Pavana Dibbur   (Appellant)  Vs.   The Directorate of Enforcement  ( Respondent)

CRIMINAL APPEAL NO.2779 OF 2023

(2JB, Abhay S. Oka and Pankaj Mithal JJ., delivered by Abhay S. Oka J.)

Facts: The respondent–the   Directorate   of   Enforcement (for short, ‘ED’), filed a complaint under the second proviso to Section   45(1)   of   the   Prevention   of   Money   Laundering   Act, 2002 before the Special Court for PMLA Cases   at   Bengaluru.     The   appellant–Pavana   Dibbur   was shown as accused no.6 in the said complaint.  By the order dated 17th March 2022, the Special Court took cognisance of the said complaint.  The appellant filed a petition before the High Court of Karnataka at Bengaluru under Section 482 of the   Code   of   Criminal   Procedure, 1973   seeking the relief of quashing of the said complaint.  By the impugned judgment and order dated 27th September 2022, the petition for quashing the complaint has been dismissed.

Issue: Whether the court has rightly dismissed the quashing petition under section 482 of the Cr.P.C.?

Arguments on behalf of counsel for appellant: Ms   Meenakshi   Arora

The   learned   senior   counsel appearing for the appellant, firstly submitted that the first and   second   properties   are   not   tainted   properties   and, therefore, the   same   are   not   covered   by   the   definition   of “proceeds   of   crime” under clause (u)  of   sub­section   (1)   of Section 2 of the PMLA.   The learned senior counsel pointed out that the first property was acquired on 1st  July 2013, much prior to the commission of the first scheduled offence. The allegation in the FIR dated 11th  November 2017 against accused no.1  is that he collected a sum of about Rs.107 crores   from   the   students   between   January   and   November 2017   and   transferred   the   said   amount   to   his   account. Therefore, the appellant’s acquisition of the first property can never be linked with the proceeds of the crime regarding the scheduled   offence.     She   submitted   that   regarding   the acquisition of the second property, the appellant had her own resources available to acquire the same.  The learned senior counsel   relied   upon   an   Income   Tax   Return   filed   by   the appellant under the Income Declaration Scheme, 2016, by which   she   declared   a   total   undisclosed   income   of Rs.26,42,54,193/­.     The   appellant   paid   Rs.11,89,08,385/­ towards income tax and penalty on 8th September 2016.  The return   was   filed   on   12th  September  2016. Therefore, the appellant had a source of money for acquiring the second property for the consideration of Rs.2.47 crores.   Both the properties acquired by the appellant had no nexus at all with the proceeds of crime of the scheduled offences.

Arguments on behalf of counsel for respondent: Shri S.V. Raju

The learned Additional Solicitor General appearing for the ED, submitted that even assuming that the appellant   had   monetary   capacity   to   acquire   the   second property, one cannot conclude that the funds siphoned by the accused no.1, which constitute proceeds of crime, were not used by the appellant for acquiring the second property.  He submits that this issue can be gone into only at the time of trial.     Regarding   the   second   submission, the   learned Additional Solicitor General submitted that a person can be held guilty of the commission of a money laundering offence under Section 3 of the PMLA, even if he is not shown as an accused in the predicate offence.   He submitted that it is apparent from the provision of Section 3 of the PMLA that in a given case, a person who is not an accused in the predicate offence   can   commit   the   offence   of   money   laundering. Regarding   the   third submission, the   learned   Additional Solicitor   General   submitted   that   wherever   the   legislature intended, it has made a particular offence read with another offence as a scheduled offence.   He invited our attention to Paragraphs 4 and 6 of Part A of the Schedule to the PMLA. Referring to Paragraph 11 of the Schedule to the PMLA, he urged that the first four offences in Paragraph 4 and all the offences   in   Paragraph   6   clearly   show   the   legislature’s intention.  He submitted that the schedule must be read as it is, and nothing can be added or subtracted from the Schedule considering the objects of the PMLA.  He submitted that the validity of the Schedule has been upheld in the case of Vijay Madanlal Choudhary. He would, therefore, submit that no interference is called for with the impugned order.

Held: The court allowed the present appeal and 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. 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. 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. 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. 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.”