PMLA proceedings need a scheduled offence foundation; attachment and complaint fail where the alleged predicate offence is not scheduled.
Proceedings under the Prevention of Money Laundering Act, 2002 require proceeds of crime traceable to a scheduled offence. Where the alleged predicate conduct was only conspiracy to commit an offence under Section 409 IPC, and that offence was treated as not constituting a scheduled offence, the PMLA complaint could not be sustained. On the same defective foundation, the provisional attachment under Section 5 and connected ECIR-linked orders also lacked jurisdiction and were quashed. The consequential seized movable properties were directed to be released.
Issues: (i) Whether proceedings under the Prevention of Money Laundering Act, 2002 could be sustained when the predicate offence alleged was conspiracy to commit an offence under Section 409 of the Indian Penal Code, 1860, which was treated as not constituting a scheduled offence; (ii) whether the provisional attachment and connected orders issued under the Prevention of Money Laundering Act, 2002 were without jurisdiction and liable to be quashed.
Issue (i): Whether proceedings under the Prevention of Money Laundering Act, 2002 could be sustained when the predicate offence alleged was conspiracy to commit an offence under Section 409 of the Indian Penal Code, 1860, which was treated as not constituting a scheduled offence.
Analysis: The complaint and provisional attachment proceeded on the basis that the alleged criminal conspiracy to commit the offence under Section 409 of the Indian Penal Code, 1860 amounted to the relevant predicate conduct. The governing principle applied was that prosecution under Section 3 of the Prevention of Money Laundering Act, 2002 requires proceeds of crime traceable to a scheduled offence. A mere allegation of conspiracy to commit an offence which is not itself a scheduled offence does not satisfy that jurisdictional requirement.
Conclusion: The PMLA complaint could not be sustained on that basis and was liable to be quashed.
Issue (ii): Whether the provisional attachment and connected orders issued under the Prevention of Money Laundering Act, 2002 were without jurisdiction and liable to be quashed.
Analysis: Once the complaint itself was held to be not maintainable for want of a scheduled offence and corresponding proceeds of crime, the attachment machinery invoked under Section 5 of the Prevention of Money Laundering Act, 2002 also lacked jurisdictional foundation. The impugned ECIR-linked proceedings and attachment orders stood on the same defective basis and could not survive independently.
Conclusion: The provisional attachment and the connected impugned orders were without jurisdiction and were quashed.
Final Conclusion: The connected proceedings under the Prevention of Money Laundering Act, 2002 could not be sustained in the absence of a valid scheduled offence foundation, and the consequential seized movable properties were directed to be released.
Ratio Decidendi: Proceedings under the Prevention of Money Laundering Act, 2002 cannot be maintained unless the alleged proceeds of crime are traceable to a scheduled offence; where that foundation is absent, the complaint and consequential attachment orders lack jurisdiction.
TaxTMI 
AI Drafter ✕
TaxTMI 
