Can Arvind Kejriwal be booked for money laundering, even if he is not named in Delhi excise policy case?

What is a predicate offence and how can an individual be booked for money laundering separately?

What is a predicate offence?

The Prevention of Money Laundering Act (PMLA) criminalises money laundering as: “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 offence of money laundering.”

Here, “proceeds of crime” is “ any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence…”

The law also defines scheduled offences, which are listed in two schedules attached to the PMLA. These acts in the schedules (scheduled acts) are also called predicate offences.

A plain reading shows that to be accused of money laundering, one has to be tied to the scheduled offence, which in Kejriwal’s case would be under the Prevention of Corruption Act. However, he is not named as an accused in the excise case itself.

What have the courts said?

In a judgment delivered on July 27, 2022 in the Vijay Madanlal Choudhary & Ors v Union of India case, where the Supreme Court upheld key provisions of the PMLA, the court had said that if an accused in the predicate offence is acquitted or discharged, he cannot be prosecuted for the offence punishable under the PMLA.

But what if an accused is not even shown as an accused in any scheduled or predicate offence? The Supreme Court in Pavana Dibbur v Enforcement Directorate verdict, delivered in November last year, answered this question.

The verdict by Justices Abhay Oka and Pankaj Mithal said that an accused in the PMLA case who comes into the picture after the scheduled offence is committed, by assisting in the concealment or use of proceeds of crime, need not be an accused in the scheduled offence. Here, the proceeds of crime that the accused has allegedly concealed or possessed must simply be linked to the scheduled offence.

“Such an accused can still be prosecuted under PMLA so long as the scheduled offence exists,” the court had said.

Essentially, whether Kejriwal has “used” allegedly tainted money that forms the proceeds of crime in the excise scam will be a question that will only be decided at the time of his trial. However, for that trial to happen, the trial in the excise scam itself has to take place.