Money-laundering complaint needs a scheduled offence; Special Court must use CrPC complaint procedure before cognizance.

A money-laundering complaint cannot be sustained unless it is founded on a scheduled offence, because proceeds of crime are a statutory precondition for liability under Section 3 of the PMLA. Where the alleged predicate offences under the Income-tax Act and the IPC, other than a conspiracy charge, are not scheduled offences and no conspiracy to commit a scheduled offence is pleaded, the complaint fails to disclose the offence of money-laundering and is liable to be quashed to that extent. The Special Court must also follow the CrPC complaint procedure under Sections 200 to 204 before taking cognizance, but that exercise is unnecessary where no prima facie PMLA offence is made out.

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Issues: (i) Whether a complaint under the Prevention of Money-Laundering Act could survive when the alleged predicate offences were not scheduled offences and, consequently, whether any proceeds of crime existed; (ii) Whether the Special Court was required to apply the procedure under Sections 200 to 204 of the Code of Criminal Procedure, 1973 before taking cognizance on the complaint.

Issue (i): Whether a complaint under the Prevention of Money-Laundering Act could survive when the alleged predicate offences were not scheduled offences and, consequently, whether any proceeds of crime existed.

Analysis: The complaint was founded on offences under the Income-tax Act, 1961 and allied offences under the Indian Penal Code, 1860, but apart from Section 120B of the Indian Penal Code, 1860, the alleged offences were not scheduled offences under the Prevention of Money-Laundering Act, 2002. A conspiracy under Section 120B of the Indian Penal Code, 1860 can attract the Schedule only if the conspiracy is to commit an offence that is itself scheduled. As the complaint did not allege conspiracy to commit a scheduled offence, the predicate offences did not satisfy the statutory requirement. In the absence of a scheduled offence, there can be no proceeds of crime, and without proceeds of crime, the offence under Section 3 of the Prevention of Money-Laundering Act, 2002 is not made out.

Conclusion: The complaint could not be sustained insofar as it rested on non-scheduled offences, and the proceedings under the Prevention of Money-Laundering Act were liable to be quashed to that extent.

Issue (ii): Whether the Special Court was required to apply the procedure under Sections 200 to 204 of the Code of Criminal Procedure, 1973 before taking cognizance on the complaint.

Analysis: Section 46(1) of the Prevention of Money-Laundering Act, 2002 makes the Code of Criminal Procedure, 1973 applicable to proceedings before the Special Court save as otherwise provided in the Act. Since the Act does not override the provisions governing examination of a complaint, the Special Court must consider whether a prima facie offence under Section 3 of the Prevention of Money-Laundering Act, 2002 is disclosed. If no prima facie case is made out, the complaint can be dismissed under Section 203 of the Code of Criminal Procedure, 1973; if a prima facie case exists, process may issue under Section 204 of the Code of Criminal Procedure, 1973.

Conclusion: The Special Court was bound to apply the complaint procedure under the Code of Criminal Procedure, 1973, but in the facts of the case such exercise would have been futile because no offence under Section 3 of the Prevention of Money-Laundering Act, 2002 was disclosed.

Final Conclusion: The absence of a scheduled offence meant that the statutory foundation for money-laundering proceedings was missing, and the complaint was quashed insofar as it concerned the petitioners against whom relief was granted.

Ratio Decidendi: A money-laundering prosecution cannot be maintained unless a scheduled offence exists, because the existence of proceeds of crime is a statutory precondition for invoking Section 3 of the Prevention of Money-Laundering Act, 2002.

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