Can Prevention Of Money Laundering Act Be Applied Retrospectively, SC Set To Examine

The Supreme Court’s Vacation Bench of Justices D.Y.Chandrachud and Sanjay Kishan Kaul, on Monday, June 19, issued notice returnable in three weeks, on an appeal by the Directorate of Enforcement against the Karnataka High Court’s March 13 order, quashing retrospective application of the Prevention of Money Laundering Act against an accused. The order was delivered by the High Court bench of the Chief Justice Subhro Kamal Mukherjee and Justice R.B.Budihal.

In the instant case, the accused, M/s Obulapuram Mining Company Private Limited challenged the action of the authorities in lodging and enforcing of an Enforcement Case Information Report in September 2010, and an order of attachment, under the PMLA, 2002.

The allegation is that the accused acquired 17.59 lakh MT of iron ore by extracting the same from outside the leased area, and thus, committed the offences under Sections 120B, 420, and 411 of the IPC and Sections 13(2) read with Sections 13(1)(d) and 13(1)(e) of the Indian Penal Code and the Prevention of Corruption Act.  However, in the final order of attachment, it is alleged that 29.32 MT iron ore were extracted from outside the leased area.

Offences under Sections 120B, 420, 411 and 471 of the IPC, and the provisions of the PCA, 1988, were included as scheduled offences under the Act only on June 1, 2009. But the offences were allegedly committed between June 21, 2007 and May 15, 2009.  Therefore, the accused contended that all the offences were allegedly committed prior to the coming into operation of the amendment to the PML Act.

The Union of India, however, submitted before the High Court that the offences alleged against the petitioner are all civil in nature, and therefore, PML Act could be invoked with retrospective effect for the offences committed prior to June 2009.

The High Court, in its judgment, held that the petitioner could not be tried and punished for the offences under the PML  Act when the offences were not inserted in the schedule of offences under the PML Act.  This would deny the writ petitioner the protection provided under clause (1) of Article 20 of the Constitution, the High Court held.

Article 20(1) of the Constitution prohibits the conviction of a person or his being subjected to penalty for ex-post facto laws. Consequently, the High Court set aside the order of attachment also.   It was submitted that since there was absence of conviction of the accused, there could not have been a final order of attachment.  Agreeing with the petitioner’s counsel, Sudhir Nandrajog, the High Court quashed the action initiated against the accused by the ED, and the attachment orders passed against them.

On Monday, ASG, P.S.Narasimha argued on behalf of the ED.