PMLA prosecution needs a scheduled offence; conspiracy alone cannot sustain proceedings when the underlying offence is unscheduled.
PMLA prosecution requires a scheduled offence and corresponding proceeds of crime. The Madras HC held that a conspiracy conviction under Section 120-B IPC does not satisfy that requirement unless the conspiracy is to commit an offence already included in the PMLA Schedule. Because the underlying offence here was not a scheduled offence, the complaint lacked statutory foundation and was not maintainable. The Court also held that the communication withholding compensation and the provisional attachment order were only consequential to the invalid PMLA proceedings, so they could not survive and were set aside as without jurisdiction.
Issues: (i) Whether a complaint under the Prevention of Money Laundering Act, 2002 could be maintained when the predicate conviction was only for criminal conspiracy under Section 120-B of the Indian Penal Code, 1860 to commit an offence that is not a scheduled offence; (ii) Whether the communication directing withholding of the compensation amount and the provisional attachment order could survive once the PMLA proceedings were found to be without jurisdiction.
Issue (i): Whether a complaint under the Prevention of Money Laundering Act, 2002 could be maintained when the predicate conviction was only for criminal conspiracy under Section 120-B of the Indian Penal Code, 1860 to commit an offence that is not a scheduled offence.
Analysis: The complaint proceeded on the basis that the petitioner had been convicted for conspiracy and offences arising from Section 409 of the Indian Penal Code, 1860. The Court applied the principle that an offence under Section 120-B of the Indian Penal Code, 1860 becomes a scheduled offence only when the conspiracy is to commit an offence already included in the Schedule to the Prevention of Money Laundering Act, 2002. Since the underlying offence of Section 409 of the Indian Penal Code, 1860 is not a scheduled offence, the prerequisite of a scheduled offence giving rise to proceeds of crime was absent. The complaint therefore lacked the statutory foundation required for prosecution under Section 3 of the Prevention of Money Laundering Act, 2002.
Conclusion: The complaint was not maintainable and was liable to be quashed.
Issue (ii): Whether the communication directing withholding of the compensation amount and the provisional attachment order could survive once the PMLA proceedings were found to be without jurisdiction.
Analysis: The withholding communication and the provisional attachment were founded on the same premise that the petitioner was involved in a scheduled offence generating proceeds of crime. Once the Court held that no scheduled offence was made out and that the respondent lacked jurisdiction to invoke the Prevention of Money Laundering Act, 2002, the ancillary measures taken to restrain the compensation amount and attach the property could not stand. Those actions were consequential to the invalid PMLA proceedings and were therefore unsustainable.
Conclusion: The communication and the provisional attachment order were set aside as without jurisdiction.
Final Conclusion: The petitioner's challenge succeeded because the alleged predicate act did not amount to a scheduled offence under the money-laundering statute, and all consequential coercive measures based on that premise fell with it.
Ratio Decidendi: A prosecution under the Prevention of Money Laundering Act, 2002 requires a scheduled offence and corresponding proceeds of crime; criminal conspiracy under Section 120-B of the Indian Penal Code, 1860 is a scheduled offence only when the conspiracy is to commit an offence already included in the Schedule.
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AI Drafter ✕
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