As key cases fall in courts, ED to staff: No PMLA on basis of conspiracy alone

The latest move follows recent “setbacks” in such cases, including two that were dismissed by the Supreme Court: one against Congress leader and Karnataka Deputy Chief Minister D K Shivakumar, and another against a retired IAS officer who had served under Congress leader and Chhattisgarh ex-CM Bhupesh Baghel.

A “predicate offence” here refers to the criminal activity mentioned in a primary FIR registered by another agency on which the ED case is based. Under PMLA, the ED can register a case only on the basis of an FIR filed by an investigative agency, such the CBI, state police or, in some cases, even the IT department.

“There is no point in facing setbacks in court after working hard on cases. The Supreme Court has made it clear that IPC section 120B cannot be construed as a standalone predicate offence under the PMLA. What the apex court says is the law. So, instructions to that effect have been passed on,” a senior ED official said.

In the past few years, the ED has proceeded with some high-profile cases where there was no predicate offence barring 120B.

But the courts, including the Supreme Court, have subsequently ruled that section 120B cannot be listed as the sole “predicate offence”, which should also have an offence related to the “criminal conspiracy” which falls under the PMLA’s ambit.

It was in November 2023 that the Supreme Court ruled against the invocation of PMLA solely on the basis of section 120B. The ruling came on an ED case against Pavana Dibbur, who was the acting head of a private university in Karnataka, over a land deal from 2020. “The offence punishable under Section 120 B of the IPC (criminal conspiracy) will become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the schedule,” the Supreme Court had said.

The ruling, by Justices Abhay Oka and Pankaj Mithal, had said, “…if the submissions of the learned Additional Solicitor General are accepted, the (PMLA) Schedule will become meaningless or redundant. The reason is that even if an offence registered is not a scheduled offence, the provisions of the PMLA and, in particular, Section 3 will be invoked by simply applying Section 120­B.”

This ruling was referred to by the apex court in March this year while dismissing the ED’s case against D K Shivakumar who was booked in 2018 in connection with a case of money laundering for alleged tax evasion, and arrested in 2019. The apex court ruled that the “question of whether 120B IPC can constitute a predicate standalone offence to enable ED to invoke PMLA has already been decided…”

Similarly, an ED case regarding an alleged liquor scam, in which Chhattisgarh’s Baghel had also come under the scanner, was quashed by the Supreme Court for the same reason. In this case, the ED had listed retired IAS officer Anil Tuteja and his son Yash as key accused.

“As there is no scheduled offence… there cannot be any proceeds of crime within the meaning of clause (u) of section 2 of PMLA… If there are no proceeds of crime, obviously offence under section 3 of PMLA is not made out,” said a bench of Justices Oka and Ujjal Bhuyan.

The ED then registered a fresh case based on another FIR by the Chhattisgarh police where provisions of Prevention of Corruption Act were invoked, and Tuteja was subsequently arrested.

Another such case, pending in court, accuses Amnesty International of alleged money laundering based on a CBI FIR in 2019. The CBI had booked Amnesty for violation of the Foreign Contribution Regulation Act (FCRA) apart from criminal conspiracy. Since FCRA does not fall under the PMLA’s ambit, the ED listed “criminal conspiracy” as the basis of its probe and prosecution complaint.

The IPC, incidentally, was replaced this year by Bharatiya Nyaya Sanhita (BNS).