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2021 (5) TMI 219 - HC - Money LaunderingOffence under PMLA - Former Minister in the Government of Karnataka and his relatives and others - Prevention of Corruption Act, 1988 - Correctness and legality of the proceedings initiated against them under sections 3, 4 and 8(5) of the Prevention of Money Laundering Act, 2002 - predicate offence or not - proceeds of crime - Attachment/confiscation of properties - offences which are alleged to have been committed prior to 01.06.2009 - HELD THAT - Petitioners appear to have put forward the plea of post facto law on the premise that the acts constituting the offences alleged against them were perpetrated prior to the amendment of the schedule to the PML Act and therefore, the action initiated against them falls within the mischief of Article 20(1) of the Constitution of India. This contention, in the factual setting of the case, is totally misplaced and misconceived and appears to have been canvassed by misconstruing the provisions of sections 3, 2(1)(u) and the Schedule appended to the PML Act. No-doubt, it is true that the Schedule to the PML Act was amended by Act 21 of 2009 and the 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. 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 the petitioners, the above offences were already included in the Schedule. But the thrust of the arguments of the learned Counsel for the petitioners is that the proceeds of crime as defined under section 2(1)(u) of the PML Act is referable to the offences specified in the Schedule and since section 13 of the PC Act and the offences under IPC (predicate offences) came to be inserted in the Schedule by way of amendment only on 01.06.2009, the petitioners cannot be prosecuted for the acts and events that had taken place earlier to the insertion of those offences as it would take away the protection granted to the petitioners under Article 20(1) of the Constitution of India. From the plain reading of section 3 read with section 2(1)(u) of the PML Act, it is clear that what is made punishable under section 3 is the activity connected with the proceeds of crime either by getting oneself involved in the process or activity connected thereto or directly or indirectly attempting to indulge or knowingly assist or knowingly be 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. No subject has an inviolable right to enjoy the wealth acquired by him by illegitimate means, the legitimate source of which cannot be explained by him. That being the object and purpose sought to be effectuated by section 5 and 8 of the PML Act and a well oiled machinery having been provided with all safeguards to protect the right and interest of the offender as well as those who are not parties to the predicate offence, there is absolutely no basis for the petitioners to seek quashment of the attachment and consequent confiscation proceedings initiated against them on the purported plea that the same is violative of Article 20(1) of the Constitution of India - No legal right having been accrued in favour of the petitioners to hold on or to enjoy the proceeds of crime, the source of which cannot be explained by them, the argument of the learned counsel for the petitioners that the attachment proceedings initiated against them are unjust and bad in law is without any substance. Petition dismissed.
Issues Involved:
1. Legality of proceedings under sections 3, 4, and 8(5) of the Prevention of Money Laundering Act, 2002 (PML Act). 2. Retrospective application of the amended law. 3. Validity of prosecution based on ex post facto laws. 4. Confiscation as punishment under Article 20(1) of the Constitution of India. Detailed Analysis: 1. Legality of Proceedings under PML Act: The petitioners challenged the proceedings initiated under sections 3, 4, and 8(5) of the PML Act. They contended that the properties were sought to be attached based on an amended law effective from 01.06.2009, while the alleged offenses occurred before this date. The court examined various cases to understand the scope and application of these sections, concluding that the prosecution under section 3 of the PML Act is independent of the predicate offenses listed in the schedule. 2. Retrospective Application of the Amended Law: The petitioners argued that the amended law should not apply retrospectively, as it would violate their substantive rights. The court referred to several judgments, including those from the Delhi High Court and the Supreme Court, which clarified that unless explicitly stated, laws affecting substantive rights are presumed to be prospective. However, the court noted that the amendments to the PML Act were clarificatory and not intended to create new offenses but to explain the existing provisions. 3. Validity of Prosecution Based on Ex Post Facto Laws: The petitioners claimed that prosecuting them based on acts committed before the amendment violates Article 20(1) of the Constitution, which prohibits ex post facto laws. The court rejected this argument, stating that the prosecution under section 3 of the PML Act is for the activity connected with the proceeds of crime, not for the predicate offenses themselves. The court emphasized that the existence of proceeds of crime is sufficient for prosecution under the PML Act, regardless of the timing of the predicate offense. 4. Confiscation as Punishment under Article 20(1): The petitioners contended that confiscation under section 8(5) of the PML Act is a form of punishment, thus violating Article 20(1) of the Constitution. The court disagreed, explaining that confiscation is not considered punishment under the PML Act or the Indian Penal Code. It is a measure to deprive individuals of the enjoyment of wealth acquired through illegal means. The court cited the Supreme Court's decision in State of West Bengal v. S.K. Ghosh, which held that forfeiture is not a penalty or punishment but a method of realizing government money or property. Conclusion: The court dismissed the petitions, holding that the prosecution under the PML Act is valid and does not violate Article 20(1) of the Constitution. The amendments to the PML Act were deemed clarificatory, and the confiscation proceedings were not considered punitive. The court emphasized that individuals cannot enjoy wealth acquired through illegitimate means, and the PML Act's provisions aim to ensure that proceeds of crime are not retained by offenders.
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