PAVANA DIBBUR versus THE DIRECTORATE OF ENFORCEMENT
[2023] 13 S.C.R. 1049, Supreme Court of India, 2023
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
[2023] 13 S.C.R. 1049 : 2023 INSC 1029
1049
CASE DETAILS
PAVANA DIBBUR
v.
THE DIRECTORATE OF ENFORCEMENT
(Criminal Appeal No. 2779 of 2023)
NOVEMBER 29, 2023
[ABHAY S. OKA AND PANKAJ MITHAL, JJ.]
HEADNOTES
Issue for consideration: Whether the oﬀ ence u/s.120B, IPC included 
in Paragraph 1 of the Schedule to the Prevention of Money Laundering Act, 
2002, can be treated as a scheduled oﬀ ence even if the criminal conspiracy 
alleged is to commit an oﬀ ence which is not a part of the Schedule.
Prevention of Money Laundering Act, 2002 – Paragraph 1 of the 
Schedule – Penal Code, 1860 – s.120B – Appellant purchased the ﬁ rst 
property from Alliance Business School and the second property from 
accused no.1 against whom an FIR was registered alleging that he 
collected Rs.107 crores from the students by claiming himself as the 
Chancellor of the Alliance University – Four FIRs, ECIR registered – 
Complaint ﬁ led against the appellant-accused alleging that she entered 
into a conspiracy with accused no.1 by getting executed nominal sale 
deeds in respect of the ﬁ rst and second properties in her name for the 
beneﬁ t of accused no.1 and facilitated him to use her bank accounts to 
siphon the university funds, assisting him in the activity connected with 
the proceeds of crime – Petition for quashing the complaint ﬁ led by the 
appellant, dismissed by High Court – Appellant pleaded that out of the 
four scheduled/predicate oﬀ ences, chargesheets were ﬁ led in the case 
of three oﬀ
ences wherein only one oﬀ ence covered by the Schedule to 
the PMLA was mentioned– It was thus contended that s.120B of IPC 
alone, in the absence of any other scheduled oﬀ ence cannot sustain a 
charge under the PMLA and unless there is an allegation regarding a 
conspiracy to commit any scheduled oﬀ ence, the prosecution under the 
PMLA cannot lie:
1050 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
Held: The oﬀ ence punishable u/s.120B of the IPC will become a 
scheduled oﬀ ence only if the conspiracy alleged is of committing an oﬀ ence 
which is speciﬁ cally included in the Schedule – In the present case, in the 
chargesheets ﬁ led in the alleged scheduled oﬀ ences, there is no allegation 
of the commission of criminal conspiracy to commit any of the oﬀ ences 
included in the Schedule – Except for s.120B, IPC, no other oﬀ ence in 
the schedule was applied – Therefore, in this case, the scheduled oﬀ ence 
does not exist at all – Hence, the appellant cannot be prosecuted for the 
oﬀ ences punishable u/s.3, PMLA – Impugned order quashed and set aside 
– Complaint pending before the Special Court for PMLA cases, Bengaluru 
quashed as regards the present appellant – Code of Criminal Procedure, 
1973 – s.482. [Paras 26, 27]
Prevention of Money Laundering Act, 2002 – s.3 – Plea of the 
appellant that as she was not arraigned as an accused in the chargesheets 
ﬁ led pertaining to the alleged scheduled oﬀ ences, she cannot be roped 
in as an accused for the oﬀ ences punishable u/s.3:
Held: In a given case, if the prosecution for the scheduled oﬀ ence 
ends in the acquittal of all the accused or discharge of all the accused or 
the proceedings of the scheduled oﬀ ence are quashed in its entirety, the 
scheduled oﬀ ence will not exist, and therefore, no one can be prosecuted for 
the oﬀ ence punishable u/s.3 of the PMLA as there will
not be any proceeds 
of crime – Thus, in such a case, the accused against whom the complaint 
u/s.3 of the PMLA is ﬁ led will beneﬁ t from the scheduled oﬀ ence ending by 
acquittal or discharge of all the accused – Similarly, he will get the beneﬁ t of 
quashing the proceedings of the scheduled oﬀ ence – However, an accused 
in the PMLA case who comes into the picture after the scheduled oﬀ ence 
is committed by assisting in the concealment or use of proceeds of crime 
need not be an accused in the scheduled oﬀ ence – Such an accused can still 
be prosecuted under PMLA so long as the scheduled oﬀ ence exists – An 
oﬀ ence u/s.3 can be committed after a scheduled oﬀ ence is committed – It 
is not necessary that a person against whom the oﬀ ence u/s.3 is alleged 
must have been shown as the accused in the scheduled oﬀ ence – Plea of 
the appellant rejected. [Paras 15, 16]
Interpretation of Statutes – Prevention of Money Laundering 
Act, 2002 – Paragraph 1 of the Schedule – Penal Code, 1860 – s.120B:
1051
Held: The penal statutes are required to be strictly construed – The 
penal laws must be construed according to the legislative intent as expressed 
in the enactment – While giving eﬀ ect to the legislature’s intention, if two 
reasonable interpretations can be given to a particular provision of a penal 
statute, the Court should generally adopt the interpretation that avoids the 
imposition of penal consequences – A more lenient interpretation of the two 
needs to be adopted – The legislative intent which can be gathered from 
the deﬁ nition of the scheduled oﬀ ence under clause (y) of sub Section (1) 
of s.2 of the PMLA is that every crime which may generate proceeds of 
crime need not be a scheduled oﬀ ence – Therefore, only certain speciﬁ c 
oﬀ ences have been included in the Schedule – Thus, if the submission of 
the ED that as s.120B, IPC is included in Part A to the Schedule even if 
the allegation is of making a criminal conspiracy to commit an oﬀ ence 
which is not a part of the Schedule, the oﬀ ence becomes a scheduled 
oﬀ ence, is accepted, the Schedule will become meaningless or redundant 
– Reason explained – Interpretation suggested by the ED will defeat the 
legislative object of making only a few selected oﬀ ences as scheduled 
oﬀ ences – If such an interpretation is accepted, the statute may attract the 
vice of unconstitutionality for being manifestly arbitrary – It cannot be the 
legislature’s intention to make every oﬀ ence not included in the
Schedule 
a scheduled oﬀ ence by applying s.120B – Therefore, the oﬀ ence u/s.120-B 
included in Part A of the Schedule will become a scheduled oﬀ ence only 
if the criminal conspiracy is to commit any oﬀ ence already included in 
Parts A, B or C of the Schedule. [Paras 23-25]
LIST OF CITATIONS AND OTHER REFERENCES
Vijay Madanlal Choudhary & Ors. vs. Union of India & Ors. (2022) 
SCC Online SC 929 – referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED 
ORDER AND APPEARANCES
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal 
No.2779 Of 2023
From the Judgment and Order dated 27.09.2022 of the High Court of 
Karnataka at Bengaluru in CRLP No.3542 of 2022.
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT
1052 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
Appearances:
Ms. Meenakshi Arora, Sr. Adv., Ms. Ashima Mandla, Ms. Mandakini 
Singh, Surya Pratap Singh, Ms. Ankita Chaudhary, Advs. for the Appellant.
S. V. Raju, ASG, Mukesh Kumar Maroria, Ms. Alka Agarwal, Annam 
Venktesh, Ms. Sairica Raju, Zoheb Hussain, Advs. for the Respondent.
JUDGMENT / ORDER OF THE SUPREME COURT
JUDGMENT
ABHAY S. OKA, J.
OVERVIEW
1. The respondent–the Directorate of Enforcement (for short, ‘ED’), 
ﬁ led a complaint under the second proviso to Section 45(1) of the Prevention 
of Money Laundering Act, 2002 (for short, ‘the PMLA’) before the Special 
Court for PMLA Cases at Bengaluru. The appellant–Pavana Dibbur was 
shown as accused no.6 in the said complaint. By the order dated 17th 
March 2022, the Special Court took cognisance of the said complaint. The 
appellant ﬁ led a petition before the High Court of Karnataka at Bengaluru 
under Section 482 of the Code of Criminal Procedure, 1973 (for short, ‘Cr.
PC’) seeking the relief of quashing of the said complaint. By the impugned 
judgment and order dated 27th September 2022, the petition for quashing 
the complaint has been dismissed.
2. In the year 2011, Alliance Business School (for short, ‘ABS’) 
purchased a property bearing Khata no.37/22 at Gollahalli Village, Jigani 
Hobli, Anekal Taluk, Bengaluru for the consideration of Rs.13.05 crores. 
The area of the said property is approximately ﬁ ve acres. For the sake of 
convenience, we are describing the
said property as ‘the First Property’. 
On 1st July 2013, the appellant purchased the ﬁ rst property from ABS by 
a registered sale deed for a consideration of Rs.13.5 crores. The accused 
no.1–Madhukar Angur, purchased a property measuring 4 acres and 0.4 
Guntas bearing survey nos.61, 62 and 63 at Karpur Village, Kasaba Hobli, 
Anekal Taluk, Bengaluru. For the sake of convenience, we are describing 
this property as ‘the Second Property’. The appellant purchased the second 
property by a registered sale deed on 29th June 2019 for a consideration of 
Rs.2.47 crores from accused no.1–Madhukar Angur.
1053
3. For a period of ﬁ ve years, i.e. from 2010 to 2015, the appellant’s 
husband–Dr Ayyappa Dore, was the Vice-Chancellor of the Alliance 
University. The appellant also acted as the Vice-Chancellor of the Alliance 
University for a brief period. On 11th November 2017, a First Information 
Report (FIR) was registered on the complaint of the Registrar of the 
Alliance University against accused no.1–Madhukar Angur, alleging that 
he collected a sum of Rs.107 crores from the students by claiming himself 
as the Chancellor of the Alliance University. The allegation was that he 
collected the said amount between January 2017 and November 2017, which 
was deposited in the account of Srivari Education Services. Subsequently, 
crores of rupees were transferred to the account of the accused no.1. 
4. An Enforcement Case Information Report (ECIR) was registered 
on 16th October 2020 by the ED against accused nos.1, 2 and 3, namely 
Madhukar Angur, his wife Priyanka Angur and Mr Ravikumar, Partner, 
Srivari Education Services and other unknown accused alleging the 
commission of the oﬀ ence of money laundering under Section 3 of the 
PMLA. The ECIR was based on four FIRs, the details of which are as under: 
Sl. 
No.
FIR No.
Sections in 
FIR
Chargesheet
Sections under 
which the 
Chargesheet 
was ﬁ led
1.
119 of 2016
(PS Jayaprakash 
Nagar)
376, 420 and 
506 of IPC
B-Report ﬁ led/ 
Closure Report 
ﬁ led on 2nd 
February 2017
Closure Report 
accepted
2.
730 of 2016 
(PS Madiwala)
143, 144, 
147, 148, 
149, 506 and 
120-B of IPC
Chargesheet 
ﬁ led on 4th July 
2017 in which 
the appellant is 
not named as the 
accused
Chargesheet 
is ﬁ led under 
Sections 143, 
144, 147, 148, 
149, 506, 120-B 
of IPC
3.
52 of 2017 
(PS 
Shankarpura)
506, 504, 
143, 149 and 
420 of IPC
Chargesheet ﬁ led 
on 25th March 
2018 in which 
the appellant is 
not named as the 
accused
Chargesheet ﬁ led 
under Sections 
504, 506, 120-B 
read with 34 of 
IPC
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
1054 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
4.
188 of 2017 
(PS Anekal)
143, 406, 
407, 408, 409 
and 149 of 
IPC
Chargesheet 
ﬁ led on 18th June 
2019 in which 
the appellant is 
not named as the 
accused
Chargesheet ﬁ led 
under Section 
406, 408, 408, 
447, 204, 120-B 
read with 34 of 
IPC
5. On 27th September 2021, the ED passed an order under Section 5 of 
the PMLA attaching ﬁ rst and second properties. A complaint was ﬁ led before 
the adjudicating authority on 13th October 2021, in which the appellant is 
shown as the ﬁ fth defendant.
6. The allegation against the appellant in the complaint ﬁ led under 
the second proviso of Section 45(1) of the PMLA is that she has entered 
into a conspiracy with accused no.1–Madhukar Angur by getting executed 
nominal sale deeds in respect of the ﬁ rst and second properties in her name 
for the beneﬁ t of accused no.1. The allegation of the ED is that the appellant 
facilitated the accused no.1 to use her bank accounts to siphon the university 
funds, thereby, assisting the accused no.1 in the activity connected with the 
proceeds of crime. By the impugned judgment, the learned Single Judge 
of the High Court dismissed the petition ﬁ led by the appellant. The learned 
Single Judge relied upon the decision of a Bench of three Hon’ble Judges 
of this Court in the case of Vijay Madanlal Choudhary & Ors. v. Union of 
India & Ors.1.
SUBMISSIONS OF THE APPELLANT
7. Ms Meenakshi Arora, the learned senior counsel appearing for 
the
appellant, ﬁ rstly submitted that the ﬁ rst and second properties are not 
tainted properties and, therefore, the same are not covered by the deﬁ nition 
of “proceeds of crime” under clause (u) of sub-section (1) of Section 2 of 
the PMLA. The learned senior counsel pointed out that the ﬁ rst property 
was acquired on 1st July 2013, much prior to the commission of the ﬁ rst 
scheduled oﬀ ence. The allegation in the FIR dated 11th November 2017 
against accused no.1 is that he collected a sum of about Rs.107 crores 
from the students between January and November 2017 and transferred 
1 
(2022) SCC Online SC 929
1055
the said amount to his account. Therefore, the appellant’s acquisition of the 
ﬁ rst property can never be linked with the proceeds of the crime regarding 
the scheduled oﬀ ence. She submitted that regarding the acquisition of the 
second property, the appellant had her own resources available to acquire 
the same. The learned senior counsel relied upon an Income Tax Return ﬁ led 
by the appellant under the Income Declaration Scheme, 2016, by which she 
declared a total undisclosed income of Rs.26,42,54,193/-. The appellant paid 
Rs.11,89,08,385/- towards income tax and penalty on 8th September 2016. 
The return was ﬁ led on 12th September 2016. Therefore, the appellant had a 
source of money for acquiring the second property for the consideration of 
Rs.2.47 crores. Both the properties acquired by the appellant had no nexus 
at all with the proceeds of crime of the scheduled oﬀ ences. The learned 
senior counsel pointed out that consideration of Rs.2.47 crores was agreed 
upon, as it is mentioned in the sale deed that it was a distress sale made by 
the accused no.1–Madhukar Angur.
8. The second limb of the submissions of the learned senior counsel 
appearing for the appellant is that as the appellant has not been arraigned 
as an accused in the chargesheets ﬁ led pertaining to the alleged scheduled 
oﬀ ences, she cannot be roped in as an accused for the oﬀ ences punishable 
under Section 3 of the PMLA. She relied upon what is held in paragraphs 
251 to 253 of the
decision of this Court in the case of Vijay Madanlal 
Choudhary1. She submitted that in the decision, this Court held that if an 
accused in the scheduled/predicate oﬀ ence is acquitted/discharged, he cannot 
be prosecuted for the oﬀ ence punishable under the PMLA. She submitted 
that the appellant’s case stands on a better footing as she was not even shown 
as an accused in any scheduled/predicate oﬀ ences. She would, therefore, 
submit that the cognizance of the crime under the PMLA could not have 
been taken against the appellant.
9. The third submission of the learned senior counsel appearing for the 
appellant is that out of the four scheduled/predicate oﬀ ences, chargesheets 
have been ﬁ led in the case of three oﬀ ences, and in these chargesheets, only 
one oﬀ ence covered by the Schedule to the PMLA has been mentioned, 
which is Section 120-B of IPC. She pointed out that in FIR no.119 of 2016 
and FIR no.52 of 2017, Section 420 of IPC was included. However, in FIR 
no.119 of 2016, the closure report was ﬁ led, and in FIR no.52 of 2017, while 
ﬁ ling the chargesheet, Section 420 of IPC was excluded. She contended that 
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
1056 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
Section 120-B of IPC alone, in the absence of any other scheduled oﬀ ence, 
cannot sustain a charge under the PMLA. Unless there is an allegation 
regarding a conspiracy to commit any scheduled oﬀ ence, the prosecution 
under the PMLA cannot lie. Relying upon the proviso to Section 120-A of 
IPC, the learned senior counsel submitted that an illegal act or a legal act by 
illegal means, in furtherance of an agreement, committed by any person is 
a sine qua non for attracting the oﬀ ence of conspiracy under Section 120-B 
of IPC. If Section 120-B of IPC can be treated as a standalone oﬀ ence to 
attract prosecution under the PMLA, by that logic, a complaint under the 
PMLA can be ﬁ led where the allegation is of criminal conspiracy to commit 
an oﬀ ence which is not a scheduled oﬀ ence. Therefore, she submits that the 
complaint against the appellant deserves to be quashed.
SUBMISSIONS OF THE RESPONDENT
10. Shri S.V. Raju, the learned Additional Solicitor General appearing 
for the ED, submitted that even assuming that the appellant had monetary 
capacity to acquire the second property, one cannot conclude that the funds 
siphoned by the accused no.1, which constitute proceeds of crime, were not 
used by the appellant for acquiring the second property. He submits that 
this issue can be gone into only at the time of trial. Regarding the second 
submission, the learned Additional Solicitor General submitted that a person 
can be
held guilty of the commission of a money laundering oﬀ ence under 
Section 3 of the PMLA, even if he is not shown as an accused in the predicate 
oﬀ ence. He submitted that it is apparent from the provision of Section 3 
of the PMLA that in a given case, a person who is not an accused in the 
predicate oﬀ ence can commit the oﬀ ence of money laundering. Regarding 
the third submission, the learned Additional Solicitor General submitted 
that wherever the legislature intended, it has made a particular oﬀ ence 
read with another oﬀ ence as a scheduled oﬀ ence. He invited our attention 
to Paragraphs 4 and 6 of Part A of the Schedule to the PMLA. Referring 
to Paragraph 11 of the Schedule to the PMLA, he urged that the ﬁ rst four 
oﬀ ences in Paragraph 4 and all the oﬀ ences in Paragraph 6 clearly show 
the legislature’s intention. He submitted that the schedule must be read as 
it is, and nothing can be added or subtracted from the Schedule considering 
the objects of the PMLA. He submitted that the validity of the Schedule 
has been upheld in the case of Vijay Madanlal Choudhary1. He would, 
therefore, submit that no interference is called for with the impugned order.
1057
CONSIDERATION OF SUBMISSIONS
THE EFFECT OF THE APPELLANT NOT BEING SHOWN AS 
AN ACCUSED IN PREDICATE OFFENCE
11. Section 3 of the PMLA reads thus:
“3. Oﬀ ence of money-laundering.—Whosoever directly or 
indirectly attempts to indulge or knowingly assists or knowingly 
is a party or is actually involved in any process or activity 
connected with the proceeds of crime including its concealment, 
possession, acquisition or use and projecting or claiming it as 
untainted property shall be guilty of oﬀ ence of money-laundering. 
Explanation.—For the removal of doubts, it is hereby clariﬁ ed 
that,— 
(i) a person shall be guilty of oﬀ ence of money-laundering if 
such person is found to have directly or indirectly attempted 
to indulge or knowingly assisted or knowingly is a party or is 
actually involved in one or more of the following processes or 
activities connected with proceeds of crime, namely:— 
(a) concealment; or 
(b) possession; or 
(c) acquisition; or 
(d) use; or 
(e) projecting as untainted property; or 
(f) claiming as untainted property, 
in any manner whatsoever; 
(ii) the process or activity connected with proceeds of crime is a 
continuing activity and continues till such time a person is directly 
or indirectly enjoying the proceeds of crime by its concealment or 
possession or acquisition or use or projecting it as untainted property 
or claiming it as untainted property in any manner whatsoever.”
On a plain reading of Section 3, unless proceeds of crime
exist, there 
cannot be any money laundering oﬀ ence. Clause (u) of sub-section 
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
1058 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
(1) of Section 2 of the PMLA deﬁ nes “proceeds of crime”, which 
reads thus: 
“2.Deﬁ nition – (1) In this Act, unless the context otherwise 
requires,- 
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .
(u) “proceeds of crime” means any property derived or obtained, 
directly or indirectly, by any person as a result of criminal activity 
relating to a scheduled oﬀ ence or the value of any such property 
or where such property is taken or held outside the country, then 
the property equivalent in value held within the country or abroad; 
Explanation.—For the removal of doubts, it is hereby clariﬁ ed 
that “proceeds of crime” include property not only derived or 
obtained from the scheduled oﬀ ence but also any property which 
may directly or indirectly be derived or obtained as a result of 
any criminal activity relatable to the scheduled oﬀ ence.”
12. Clause (v) of sub-section (1) of Section 2 of the PMLA deﬁ nes 
“property” to mean any property or assets of every description, whether 
corporeal or incorporeal, movable or immovable, tangible or intangible. To 
constitute any property as proceeds of crime, it must be derived or obtained 
directly or indirectly by any person as a result of criminal activity relating 
to a scheduled oﬀ ence. The explanation clariﬁ es that the proceeds of crime 
include property, not only derived or obtained from scheduled oﬀ ence but 
also any property which may directly or indirectly be
derived or obtained as 
a result of any criminal activity relatable to the scheduled oﬀ ence. Clause 
(u) also clariﬁ es that even the value of any such property will also be the 
proceeds of crime. Thus, the existence of “proceeds of crime” is sine qua 
non for the oﬀ ence under Section 3 of the PMLA. 
13. Clause (x) of sub-section (1) of Section 2 of the PMLA deﬁ nes 
“schedule”. Clause (y) thereof deﬁ nes “scheduled oﬀ ence”, which reads thus:
“2. Deﬁ nition – (1) In this Act, unless the context otherwise requires,- 
.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
(y) “scheduled oﬀ ence” means—
1059
(i) the oﬀ ences speciﬁ ed under Part A of the Schedule; or
(ii) the oﬀ ences speciﬁ ed under Part B of the Schedule if the total 
value involved in such oﬀ ences is one crore rupees or more; or
(iii) the oﬀ ences speciﬁ ed under Part C of the Schedule.”
14. The condition precedent for the existence of proceeds of crime is 
the existence of a scheduled oﬀ ence. On this aspect, it is necessary to refer 
to the decision of this Court in the case of Vijay Madanlal Choudhary1. In 
paragraph 253 of the said decision, this Court held thus:
“253. Tersely put, it is only such property which is derived or 
obtained, directly or indirectly, as a result of criminal activity 
relating to a scheduled oﬀ ence can be regarded as proceeds of 
crime. The authorities under the 2002 Act cannot resort to action 
against any person for money-laundering on an assumption that 
the property recovered by them must be proceeds of crime and 
that a scheduled oﬀ ence has been committed, unless the same 
is registered with the jurisdictional police or pending inquiry by 
way of complaint before the competent forum. For, the expression 
“derived or obtained” is indicative of criminal activity relating to 
a scheduled oﬀ ence already accomplished. Similarly, in the event 
the person named in the criminal activity relating to a scheduled 
oﬀ ence is ﬁ nally absolved by a Court of competent jurisdiction 
owing to an order of discharge, acquittal or because of quashing 
of the criminal case (scheduled
oﬀ ence) against him/her, there 
can be no action for money-laundering against such a person or 
person claiming through him in relation to the property linked 
to the stated scheduled oﬀ ence. This interpretation alone can be 
countenanced on the basis of the provisions of the 2002 Act, in 
particular Section 2(1)(u) read with Section 3. Taking any other 
view would be rewriting of these provisions and disregarding 
the express language of deﬁ nition clause “proceeds of crime”, 
as it obtains as of now.”
(underline supplied)
In paragraphs 269 and 270, this Court held thus:
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
1060 
SUPREME COURT REPORTS 
[2023] 13 S.C.R.
“269. From the bare language of Section 3 of the 2002 Act, 
it is amply clear that the oﬀ ence of money-laundering is an 
independent oﬀ ence regarding the process or activity connected 
with the proceeds of crime which had been derived or obtained as 
a result of criminal activity relating to or in relation to a scheduled 
oﬀ ence. The process or activity can be in any form — be it one 
of concealment, possession, acquisition, use of proceeds of crime 
as much as projecting it as untainted property or claiming it to 
be so. Thus, involvement in any one of such process or activity 
connected with the proceeds of crime would constitute oﬀ ence of 
money-laundering. This oﬀ ence otherwise has nothing to do with 
the criminal activity relating to a scheduled oﬀ ence — except the 
proceeds of crime derived or obtained as a result of that crime.
270. Needless to mention that such process or activity can be 
indulged in only after the property is derived or obtained as a 
result of criminal activity (a scheduled oﬀ ence). It would be an 
oﬀ ence of money-laundering to indulge in or to assist or being 
party to the process or activity connected with the proceeds of 
crime; and such process or activity in a given fact situation may 
be a continuing oﬀ ence, irrespective of the date and time of 
commission of the scheduled oﬀ ence. In other words, the criminal 
activity may have been committed before the same had been 
notiﬁ ed as
scheduled oﬀ ence for the purpose of the 2002 Act, 
but if a person has indulged in or continues to indulge directly or 
indirectly in dealing with proceeds of crime, derived or obtained 
from such criminal activity even after it has been notiﬁ ed as 
scheduled oﬀ ence, may be liable to be prosecuted for oﬀ ence 
of money-laundering under the 2002 Act — for continuing to 
possess or conceal the proceeds of crime (fully or in part) or 
retaining possession thereof or uses it in trenches until fully 
exhausted. The oﬀ ence of money-laundering is not dependent on 
or linked to the date on which the scheduled oﬀ ence or if we may 
say so the predicate oﬀ ence has been committed. The relevant 
date is the date on which the person indulges in the process or 
activity connected with such proceeds of crime. These ingredients 
are intrinsic in the original provision (Section 3, as amended
1061
until 2013 and were in force till 31.7.2019); and the same has 
been merely explained and clariﬁ ed by way of Explanation vide 
Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause 
(ii) in Explanation inserted in 2019 is of no consequence as it 
does not alter or enlarge the scope of Section 3 at all.”
(underline supplied)
15. Coming back to Section 3 of the PMLA, on its plain reading, 
an oﬀ ence under Section 3 can be committed after a scheduled oﬀ ence is 
committed. For example, let us take the case of a person who is unconnected 
with the scheduled oﬀ ence, knowingly assists the concealment of the 
proceeds of crime or knowingly assists the use of proceeds of crime. In 
that case, he can be held guilty of committing an oﬀ ence under Section 3 
of the PMLA. To give a concrete example, the oﬀ ences under Sections 384 
to 389 of the IPC relating to “extortion” are scheduled oﬀ ences included 
in Paragraph 1 of the Schedule to the PMLA. An accused may commit a 
crime of extortion covered by Sections 384 to 389 of IPC and extort money. 
Subsequently, a person unconnected with the oﬀ ence of extortion may 
assist the said accused in the concealment of the proceeds of extortion. In 
such a case, the person who assists the accused in the scheduled oﬀ ence 
for concealing the proceeds of the crime of extortion can be guilty of the 
oﬀ ence of money laundering. Therefore, it is not necessary that a person 
against whom the oﬀ ence under Section 3 of the PMLA is
alleged must 
have been shown as the accused in the scheduled oﬀ ence. What is held in 
paragraph 270 of the decision of this Court in the case of Vijay Madanlal 
Choudhary1 supports the above conclusion. The conditions precedent for 
attracting the oﬀ ence under Section 3 of the PMLA are that there must be 
a scheduled oﬀ ence and that there must be proceeds of crime in relation to 
the scheduled oﬀ ence as deﬁ ned in clause (u) of sub-section (1) of Section 
3 of the PMLA.
16. In a given case, if the prosecution for the scheduled oﬀ ence 
ends in the acquittal of all the accused or discharge of all the accused or 
the proceedings of the scheduled oﬀ ence are quashed in its entirety, the 
scheduled oﬀ ence will not exist, and therefore, no one can be prosecuted 
for the oﬀ ence punishable under Section 3 of the PMLA as there will not 
be any proceeds of crime. Thus, in such a case, the accused against whom 
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
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[2023] 13 S.C.R.
the complaint under Section 3 of the PMLA is ﬁ led will beneﬁ t from the 
scheduled oﬀ ence ending by acquittal or discharge of all the accused. 
Similarly, he will get the beneﬁ t of quashing the proceedings of the scheduled 
oﬀ ence. However, an accused in the PMLA case who comes into the picture 
after the scheduled oﬀ ence is committed by assisting in the concealment or 
use of proceeds of crime need not be an accused in the scheduled oﬀ ence. 
Such an accused can still be prosecuted under PMLA so long as the scheduled 
oﬀ ence exists. Thus, the second contention raised by the learned senior 
counsel appearing for the appellant on the ground that the appellant was 
not shown as an accused in the chargesheets ﬁ led in the scheduled oﬀ ences 
deserves to be rejected.
ACQUISITION OF THE FIRST AND SECOND PROPERTY
17. The allegation against the appellant in the complaint is that she 
purchased the property worth crores, though she did not have the source of 
income which would generate enough money to buy the subject properties. 
The allegation against the appellant is that she allowed and facilitated 
accused no.1–Madhukar Angur, to conceal the siphoned/misappropriated 
amounts by using her bank account. Another allegation is that she is shown 
to have purchased the second property from accused no.1, though she did 
not have the resources to pay the consideration. The allegation is that she 
allowed the accused no.1 to use her
bank accounts to facilitate siphoning the 
proceeds of the crime. Another allegation is that both the ﬁ rst and second 
properties have been acquired out of the proceeds of crime. The ﬁ rst property, 
ex-facie, cannot be said to have any connection with the proceeds of crime 
as the acts constituting the scheduled oﬀ ence took place after its acquisition. 
The case of the appellant is that she possessed a substantial amount, as can 
be seen from the declaration made by her under the Income Declaration 
Scheme, 2016 in September 2016 and therefore, at the time of the acquisition 
of the second property, more than suﬃ  cient money was available with her 
to acquire the second property. The issue of whether the appellant used 
tainted money to acquire the second property can be decided only after 
the evidence is adduced. This is not a case where any material is placed on 
record to show that the sale consideration was paid from a particular Bank 
Account of the appellant. Therefore, it is not possible to record a ﬁ nding at 
this stage that the Second property was not acquired by using the proceeds 
of crime. We also make it clear that we have considered the issue only in
1063
the context of the applicability of the PMLA. We have not dealt with the 
issues of valuation and legality of the sale deeds.
INTERPRETATION OF THE FIRST ENTRY IN PARAGRAPH 
1 OF THE SCHEDULE
18. Now, we come to the third argument made by the learned 
senior counsel appearing for the appellant based on the interpretation of 
the Schedule. It must be noted here that in  the case of Vijay Madanlal 
Choudhary1, even the validity of the Schedule was under challenge. A 
perusal of the said decision shows that this Court was not called upon to 
interpret any entry in the Schedule and, in particular, entry of Section 120-B 
in the Schedule. The challenge to the Schedule is dealt with in paragraphs 
453, 454 and 455 of the said decision. The contention before this Court 
was that even minor oﬀ ences have been included in the Schedule, and 
even compoundable oﬀ ences form part of the Schedule. It was submitted 
that the oﬀ ences which do not have cross-border implications have been 
included in the Schedule. In paragraphs 454 and 455 of the said decision, 
this Court held thus:
“454. This Schedule has been amended by Act 21 of 2009, Act 2 of 
2013, Act 22 of 2015, Act 13 of 2018 and Act 16 of 2018, thereby 
inserting new oﬀ ences to be regarded as scheduled oﬀ ence. 
The challenge is not on the basis of legislative competence in 
respect of enactment of Schedule and the amendments thereto 
from time to time. However, it had been urged before us that 
there is no consistency in
the approach as it includes even 
minor oﬀ ences as scheduled oﬀ ence for the purposes of oﬀ ence 
of money-laundering, more so even oﬀ ences which have no 
trans-border implications and are compoundable between the 
parties. The classiﬁ cation or grouping of oﬀ ences for treating the 
same as relevant for constituting oﬀ ence of money-laundering 
is a matter of legislative policy. The Parliament in its wisdom 
has regarded the property derived or obtained as a result of 
speciﬁ ed criminal activity, being an oﬀ ence under the concerned 
legislation mentioned in the Schedule. The fact that some of the 
oﬀ ences may be non-cognizable oﬀ ences under the concerned 
legislation or regarded as minor and compoundable oﬀ ences, yet, 
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
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[2023] 13 S.C.R.
the Parliament in its wisdom having perceived the cumulative 
eﬀ ect of the process or activity concerning the proceeds of crime 
generated from such criminal activities as being likely to pose 
threat to the economic stability, sovereignty and integrity of the 
country and thus, grouped them together for reckoning it as an 
oﬀ ence of money-laundering, is a matter of legislative policy. It 
is not open to the Court to have a second guess at such a policy.
455. Needless to underscore that the 2002 Act is intended to 
initiate action in respect of money-laundering activity which 
necessarily is associated with the property derived or obtained by 
any person, directly or indirectly, as a result of speciﬁ ed criminal 
activity. The prosecution under this Act is not in relation to the 
criminal activity per se but limited to property derived or obtained 
from speciﬁ ed criminal activity. Resultantly, the inclusion of 
criminal activity which has been regarded as non-cognizable, 
compoundable or minor oﬀ ence under the concerned legislation, 
should have no bearing to answer the matter in issue. In that, the 
oﬀ ence of money-laundering is an independent oﬀ ence and the 
persons involved in the commission of such oﬀ ence are grouped 
together as oﬀ enders under this Act. There is no reason to make 
distinction between them insofar as the oﬀ ence of money-
laundering is concerned. In our opinion, therefore, there is no 
merit in the
argument under consideration.”
In this case, we are not called upon to decide the validity of the 
Schedule or any part thereof. The question is whether the oﬀ ence under 
Section 120-B of IPC, included in Paragraph 1 of the Schedule, can be 
treated as a scheduled oﬀ ence even if the criminal conspiracy alleged is to 
commit an oﬀ ence which is not a part of the Schedule. This issue did not 
arise for consideration in the case of Vijay Madanlal Choudhary1.
19. Section 120-A of IPC deﬁ nes “criminal conspiracy”, which reads 
thus:
“120A. Deﬁ nition of criminal conspiracy.—When two or more 
persons agree to do, or cause to be done,— 
(1) an illegal act, or
1065
(2) an act which is not illegal by illegal means, such an agreement 
is designated a criminal conspiracy: 
Provided that no agreement except an agreement to commit an 
oﬀ ence shall amount to a criminal conspiracy unless some act 
besides the agreement is done by one or more parties to such 
agreement in pursuance thereof. 
Explanation.—It is immaterial whether the illegal act is the 
ultimate object of such agreement, or is merely incidental to 
that object.”
Section 120-B of IPC provides for punishment for a criminal 
conspiracy which reads thus: 
“120B. Punishment of criminal conspiracy.— (1) Whoever is 
a party to a criminal conspiracy to commit an oﬀ ence punishable 
with death, imprisonment for life or rigorous imprisonment for a 
term of two years or upwards, shall, where no express provision 
is made in this Code for the punishment of such a conspiracy, be 
punished in the same manner as if he had abetted such oﬀ ence. 
(2) Whoever is a party to a criminal conspiracy other than a 
criminal conspiracy to commit an oﬀ ence punishable as aforesaid 
shall be punished with imprisonment of either description for a 
term not exceeding six months, or with ﬁ ne or with both.”
20. Now, we turn to the Schedule to the PMLA. We ﬁ nd that many 
oﬀ ences, which may generate proceeds of crime, have not been included 
in the Schedule. We are referring to only a few of such oﬀ ences only by 
way of illustration:-
a. 
Section 263A of IPC, which deals with the oﬀ ence of making or
possessing ﬁ ctitious stamps is not a part of the Schedule;
b. 
Though oﬀ ences punishable under Sections 392 to 402 regarding 
robbery and dacoity have been included in part A of the Schedule, 
the oﬀ ence punishable under Section 379 of committing theft and 
the oﬀ ence punishable under Section 380 of theft in a dwelling 
house are not made a part of parts A and B of the Schedule. The 
theft of both categories can be of a very large amount running 
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
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into crores.  The said two oﬀ ences become scheduled oﬀ ences by 
virtue of clause (3) of part C of the Schedule only if the oﬀ ences 
have cross-border implications;
c. 
The offence punishable under Section 403 of dishonest 
misappropriation of property does not form part of the Schedule. 
 The said oﬀ ence becomes a scheduled oﬀ ence by virtue of clause 
(3) of part C of the Schedule only if the oﬀ ence has cross-border 
implications;
d. 
The oﬀ ence under Section 405 of criminal breach of trust, which 
is punishable under Section 406, is not a part of the Schedule The 
said oﬀ ence becomes a scheduled oﬀ ence by virtue of clause (3) 
of part C of the Schedule only if the oﬀ ence has cross-border 
implications;
e. 
Though the oﬀ ence under Section 417 of cheating has been 
made a scheduled oﬀ ence, the more stringent crime of forgery 
for the purposes of cheating under Section 468 is not a part of 
the Schedule, and
f. 
Though the oﬀ ences under Sections 489A to 489C regarding 
forging or counterfeiting currency notes are part of the Schedule, 
the offence under Section 489D of making or possessing 
instruments or materials for forging or counterfeiting currency 
notes is not a part of the Schedule.
21. Now, coming to Part B of the Schedule, it includes only one 
oﬀ ence under Section 132 of the Customs Act, 1962. The oﬀ ence under 
Section 132 of the Customs Act of making a false declaration, etc., becomes 
a scheduled oﬀ ence
in view of sub-clause (ii) of Clause (y) of sub-section 
(1) of Section 2 of the PMLA only if the total value involved in the oﬀ ence 
is Rs.1 crore or more. Part C of the Schedule provides that any oﬀ ence 
speciﬁ ed in Part A having cross-border implications becomes a part of Part 
C. More importantly, all the oﬀ ences against the property under Chapter 
XVII of IPC having cross-border implications become scheduled oﬀ ences. 
As pointed out earlier, the oﬀ ences punishable under Sections 379 (theft), 
380 (theft in dwelling house), 403 (dishonest misappropriation of property) 
and 405 (criminal breach of trust) are part of Chapter XVII. Though the
1067
said oﬀ ences are not included in Part A, they become scheduled oﬀ ences 
by virtue of Part C only if they have cross-border implications. Thus, it can 
be said that many oﬀ ences capable of generating proceeds of crime do not 
form a part of the schedule. 
22. The learned Additional Solicitor General argued that as Section 
120-B of IPC is included in Part A to the Schedule, even if the allegation 
is of making a criminal conspiracy to commit an oﬀ ence which is not a 
part of the Schedule, the oﬀ ence becomes a scheduled oﬀ ence. As stated 
earlier, many oﬀ ences under Chapter XVII of IPC are not included in Parts 
A and B. They become scheduled oﬀ ences only if the same have cross-
border implications. Thus, the oﬀ ences of dishonest misappropriation 
of property or criminal breach of trust or theft can become a scheduled 
oﬀ ence, provided they have cross-border implications. If the argument 
of the learned Additional Solicitor General is accepted, if there is a 
conspiracy to commit oﬀ ences under Section 403 or Section 405, though 
the same have no cross-border implications, the oﬀ ence under Section 
120-B of conspiracy to commit oﬀ ences under Sections 403 and 405 will 
become a scheduled oﬀ ence. Thus, if any oﬀ ence is not included in Parts 
A, B and C of the Schedule but if the conspiracy to commit the oﬀ ence is 
alleged, the same will become a scheduled oﬀ ence. A crime punishable 
under Section 132 of the Customs Act is made a scheduled oﬀ ence under 
Part
B, provided the value involved in the oﬀ ence is Rupees One Crore or 
more. But if Section 120-B of IPC is applied, one who commits such an 
oﬀ ence having a value of even Rs.1 lac can be brought within the purview 
of the PMLA. By that logic, a conspiracy to commit any oﬀ ence under 
any penal law which is capable of generating proceeds, can be converted 
into a scheduled oﬀ ence by applying Section 120-B of the IPC, though 
the oﬀ ence is not a part of the Schedule. This cannot be the intention of 
the legislature.
23. The penal statutes are required to be strictly construed. It is true 
that the penal laws must be construed according to the legislative intent 
as expressed in the enactment. In Chapter 1 of GP Singh’s Principles of 
Statutory Interpretation (15th Edition), it is observed that:
“The intention of the Legislature, thus, assimilates two 
aspects: In one aspect it carries the concept of “meaning”, i.e. 
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
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what the words mean and in another aspect, it conveys the 
concept of “purpose and object” or the “reason and spirit” 
pervading through the statute. The process of construction, 
therefore, combines both literal and purposive approaches. 
In other words the legislative intention, i.e., the true or legal 
meaning of an enactment is derived by considering the meaning 
of the words used in the enactment in the light of any discernible 
purpose or object which comprehends the mischief and its remedy 
to which the enactment is directed.” In the words of A Driedger, 
Construction of Statute, 2nd Edn, 1983: The words of an Act 
are to be read in their entire context and in their grammatical 
and ordinary sense harmoniously with the Scheme of the Act, 
the object of the Act, and the intent of the Parliament. This 
formulation later received the approval of the Supreme Court 
and was called the “cardinal principle of construction”.” In both 
Constitutional and statutory interpretation, the court is supposed 
to exercise discretion in determining the proper relationship 
between the subjective and objective purposes of the law and 
help the law achieve its purpose.”
 (Emphasis added)
24. While giving eﬀ ect to the legislature’s intention, if two reasonable 
interpretations can be given to a particular provision of a penal statute, the 
Court should generally adopt the interpretation that avoids the imposition 
of penal consequences. In
other words, a more lenient interpretation of the 
two needs to be adopted. 
25. The legislative intent which can be gathered from the deﬁ nition of 
the scheduled oﬀ ence under clause (y) of sub-Section (1) of Section 2 of the 
PMLA is that every crime which may generate proceeds of crime need not 
be a scheduled oﬀ ence. Therefore, only certain speciﬁ c oﬀ ences have been 
included in the Schedule. Thus, if the submissions of the learned Additional 
Solicitor General are accepted, the Schedule will become meaningless or 
redundant. The reason is that even if an oﬀ ence registered is not a scheduled 
oﬀ ence, the provisions of the PMLA and, in particular, Section 3 will be 
invoked by simply applying Section 120-B. If we look at Section 120-B, 
only because there is a conspiracy to commit an oﬀ ence, the same does not
1069
become an aggravated oﬀ ence. The object is to punish those involved in 
conspiracy to commit a crime, though they may not have committed any 
overt act that constitutes the oﬀ ence. Conspiracy is an agreement between the 
accused to commit an oﬀ ence. If we look at the punishments provided under 
Section 120-B, it becomes evident that it is not an aggravated oﬀ ence. It only 
incorporates the principle of vicarious liability. If no speciﬁ c punishment 
is provided in the Statute for conspiracy to commit a particular oﬀ ence, 
Section 120-B treats a conspirator of the main accused as an abettor for the 
purposes of imposing the punishment. The interpretation suggested by the 
ED will defeat the legislative object of making only a few selected oﬀ ences 
as scheduled oﬀ ences. If we accept such an interpretation, the statute may 
attract the vice of unconstitutionality for being manifestly arbitrary. It 
cannot be the legislature’s intention to make every oﬀ ence not included in 
the Schedule a scheduled oﬀ ence by applying Section 120-B. Therefore, in 
our view, the oﬀ ence under Section 120-B of IPC included in Part A of the 
Schedule will become a scheduled oﬀ ence only if the criminal conspiracy is 
to commit any oﬀ ence already included in Parts A, B or C of the Schedule. 
In other words, an oﬀ ence punishable under Section 120-B of IPC will 
become a scheduled oﬀ ence only if the conspiracy alleged is of committing 
an oﬀ ence which is otherwise a scheduled oﬀ ence.
26. Coming back to the facts of the case, in the chargesheets 
filed in the alleged scheduled offences, there is no allegation of the 
commission of criminal conspiracy to commit any of the offences 
included in the Schedule. As pointed out earlier, except for Section 
120B of the IPC, no other offence in the schedule has been applied. 
Therefore, in this case, the scheduled offence does not exist at all. 
Hence, the appellant cannot be prosecuted for the offences punishable 
under Section 3 of the PMLA.
CONCLUSIONS
27. While we reject the ﬁ rst and second submissions canvassed by 
the learned senior counsel appearing for the appellant, the third submission 
must be upheld. Our conclusions are:
a. 
It is not necessary that a person against whom the oﬀ ence under 
Section 3 of the PMLA is alleged, must have been shown as the 
accused in the scheduled oﬀ ence;
PAVANA DIBBUR v. THE DIRECTORATE OF 
ENFORCEMENT [ABHAY S. OKA, J.]
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[2023] 13 S.C.R.
b. 
Even if an accused shown in the complaint under the PMLA is 
not an accused in the scheduled oﬀ ence, he will beneﬁ t from the 
acquittal of all the accused in the scheduled oﬀ ence or discharge 
of all the accused in the scheduled oﬀ ence. Similarly, he will 
get the beneﬁ t of the order of quashing the proceedings of the 
scheduled oﬀ ence;
c. 
The ﬁ rst property cannot be said to have any connection with the 
proceeds of the crime as the acts constituting scheduled oﬀ ence 
were committed after the property was acquired;
d. 
The issue of whether the appellant has used tainted money 
forming part of the proceeds of crime for acquiring the second 
property can be decided only at the time of trial; and
e. 
The oﬀ ence punishable under Section 120-B of the IPC will 
become a scheduled oﬀ ence only if the conspiracy alleged is 
of committing an oﬀ ence which is speciﬁ cally included in the 
Schedule.
28. Accordingly, the impugned order dated 27th September 2022 is, 
hereby, quashed and set aside, and the complaint being Special C.C no.781 
of 2022 pending before the Special Court for PMLA cases, Bengaluru is, 
hereby, quashed only insofar as the present appellant is concerned.
29. The appeal is, accordingly, allowed.
Headnotes prepared by:  
Appeal allowed.
Divya Pandey