New Delhi, Mar 5 (UNI) The Supreme Court on Tuesday quashed the money-laundering case against Karnataka Deputy Chief Minister DK Shivakumar being probed by the Enforcement Directorate (ED), saying that criminal conspiracy can be a charge under the PMLA only when the conspiracy relates to a crime enlisted as a scheduled offense under the 2000 Act.
A bench of Justices Surya Kant and KV Viswanathan said, given its November 2023 judgment, that criminal conspiracy, which is punishable under Section 120B of the Indian Penal Code (IPC), cannot be the only offense for initiating a money laundering probe.
Taking note of the Supreme Court’s judgment in the Pavana Dibbur case, in which another two-judge bench declared that criminal conspiracy can be a charge under the PMLA only when the conspiracy relates to a crime enlisted as a scheduled offense under the 2000 Act, the two-judge bench quashed the case being probed by ED against the congress leader.
The matter relates to a case in which Congress leader Shivakumar and a few others were accused of establishing an extensive network of individuals and places across Bangalore and Delhi to transport and use unaccounted cash.
A case of money laundering was registered against Shivakumar and two others in 2018 after around Rs 7 crores of cash was reported to be seized during Income Tax raids in 2017 from premises in Delhi that were said to be linked to him.
The ED probe followed a spate of income tax raids in 2019 as the agency alleged Shivakumar conspired with Anjaneya Hanumanthaiah, Sunil Kumar Sharma, and some others to evade tax.
Shivakumar was arrested by the ED in September 2019, and his interrogation continued for many days. He remained in jail for nearly two months.
He was eventually granted bail by the Delhi High Court in October 2019, which was also upheld by the Apex Court.
Prior to his arrest, Shivakumar and others had filed a petition before the Karnataka High Court challenging the ED summons issued to them.
In August 2019, Justice Aravind Kumar of the Karnataka High Court, who has since been elevated to the Supreme Court, dismissed these writ petitions and refused to quash ED summons against Shvakumar.
Shivakumar then moved the apex court against the same.
The Supreme Court today set aside the High Court order and quashed the proceedings.
Senior Advocate Sidharth Luthra appeared for Shivakumar. Senior Counsel Dr. Abhishek Manu Singhvi and S Nagamuthu appeared for the other accused.
Advocates Parmatma Singh, Mayank Jain, and Madhur Jain briefed the senior advocates on the matter.
Senior Advocates Abhishek Manu Singhvi and Sidharth Luthra, appearing for Hanumanthaiah and Shivakumar, argued that the ED probe against Shivakumar and others was premised solely on the criminal conspiracy charge under Section 120 of the IPC and that there was no scheduled offense involved in the matter.
The lawyers argued that the PMLA enumerates certain offenses in the Schedule annexed to it. These include numerous offenses under the IPC, the Narcotic Drugs and Psychotropic Substances (NDPS) Act, and other statutes, besides offenses having cross-border implications.
Singhvi pressed that the high court order was not tenable in law after the top court’s ruling that Section 120B cannot be a standalone offense to initiate a probe under the PMLA. He added that the alleged offense under the Income Tax Act was admittedly not a scheduled offense under the Act, and therefore, there is no basis for the money laundering probe to continue.
Senior Advocate Luthra cited the 2023 ruling of the top court to contend that since there was no allegation of the commission of criminal conspiracy to commit any of the offenses included in the PMLA Schedule, Shivakumar could not be prosecuted under the Act.
In its judgment on November 29, 2023, a bench of Justice Oka and Justice Pankaj Mithal held that criminal conspiracy to commit any crime cannot be grounds to initiate money laundering proceedings against a person, adding the conspiracy must relate to an offense that is a scheduled offense under the PMLA.
Representing the ED, additional solicitor general SV Raju conceded that a prosecution under the PMLA cannot be conducted only based on the invocation of Section 120B in the wake of the November 2023 judgment by the Supreme Court.
SV Raju said that the ED has filed a review petition against the 2023 judgment in the Pavana Dibbur case, and if it succeeds, the agency should be granted the liberty to revive the prosecution.
The bench then proceeded to quash the ED summons against Shivakumar and two others.
The Court said, “The ASG fairly submits that the question of whether 120B can be a stand-alone and distinct offense had been decided by a two-judge bench in 2023, holding that Section 120B can become an offense only when it is applied with a main offense, which is a scheduled offense, the Apex Court held.
The judgment said that it wasn’t the legislative intent to make all offenses under PMLA by applying Section 120B. Given this, the reasons assigned by the high court cannot be sustained.
Appeals are allowed, and the proceedings under the PMLA are quashed,” the Supreme Court order stated.
The bench also granted ED the liberty to seek review or recall this order if its review petition against the 2023 judgment eventually succeeds.
UNI/SNG GNK