TaxTMI 
TaxTMI 
2021 (5) TMI 219
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....perties belonging to them are sought to be attached / confiscated on the basis of amended law which came into force on 01.06.2009 in respect of the offences which are alleged to have been committed prior to 01.06.2009. 3. For better understanding of the controversy raised in the petitions, narration of the basic facts involved in each case may be necessary. They are recapitulated hereunder: Criminal Petition No.5698 of 2019 The petitioner in this case was a Minister in the Government of Karnataka at the relevant time. FIR was registered against him in Crime No.57/2010 alleging commission of offences punishable under Sections 7, 8, 12, 13(1)(d) of Prevention of Corruption Act, 1988 (hereinafter referred to as "PC Act") and sections 419, 420, 465, 468 and 471 r/w. 120B of IPC. After investigation, charge sheet was filed against the petitioner (accused No.1) and 8 other accused persons in charge sheet No.4/2011 dated 07.07.2011 by the Karnataka Lokayuktha. The offences alleged against the petitioner were punishable under sections 7, 13(1)(d) read with 13(2)of PC Act and sections 465, 471 r/w. 120-B of IPC. He was summoned before the XXIII Addl. City Civil & Sessions Judge and Speci....
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....sed No.6 is the wife of accused No.1. Accused No.7 is the sister of accused No.2 and daughter of accused Nos.1 and 6. Accused No.8 is the brother-in-law of accused No.2 and son-in-law of accused Nos.1 and 2 and husband of accused No.7. Accused No.9 is the sister of accused No.32 and daughter of accused Nos.1 and 6. Accused No.10 is the brother-in-law of accused No.2 and son-in-law of accused Nos.1 and 6 and husband of accused No.9. Accused No.11 is the wife of accused No.2 and daughter-in-law of accused Nos.1 and 6. 6. In the complaint, it is alleged that accused No.6 was involved in the process and activities connected with the proceeds of crime to the extent of over Rs. 1.00 Crore; accused No.7 was in possession of the property to the extent of Rs. 83,42,255/-; accused Nos.8, 9, 10 and 11 were involved in the process and activities connected with the proceeds of the crime to an extent of Rs. 7,24,81,000/-, Rs. 5,56,00,000/-, Rs. 10,19,00,000/- and Rs. 19,80,00,000/- respectively. The details of the properties acquired by them out of the proceeds of the crime are detailed in the complaint. 7. Insofar as accused No.19, 20 and 21 are concerned, it is alleged that they directly as ....
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....the proceeds of crime to an extent of Rs. 34,98,500/- and accused No.2 being the wife of accused No.1 actively assisted accused No.1 in the process connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property to the extent of Rs. 22,00,500/-It is further alleged that accused No.3-elder brother of accused No.1 and accused No.4, son of accused Nos.1 and 2 actively assisted accused No.1 in the activity connected with the proceeds of the crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property to the extent of Rs. 12,83,000/-, Rs. 15,000/- respectively and thereby committed the offence of money laundering as defined under sections 3 and 4 of PML Act. Crl.P.No.5556/2016 10. Petitioner was the sole accused in Crime No.20/2009 registered by the Lokayuktha Police, Belagavi, for the offence punishable under Sections 13(1)(e) r/w 13(2) of the Prevention of Corruption Act. After investigation, charge sheet was laid against him in Spl.C.No.55/2013 and after trial, he was acquitted by order dated 13.01.2016. 11. The instant proceedings are initiated....
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....g the check period from 11.01.1983 to 16.11.2010. The matter was pending on the file of the Prl. District & Sessions Judge (Special Court for cases under Prevention of Corruption Act), Vijayapura in Spl.C.No.3/2014. During pendency of this proceedings, the Enforcement Directorate initiated attachment proceedings under Section 5 of the P.M.L.A. Act. W.P.No.24502/2017 15. Petitioner is the accused in Special CC.No.156/2017 on the file of XLVI Additional City Civil and Sessions Judge at Bengaluru. He is aggrieved by the initiation of the prosecution against him for the alleged offences punishable under Sections 3, 4 and 8(5) of the Prevention of Money Laundering Act, 2002 (PMLA Act for short). 16. ECIR/84/BZ/2010 was filed against the petitioner on 1.4.2017. As per the complaint, the alleged offences were committed during the year 2003-2009, to be precise during the check period 1.3.2003 to 31.3.2009. It is not in dispute that the prosecution was initiated against the petitioner/accused under Section 13(2) of the PC Act, 1988 r/w 13(1)(e) of PC Act, 1988. During the pendency of this proceedings, the instant proceedings have been launched against the petitioner. 17. The contention ....
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.... the PML Act clearly reveal that the basis for launching the prosecution and initiating attachment proceedings against the petitioners are the final reports /charge sheets filed by the Lokayukta police under section 173 of Cr.P.C. for the alleged offences punishable under Sections 7, 8, 12, 13(1)(d) of Prevention of Corruption Act, 1988 (hereinafter referred to as "PC Act") and/or sections 419, 420, 465, 468 and 471 r/w. 120B of IPC. Undeniably these offences termed as "predicate offences" came to be included in the Schedule to the PML Act by Act 21 of 2009 w.e.f. 1.06.2009. i) The first and serious question raised by the petitioners is that going by the allegations made in the respective complaints, the acts constituting the alleged offences are stated to have been committed prior to the amendment of sections 3, 2(1) (u)and 2(1) (y)of the PML Act. In view of the constitutional protection under Article 20(1) of the Constitution of India, the prosecution of the petitioners based on ex post facto laws that created the offences after the commission of the acts charged against them is violative of Article 20(1) of the Constitution of India and bad in law as being highly inequitable a....
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..... v/s. Directorate of Enforcement, (W.P.(C)1925/2014 & CM.No.4017/2014 dated 25.01.2016) has ruled as under:- 32. ... There is no indication from the express language of the Act, that the Legislature intended the Act to be retroactive or operative with retrospective effect. 34. ... Thus, unless such acts have been committed after the Act came into force, an offence of money-laundering punishable under Section 4 would not be made out. The 2013 Amendment to Section 3 of the Act by virtue of which the words 'process or activity connected with proceeds of crime and projecting it as untainted property' were substituted by the words 'any process or activity connected with proceeds of crime including concealment, possession, acquisition or use and projecting or claiming it as untainted property'. The words 'concealment, possession, acquisition or use' must be read in the context of the process or activity of money-laundering and this is over once the money is laundered and integrated into the economy. Thus a person concealing or coming into possession or bringing proceeds of crime to use would have committed the offence of money laundering when he came into possession or concealed or ....
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....TORATE OF ENFORCEMENT, (W.P.No.37487/2012 and connected cases dated 31.12.2018) has taken the view that, 68. ... Since the charge sheets were filed prior to the amendment and since the petitioner was not one of the accused, the amendment to Section 8 (5) will not apply to the case of the petitioner. That vested rights cannot be taken away by retrospective application of the law (especially quasi criminal) is too well settled. A useful reference may be made in this regard to the judgments of the Supreme Court in STO v. Oriental Coal Corporation and in K.S. Paripoornan v. State of Kerala. In Oriental Coal Corporation the Supreme Court pointed out that where there is no hint of retrospectivity, in the statute itself, it is not possible to read retrospectivity. Similarly, in K.S. Paripoornan, the Supreme Court indicated the distinction between a statute dealing with substantive rights and a statute, which relates to procedure or evidence or is declaratory in nature. A statute dealing with substantive rights is prima facie prospective unless it is expressly or by necessary implication made to have retrospective effect. On the contrary, a statute concerned mainly with matters of proced....
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....ent in Crl.M.C.No.5581/2014 dt. 09.04.2015, has interpreted the provisions of PML Act as follows: 22. It is settled principle of law that the provisions of law cannot be retrospectively applied as Article 20(1) of the Constitution bars the ex-post facto penal laws and no person can be prosecuted on the allegations which occur earlier by applying the provisions of law, which has come into force after the alleged incident. 28. In Abdullah Ali Balsharaf and another vs. Directorate of Enforcement, 2019 SCC OnLine Del 6428, another Bench of the Delhi High Court has held as under: 106. The expression "proceeds of crime" has been defined under Section 2(1) (u) of PMLA as under: "Section 2(1) (u) - "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 offence or the value of any such property [or where such property is taken or held outside the country, then the property equivalent in value held within the country] [or abroad];" 107. A plain reading of the aforesaid definition indicates that the definition / expression of proceeds of crime is in two parts. The first part relates t....
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....dments. In fact, I would like to mention, well before that, the number of amendments, which are coming through for the PMLA, which is of 2002 vintage. Eight are being proposed by us. Of the eight, six are only explanations to the existing clause. The clause itself is not being changed. We are only coming with explanations. These explanations are being brought into the Act because of pleading in the courts by some of those who are accused and because of some kind of a confusion or a grey area or an ambiguity which might exist. Therefore, the amendment is not amendment of the clause itself. It is more explaining the clause. So, of the eight amendments proposed under the PMLA, six of them are amendments only for additional explanations to be added. xxx But of those eight points on which the amendments are being brought in, as I said, six are only explanation. One is deletion of a proviso, a proviso which has no purpose to be there, which was not being invoked but of course, being invoked by people who intend differently, and, therefore, that proviso is being removed. A new proviso, which is being added, is only to make sure that where a case exists in one court and the hearing....
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.... of crime" and the Act of 2002 would apply only to such property. The intention of the legislature had always been that the property derived or obtained, directly or indirectly by any person as a result of not only the commission of the scheduled offence but also any criminal activity relatable to the scheduled offence would also fall within the definition of "proceeds of crime". Accordingly, a clarification is proposed to be inserted in clause (u) to sub-section (1) of section 2 to clarify that "proceeds of crime" shall include property not only derived or obtained from the commission of the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. 4. ... The intention of the legislature had always been that a person will be held to be guilty of offence of money-laundering and will be punished as long as person is enjoying the 'proceeds of crime' by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property." 31. On the question of the effect of declaratory statute, learned ASG made a reference to the....
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.... 1. In paras 14 and 15 whereof, it is laid down thus: "14. The presumption against retrospective operation is not applicable to declaratory statutes.... In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended.... An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect. (ibid, pp.468-469). 15. Though retrospectivity is not to be presumed and rather there is presumption against retrospectivity, according to Craies (Statute Law, Seventh Edition), it is open for the legislature to enact laws having retrospective operation. This can be achieved by express enactment or by necessary implication from the language employed. If i....
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....st be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language 'shall be deemed always to have meant' is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-amended provision was clear and unambiguous. An amending Act may be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law which the Constitution came into force, the amending Act also will be part of the existing law." The above summing up is factually based on the judgments of this Court as well as English decisions." 34. Further he made reference to the observation o....
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....al of the PMLA as amended by Act 2 of 2013, it is clear that the scheme of Act, as it now operates, is directed not only against persons and juridical entities which are prosecuted for scheduled offences by various agencies, such as the CBI, Customs, SEBI etc., but also operates qua persons who conceal, possess, acquire, use and project or claim proceeds of crime. The scope and ambit of the Act is best defined by the amended Sections 2(u) and 3 which reads, respectively, as follows:- "..2(u). "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 offence or the value of any such property. 3. Offence of money-laundering - Whosoever directly or indirectly attempts to indulge or knowingly is a party or is actually involved in any process or activity connected [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering..." 36. The Madras High Court in V.M. GANESAN and ors vs. THE JOINT DIRECTOR, DIRECTORATE OF ENFORCEMENT, and ors, (2015)1 Madras Law Journal 870, has ....
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....ading the two provisos under Section 5(1) of the Act in complete disregard to the object sought to be achieved. 37. In GOKAK PATEL vs. DUNDAYYA GURUSHIDDAIAH HIREMATH, (1991) 2 SCC 141, the term "continuing offence" has been explained as under: 7. What then is a continuing offence? According to the Blacks' Law Dictionary, Fifth Edition (Special Deluxe), 'Continuing means "enduring; not terminated by a single act or fact; subsisting for a definite period or intended to cover or apply to successive similar obligations or occurrences." Continuing offence means "type of crime which is committed over a span of time." As to period of statute of limitation in a continuing offence, the last act of the offence controls for commencement of the period. "A continuing offence, such that only the last act thereof within the period of the statute of limitations need be alleged in the indictment or information, is one which may consist of separate acts or a course of conduct but which arises from that singleness of thought, purpose or action which may be deemed a single impulse." So also a 'Continuous Crime' means "one consisting of a continuous series of acts, which endures after the period of....
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....e name of anyone else. Now, the character of proceeds of crime has changed from "money" to "immovable property". When the same immovable property is sold, it cannot lose the characteristics of a proceeds of crime, though the purchaser may claim that he had legally purchased it through lawful sources. Of course, it is open for the purchaser to take a plea of lawful acquisition before the adjudicating authority and it is now too preposterous to hazard a guess on the outcome of such a plea. 40. In SACHIN NARAYAN VS. THE INCOME TAX DEPARTMENT, in W.P.No.5408/2019 and connected cases, decided on 29.08.2019, this Court has observed thus: 25. The PML Act being a special enactment contemplates a distinct procedure at the initial stage and thereafter provide for initiation of prosecution in order to achieve the special purpose envisaged under the Act and as such, it cannot be construed that proceedings under the PML Act is to be equated with prosecution initiated under the criminal proceedings for the offence punishable under the Indian Penal Code. Thus, initiation of action under the PML Act. cannot have any implication or impact in respect of registration of other cases either under th....
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.... brought to the provisions of PML Act, in para 36 has observed thus: 36. Proceeds of crime is defined to include not merely property derived or obtained as a result of criminal activity relating to a scheduled offence but the value of any such property as well. The bogey of apprehensions propounded on behalf of the petitioners is that where proceeds of crime are sequentially transferred through several transactions, in favour of a series of individuals having no knowledge or information as to the criminality antecedent to the property; the authorities may proceed against each and all of such sequential transaction, thus bringing within the vortex of Chapter-III of the Act, all the properties involved in several transactions. The above reasoning is sound and is endorsed by this Court. xxx However, it is to be seen that proceeds of crime is "property" of all kinds as defined under clause (v) of Section 2(1). The "Explanation" inserted to the said clause reads thus: "Explanation.-For the removal of doubts, it is hereby clarified that the term "property" includes property of any kind used in the commission of an offence under this Act or any of the scheduled offences;" Hence, ....
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....f ex post facto laws is factually incorrect. 45. In order to answer the contentions urged by the petitioners, it may be necessary to refer to section 3 of the PML Act as it existed on 01.06.2009. The section as on that date read as under:- 3. Offence of money-Laundering.-Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering. 46. The unamended section 2(1) (u) of the PML Act, as on 1.06.2009, read as under:- 2(1)(u) "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 offence or the value of any such property." 47. The Schedule to the PML Act of 2002 was amended by Act 21 of 2009 and section 13 of the Prevention of Corruption Act namely 'criminal misconduct by a public servant' and sections 419, 420, 465, 468, 471, 120B of IPC came to be inserted in the schedule with effect from 01.06.2009. As a result, as on the date of initiation of the proceedings against th....
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....ven without there being any conviction of the accused in a predicate offence and even if the offender under section 3 of the PML Act is not a party to the predicate offence, still the prosecution could be launched against him if the offender is found involved in any process or activity connected with the 'proceeds of crime'. What is necessary to constitute the offence of money laundering is the existence of proceeds of crime and not the pendency of predicate offence as vehemently contended by the learned counsel appearing for the petitioners. This Court as well as various other Courts have analysed this provision and have consistently held that the offences under section 3 of the PML Act is an independent and stand alone offence. Therefore, the argument of learned counsel for petitioners that without the existence of predicate offence and without there being any conviction of the petitioners for the predicate offence, their prosecution for the offence of money-laundering cannot be sustained being contrary to the language of section 3 of the PML Act and the intendment of the Legislature in enacting section 3 of the PML Act and the allied provisions is liable to be rejected and is ac....
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....he predicate offence. As a result, I hold that the prosecution of the petitioners does not offend Article 20(1) of the Constitution of India. 51. The correlation between possession and acquisition of the subject matter of a crime which is made an offence post facto has been considered by the Hon'ble Apex Court in MOHAN LAL v. STATE OF RAJASTHAN, (2015 ) 6 SCC 222, in the context of possession of contraband substance under NDPS Act. In the said case, the appellant/accused therein was convicted and punished under section 18 of the NDPS Act when admittedly the theft of contraband substance was committed prior to coming into force of NDPS Act. The FIR was registered against the appellant/accused therein prior to coming into force of NDPS Act and therefore a contention was taken before the Court that the possession of contraband substance having commenced prior to coming into force of the NDPS Act i.e., when the theft was committed on the intervening night of 12/13-11-1985 whereas the NDPS Act came into force on 14.11.1985, the accused cannot be subjected to an offence under a new Act which was not in force on the date of theft and possession of the contraband articles. Analyzing the c....
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....ence at the time cannot 'ipso facto' be held to be unconstitutional. A person accused of the commission of a particular Court or by a particular procedure, except in so far as any constitutional objection by way of discrimination or the violation of any other fundamental right may be involved." In the instant case, Article 20(1) would have no application. The actus of possession is not punishable with retrospective affect. No offence is created under Section 18 of the NDPS Act with retrospective effect. What is punishable is possession of the prohibited article on or after a particular date when the statute was enacted, creating the offence or enhancing the punishment. Therefore, if a person is in possession of the banned substance on the date when the NDPS Act was enforced, he would commit the offence, for on the said date he would have both the 'corpus' and 'animus' necessary in law." (underlining supplied) 53. The above principle, in my view, applies with full force to the facts of this case. As already held above, petitioners are not prosecuted for the offence which is added in the schedule subsequent to the petitioners coming in possession of the tainted property, rather t....
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.... neither these provisions nor the offences included in the schedule could be construed as post facto legislation as contended by the petitioners. As a result, the contention urged by the petitioners that their prosecution is based on ex post facto law and is liable to be rejected and is accordingly rejected. 56. In view of the above conclusion, the contra view taken by the Division Bench of this court in M/s. OBULAPURAM MINING COMPANY Pvt. Ltd., vs. JOINT DIRECTOR in W.P.No.5962/2016 and connected matters, has not been followed for the reason that while admitting the SLP filed against this order in Special Leave to Appeal (Crl.) No.4466/2017 vide order dated 24.07.2017, the Hon'ble Supreme Court has directed that the impugned judgment and order will not operate as a precedent. Likewise, the Division Bench of the High Court of Delhi, on consideration of the appeal preferred against the order of learned Single Judge in M/s Mahanivesh Oils and Foods Pvt Ltd. v/s. Directorate of Enforcement, (W.P.(C)1925/2014 & CM.No.4017/2014 dated 25.01.2016) has directed that the findings recorded by learned Single Judge shall not be construed as conclusive and binding precedent. 57. The next cont....
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...., the departmental proceedings for the purpose of confiscating the proceeds of crime and the criminal proceedings for punishing the offender, can run concurrently and that they need not converge at any point." 60. I am in respectful agreement with the view taken in the above decision. Even otherwise, Chapter III of the Provisions of the PML Act provides for a separate mechanism for attachment of properties involved in money laundering. Section 6 of the PML Act provides for the constitution of Adjudicating Authority and confers power on the Adjudicating Authority to decide the dispute relating to the attached properties. Section 8 of the PML Act deals with adjudication. The regime of attachment and forfeiture of the properties procured by commission of the offence is not a new phenomenon. The Criminal Law (Amendment) Ordinance, 1994 provided for a fullfledged mechanism for attachment of money or other properties which were believed to have been procured by means of the schedule mentioned offences. Considering the question as to whether the forfeiture provided under the said Ordinance violated Article 20 of the Constitution of India, the Constitution Bench of the Supreme Court of In....