LI Network
Published on: November 22, 2023 at 17:22 IST
The Supreme Court Justice Sanjiv Khanna asserted that the Enforcement Directorate (ED) cannot apply the Prevention of Money Laundering Act (PMLA) against an accused using Section 120B of the Indian Penal Code (IPC), which pertains to criminal conspiracy, if the purported conspiracy is not linked to a scheduled offence under the PMLA.
The bench, comprising Justices Sanjay Kishan Kaul, Sanjiv Khanna, and Bela M Trivedi, is currently deliberating on a series of applications seeking a reevaluation of the 2022 verdict in Vijay Madanlal Chaudhary v. Union of India.
This previous ruling affirmed the ED’s authority in matters of arrest, summoning, search and seizure, as well as the imposition of stringent bail conditions and the reversal of the burden of proof under the PMLA.
The PMLA can only be invoked in connection to the “proceeds of crime” arising from offences listed in the schedule of the Act.
During the proceedings, Senior Advocates Kapil Sibal and Dr. Abhishek Manu Singhvi, representing the petitioners, informed the bench that the ED is applying the PMLA to cases of income tax evasion, even though the Income Tax Act is not a scheduled offence.
This is achieved by invoking Section 120B IPC, which is a scheduled offence, and alleging criminal conspiracy to commit income tax offences. Singhvi noted that Section 120B is often added as a standalone offence in numerous cases.
Justice Khanna expressed his disapproval of this ED approach, clarifying that unless the parent offence is included in the PMLA, the Act cannot be applied solely by alleging criminal conspiracy through Section 120B.
“If the ED says that by adding 120B added to a non-scheduled offence, cognisance can be taken under PMLA for registration of ECIR, then I have an issue,” Justice Khanna remarked.
Sibal argued that the original purpose of the PMLA was to address organized and cross-border crimes, including narcotic syndicates. However, a variety of ordinary crimes have been added as scheduled offences, deviating from the legislation’s original intent.
The ongoing hearing is scheduled to continue tomorrow.