Retrospective PMLA enforcement barred where alleged predicate offences pre-dated the Act and were not scheduled offences.

Proceedings under the Prevention of Money Laundering Act could not be sustained where the alleged conduct pre-dated the Act and the underlying corruption offence was not a scheduled offence at the relevant time. The Court held that Section 5 attachment requires proceeds of crime from a scheduled offence and recorded reasons to believe that the property may be concealed or dealt with to frustrate proceedings; those statutory preconditions were absent on the facts. Retrospective application of the penal statute would also offend Article 20(1) of the Constitution of India. The provisional attachment order and original complaint were therefore quashed as unsustainable.

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Issues: Whether the provisional attachment order and original complaint under the Prevention of Money Laundering Act, 2002 were liable to be quashed on the ground that the alleged predicate offences pre-dated the Act and were not scheduled offences when committed.

Analysis: The alleged conduct related to the period from 01.05.1997 to 30.06.2005, while the Prevention of Money Laundering Act, 2002 came into force only on 01.07.2005. The offence under the Prevention of Corruption Act was brought into the Schedule only on 01.06.2009. The attachment power under Section 5 of the Act is conditioned on the existence of proceeds of crime arising from a scheduled offence and on recorded reasons to believe that the property is likely to be concealed, transferred, or dealt with so as to frustrate proceedings under the Act. Where the predicate offence was not yet a scheduled offence, the statutory foundation for initiation and attachment was absent. The Court held that a penal statute cannot be applied retrospectively so as to attract Article 20(1) of the Constitution of India, and that the impugned attachment was also unsupported by a genuine reason to believe in the facts of the case.

Conclusion: The provisional attachment order and the original complaint were held to be unsustainable and were quashed in favour of the petitioners.

Ratio Decidendi: Proceedings under the Prevention of Money Laundering Act, 2002 cannot be sustained on the basis of conduct committed before the Act came into force or before the underlying offence was included in the Schedule, as retrospective application of a penal statute offends Article 20(1) of the Constitution of India.

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