PMLA Invocation for Criminal Conspiracy U/s 120B IPC, Requires Link to Money Laundering Conspiracy

The Supreme Court in the case titled ‘Pavana Dibbur Vs. Directorate of Enforcement’ held that a money-laundering case cannot be initiated based solely on allegations of criminal conspiracy unless the conspiracy is linked to a money-laundering offence specified in the Prevention of Money Laundering Act (PMLA).


The bench of Justices Abhay S Oka and Pankaj Mithal emphasized that allowing criminal conspiracy as a scheduled offence independently would render the PMLA redundant. The court underscored that Section 120-B of the Indian Penal Code becomes a scheduled offence only if the alleged conspiracy is related to an existing scheduled or money laundering offence.


The decision stemmed from an appeal challenging a Karnataka High Court ruling that refused to quash a money-laundering case against a former Vice-Chancellor accused of misusing student fees. The Supreme Court concluded that, except for Section 120B of the IPC, no scheduled offence under the PMLA had been invoked, thereby barring prosecution under Section 3 of the PMLA.


The court rejected the argument that the PMLA could only be invoked against a person accused of a scheduled offence, stating that those implicated after the scheduled offence could still face prosecution. The ruling underscores the need for a strict interpretation of the PMLA and guards against transforming every non-scheduled offence into a PMLA offence, emphasizing the Act’s criminal nature. The decision aligns with a recent oral opinion by a three-judge bench, asserting that the ED cannot use the PMLA for tax evasion cases merely by citing a “criminal conspiracy” charge, as offences under the Income Tax Act are not scheduled under the PMLA.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. The content may not reflect the most current legal developments and is not guaranteed to be accurate, complete, or up-to-date. Readers should consult a qualified legal professional before taking any action based on the information provided. The authors and publishers disclaim any liability for any loss or damage incurred as a result of reliance on this article. This article does not create an attorney-client relationship.

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