2024 (10) TMI 458 - AT - Money Laundering

Money Laundering - limitation period for filing of prosecution complaint - provisional attachment of assets - scheduled offence - proceeds of crime - money was siphoned off by diverting the funds to several group companies to hide its true source and to use the funds for other purposes - HELD THAT - The relevant notification in this regard is GSR 383(E) dated 19.04.2018 and the amended clause came into effect on the date of publication of the notification, i.e., 19.04.2018. Accordingly, the respondent Directorate had 90 days from 19.04.2018 to file the prosecution complaint. As per appellant's own admission, the prosecution complaint in this case was filed on 16.07.2018. The said date was within the limitation period of 90 days. In Sree Sankaracharya University of Sanskrit 2023 (5) TMI 1246 - SUPREME COURT , while upholding the position that if a statute is curative or merely clarificatory of the previous law, retrospective operation thereof may be permitted, the Hon'ble Supreme Court also pointed out that in order for a subsequent order/provision/amendment to be considered as clarificatory of the previous law, the pre-amended law ought to have been vague or ambiguous. It is only when it would be impossible to reasonably interpret a provision unless an amendment is read into it, that the amendment is considered to be a clarification or a declaration of the previous law and therefore applied retrospectively. It was also held that merely because a provision is described as a clarification/explanation, the Court is not bound by the said statement in the statute itself, but must proceed to analyze the nature of the amendment and then conclude whether it is in reality a clarificatory or declaratory provision or whether it is a substantive amendment which is intended to change the law and which would apply prospectively. No such difficulty in interpretation or implementation existed vis- -vis the PMLA, 2002 which made the provisions of Section 8(3)(a) impossible to interpret without the amendment made vide Finance Act, 2018. In Memon Abdul Karim Haji Tayab's case 1964 (2) TMI 95 - SUPREME COURT the Apex Court noted that it is well-settled that procedural amendments to a law, in the absence of anything to the contrary, apply retrospectively in the sense that they apply to all actions after the date they come into force even though the actions may have begun earlier or the claim on which the action may be based may be of an anterior date. In the present case, the Directorate has complied with the requirement of the amended law after it came into force by filing the prosecution complaint within 90 days of that date. There are no merit in the appellant's contention that the subject properties which were provisionally attached were liable to be released on account of the respondent Directorate's failure to file a prosecution complaint within 90 days of the order of the Ld. AA dated 19.01.2015. The period of 90 days would commence on the date the amendment came into force, i.e., 19.04.2018. The respondent's having complied with the requirement of filing the prosecution complaint within 90 days of 19.04.2018, there is no illegality in the continued attachment of the properties during the pendency of the same. Appeal dismissed.

Summary

Issues Involved:

1. Provisional attachment of assets under the Prevention of Money Laundering Act, 2002 (PMLA).
2. Alleged failure to file a prosecution complaint within the stipulated time period.
3. Retrospective application of amendments to the PMLA.

Detailed Analysis:

1. Provisional Attachment of Assets:

The case involves the confirmation of provisional attachment of assets by the Adjudicating Authority (AA) under the PMLA. The assets were initially attached following investigations by the Directorate of Enforcement, which revealed that funds collected by M/s Birla Power Solutions Ltd. through Fixed Deposits (FDs) and Inter-Corporate Depositors (ICDs) were not utilized as intended. Instead, these funds were allegedly siphoned off to other group companies, thereby creating a web of interconnected transactions to disguise the proceeds of crime from cheating and conspiracy. The appellant challenged the AA's order confirming the attachment, arguing that the deposits were invited in compliance with the Companies Act and that the transactions were regular financial transactions. However, these grounds were not pressed at the final hearing.

2. Alleged Failure to File Prosecution Complaint:

The primary argument presented by the appellant was the alleged failure of the respondent Directorate to file a prosecution complaint within the limitation period, which they claimed resulted in the lapse of the attachments. Initially, there was no timeline for filing such complaints under the PMLA. An amendment in 2018 introduced a 90-day limit, which was later extended to 365 days in 2019. The appellant contended that the amendment should apply retrospectively, arguing that the prosecution complaint filed on 16.07.2018, over three years after the confirmation of the Provisional Attachment Order (PAO), was delayed. They relied on various case laws to support the retrospective application of curative or clarificatory amendments.

3. Retrospective Application of Amendments:

The Tribunal analyzed whether the 2018 amendment to the PMLA, which introduced a timeline for filing prosecution complaints, should apply retrospectively. The Tribunal noted that the amendment was intended to "allow Enforcement Directorate reasonable time to file prosecution" and was not meant to nullify past attachments confirmed by the AA. The Tribunal concluded that the amendment was neither clarificatory nor declaratory, but rather introduced a new time limit. Consequently, the 90-day period for filing the prosecution complaint commenced on the date the amendment came into force, i.e., 19.04.2018. Since the complaint was filed within this period, there was no illegality in the continued attachment of the properties.

Conclusion:

The Tribunal dismissed the appeal, holding that the Directorate of Enforcement complied with the amended requirement of filing the prosecution complaint within the stipulated period following the amendment. The provisional attachment of the properties was deemed lawful, and the appeal was disposed of without any order as to costs.