In a groundbreaking ruling, the Supreme Court has clarified that being accused under Section 3 of the Prevention of Money Laundering Act (PMLA) does not necessarily require a parallel accusation in the scheduled offense. The judgment underscores that individuals, unrelated to the scheduled offense but actively involved in concealing the proceeds of crime, can face charges under Section 3 of the PMLA.
The verdict, delivered by Justices Abhay S. Oka and Pankaj Mithal, stemmed from an appeal against the Karnataka High Court’s decision to uphold proceedings in a money laundering case involving the former Vice-Chancellor of Alliance University. The Enforcement Directorate (ED) had filed charges against her, alleging offenses under sections 44 and 45 of the PMLA.
The accusations revolved around her tenure as VC, during which she was accused of conspiring with Madhukar Angur to execute a fraudulent sale deed and using her bank accounts to conceal embezzled funds from the university. The predicate offense involved charges under Sections 143, 406, 407, 408, 409, and 149 of the Indian Penal Code.
Challenging the proceedings under Section 482 of the Criminal Procedure Code (CrPC), the petitioner faced a setback at the Karnataka High Court, which emphasized the broader scope of “any person” rather than “any accused” in PMLA proceedings. The High Court ruled that even aiding in the process or activity constitutes a part of the crime of money laundering.
Undeterred, the petitioner approached the Supreme Court, prompting a meticulous examination of the conditions under Section 3 of the PMLA. The Court clarified that the crucial elements are the existence of a scheduled offense and the presence of proceeds of crime related to the scheduled offense.
Drawing on a practical example involving extortion offenses, the Court illustrated that a person unconnected with the scheduled offense may assist in concealing the proceeds of crime. Importantly, the judgment emphasized that if proceedings for the scheduled offense conclude with the acquittal or discharge of all accused, or if the proceedings are quashed, the scheduled offense ceases to exist, barring prosecution under Section 3 of the PMLA.
However, the Court emphasized that an individual accused under the PMLA, who becomes involved after the commission of the scheduled offense by aiding in the concealment or use of proceeds of crime, need not be an accused in the scheduled offense. Such individuals can still face prosecution under the PMLA, provided the scheduled offense exists.
In a notable statement, the Court asserted, “Even if an accused shown in the complaint under the PMLA is not an accused in the scheduled offense, he will benefit from the acquittal of all the accused in the scheduled offense or discharge of all the accused in the scheduled offense.”
This landmark decision clarifies the standalone nature of PMLA accusations and establishes a precedent for future cases.
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