A) Abstract / Headnote

This case revolves around the applicability of the Prevention of Money Laundering Act, 2002 (PMLA) to a complaint filed under Section 44(1)(b). The crux of the issue was whether offenses listed in the complaint qualify as scheduled offenses under Section 2(1)(y) of the PMLA. The petitioners argued that only Section 120B of the IPC was a scheduled offense, while the others were not. The court examined the requirement of a scheduled offense to establish “proceeds of crime” under Section 3 of the PMLA. Concluding that the absence of a scheduled offense negated the existence of proceeds of crime, the court quashed the complaint based on ECIR/RPZO/11/2022. The judgment emphasizes the legislative framework of the PMLA and its reliance on the foundational concept of scheduled offenses.

Keywords: Prevention of Money Laundering Act, Scheduled Offense, Section 120B IPC, Proceeds of Crime, Cognizance.

B) Case Details

i. Judgment Cause Title
Yash Tuteja & Anr. v. Union of India & Ors.

ii. Case Number
Writ Petition (Criminal) No. 153 of 2023

iii. Judgment Date
April 8, 2024

iv. Court
Supreme Court of India

v. Quorum
Justice Abhay S. Oka, Justice Ujjal Bhuyan

vi. Author
Justice Abhay S. Oka

vii. Citation
[2024] 4 S.C.R. 591 : 2024 INSC 301

viii. Legal Provisions Involved

• Prevention of Money Laundering Act, 2002 (Sections 2(1)(y), 3, 4, 44, and 46)
• Indian Penal Code, 1860 (Sections 120B, 191, 199, 200, and 204)
• Code of Criminal Procedure, 1973 (Sections 200–204)

ix. Judgments Overruled by the Case (if any)
None.

x. Case is Related to which Law Subjects
Criminal Law, Money Laundering, Procedural Law, Constitutional Law.

C) Introduction and Background of Judgment

The petitioners filed writ petitions under Article 32 of the Constitution, challenging a complaint under the PMLA initiated by the Directorate of Enforcement. The allegations involved offenses under the Income-tax Act, 1961, read alongside the IPC. Crucially, except for Section 120B IPC, none of the offenses were scheduled offenses as defined under Section 2(1)(y) of the PMLA. The petitioners sought quashing of the complaint on grounds that the absence of a scheduled offense invalidated the proceedings under the PMLA.

D) Facts of the Case

1. The Directorate of Enforcement initiated a complaint under Section 44(1)(b) of the PMLA, based on an Enforcement Case Information Report (ECIR).
2. The complaint referred to alleged offenses under the Income-tax Act, 1961, coupled with IPC provisions like Sections 120B, 191, 199, 200, and 204.
3. The petitioners argued that only Section 120B IPC qualified as a scheduled offense, which itself required conspiracy to commit an offense included in the Schedule to the PMLA.
4. The petitioners contended that the absence of such a scheduled offense undermined the existence of “proceeds of crime,” a prerequisite under Section 3 of the PMLA.
5. The complaint was challenged for lack of jurisdiction and maintainability.

E) Legal Issues Raised

1. Whether the offenses alleged in the complaint qualify as scheduled offenses under the PMLA?
2. Can proceedings under the PMLA be sustained without the existence of proceeds of crime?
3. Does the cognizance taken by the Special Court comply with the procedural requirements under the CrPC and PMLA?

F) Petitioners’ Arguments

1. Non-scheduled Offenses:
   The petitioners emphasized that except for Section 120B IPC, none of the offenses alleged in the complaint were scheduled offenses under Section 2(1)(y) of the PMLA. Even Section 120B IPC requires a conspiracy to commit a scheduled offense, which was absent in this case.

2. Absence of Proceeds of Crime:
   They argued that “proceeds of crime,” as defined under Section 2(1)(u) of the PMLA, cannot exist without a scheduled offense. Thus, the applicability of Section 3 was untenable.

3. Improper Cognizance:
   The petitioners highlighted that the Special Court had not properly applied its mind, as required under Sections 200–204 of the CrPC, before taking cognizance.

G) Respondents’ Arguments

1. Sufficiency of Allegations:
   The respondents contended that the conspiracy under Section 120B IPC sufficed to establish a scheduled offense under the PMLA, irrespective of whether the co-accused were charged under the scheduled offense.

2. Legislative Intent:
   The respondents argued that the scheme of the PMLA permits proceeding against individuals even if the predicate offense is not formally charged.

3. Prima Facie Case:
   The respondents asserted that the allegations in the ECIR and complaint made out a prima facie case under the PMLA.

H) Judgment

a. Ratio Decidendi

1. Scheduled Offense Requirement:
   A conspiracy under Section 120B IPC qualifies as a scheduled offense only if the conspiracy relates to an offense explicitly listed in the Schedule to the PMLA.

2. Proceeds of Crime Dependency:
   The existence of “proceeds of crime” under Section 2(1)(u) of the PMLA is contingent upon the commission of a scheduled offense. Without such an offense, no proceeds of crime can exist, and Section 3 of the PMLA is inapplicable.

3. Special Court’s Role:
   The Special Court must assess prima facie evidence before taking cognizance, applying provisions of Sections 200–204 of the CrPC, unless explicitly overridden by the PMLA.

b. Obiter Dicta

• The court emphasized that procedural safeguards under the CrPC apply to the PMLA unless explicitly excluded.

c. Guidelines

1. Scheduled Offenses:
   Offenses alleged under the PMLA must align with the Schedule’s requirements.

2. Procedural Compliance:
   Special Courts must strictly follow the procedural requirements under Sections 200–204 of the CrPC while taking cognizance of complaints.

I) Conclusion and Comments

The court quashed the complaint for lack of a foundational scheduled offense, reaffirming the critical role of scheduled offenses under the PMLA framework. The judgment clarifies the interplay between substantive and procedural law under the PMLA, emphasizing adherence to legislative intent.

J) References

a. Important Cases Referred

1. Pavana Dibbur v. Directorate of Enforcement [2023] 13 SCR 1049
2. State of Haryana v. Bhajan Lal [1992] Supp (1) SCC 335

b. Important Statutes Referred

1. Prevention of Money Laundering Act, 2002
2. Indian Penal Code, 1860
3. Code of Criminal Procedure, 1973