No Penal Consequence For The Past Act Done By Accused: Kerala High Court Upholds Constitutional Validity Of Section 3 PMLA
The Kerala High Court dismissed a Writ Appeal of an accused, challenging the Single Bench's Judgment, which upheld an action initiated by the Enforcement Directorate.
Justice A. Muhamed Mustaque, Justice P. Krishna Kumar, Kerala High Court
The Kerala High Court has upheld the Constitutional validity of Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA), in respect of the criminal proceedings initiated under it.
The Court was dealing with a Writ Appeal filed by an accused, challenging the Judgment of the Single Bench, which upheld an action initiated by the Enforcement Directorate (ED).
A Division Bench comprising Justice A. Muhamed Mustaque and Justice P. Krishna Kumar held, “… there is no question of retrospective operation of a penal law. There is only a reference in the statute to a past action, which is only for the identification of the subject - the proceeds of crime. There is no penal consequence for the past act done by him, under the PMLA.”
The Bench observed that in relation to an act done by a person before the commencement of the PMLA or the amendment to its Schedule, the penal consequences will follow only if the accused uses/puts into circulation the tainted money obtained by the past act, or when he projects that it is untainted money or when he does any other acts as defined in Section 3, after the commencement of the PMLA and the amendment to its Schedule in 2009.
Senior Advocates B. Raman Pillai, Reghuraj, and Advocate Vivek Menon appeared on behalf of the Appellant while Retainer Counsel Jaishankar V. Nair appeared on behalf of the Respondents.
Factual Background
The primary issue in this case was the Constitutional validity of the criminal proceedings initiated under Section 3 of the PMLA. As per the Appellant-accused, at the time when the act of money laundering was allegedly committed, either (i) the PMLA itself was not in force, or (ii) the predicate offences were not included in the Schedule of the said Act, and thus all the proceedings initiated against him by the ED are in the teeth of Article 20(1) of the Constitution of India. The accused also challenged the investigation and further proceedings under Section 3 PMLA.
Reasoning
The High Court in the above context of the case, noted, “The question whether the offence of money laundering under Section 3 of the PMLA can be extended to a predicate offence which happened prior to the coming into the force of PMLA or before the inclusion of such offences in the schedule of the PMLA, is no longer re integra.”
The Court said that Article 20(1) of the Constitution declares that a person shall not be convicted for any offence except for violation of a law in force at the time of commission of the act and the expression “law in force” refers to a law that is factually in operation at the time when the offence is committed, in contrast to a law “deemed to be in force” due to the retrospective operation of a subsequently enacted law.
“This interdiction cannot be extended to a case of the above nature where a person is allegedly using the proceeds of crime or projecting or claiming it as untainted property, after the commencement of the relevant statutory provision”, it added.
The Court remarked that the issue, on one hand, is that if the trial of the offence under PMLA proceeds by examining all the witnesses by spending invaluable judicial time, it would become a futile exercise if the accused is ultimately acquitted in the predicate offence and on the other hand, if the trial of the offence under the PMLA is kept in limbo until the conclusion of the trial of the predicate offence, the ED may even lose the most valuable evidence by that time.
“In this circumstance, we deem it appropriate to leave the matter for the just decision of the trial court. Depending upon the nature of each case, it can take a balanced course. The court may, in its discretion, permit the Enforcement Directorate to examine those witnesses who are required to prove the most important elements of the crime (such as the act of using the proceeds of crime or projecting or claiming it as untainted) while the trial of the predicate offence is pending”, it further observed.
The Court also said that in such cases, the Court may keep the examination of the rest of the witnesses in abeyance until the conclusion of the trial. It added that the procedural and adjective law applicable to the criminal trial permits the Criminal Courts to adopt such a course when it is essential.
“The sufficiency of the materials for attracting the penal offences is a matter to be looked into by the trial court. Based on the interim directions of this court, the Enforcement Directorate has not submitted a final report in those cases. The parties are at liberty to raise such disputes as and when a situation arises”, it concluded.
Accordingly, the High Court dismissed the Writ Appeal.
Cause Title- A.K. Samsuddin v. Union of India & Ors. (Neutral Citation: 2025:KER:24506)
Appearance:
Appellant: Senior Advocates B. Raman Pillai, Reghuraj, Advocates Vivek Menon, R. Anil, T. Anil Kumar, B. Krishna Kumar, A. Rajesh, M. Sunilkumar, Sujesh Menon V.B., and Thomas Abraham Nilackappillil.
Respondents: Retainer Counsel Jaishankar V. Nair
