of
the PMLA attaching fi rst and second properties. A complaint was fi led before
the adjudicating authority on 13th October 2021, in which the appellant is
shown as the fi fth defendant.
6. The allegation against the appellant in the complaint fi led 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 fi rst and second properties in her name
for the benefi t 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. By the impugned judgment, the learned Single Judge
of the High Court dismissed the petition fi led by the appellant. The learned
Single Judge relied upon the decision of a Bench of three Hon'ble Judges
of this Court in the case of Vijay Madanlal Choudhary & Ors. v. Union of
India & Ors.1.
SUBMISSIONS OF THE APPELLANT
7. Ms Meenakshi Arora, the learned senior counsel appearing for
the appellant, fi rstly submitted that the fi rst and second properties are not
tainted properties and, therefore, the same are not covered by the defi nition
of "proceeds of crime" under clause (u) of sub-section (1) of Section 2 of
the PMLA. The learned senior counsel pointed out that the fi rst property
was acquired on 1st July 2013, much prior to the commission of the fi rst
scheduled off ence. 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
1
(2022) SCC Online SC 929
1055
the said amount to his account. Therefore, the appellant's acquisition of the
fi rst property can never be linked with the proceeds of the crime regarding
the scheduled off ence. 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 an Income Tax Return fi led
by the appellant under the Income Declaration Scheme, 2016, by which she
declared a total undisclosed income of Rs.26,42,54,193/-. The appellant paid
Rs.11,89,08,385/- towards income tax and penalty on 8th September 2016.
The return was fi led on 12th September 2016. Therefore, the appellant had a
source of money for acquiring the second property for the consideration of
Rs.2.47 crores. Both the properties acquired by the appellant had no nexus
at all with the proceeds of crime of the scheduled off ences. The learned
senior counsel pointed out that consideration of Rs.2.47 crores was agreed
upon, as it is mentioned in the sale deed that it was a distress sale made by
the accused no.1-Madhukar Angur.
8. 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 fi led pertaining to the alleged scheduled
off ences, she cannot be roped in as an accused for the off ences 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 off ence is acquitted/discharged, he cannot
be prosecuted for the off ence 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 off ences. She would, therefore,
submit that the cognizance of the crime under the PMLA could not have
been taken against the appellant.
9. The third submission of the learned senior counsel appearing for the
appellant is that out of the four scheduled/predicate off ences, chargesheets
have been fi led in the case of three off ences, and in these chargesheets, only
one off ence covered by the Schedule to the PMLA has been mentioned,
which is Section 120-B of IPC. She pointed out that in FIR no.119 of 2016
and FIR no.52 of 2017, Section 420 of IPC was included. However, in FIR
no.119 of 2016, the closure report was fi led, and in FIR no.52 of 2017, while
fi ling the chargesheet, Section 420 of IPC was excluded. She contended that
PAVANA DIBBUR v. THE DIRECTORATE OF
ENFORCEMENT [ABHAY S. OKA, J.]
1056
SUPREME COURT REPORTS
[2023] 13 S.C.R.
Section 120-B of IPC alone, in the absence of any other scheduled off ence,
cannot sustain a charge under the PMLA. Unless there is an allegation
regarding a conspiracy to commit any scheduled off ence, the prosecution
under the PMLA cannot lie. Relying upon the proviso to Section 120-A 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 off ence of conspiracy under Section 120-B
of IPC. If Section 120-B of IPC can be treated as a standalone off ence to
attract prosecution under the PMLA, by that logic, a complaint under the
PMLA can be fi led where the allegation is of criminal conspiracy to commit
an off ence which is not a scheduled off ence. 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. Regarding the second
submission, the learned Additional Solicitor General submitted that a person
can be held guilty of the commission of a money laundering off ence under
Section 3 of the PMLA, even if he is not shown as an accused in the predicate
off ence. He submitted that it is apparent from the provision of Section 3
of the PMLA that in a given case, a person who is not an accused in the
predicate off ence can commit the off ence of money laundering. Regarding
the third submission, the learned Additional Solicitor General submitted
that wherever the legislature intended, it has made a particular off ence
read with another off ence as a scheduled off ence. He invited our attention
to Paragraphs 4 and 6 of Part A of the Schedule to the PMLA. Referring
to Paragraph 11 of the Schedule to the PMLA, he urged that the fi rst four
off ences in Paragraph 4 and all the off ences in Paragraph 6 clearly show
the legislature's intention. He submitted that the schedule must be read as
it is, and nothing can be added or subtracted from the Schedule considering
the objects of the PMLA. He submitted that the validity of the Schedule
has been upheld in the case of Vijay Madanlal Choudhary1. He would,
therefore, submit that no interference is called for with the impugned order.
1057
CONSIDERATION OF SUBMISSIONS
THE EFFECT OF THE APPELLANT NOT BEING SHOWN AS
AN ACCUSED IN PREDICATE OFFENCE
11. Section 3 of the PMLA reads thus:
"3. Off ence of money-laundering.-Whosoever directly or
indirectly attempts to indulge or knowingly assists or knowingly
is a party or is actually involved in any process or activity
connected with the proceeds of crime including its concealment,
possession, acquisition or use and projecting or claiming it as
untainted property shall be guilty of off ence of money-laundering.
Explanation.-For the removal of doubts, it is hereby clarifi ed
that,-
(i) a person shall be guilty of off ence of money-laundering if
such person is found to have directly or indirectly attempted
to indulge or knowingly assisted or knowingly is a party or is
actually involved in one or more of the following processes or
activities connected with proceeds of crime, namely:-
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property,
in any 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 off ence. Clause (u) of sub-section
PAVANA DIBBUR v. THE DIRECTORATE OF
ENFORCEMENT [ABHAY S. OKA, J.]
1058
SUPREME COURT REPORTS
[2023] 13 S.C.R.
(1) of Section 2 of the PMLA defi nes "proceeds of crime", which
reads thus:
"2.Defi nition - (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 off ence 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 clarifi ed
that "proceeds of crime" include property not only derived or
obtained from the scheduled off ence but also any property which
may directly or indirectly be derived or obtained as a result of
any criminal activity relatable to the scheduled off ence."
12. Clause (v) of sub-section (1) of Section 2 of the PMLA defi nes
"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 off ence. The explanation clarifi es that the proceeds of crime
include property, not only derived or obtained from scheduled off ence but
also any property which may directly or indirectly be derived or obtained as
a result of any criminal activity relatable to the scheduled off ence. Clause
(u) also clarifi es 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 off ence under Section 3 of the PMLA.
13. Clause (x) of sub-section (1) of Section 2 of the PMLA defi nes
"schedule". Clause (y) thereof defi nes "scheduled off ence", which reads thus:
"2. Defi nition - (1) In this Act, unless the context otherwise requires,-
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
(y) "scheduled off ence" means-
1059
(i) the off ences specifi ed under Part A of the Schedule; or
(ii) the off ences specifi ed under Part B of the Schedule if the total
value involved in such off ences is one crore rupees or more; or
(iii) the off ences specifi ed under Part C of the Schedule."
14. The condition precedent for the existence of proceeds of crime is
the existence of a scheduled off ence. On this aspect, it is necessary to refer
to the decision of this Court in the case of Vijay Madanlal Choudhary1. In
paragraph 253 of the said decision, this Court held thus:
"253. Tersely put, it is only such property which is derived or
obtained, directly or indirectly, as a result of criminal activity
relating to a scheduled off ence can be regarded as proceeds of
crime. The authorities under the 2002 Act cannot resort to action
against any person for money-laundering on an assumption that
the property recovered by them must be proceeds of crime and
that a scheduled off ence has been committed, unless the 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 off ence already accomplished. Similarly, in the event
the person named in the criminal activity relating to a scheduled
off ence is fi nally absolved by a Court of competent jurisdiction
owing to an order of discharge, acquittal or because of quashing
of the criminal case (scheduled off ence) against him/her, there
can be no action for money-laundering against such a person or
person claiming through him in relation to the property linked
to the stated scheduled off ence. 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 defi nition clause "proceeds of crime",
as it obtains as of now."
(underline supplied)
In paragraphs 269 and 270, this Court held thus:
PAVANA DIBBUR v. THE DIRECTORATE OF
ENFORCEMENT [ABHAY S. OKA, J.]
1060
SUPREME COURT REPORTS
[2023] 13 S.C.R.
"269. From the bare language of Section 3 of the 2002 Act,
it is amply clear that the off ence of money-laundering is an
independent off ence regarding the process or activity connected
with the proceeds of crime which had been derived or obtained as
a result of criminal activity relating to or in relation to a scheduled
off ence. The process or activity can be in any form - be it one
of concealment, possession, acquisition, use of proceeds of crime
as much as projecting it as untainted property or claiming it to
be so. Thus, involvement in any one of such process or activity
connected with the proceeds of crime would constitute off ence of
money-laundering. This off ence otherwise has nothing to do with
the criminal activity relating to a scheduled off ence - except the
proceeds of crime derived or obtained as a result of that crime.
270. Needless to mention that such process or activity can be
indulged in only after the property is derived or obtained as a
result of criminal activity (a scheduled off ence). It would be an
off ence of money-laundering to indulge in or to assist or being
party to the process or activity connected with the proceeds of
crime; and such process or activity in a given fact situation may
be a continuing off ence, irrespective of the date and time of
commission of the scheduled off ence. In other words, the criminal
activity may have been committed before the same had been
notifi ed as scheduled off ence for the purpose of the 2002 Act,
but if a person has indulged in or continues to indulge directly or
indirectly in dealing with proceeds of crime, derived or obtained
from such criminal activity even after it has been notifi ed as
scheduled off ence, may be liable to be prosecuted for off ence
of money-laundering under the 2002 Act - for continuing to
possess or conceal the proceeds of crime (fully or in part) or
retaining possession thereof or uses it in trenches until fully
exhausted. The off ence of money-laundering is not dependent on
or linked to the date on which the scheduled off ence or if we may
say so the predicate off ence has been committed. The relevant
date is the date on which the person indulges in the process or
activity connected with such proceeds of crime. These ingredients
are intrinsic in the original provision (Section 3, as amended
1061
until 2013 and were in force till 31.7.2019); and the same has
been merely explained and clarifi ed by way of Explanation vide
Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause
(ii) in Explanation 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 off ence under Section 3 can be committed after a scheduled off ence is
committed. For example, let us take the case of a person who is unconnected
with the scheduled off ence, 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 off ence under Section 3
of the PMLA. To give a concrete example, the off ences under Sections 384
to 389 of the IPC relating to "extortion" are scheduled off ences 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 off ence 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 off ence
for concealing the proceeds of the crime of extortion can be guilty of the
off ence of money laundering. Therefore, it is not necessary that a person
against whom the off ence under Section 3 of the PMLA is alleged must
have been shown as the accused in the scheduled off ence. What is held in
paragraph 270 of the decision of this Court in the case of Vijay Madanlal
Choudhary1 supports the above conclusion. The conditions precedent for
attracting the off ence under Section 3 of the PMLA are that there must be
a scheduled off ence and that there must be proceeds of crime in relation to
the scheduled off ence as defi ned in clause (u) of sub-section (1) of Section
3 of the PMLA.
16. In a given case, if the prosecution for the scheduled off ence
ends in the acquittal of all the accused or discharge of all the accused or
the proceedings of the scheduled off ence are quashed in its entirety, the
scheduled off ence will not exist, and therefore, no one can be prosecuted
for the off ence punishable under Section 3 of the PMLA as there will not
be any proceeds of crime. Thus, in such a case, the accused against whom
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the complaint under Section 3 of the PMLA is fi led will benefi t from the
scheduled off ence ending by acquittal or discharge of all the accused.
Similarly, he will get the benefi t of quashing the proceedings of the scheduled
off ence. However, an accused in the PMLA case who comes into the picture
after the scheduled off ence is committed by assisting in the concealment or
use of proceeds of crime need not be an accused in the scheduled off ence.
Such an accused can still be prosecuted under PMLA so long as the scheduled
off ence exists. Thus, the second contention raised by the learned senior
counsel appearing for the appellant on the ground that the appellant was
not shown as an accused in the chargesheets fi led in the scheduled off ences
deserves to be rejected.
ACQUISITION OF THE FIRST AND SECOND PROPERTY
17. The allegation against the appellant in the complaint is that she
purchased the property worth crores, though she did not have the source of
income which would generate enough money to buy the subject properties.
The allegation against the appellant is that she allowed and facilitated
accused no.1-Madhukar Angur, to conceal the siphoned/misappropriated
amounts by using her bank account. Another allegation is that she is shown
to have purchased the second property from accused no.1, though she did
not have the resources to pay the consideration. The allegation is that she
allowed the accused no.1 to use her bank accounts to facilitate siphoning the
proceeds of the crime. Another allegation is that both the fi rst and second
properties have been acquired out of the proceeds of crime. The fi rst property,
ex-facie, cannot be said to have any connection with the proceeds of crime
as the acts constituting the scheduled off ence 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 suffi cient 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 fi nding 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 issue only in
1063
the context of the applicability of the PMLA. We have not dealt with the
issues of valuation and legality of the sale deeds.
INTERPRETATION OF THE FIRST ENTRY IN PARAGRAPH
1 OF THE SCHEDULE
18. Now, we come to the third argument made by the learned
senior counsel appearing for the appellant based on the interpretation of
the Schedule. It must be noted here that in the case of Vijay Madanlal
Choudhary1, even the validity of the Schedule was under challenge. A
perusal of the said decision shows that this Court was not called upon to
interpret any entry in the Schedule and, in particular, entry of Section 120-B
in the Schedule. The challenge to the Schedule is dealt with in paragraphs
453, 454 and 455 of the said decision. The contention before this Court
was that even minor off ences have been included in the Schedule, and
even compoundable off ences form part of the Schedule. It was submitted
that the off ences which do not have cross-border implications have been
included in the Schedule. In paragraphs 454 and 455 of the said decision,
this Court held thus:
"454. This Schedule has been amended by Act 21 of 2009, Act 2 of
2013, Act 22 of 2015, Act 13 of 2018 and Act 16 of 2018, thereby
inserting new off ences to be regarded as scheduled off ence.
The challenge is not on the basis of legislative competence in
respect of enactment of Schedule and the amendments thereto
from time to time. However, it had been urged before us that
there is no consistency in the approach as it includes even
minor off ences as scheduled off ence for the purposes of off ence
of money-laundering, more so even off ences which have no
trans-border implications and are compoundable between the
parties. The classifi cation or grouping of off ences for treating the
same as relevant for constituting off ence of money-laundering
is a matter of legislative policy. The Parliament in its wisdom
has regarded the property derived or obtained as a result of
specifi ed criminal activity, being an off ence under the concerned
legislation mentioned in the Schedule. The fact that some of the
off ences may be non-cognizable off ences under the concerned
legislation or regarded as minor and compoundable off ences, yet,
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the Parliament in its wisdom having perceived the cumulative
eff ect of the process or activity concerning the proceeds of crime
generated from such criminal activities as being likely to pose
threat to the economic stability, sovereignty and integrity of the
country and thus, grouped them together for reckoning it as an
off ence of money-laundering, 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 money-laundering activity which
necessarily is associated with the property derived or obtained by
any person, directly or indirectly, as a result of specifi ed 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 specifi ed criminal activity. Resultantly, the inclusion of
criminal activity which has been regarded as non-cognizable,
compoundable or minor off ence under the concerned legislation,
should have no bearing to answer the matter in issue. In that, the
off ence of money-laundering is an independent off ence and the
persons involved in the commission of such off ence are grouped
together as off enders under this Act. There is no reason to make
distinction between them insofar as the off ence of moneylaundering is concerned. In our opinion, therefore, there is no
merit in the argument under consideration."
In this case, we are not called upon to decide the validity of the
Schedule or any part thereof. The question is whether the off ence under
Section 120-B of IPC, included in Paragraph 1 of the Schedule, can be
treated as a scheduled off ence even if the criminal conspiracy alleged is to
commit an off ence which is not a part of the Schedule. This issue did not
arise for consideration in the case of Vijay Madanlal Choudhary1.
19. Section 120-A of IPC defi nes "criminal conspiracy", which reads
thus:
"120A. Defi nition of criminal conspiracy.-When two or more
persons agree to do, or cause to be done,-
(1) an illegal act, or
1065
(2) an act which is not illegal by illegal means, such an agreement
is designated a criminal conspiracy:
Provided that no agreement except an agreement to commit an
off ence shall amount to a criminal conspiracy unless some act
besides the agreement is done by one or more parties to such
agreement in pursuance thereof.
Explanation.-It is immaterial whether the illegal act is the
ultimate object of such agreement, or is merely incidental to
that object."
Section 120-B of IPC provides for punishment for a criminal
conspiracy which reads thus:
"120B. Punishment of criminal conspiracy.- (1) Whoever is
a party to a criminal conspiracy to commit an off ence punishable
with death, imprisonment for life or rigorous imprisonment for a
term of two years or upwards, shall, where no express provision
is made in this Code for the punishment of such a conspiracy, be
punished in the same manner as if he had abetted such off ence.
(2) Whoever is a party to a criminal conspiracy other than a
criminal conspiracy to commit an off ence punishable as aforesaid
shall be punished with imprisonment of either description for a
term not exceeding six months, or with fi ne or with both."
20. Now, we turn to the Schedule to the PMLA. We fi nd that many
off ences, which may generate proceeds of crime, have not been included
in the Schedule. We are referring to only a few of such off ences only by
way of illustration:-
a.
Section 263A of IPC, which deals with the off ence of making or
possessing fi ctitious stamps is not a part of the Schedule;
b.
Though off ences punishable under Sections 392 to 402 regarding
robbery and dacoity have been included in part A of the Schedule,
the off ence punishable under Section 379 of committing theft and
the off ence 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
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into crores. The said two off ences become scheduled off ences by
virtue of clause (3) of part C of the Schedule only if the off ences
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 off ence becomes a scheduled off ence by virtue of clause
(3) of part C of the Schedule only if the off ence has cross-border
implications;
d.
The off ence under Section 405 of criminal breach of trust, which
is punishable under Section 406, is not a part of the Schedule The
said off ence becomes a scheduled off ence by virtue of clause (3)
of part C of the Schedule only if the off ence has cross-border
implications;
e.
Though the off ence under Section 417 of cheating has been
made a scheduled off ence, the more stringent crime of forgery
for the purposes of cheating under Section 468 is not a part of
the Schedule, and
f.
Though the off ences under Sections 489A to 489C regarding
forging or counterfeiting currency notes are part of the Schedule,
the offence under Section 489D of making or possessing
instruments or materials for forging or counterfeiting currency
notes is not a part of the Schedule.
21. Now, coming to Part B of the Schedule, it includes only one
off ence under Section 132 of the Customs Act, 1962. The off ence under
Section 132 of the Customs Act of making a false declaration, etc., becomes
a scheduled off ence in view of sub-clause (ii) of Clause (y) of sub-section
(1) of Section 2 of the PMLA only if the total value involved in the off ence
is Rs.1 crore or more. Part C of the Schedule provides that any off ence
specifi ed in Part A having cross-border implications becomes a part of Part
C. More importantly, all the off ences against the property under Chapter
XVII of IPC having cross-border implications become scheduled off ences.
As pointed out earlier, the off ences punishable under Sections 379 (theft),
380 (theft in dwelling house), 403 (dishonest misappropriation of property)
and 405 (criminal breach of trust) are part of Chapter XVII.