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The Supreme Court has said if the Special Court is of the view that no prima facie case of an offence under Section 3 of the PMLA is made out, it must exercise the power under Section 203 of the CrPC to dismiss the complaint. 

If a prima facie case is made out, the Special Court can take recourse to Section 204 of the CrPC, it added.

A bench of Justices Abhay S Oka and Pankaj Mithal quashed the ECIR against Anwar Dhebar and Arun Pati Tripathi, dealing with their writ petitions.

The bench noted it is not in dispute that the alleged scheduled offences on which the complaint is based are under various sections of the Income-tax Act, 1961, read with Sections 120B, 191, 199, 200 and 204 of the IPC.

The court further noted it is also not in dispute that except for Section 120B of the IPC, none of the offences are scheduled offences within the meaning of clause (y) of sub-Section (1) of Section 2 of the PMLA. 

The bench relied upon the Supreme Court's judgment in 'Pavana Dibbur Vs Directorate of Enforcement' (2023) in which it was held the offence punishable under Section 120-B of the IPC will become a scheduled offence only if the conspiracy alleged is of committing an offence, specifically included in the Schedule.

"Hence, the offence punishable under Section 120B of the IPC could become a scheduled offence only if the conspiracy alleged is of committing an offence which is specifically included in the Schedule to the PMLA. In this case, admittedly, the offences alleged in the complaint except Section 120-B of IPC are not the scheduled offences," the bench said.

The court also pointed out conspiracy to commit any of the offences included in the Schedule has not been alleged in the complaint. 

As the conspiracy alleged is of the commission of offences which are not the scheduled offences, the offences mentioned in the complaint are not scheduled offences within the meaning of clause (y) of sub-Section (1) of Section 2 of the PMLA, it said.

The court further cited Pavana Dibbur, in which it was held that “The condition precedent for the existence of proceeds of crime is the existence of a scheduled offence.” 

"Therefore, in the absence of the scheduled offence, as held in the decision of this Court, there cannot be any proceeds of crime within the meaning of clause (u) of subSection (1) of Section 2 of the PMLA. If there are no proceeds of crime, the offence under Section 3 of the PMLA is not made out. The reason is that existence of the proceeds of crime is a condition precedent for the applicability of Section 3 of the PMLA," the bench said.

In the case, the ED submitted as the cognizance was not taken, this court should not entertain the prayer for quashing the complaint.

"In this case, no scheduled offence is made out the basis of the complaint as the offences relied upon therein are not scheduled offences. Therefore, there cannot be any proceeds of crime. Hence, there cannot be an offence under Section 3 of the PMLA. Therefore, no purpose will be served by directing the Special Court to apply its mind in accordance with Section 203 read with Section 204 of the Cr.PC. That will only be an empty formality," the bench said.

The bench pointed out the only mode by which the cognisance of the offence under Section 3, punishable under Section 4 of the PMLA, can be taken by the Special Court is upon a complaint filed by the Authority authorised on this behalf. 

It said Section 46 of PMLA provides that the provisions of the CrPC (including the provisions as to bails or bonds) should apply to proceedings before a Special Court and for the purposes of the CrPC provisions, the Special Court shall be deemed to be a Court of Sessions. However, sub-section (1) of Section 46 starts with the words “save as otherwise provided in this Act.” 

"Considering the provisions of Section 46(1) of the PMLA, save as otherwise provided in the PMLA, the provisions of the Code of Criminal Procedure, 1973 (for short, CrPC) shall apply to the proceedings before a Special Court. Therefore, once a complaint is filed before the Special Court, the provisions of Sections 200 to 204 of the CrPC will apply to the Complaint. There is no provision in the PMLA which overrides the provisions of Sections 200 to Sections 204 of CrPC," the bench said. 

"Hence, the Special Court will have to apply its mind to the question of whether a prima facie case of a commission of an offence under Section 3 of the PMLA is made out in a complaint under Section 44(1)(b) of the PMLA. If the Special Court is of the view that no prima facie case of an offence under Section 3 of the PMLA is made out, it must exercise the power under Section 203 of the CrPC to dismiss the complaint. If a prima facie case is made out, the Special Court can take recourse to Section 204 of the CrPC," the bench added.

The court noted in the case IAS officer Anil Tuteja and his son Yash Tuteja were not named as accused in the complaint related to alleged Rs 2000-Cr money laundering case.

As the ED submitted based on another First Information Report, which involved a scheduled offence, criminal proceedings under the PMLA are likely to be initiated against the petitioners, the bench said, it is not necessary for us to go into the issue of the legality and validity of the proceedings that are likely to be initiated at this stage.