2017 (8) TMI 135 - HC - Money Laundering

Court Quashes Attachment Order & Complaint, Rules on Retrospective Application of Laws

Shri Ajay Kumar Gupta, Smt. Veenita Gupta, Ms. Vishakha Gupta, Ms. Saloni Gupta Versus Adjudicating Authority (PMLA), Deputy Director, Directorate of Enforcement, Deputy Superintendent of Police, Central Bureau of Investigation

The court quashed the Provisional Attachment Order and the Original Complaint, stating that the Prevention of Money Laundering Act cannot be applied ... Prevention of Money Laundering Act, 2002 - attachment orders - Held that:- The offences allegedly committed by the first and second petitioners prior to 1.7.2005, the Prevention of Money Laundering Act was not in force. Even after 1.7.2005, the offences were not included in the scheduled offences till 1.6.2009. Since the charge sheet dated 13.1.2009, even on that date, Prevention of Corruption Act has not included in the scheduled list of offences. Therefore, this court is of the view that if retrospective effect is given to any statute of any penal nature, it will be directly in conflict with the fundamental rights of the citizen enshrined in Article 20(1) of the Constitution of India. Admittedly, 2nd respondent filed the case only based on the charge sheet of the CBI, who have not conducted any enquiry on their own. In fact, all the documents are original documents of the alleged proceeds of crime, which are in the custody of the CBI Court. When the entire documents are in the custody of the Court, there cannot be any reason to believe that the properties will be dealt with in any other manner. The impugned order was as if 1st petitioner not able to offer any satisfactory explanation during examination. Therefore, the attachment officer has passed an order without a reason to believe that the proceeds of crime are likely to be transferred or disposal. In the absence of any sufficient reason, arriving to such conclusion by mere reproducing the words reason to believe it cannot be stated that the order has been passed after considering the entire gamut of materials. Admittedly, in this case, entire documents are available and the properties are in the custody of the court. Therefore, the order of attachment is not maintainable. Issues Involved:1. Validity of the Provisional Attachment Order under the Prevention of Money Laundering Act, 2002.2. Applicability of the Prevention of Money Laundering Act, 2002 to offences committed before its enactment.3. Inclusion of Section 13 of the Prevention of Corruption Act in the list of scheduled offences under the Prevention of Money Laundering Act.4. Retrospective application of penal statutes.Issue-wise Detailed Analysis:1. Validity of the Provisional Attachment Order:The petitioners challenged the Provisional Attachment Order No.09/2017 dated 07.04.2017, issued by the second respondent under the Prevention of Money Laundering Act, 2002. The petitioners argued that the properties provisionally attached were acquired during the period from 01.05.1997 to 30.06.2005, before the Prevention of Money Laundering Act came into force on 01.07.2005. Additionally, the properties in question were already seized by the CBI and were in the custody of the court, making the attachment order redundant and legally unsustainable.2. Applicability of the Prevention of Money Laundering Act, 2002 to Offences Committed Before Its Enactment:The petitioners contended that the Prevention of Money Laundering Act, 2002, being a penal statute, cannot have retrospective or retroactive operation. They cited Article 20(1) of the Constitution of India, which prohibits penal action for offences committed before the enactment of the law. The court noted that the alleged offences occurred between 01.05.1997 and 30.06.2005, prior to the Act's enforcement on 01.07.2005. Therefore, applying the Act retrospectively would violate constitutional protections.3. Inclusion of Section 13 of the Prevention of Corruption Act in the List of Scheduled Offences:The petitioners highlighted that Section 13 of the Prevention of Corruption Act was included in the list of scheduled offences under the Prevention of Money Laundering Act only on 01.06.2009, after the alleged offences and the filing of the charge sheet on 13.01.2009. The court agreed, stating that subsequent amendments to include Section 13 in the schedule cannot be applied retrospectively to actions that occurred before the amendment.4. Retrospective Application of Penal Statutes:The court relied on the judgments of the Karnataka High Court in M/s Obulapuram Mining Company Pvt. Ltd. vs. Directorate of Enforcement and the Delhi High Court in Mahanivesh Oils & Foods Pvt. Ltd. v. Directorate of Enforcement, which held that penal statutes cannot be applied retrospectively. The court concluded that giving retrospective effect to the Prevention of Money Laundering Act would conflict with Article 20(1) of the Constitution, which protects individuals from ex-post facto laws.Conclusion:The court quashed the Provisional Attachment Order No.09/2017 dated 07.04.2017 and the Original Complaint in O.C.No.855 of 2017. It held that the Prevention of Money Laundering Act could not be applied to offences committed before its enactment, and the inclusion of Section 13 of the Prevention of Corruption Act in the scheduled offences list could not have retrospective effect. The petitions were ordered as prayed for, and the connected miscellaneous petitions were closed.