The Supreme Court ruled that authorities cannot initiate proceedings under the Prevention of Money Laundering Act (PMLA) using Section 120B of the Indian Penal Code unless the alleged criminal conspiracy involves a scheduled offence link.
In a case involving Pavana Dibbur v. The Directorate. The Supreme Court clarified that an offense under Section 120-B qualifies as a scheduled offense under PMLA only if the conspiracy targets a crime listed in the PMLA schedule.
The bench comprised Justices Abhay S Oka and Pankaj Mithal dismissed review petitions. They were filed by the Directorate of Enforcement and Alliance University seeking review of judgment delivered on November 29, 2023.
Background
The case stemmed from a complaint by the Enforcement Directorate against the former Vice-Chancellor of Alliance University, citing offences under sections 44 and 45 of the PMLA. Allegations suggested involvement in executing a sham sale deed and concealing money siphoned from the university.
Despite the FIR in the predicate offence not being registered under “scheduled offences,” the Enforcement Directorate invoked PMLA under Section 120B IPC, leading to controversy.
The Supreme Court’s decision reaffirms the necessity for a direct nexus between the alleged criminal conspiracy and a scheduled offence for PMLA applicability, safeguarding against misuse of the Act.
What Is PMLA
The Prevention of Money Laundering Act (PMLA), 2002 aims to curb money laundering in India. It mandates strict penalties for financial crimes. Authorities like the Enforcement Directorate (ED) investigate offenses. The act requires financial institutions to maintain records and report suspicious transactions. It empowers agencies to seize assets linked to illegal funds. PMLA covers crimes like fraud, corruption, and drug trafficking. Special courts handle money laundering cases for swift justice. Recent amendments strengthen enforcement and compliance. The law ensures transparency in financial dealings and prevents black money circulation. Compliance is crucial to avoid penalties and legal action.
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