Pavana Dibbur Vs. The Directorate of Enforcement - 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;

SCI (29.11.2023) in Pavana Dibbur Vs. The Directorate of Enforcement [Criminal Appeal No. .2779 of 2023, Neutral Citation 2023 INSC 1029 ] held that.

• 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;

• 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; 

Excerpts of the Order;    

# 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 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.   What is held in paragraph 270 of the decision   of   this   Court   in   the   case   of  Vijay   Madanlal Choudhary  supports the above conclusion.  The conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of sub­section (1) of Section 3 of the PMLA. 

# 16. In a given case, if the prosecution for the scheduled offence ends in the acquittal of all the accused or discharge of all the accused or the proceedings of the scheduled offence are quashed in its entirety, the scheduled offence will not exist, and therefore, no one can be prosecuted for the offence 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 the complaint under Section 3 of the PMLA is filed   will   benefit   from   the   scheduled   offence   ending   by acquittal or discharge of all the accused.  Similarly, he will get the   benefit   of   quashing   the   proceedings   of   the   scheduled offence.  However, an accused in the PMLA case who comes into the picture after the scheduled offence is committed by assisting in the concealment or use of proceeds of crime need not be an accused in the scheduled offence. Such an accused can still be prosecuted under PMLA so long as the scheduled offence 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 filed in the scheduled offences deserves to be rejected.

CONCLUSIONS 

# 27. While   we   reject   the   first   and   second   submissions canvassed by the learned senior counsel appearing for the appellant,   the   third   submission   must   be   upheld.     Our conclusions are: 

• a. 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; 

• b. 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; 

• c. 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; 

• d. The   issue   of   whether   the   appellant   has   used tainted   money   forming   part   of   the   proceeds   of crime for acquiring the second property can be decided only at the time of trial; and 

• e. 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. 

# 28. Accordingly, the impugned order dated 27th  September 2022 is, hereby, quashed and set aside, and the complaint being Special C.C no.781 of 2022 pending before the Special Court for PMLA cases, Bengaluru is, hereby, quashed only insofar as the present appellant is concerned.

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