India: Person Cannot Be Prosecuted For The Offence Committed Prior To The Inclusion Of Such Offence In The Schedule Of Scheduled Offence Under PMLA (PML Act) (India AML Law)

Last Updated: 15 May 2017
Article by Vijay Pal Dalmia, Partner and Rajat Jain

Article by Vijay Pal Dalmia, Advocate, Supreme Court of India and Delhi High Court, Partner & Head of Intellectual Property Laws Division, Vaish Associates Advocates, India

This important judgment pertains to challenging the action  of  the  authorities  in lodging and  enforcing  of  an Enforcement Case Information Report (ECIR) and  an order of attachment, both provisional and final,  under the provisions  of  the  Prevention of  Money  Laundering   Act, 2002 [for short, the PML Act / PMLA Act] in an Anti Money Laundering (AML) case.

The issue that a Person cannot be prosecuted for the offence committed prior to the inclusion of such offence in the schedule of scheduled offence under PMLA (PML Act) (Indian AML law), came up before the High Court of Karnataka at Bengaluru before the Hon'ble Mr.  Subhro Kamal Mukherjee, Chief Justice and the  Hon'ble Mr.  Justice Budihal  R B, in the Writ Petition No. 5962 of 2016 (GM-MM-C); Writ Petition No. 11442 of 2016 (GM-MM-C); and Writ Petition Nos. 11440-11441 of 2016 (GM-MM-C). (Original judgment can be accessed at http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/157749/1/WP5962-16-13-03-2017.pdf).

The issue before the court was that the offenses alleged against the petitioner are not scheduled offenses under the PML Act, and,   therefore, the petitioners could not be  prosecuted under the provisions of the PML Act. The allegation was that the accused committed the offences  under Sections 120B, 420 and 411 of the Indian Penal Code and Sections 13(2)   read with Sections 13(1)(d)  and 13(1)(e)   of the Prevention of  Corruption Act, 1988  [for short,  the PC Act]. The contention of the Petitioner was that the alleged  offences were included as scheduled offences only on June 1, 2009, whereas the alleged offences had been  allegedly committed between June 21, 2007 and May 15, 2009, all the offences were allegedly committed prior to the coming into operation of the amendment to the PML Act.

Section 2(p)   of the PML   Act (Indian AML law) defines that 'money laundering' has the meaning assigned to it in Section 3. Section 2(u) provides that the '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 offense or the value of any such property. Section 2(y) defines the 'schedule offence' as (i) the offences specified under Part A of the Schedule; or (ii) the offences specified under Part B  of  the Schedule, if the total value involved in such offences  is thirty lakh rupees or more; or (iii) the offences specified under Part C of the Schedule. The fact is that the amended provisions of the PML  Act, as amended by the Prevention of  Money Laundering (Amendment) Act, 2009, came into operation on the appointed date, that is, June 1, 2009.

The Hon'ble Court held that it could be  seen from the records that all the offenses allegedly committed by the writ petitioner were earlier to the insertion of the provision in the schedule of the Prevention of (Anti Money Laundering law) Money Laundering  (Amendment)  Act, 2009, and as such, they have no application. Therefore, the Enforcement Case Information Report and the order of attachment are without jurisdiction and are liable to be quashed.  

In this case, it has been held that the writ petitioner cannot be prosecuted for the offenses alleged, as they are not the scheduled offenses under the PML  Act.    The offenses under the Mines and Geology (Development and Regulation) Act, 1957,  the Forest (Conservation)  Act, 1980,  the  Indian  Penal Code and the Prevention of  Corruption Act, 1988, were included in the PML  Act declaring them as scheduled offenses only with effect from   June   1,  2009.     Hence, the Enforcement Directorate could not have invoked the provisions of the PML Act with retrospective effect.

It has been held by the Hon'ble Court that the petitioner cannot  be  tried and punished for the offences  under the PML  Act  when the  offences  were not inserted in the schedule of  offences  under the PML  Act, otherwise this will deny the writ petitioner the protection provided under clause (1) of Article 20  of the Constitution of India. Article 20(1) of the Constitution of India prohibits the conviction of a person or his being subjected to a penalty for ex-post facto laws.  The order of attachment was also set aside.

* Vijay Pal Dalmia is a senior litigator with 30 years of experience in court trials and deals with cases relating to prosecution under the Income Tax Act, 1961, The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, Money Laundering Act, economic offences and white collar crimes.

Vijay Pal Dalmia, Advocate & Partner Vaish Associates

Email: vpdalmia@vaishlaw.com     Mobile: 09810081079

Rajat Jain, Advocate

Email: rajatjain@vaishlaw.com   Mobile: 09953887311

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