SC upholds Nov order, says 120B can't be invoked if conspiracy not related to scheduled PMLA offence

The Supreme Court has dismissed a petition seeking a review of its verdict which held that a person cannot be booked under the Prevention of Money Laundering Act (PMLA) by invoking section 120B of the IPC (criminal conspiracy to commit an offence) if the alleged conspiracy is not related to a scheduled offence under the PMLA.

A bench of justices Abhay S. Oka and Pankaj Mithal dismissed the petition seeking review of the 29 November 2023 verdict that also said 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.

"Applications seeking hearing of the review petitions in Open Court are rejected. Delay condoned. We have perused the judgement and order dated November 29, 2023, which has been sought to be reviewed. There is no error apparent on the record. Even otherwise, there is no ground for review. Review petitions are dismissed," the bench ordered in its recent order.

On 29 November, the top court had said, "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."

In the verdict, the top court had interpreted the provisions of the PMLA and said 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, it had said.

"The legislative intent which can be gathered from the definition of the scheduled offence under clause (y) of sub-section (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," it had said.

The bench had said allowing criminal conspiracy to be a scheduled offence by itself, without any link to the scheduled offence included in the PMLA, would make the schedule "meaningless or redundant".

"If section 120­B of IPC can be treated as a stand-alone 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," it said.

The bench had said only because there is a conspiracy to commit an offence, the same does not become an aggravated offence. "Conspiracy is an agreement between the accused to commit an offence," it said, adding the interpretation suggested by the Enforcement Directorate will defeat the legislative object of making only a few selected offences as scheduled offences.

The bench held, "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."

The top court had pronounced the verdict in November 2023 on an appeal against a Karnataka High Court order, which had refused to quash a money laundering case against a former vice-chancellor of Alliance University.

The ED had booked her under provisions of PMLA by invoking section 120B of IPC, though the offences for which the accused was charged were not scheduled offences.