2017 (4) TMI 1353 - HC - Money Laundering

Prevention of Money Laundering Act: No Retroactive Application

The Karnataka High Court clarified that the Prevention of Money Laundering Act, 2009 cannot be applied retrospectively to prosecute offenses not listed in ... Offence under PMLA - Whether the offences allegedly committed by the petitioners therein were earlier to the inclusion of several offences under several enactments in the Schedule to the Prevention of Money Laundering Act, 2009? - Held that:- Insofar as the question as to whether the proceedings initiated against the petitioners pursuant to the amendment in respect of offences allegedly committed prior to the amendment could be taken forward under the provisions of the PML Act is concerned, the Division Bench IN in the case of Obulapuram Mining Company Private Limited vs. Joint Director, Directorate of Enforcement [ 2017 (4) TMI 1 - KARNATAKA HIGH COURT] has opined in the negative. Since the offences were included in the Schedule only with effect from 1.6.2009, it was held that the Enforcement Directorate could not have invoked the provisions of the Act with retrospective effect and the petitioners cannot be tried and punished for the offences under the PML Act, as the offences were not inserted in the schedule of offences under the PML Act. It is also stated that this would deny the petitioners the protection provided under clause (1) of Article 20 of the Constitution of India and that the said Article 20(1) prohibits the conviction of a person or his being subjected to penalty for ex-post facto laws. Consequently, the order of attachment was held liable to be set aside. the respondents would seek to distinguish the said decision by reference to a judgment of the Andhra Pradesh High Court in the case of B.Rama Raju vs. Union of India, (2012 (5) TMI 240 - HIGH COURT OF ANDHRA PRADESH), which was dealing with the very Act. Since the Division Bench of this Court was aware of the aforesaid judgment, as it was available as on the date of the order, the same being sought to be distinguished, would require this court to disagree with the order passed by a Division Bench of the Andhra Pradesh High Court and therefore, this court refrains from doing so. On the other hand, the reasoning of the Division Bench of this Court appeals to this Bench. Issues:1. Interpretation of the Prevention of Money Laundering Act, 2009 regarding the retrospective application of offences.2. Validity of Enforcement Case Information Report and Order of Attachment under the Act.Analysis:1. The main issue in this judgment revolves around the interpretation of the Prevention of Money Laundering Act, 2009 (PML Act) concerning the retrospective application of offences. The court considered whether the offences allegedly committed by the petitioners before the inclusion of said offences in the Schedule to the PML Act could be prosecuted under the Act. The Division Bench had previously addressed a similar question in another case and opined that offences not included in the Schedule before a certain date could not be tried under the PML Act. The court held that since the offences were added to the Schedule only after a specific date, the Enforcement Directorate could not apply the Act retrospectively to prosecute the petitioners. This decision was based on the protection provided under Article 20(1) of the Constitution of India, which prohibits conviction or penalty under ex-post facto laws.2. The validity of the Enforcement Case Information Report and Order of Attachment under the PML Act was also challenged in this case. The petitioners argued that since the offences were not part of the Schedule before a certain date, the proceedings initiated against them were without jurisdiction and should be quashed. The respondents tried to distinguish this case from a judgment of the Andhra Pradesh High Court but the court found the reasoning of the Division Bench of the Karnataka High Court more convincing. Therefore, the court allowed the petitions and quashed the impugned proceedings, including the Order of Attachment, based on the interpretation of the PML Act and the protection provided under the Constitution of India.In conclusion, the Karnataka High Court, in this judgment, clarified the application of the Prevention of Money Laundering Act, 2009 regarding the retrospective prosecution of offences not included in the Schedule before a specific date. The court emphasized the importance of protecting individuals from being tried under ex-post facto laws and held that the Enforcement Directorate could not apply the Act retrospectively in this case. The court ultimately allowed the petitions and quashed the proceedings, including the Order of Attachment, based on this interpretation and legal reasoning.