In a recent landmark judgment, the Supreme Court has provided crucial clarification on the application of Section 120-B of the Indian Penal Code (IPC) in connection with the Prevention of Money Laundering Act (PMLA). The ruling establishes that for an offence of criminal conspiracy under Section 120-B to be categorized as a scheduled offence under the PMLA, the conspiracy must be directed towards committing an offence explicitly listed in the PMLA schedule.

The case, which prompted this clarification, involved an appeal challenging the decision of the Karnataka High Court. The High Court had refused to quash proceedings in a money laundering case before a Special Judge in Bangalore. The accused faced charges under the PMLA, despite the underlying offences not being explicitly listed as "scheduled offences."

The Supreme Court bench, comprising Justice Abhay S. Oka and Justice Pankaj Mithal, emphasized that to invoke the PMLA, the alleged conspiracy must be linked to offences explicitly outlined in the Act's schedule. Consequently, the proceedings in question were quashed based on this criterion.

The controversy stems from a complaint filed by the Enforcement Directorate (ED) against the ex-Vice-Chancellor of Alliance University. The ED accused the individual of money laundering under the PMLA, citing offences outlined in sections 44 and 45 of the Act. The charges revolved around an alleged conspiracy to carry out a fictitious sale deed involving university properties and the misuse of bank accounts to conceal embezzled funds.

Challenging the High Court's decision, the appellant approached the Supreme Court. The legal argument centered on whether the accused, not explicitly mentioned in the First Information Report (FIR), could still be held accountable under the PMLA. The Additional Solicitor General argued that the PMLA operates independently, allowing for the inclusion of individuals not named in the FIR.

Another critical aspect of the case concerned whether properties acquired before a predicate scheduled offence could be deemed as "Proceeds of Crime." The appellant, relying on precedent, argued that such proceeds must originate from criminal activity associated with a scheduled offence. The Additional Solicitor General opposed this view.

The third key point involved the independent use of Section 120-B of the IPC by authorities under the PMLA. The appellant contended that Section 120-B cannot operate in isolation and must be connected to scheduled offences. The court presented a hypothetical scenario, questioning whether authorities could prosecute a case solely under Section 120-B in the absence of a scheduled offence other than theft. The Additional Solicitor General argued in favor of such authority, citing Section 120-B as a scheduled offence under the PMLA.

Case: Pavana Dibbur v. The Directorate of Enforcement,

Crl. A. No. 002779 / 2023.