2017 (3) TMI 1766 - HC - Money Laundering

Penal provisions applicability prospective or retrospective - offence under Section 3 of PMLA - enactment shows it was passed in the year 2002 as Act No.15/2003 and came into force with effect from 01.07.2005 pursuant to the Central Government notification No.GSR/436(E) of that date as per Section 1(3) of the PML Act - HELD THAT - There is nothing to indicate retrospective in operation specifically that too by virtue of Article 12 of the Constitution of India, it cannot be retrospective in operation. Once the provisions of the Act not given effect as on the date of the alleged act and it is not specific mention of retrospective in operation, there is no penal consequence under Section 3 of the Act to sustain charge against the petitioner/A.2 thereunder. Having regard to the above, the discharge application filed of the petitioner/A.2 ought to have been allowed by the Court below rather than dismissal by impugned order dated 26.10.2016. While setting aside the dismissal of the discharge application of the petitioner/A.2, the revision is allowed and A.2 is discharged for the offence under Section 3 of the Act and his bail bonds stands cancelled unless he is required for any other offence thereto.

Summary

Issues: Interpretation of penal provisions of the Prevention of Money Laundering Act, 2002 as prospective or retrospective.

Analysis:
The judgment involves the interpretation of whether the penal provisions of the Prevention of Money Laundering Act, 2002 (PML Act) are prospective or retrospective. The Act came into force on 01.07.2005, and the question at hand is whether the alleged actions of the accused, prior to this date, can be penalized under the Act. The Court highlighted that there is no specific indication of retrospective operation in the Act, and under Article 12 of the Constitution of India, retrospective application is not permissible. The accused, as the 2nd accused in the case, was involved in negotiating investments with officials and transferring funds before the Act came into force. The Court emphasized that since the provisions of the Act were not in effect at the time of the alleged acts and there was no explicit mention of retrospective application, the accused cannot be charged under Section 3 of the Act for those actions.

The Court reviewed the facts of the case, where the accused was alleged to have been involved in transferring funds prior to the enforcement of the PML Act. The funds were transferred to a company's account before the Act's effective date, and the Court found that the alleged actions did not fall under the penal provisions of the Act due to the absence of retrospective application. The Court concluded that since the Act was not in force at the time of the transactions, and there was no provision for retrospective application, the accused cannot be held liable under Section 3 of the Act for the said transactions. Consequently, the Court allowed the revision, set aside the dismissal of the discharge application, and discharged the accused from the offence under Section 3 of the Act, canceling his bail bonds unless required for any other offence.

In summary, the judgment delves into the crucial issue of whether the penal provisions of the Prevention of Money Laundering Act, 2002 can be applied retrospectively. Through a detailed analysis of the Act's enforcement date and the actions of the accused, the Court determined that in the absence of explicit retrospective provisions, the accused cannot be charged under the Act for actions taken before its effective date. The judgment emphasizes the importance of legal clarity and adherence to constitutional principles in interpreting penal statutes, ultimately leading to the discharge of the accused from the offence under Section 3 of the Act in this case.