The Supreme Court has ruled that occurrence of a scheduled offences was the basic condition for giving rise to “proceeds of crime”; and commission of scheduled offence was a precondition for proceeding under the PMLA 2002.
The appellants herein have questioned the judgment and order dated 17.12.2020 as passed by the High Court of Karnataka at Bengaluru whereby, the High Court allowed the revision petition filed by the respondent for the offence under Section 3 of the Prevention of Money- Laundering Act, 2002. The accused no. 1 during his tenure as Deputy Revenue Officer, amassed assets disproportionate to his known source of income to an extent of Rs.42,25,859/-. For this, the Lokayukta Police registered a case under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act, 1988. During the pendency of trial, the Directorate of Enforcement registered a case against the accused No. 1 and the appellants under the Act of 2002 and filed a complaint before the Special Court for trial of the offence under Section 3 thereof.
In the meantime, the Special Judge (Lokayukta) acquitted the accused No. 1 of the offences aforesaid under the Act of 1988 while observing that the evidence produced by the
prosecution was insufficient to hold him guilty. Then, the accused No. 1 as also the present appellants moved an application under Section 277 of the Code of Criminal Procedure, 1973 seeking discharge in the case pertaining to the Act of 2002.
Thereafter, the Trial Court, by its judgment, allowed the application and discharged the appellants from the offences pertaining to the Act of 2002 while observing that occurrence of a scheduled offences was the basic condition for giving rise to “proceeds of crime”; and commission of scheduled offence was a precondition for proceeding under the Act of 2002.
Aggrieved by the said discharge order, the Directorate preferred a revision petition before the High Court. The High Court proceeded to set aside the discharge order while observing that the allegations made in the complaint and the material produced, prima facie, made out sufficient ground for proceeding against the appellants for offences under the Act of 2002.
The Authorities under the 2002 Act cannot prosecute any person on notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. If the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money laundering against him or any one claiming such property being the property linked to stated scheduled offence through him The Court allowing the appeal held that “the result of the discussion aforesaid is that the view as taken by the Trial Court in this matter had been a justified view of the matter and the
High Court was not right in setting aside the discharge order despite the fact that the accused No. 1 had already been acquitted in relation to the scheduled offence and the present appellants were not accused of any scheduled offence.”
CASE: Parvathi Kollur & others V. State by Directorate of Enforcement
CITATION: CRIMINAL APPEAL NO. 1254 OF 2022 (Arising out of S.L.P.(Crl.) No. 4258 of 2021
BENCH: Justice Dinesh Maheshwari, Justice Krishna Murari
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