Wife not named in fraud case gets PMLA case quashed by Supreme Court
The court held that criminal conspiracy becomes a scheduled offence under PMLA only if the conspiracy is to commit a crime already in the schedule.
107
crores.
The court held that criminal conspiracy becomes a scheduled offence under PMLA only if the conspiracy is to commit a crime already in the schedule.
She was never accused in the Rs 107 crore university fraud. Yet the ED named her in a money laundering case. The Supreme Court just said — no.
Pavana Dibbur was a wife who let her husband's associate use her bank accounts. She bought a property from him in 2019. For that, the Enforcement Directorate (ED) called her a money launderer. She had never been charged in the original fraud — not once. The only crime the ED linked her to was "criminal conspiracy." But conspiracy to do what? That question would decide her freedom.
When the Vice-Chancellor's wife became accused number six
In 2017, Bengaluru police registered an FIR against Madhukar Angur. Angur had allegedly posed as the Chancellor of Alliance University and collected Rs 107 crores from students by fraud. Her husband was the Vice-Chancellor of Alliance University. Angur was the main accused.
Three years later, in October 2020, the ED registered an Enforcement Case Information Report (ECIR — the ED's version of an FIR that starts a money laundering investigation). The ED alleged that Dibbur helped Angur hide the stolen money. She had let him use her bank accounts. She had bought two properties — one in 2013 (before the alleged crimes began) and another from Angur in 2019.
In September 2021, the ED attached both properties under Section 5 of the Prevention of Money Laundering Act (PMLA — the law that targets money laundering). The attachment order landed like a seal on a door — the properties were frozen, their ownership stripped of meaning until the case was resolved. A month later, the ED filed a complaint before the Adjudicating Authority (a tribunal that decides whether property can be seized). Dibbur was shown as the fifth defendant.
In March 2022, a Special Court in Bengaluru took cognizance (formally accepted the complaint for trial) of the ED's case. The courtroom was quiet as the judge noted the names — six accused, Dibbur at number six. The file on the bench was thin, but it carried the weight of a ruined reputation. The judge's voice was flat, almost mechanical, as he read out the case number — Special C.C. No. 781 of 2022 — and the name of each accused, the sound of the paper shuffling under his fingers the only other noise in the room.
The third argument that killed the case
Dibbur challenged the complaint on three grounds. First, she said the properties were not bought with crime money — the 2013 purchase happened years before the fraud, and the 2019 purchase was a genuine transaction. Second, she argued she was never accused in the original fraud case — the predicate offence (the underlying crime that generates the money allegedly laundered). How could she be a money launderer, she asked, when no one said she committed the original crime?
But the third argument was the killer. The only scheduled offence (a crime listed in the PMLA's Schedule that can trigger a money laundering case) in the chargesheets against her was Section 120-B of the Indian Penal Code — criminal conspiracy. The ED said: Dibbur conspired with Angur to hide the money. That conspiracy, the ED claimed, was itself a scheduled offence under the PMLA.
Dibbur's lawyer said no. Section 120-B becomes a scheduled offence under the PMLA only if the conspiracy is to commit a crime that is already in the Schedule. If the underlying conspiracy is to commit a non-scheduled offence, then Section 120-B cannot stand alone as a scheduled offence. In other words: you cannot launder money from a conspiracy unless the conspiracy itself targets a crime that the PMLA recognises.
The Karnataka High Court did not buy this argument. In September 2022, it dismissed Dibbur's petition under Section 482 of the CrPC (the High Court's power to shut down a case that should never have been filed).
Why the Supreme Court looked at the Schedule
Dibbur appealed to the Supreme Court. The bench — Justice Abhay S. Oka and Justice Pankaj Mithal — examined the PMLA's Schedule carefully. The Schedule lists offences that can form the basis of a money laundering case. Part A of the Schedule includes certain offences under the Indian Penal Code. Paragraph 1 of Part A includes Section 120-B — but with a condition.
The condition, the court found, was this: Section 120-B is a scheduled offence only when the conspiracy is to commit an offence that is itself listed in the Schedule. If the conspiracy is to commit an offence that is not in the Schedule, then Section 120-B cannot be used as a standalone scheduled offence. The courtroom fell silent as the bench read the Schedule aloud — the words hung in the air, stripping the ED's case of its foundation. The texture of the paper in the judge's hand seemed to rustle with finality, a sound that echoed in the quiet chamber.
The court relied on its own earlier judgment in Vijay Madanlal Choudhary & Ors. v. Union of India (2022). In that case, the Supreme Court had interpreted the PMLA's scope and held that the offence of money laundering under Section 3 of the PMLA requires the existence of proceeds of crime (property derived from a scheduled offence). Without a scheduled offence, there can be no proceeds of crime. And without proceeds of crime, there can be no money laundering.
The court also clarified two other points. First, it is not necessary that a person accused under the PMLA must also be an accused in the scheduled offence. A person who helps conceal or use crime money after the original crime is committed can be prosecuted under PMLA even if they were never named in the predicate offence case. Second, if all accused in the scheduled offence are acquitted or discharged, or if the scheduled offence proceedings are quashed, the PMLA case against any person — including someone who was not an accused in the predicate offence — also falls apart. Because the scheduled offence ceases to exist, and without it, there is no crime money to launder.
The moment the complaint collapsed
Applying these principles, the court looked at the ED's case against Dibbur. The only scheduled offence in the chargesheets was Section 120-B — criminal conspiracy. But the conspiracy alleged was to commit an offence that was not in the PMLA Schedule. Therefore, Section 120-B could not stand alone as a scheduled offence. Without a valid scheduled offence, there were no proceeds of crime. And without proceeds of crime, the offence of money laundering under Section 3 of the PMLA could not exist.
The court held that Section 120-B becomes a scheduled offence only when the conspiracy is to commit an offence already in the Schedule. The words were precise, almost clinical — but they carried the force of a door swinging open. The stack of chargesheets on the bench, once the backbone of the ED's case, now seemed like a pile of paper with no legal spine.
The court quashed the Karnataka High Court's order. It also quashed the entire complaint — Special C.C. No. 781 of 2022 — pending before the Special Court in Bengaluru, but only as far as Pavana Dibbur was concerned. The case against the other five accused would continue.
THE PLAY: If the only scheduled offence in a PMLA case is criminal conspiracy under Section 120-B IPC, check whether the conspiracy was to commit a crime already listed in the PMLA Schedule — if not, the money laundering case cannot survive.
The properties were attached. The bank accounts were frozen. The trial was set. And then the Supreme Court said: none of this should have happened.
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