Pavana Dibbur vs. The Directorate of Enforcement.

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INTRODUCTION:

In the case of *Pavana Dibbur v. The Directorate of Enforcement*, a criminal appeal challenges the complaint filed by the Enforcement Directorate under the Prevention of Money Laundering Act, 2002 (PMLA). This case centers on whether the properties acquired by the appellant constitute “proceeds of crime” and raises questions about holding an individual guilty of money laundering when not explicitly accused in the initial criminal charges. The case also offers a crucial interpretation of scheduled offences under the PMLA, especially in conjunction with Section 120-B of the Indian Penal Code (IPC). The court’s analysis provides a significant judicial development in the PMLA landscape, and the commentary below explores key arguments, judicial interpretations, and the implications of the decision, highlighting its favorable outcome for the appellant.

FACTS OF THE CASE:

1. In the case of Pavana Dibbur v. The Directorate of Enforcement, related to the Prevention of Money Laundering Act 2002, the respondent filed a complaint accusing Pavana Dibbur of violating the Prevention of Money Laundering Act in Bangalore. 
2. In 2011, Pavana Dibbur purchased a property from Alliance Business School, and in 2019, she acquired another property from Madhukar Angur. In 2017, a case was filed against Madhukar Angur for collecting money from students at Alliance University, falsely claiming to be the chancellor. During the period from 2011 to 2015, the appellant served as the vice-chancellor of the university.
3. In 2020, the Enforcement Directorate (ED) registered a case for money laundering against Madhukar Angur and others. In 2021, the ED attached properties and filed a complaint against Pavana Dibbur under the same case, alleging her involvement in assisting Madhukar Angur in using fraudulent bank accounts to move university funds, linking her to alleged illegal activities. 
4. On March 17, 2022, the special court considered this complaint, after which the appellant filed a petition to quash the complaint under Section 482 of the CRPC before the High Court of Karnataka. On September 27, 2022, the quash petition was dismissed. 
5. Currently, the appellant is appealing against the High Court order, seeking the quashing of the complaint filed against her under the Prevention of Money Laundering Act 2000.

ISSUES RAISED:

1. Are the properties acquired by the appellant considered “proceeds of crime” under the law?
2. Can the appellant be held guilty of money laundering even if she is not specifically accused in the initial criminal charges?
3. What does the law intend regarding charging individuals not directly accused in the primary criminal offense?
4. Is the list of scheduled offenses in the Prevention of Money Laundering Act legally sound and applicable in this case?

CONTENTIONS OF APPEALENT:

1. The counsel representing the appellant presented various arguments before the highest court to counter the allegations made by the respondent. Firstly, it was asserted that the first and second properties in question were not tainted and did not meet the criteria of “proceeds of crime” under the PMLA act. The appellant clarified that the first property was acquired before the commission of the scheduled offence. 
2. The second property was purchased using their own resources, substantiated by evidence from income tax returns filed during the acquisition. Secondly, in response to the charge sheet filed by the respondent, the appellant contended that it did not encompass implications under section 3 of the PMLA. Additionally, the appellant was not even mentioned as an accused in any scheduled offence under the PMLA.
3. Thirdly, the appellant argued that out of the four scheduled offences, only one offense under section 120-B of the IPC was mentioned in the charge sheet. The appellant emphasized that without an allegation of conspiracy to commit a scheduled offence, a charge under the PMLA could not be sustained. Consequently, the appellant urged the court to quash the complaint against her.

CONTENTIONS OF RESPONDENT: 

1. The additional solicitor general, who is representing the Enforcement Directorate in this case before the apex court, has rebutted the submissions made by the appellant. To begin with, they argued that even if the appellant possessed the financial capacity to acquire the second property, it cannot be definitively concluded that the funds allegedly proceeded of crime were not used for the purchase. The assertion was made that this matter should be examined during the trial. 
2. Secondly, they contended that the appellant could be found guilty of money laundering under section 3 of the PMLA, even if not named as an accused in the predicate offence. Section 3 allows for the commission of the offence of money laundering by a person not accused in the predicate offence. 
3. Thirdly, in response to the legislature, it was emphasized that in the PMLA, scheduled offences must be interpreted as they are, without any addition or subtraction. The counsel concluded by stating that there is no jurisdiction for interference in the impugned order.

JUDGEMENT: 

In essence, the argument presented is that if the prosecution for a scheduled offence results in the acquittal or discharge of all accused, or if the proceedings for the scheduled offence are entirely quashed, then the scheduled offence ceases to exist. Consequently, no one can be prosecuted under Section 3 of the Prevention of Money Laundering Act (PMLA) since there are no proceeds of crime. However, the counterargument is that an accused in a PMLA case, who becomes involved after the commission of the scheduled offence by assisting in the concealment or use of proceeds of crime, can still be prosecuted under the PMLA as long as the scheduled offence exists. Therefore, the contention that the appellant was not named as an accused in the chargesheets for the scheduled offences is rejected. Additionally, the argument based on the interpretation of the Schedule is addressed, emphasizing that, in this case, there is no allegation of criminal conspiracy for any offence in the Schedule beyond Section 120B of the IPC. Consequently, the scheduled offence does not exist, and the appellant cannot be prosecuted under Section 3 of the PMLA.

ANALYSIS:

1. The court establishes that it is not a prerequisite for a person accused under Section 3 of the Prevention of Money Laundering Act (PMLA) to be explicitly named as an accused in the scheduled offence.
2. Even if an accused in the PMLA complaint is not named in the scheduled offence, they will benefit from the acquittal or discharge of all accused in the scheduled offence, as well as from any order quashing the proceedings of the scheduled offence.
3. The court determines that the first property is not connected to the proceeds of the crime, as the acts constituting the scheduled offence occurred after the acquisition of the property.
4. The court notes that the question of whether the appellant used tainted money, part of the proceeds of crime, to acquire the second property can only be decided during the trial.
5. The court emphasizes that an offence punishable under Section 120-B of the Indian Penal Code (IPC) becomes a scheduled offence only if the alleged conspiracy is related to committing an offence explicitly included in the Schedule.

CONCLUSION:

In the case of Pavana Dibbur v. The Directorate of Enforcement, the court’s decisive verdict dismisses the initial two arguments while affirming the significance of the third presented by the appellant’s counsel. The judgment provides a crucial interpretation of “proceeds of crime” and scheduled offences under the Prevention of Money Laundering Act (PMLA), particularly in conjunction with Section 120-B of the Indian Penal Code (IPC). This nuanced analysis not only clarifies the legal standing of the appellant but also constitutes a notable development in understanding the intersection of scheduled offences and criminal conspiracy within the ambit of money laundering laws. The judgment stands as a pivotal milestone in shaping the evolving landscape of PMLA jurisprudence.

REFERENCES:

1. https://main.sci.gov.in/supremecourt/2022/42568/42568_2022_8_1501_48657_Judgement_29-Nov-2023.pdf
2. https://indiankanoon.org/doc/43352147/

This article is written by Deepika student at school of Execellence in Law, Tamil Nadu Dr. Ambedkar law university, Chennai. legal intern at legal vidhiya 

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