TaxTMI 
TaxTMI 
2021 (5) TMI 219
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....hey are sought to be prosecuted and the properties 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 ....
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....1 and 19 to 21 in Spl.C.C.No.124/2014 are the petitioners in this case. Accused 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....
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....3.1975 and 23.09.2009, accused No.1 was actively involved in the process connected with 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 t....
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....ter investigation, charge sheet was laid for the above offences, alleging disproportionate of assets during 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 pende....
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....ds of the crime under sections 5 and 8 of PML Act. 20. Reading of the respective complaints filed under section 45 of 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 ac....
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....ce on large number of authorities of various High Courts which lay down the following principles: 22. The Delhi High Court 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 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....
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....uired any proceeds of crime or any property out of the proceeds of crime. (Underlining supplied) 24. The High Court of Judicature at Hyderabad while deciding M/S SATYAM COMPUTER SERVICES LTD., vs. DIRECTORATE 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. ....
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.... India prohibits the conviction of a person or his being subjected to penalty for ex-post facto laws. Consequently, the order of attachment is also, liable to be set aside. 27. The High Court of Delhi in M/s Ajanta Merchants Pvt. Ltd., vs. Directorate of Enforcement 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 wh....
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....rued right of the petitioners / accused have been taken away. In support of this submission, learned ASG referred to the following portions of the Lok Sabha Debates: "The other amendments are into the PMLA, the Act relating to black money. On that, I would like to assure the Members regarding the kind of amendments. 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 onl....
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....of "Proceeds of Crime" included in clause (u) to sub-section (1) of section 2 of the Act of 2002. It is observed that the object and intention of the legislature while enacting Act of 2002 is wrongly understood to mean that only the property which is derived or obtained as a result of commission of scheduled offence would fall within the definition of "proceeds 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 tha....
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....otally misplaced as this decision was overruled in R. Raja Gopal Reddy vs. Padmini Chandrasekharan (supra) wherein it was held that, the Act was not passed to clear any doubt existed as to the common law or the meaning of effect of any statute and it was, therefore, not a declaratory Act." 32. Next he referred to the decision in ZILE SINGH vs. STATE OF HARYANA & Others, (2004) 8 SCC 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 nat....
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....on of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word 'declared' as well as the word 'enacted'. But the use of the words 'it is declared' is not conclusive that the Act is declaratory for these words may, at times, be used to introduced new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. 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 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 ....
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....ake place if, upon conclusion of trial for an offence under PMLA, the special court finds, that the, offence of money laundering has been committed. In other words, the special court, on coming to a conclusion that the offence of money laundering stood committed, can order confiscation of property in favour of the Central Government, in respect of a property, involved in money laundering or, that which was used for commission of offence of money laundering. 10. Having regard to the above and a perusal 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 a....
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.... above three categories of persons, the case of a person coming under the first category is covered by the second proviso. Similarly, the case of a person coming under the third category is covered by the first proviso. Both these persons represent individuals standing at two extremes of a spectrum. An interpretation to Section 5(1) of the Act that would make persons standing at two extremes of the spectrum liable to suffer an order of attachment, but would leave out persons standing in between, as not liable to suffer an order of attachment, would tantamount to reading 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....
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.... 2(u), the words "any property and any person" are used. The Section does not say that at the relevant point of time, the property in question must be in the hands of the alleged offender. This can be elucidated with an example. A professional assassin would quote a price for an elimination from his hirer. The price will mostly be in terms of "money". He would successfully complete his assignment and take his price in money. That is one proceeds of crime. The money will not be in the same avatar indefinitely. It would be converted to an immovable property either in the name of the offender or in the 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, decid....
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....vides that "money laundering" having the meaning assigned to it under Section 3 of the Act. 41. This decision is followed by this Court in VINOD RAMNANI VS. STATION HOUSE OFFICER,(W.P.No.244 of 2020(GM-RES) c/w W.P.No.8031/2020) decided on 13.08.2020. 42. This Court in SOWBAGHYA VS. UNION OF INDIA, MINISTRY OF FINANCE, NORTH BLOCK, DEPARTMENT OF REVENUE AND OTHERS in W.P.Nos.14649 and 19732 of 2014 decided on 28.01.2016, has gone into the constitutional validity of sections 2(1)(u), 3, 5, 8, 9, 17, 18, 19, 23, 24 and 44 of the PML Act and after elaborately considering the object of the Act as well as various amendments 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 m....
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.... various offences specified therein came to be included therein with effect from 1.06.2009. Nonetheless, in the instant cases, as on the date of initiation of action against petitioners, be it under section 3 or under section 5 of the PML Act, these provisions were very much there in the statute book. As already stated above, in all the cases, the prosecution under section 3 of the PML Act and adjudication proceedings under section 5 of the PML Act have been initiated against the petitioners subsequent to 1.06.2009. Therefore, the contention urged by learned counsel appearing for the petitioners that the petitioners are sought to be prosecuted on the basis of 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 offen....
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....a party to the alleged activities and projecting it as untainted property, whereas the components of the offences under section 13 of the PC Act and Sections 120B, 419, 420 and other IPC offences are entirely different. The prosecution under section 3 of the PML Act, by no stretch of imagination, could be equated with the prosecution under section 13 of the PC Act or other offences specified in the Schedule namely IPC or other laws. They are distinct and separate offences. Prosecution under section 3 of PML Act is not based on the outcome of the trial of the offenders under section 13 of the PC Act. A reading of section 3 of PML Act in unamended form would clearly indicate that even 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 co....
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....t under challenge from any quarters. The view taken in this judgment is consistently followed by various other High courts and the position of law is now well established that the offence under section 3 is independent of the predicate offence listed in the Schedule appended to the PML Act. Therefore, the prosecution of the offender for his involvement in the process or activity connected with the proceeds obtained through the commission of a predicate offence cannot be said to be a prosecution based on ex post facto legislation. The allegations made against the petitioners prima facie indicate that the properties and assets found in their possession as on 1.6.2009 were acquired by commission of the 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 con....
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.... of the offence. The Article prohibits application of ex post facto law. In Rao Shiv Bahadur Singh and Anr. v. State of Vindhya Pradesh[23], while dealing with the import under Article 20(1) of the Constitution of India, the Court stated what has been prohibited under the said Article is the conviction and sentence in a criminal proceeding under ex post facto law and not the trial thereof. The Constitution Bench has held that:- "9.... what is prohibited under Article 20 is only conviction or sentence under an 'ex post facto' law and not the trial thereof. Such trial under a procedure different from what obtained at the time of the commission of the offence or by a Court different from that which had competence 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 o....
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....ions 5, 8 of the PML Act. As a result, it goes without saying that the properties acquired by commission of any of the offences listed in the schedule at any point of time as long as they continue to be in the possession or enjoyment of the offenders and that the offenders are found to have been involved in any of the process or activity connected with the proceeds derived by the scheduled offence, render themselves liable not only for prosecution but also for adjudication and consequent confiscation unless they establish that they have legitimate source to enjoy the assets held by them. Apparently for this reason, offence of 'money laundering' is made a continuing offence. That being the purport of section 3, 5 and 8 of the Act, 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. JOIN....
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....ne stream is the criminal proceedings before the Special Courts for the trial of offences u/s.3 r/w Sec.4, that are governed by the provisions of Chapter VII, and the other stream is the departmental proceedings apparently civil in nature, instituted by the competent authorities, that are governed by the provisions of Chapter III; the object of former is punitive, whereas that of the latter is confiscatory; obviously, the proceedings under one chapter are independent of those under the other, and therefore, the determination of proceedings under one stream does not ipso facto affect or influence those in the other; thus, even the closure of criminal proceedings would not determine the departmental proceedings, the offence of money laundering u/s.3 being completely a stand alone event; in other words, 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 at....