No Predicate Offence, No PMLA: The Jurisdictional Foundation of Money-Laundering Prosecution
The offence of money-laundering is independent in its ingredients and trial, but it is not legally self-generating. Its jurisdictional foundation is property derived or obtained from criminal activity relating to a scheduled offence. Without that foundation, there can be no “proceeds of crime” under Section 2(1)(u) and, consequently, no offence under Section 3 of the Prevention of Money-Laundering Act, 2002.
The statutory chain
Section 3 criminalises specified dealings with proceeds of crime. Section 2(1)(u) defines those proceeds by reference to criminal activity relating to a scheduled offence. Section 2(1)(y) identifies a scheduled offence by reference to the Schedule. Each link must therefore exist: a legally cognisable scheduled offence, property generated by criminal activity relating to it, and the accused’s involvement in one or more processes or activities concerning that property.
In Yash Tuteja v. Union of India, 2024 INSC 301, the Supreme Court stated the position directly: existence of a scheduled offence is a condition precedent to the existence of proceeds of crime; without proceeds of crime, Section 3 is not attracted. The Court quashed the complaint where the offences relied upon, apart from Section 120-B IPC, were not scheduled offences and the alleged conspiracy was not to commit an offence included in the Schedule.
Section 120-B IPC and the corresponding BNS position
Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586, holds that Section 120-B IPC becomes a scheduled offence only when the alleged conspiracy is to commit an offence specifically included in the PMLA Schedule. The label “criminal conspiracy” cannot convert an unscheduled offence into a scheduled one.
For conduct governed by the Bharatiya Nyaya Sanhita, 2023, criminal conspiracy is addressed by Section 61 BNS. The PMLA Schedule and the dates of the alleged conduct must be checked carefully before assuming that a new-code provision supplies the predicate.
Acquittal, discharge and quashing
Vijay Madanlal Choudhary v. Union of India, 2022 INSC 757, explains that if a person is finally discharged or acquitted of the scheduled offence, or the scheduled-offence proceedings are quashed, money-laundering proceedings based only on the property allegedly derived from that criminal activity cannot survive. Pavana Dibbur further clarifies that even a person not arrayed as an accused in the predicate case receives the benefit when all accused in that case are acquitted or discharged, or the predicate proceedings are quashed.
This rule must be applied precisely. A bail order, interim stay, pending discharge application or incomplete investigation is not a final extinguishment of the predicate offence. Nor will termination of one FIR necessarily defeat a PMLA case supported by another valid scheduled offence concerning the same alleged proceeds.
The accused need not be named in the predicate case
“No predicate offence, no PMLA” does not mean that every person prosecuted under Section 3 must also be an accused in the scheduled offence. Pavana Dibbur rejects that proposition. A person who later knowingly assists in concealment, possession, acquisition, use, projection or claiming of proceeds may face Section 3 even if not prosecuted for generating the proceeds. What remains indispensable is the existence of criminal activity relating to a scheduled offence and identifiable proceeds arising from it.
A practical litigation test
Courts and parties should insist on a property-by-property and offence-by-offence map: the precise scheduled provision; the FIR, complaint or final report; the alleged criminal activity; the property said to have been generated; the route by which it reached the person concerned; and the final status of the predicate case. General allegations of economic wrongdoing cannot substitute for this statutory analysis.
The central principle is therefore one of disciplined dependence. Money-laundering is a distinct offence, but “proceeds of crime” remain tethered to a scheduled offence. If that legal source disappears finally, the dependent PMLA case cannot continue merely on suspicion that wealth is unexplained.
Sources
Supreme Court of India, Yash Tuteja v. Union of India, 2024 INSC 301: https://api.sci.gov.in/supremecourt/2023/14771/14771_2023_8_68_52049_Judgement_08-Apr-2024.pdf
Supreme Court of India, Vijay Madanlal Choudhary v. Union of India, 2022 INSC 757: https://api.sci.gov.in/supremecourt/2014/3989/3989_2014_4_1501_36874_Judgement_27-Jul-2022.pdf
Supreme Court of India, Pavana Dibbur v. Directorate of Enforcement, Criminal Appeal No. 2779 of 2023, decided 29 November 2023, 2023 SCC OnLine SC 1586.
Prevention of Money-Laundering Act, 2002: https://upload.indiacode.nic.in/showfile?actid=AC_CEN_2_2_00035_200315_1517807326550&filename=a2003-15.pdf&type=actfile
#PMLA #PredicateOffence #SupremeCourt