Retrospective PMLA liability and provisional attachment fail where the predicate offence was not scheduled at the relevant time.
Retrospective penal operation under the Prevention of Money Laundering Act, 2002 was held impermissible where the alleged predicate conduct and the relevant scheduled-offence regime predated the amendment bringing the underlying offence within the Schedule. Article 20(1) was relied on to exclude criminal liability for conduct not punishable in the relevant form at the time. The provisional attachment under section 5 also could not survive once the connected PMLA proceedings were quashed, because the statutory foundation for attachment and the required "reason to believe" were no longer sustainable. The attached properties were directed to be released.
Issues: (i) Whether the proceedings under the Prevention of Money Laundering Act, 2002 could be sustained when the alleged predicate acts and the relevant scheduled offence regime were prior to the amendment bringing the underlying offence within the Schedule. (ii) Whether the provisional attachment under section 5 of the Prevention of Money Laundering Act, 2002 could survive after the connected PMLA proceedings had been quashed and in the absence of a sustainable basis for the formation of "reason to believe".
Issue (i): Whether the proceedings under the Prevention of Money Laundering Act, 2002 could be sustained when the alleged predicate acts and the relevant scheduled offence regime were prior to the amendment bringing the underlying offence within the Schedule.
Analysis: The attachment and prosecution were founded on allegations relatable to disproportionate assets and the offences under the Prevention of Corruption Act, 1988. The relevant transactions were found to be of a period prior to the amendment that brought the relevant provisions into the Schedule of the Prevention of Money Laundering Act, 2002. Retrospective application of penal consequences was held impermissible, and Article 20(1) of the Constitution of India was relied upon to hold that criminal liability could not be imposed for conduct occurring before the law made it punishable in the relevant form.
Conclusion: The PMLA proceedings could not be sustained on a retrospective basis and were held unsustainable.
Issue (ii): Whether the provisional attachment under section 5 of the Prevention of Money Laundering Act, 2002 could survive after the connected PMLA proceedings had been quashed and in the absence of a sustainable basis for the formation of "reason to believe".
Analysis: The provisional attachment depended upon the existence of proceedings under the Act and upon a valid satisfaction that the properties were proceeds of crime and were likely to be dealt with in a manner prejudicial to confiscation. Once the connected PMLA proceedings had already been quashed, the foundation for attachment was removed. The order was also found unsustainable on the facts, as the record did not justify the requisite statutory satisfaction.
Conclusion: The provisional attachment was held unsustainable and the attached properties were directed to be released.
Final Conclusion: The appellate tribunal set aside the impugned order and held that the provisional attachment could not be maintained in view of the quashing of the PMLA proceedings and the impermissibility of retrospective penal application.
Ratio Decidendi: A provisional attachment under the Prevention of Money Laundering Act, 2002 cannot be sustained where the alleged predicate offence was not a scheduled offence at the relevant time and the connected PMLA proceedings have been quashed, since retrospective penal operation is barred and the statutory basis for attachment falls away.