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TMI Blog2011 (8) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... Additional Chief Metropolitan Magistrate, Hyderabad, on 12-01-2009. It is further submitted that pursuant to a notification dated 16-02- 2009, the investigation has been entrusted to C.B.I. and the case was registered as C.C.No.187 of 2009 on the file of the XIV Additional Chief Metropolitan Magistrate, Hyderabad, and upon transfer to Special Court-cum-XXI Additional Chief Metropolitan Magistrate, Hyderabad, is numbered as C.C.Nos.1, 2 and 3 of 2010. The 1st petitioner is arrayed as Accused 10 in the said criminal case. It is further averred that the Directorate of Enforcement moved Crl.M.P.No.16 of 2010 in C.C.No.1 of 2010 under Section 57 of the PML Act, for recording the statements of the 1st petitioner and others under the said Act. The said petition was ordered on 23-04-2010 allowing recording of the statements in the presence of the counsel for the accused. It is further stated that challenging the correctness and validity of the said order, the 1st petitioner herein filed Crl.R.C.No.907 of 2010 in this Court and while directing not to record further statements, the said Revision is posted for further consideration and it is still pending in this Court. It was further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought on 01-06-2009 incorporating those offences would amount to an ex post law and hence, the petitioners cannot be charged under the PML Act at all. The learned counsel for the petitioners has placed reliance, in support of his contentions, upon judgments rendered by the Supreme Court in RAO SHIV BAHADUR SINGH AND ANOTHER v. THE STATE OF VINDHYA PRADESH AIR 1953 SC 394 a n d G.P.NAYYAR v. STATE (DELHI ADMINISTRATION) (1979) 2 SCC 593 as well as the judgment of a learned Single Judge of Allahabad High Court rendered in ABDUL HALEEM v. STATE, OPPOSITE PARTY 1962(2) CRI. L.J. 414 and another judgment of a learned Single Judge of the Kerala High Court rendered in PAREED LUBBA MUHAMMED LUBBA v. K.K. NEELAMBARAN, EXECUTIVE OFFICER, THODUPUZHA PANCHAYAT AIR 1967 KERALA155. Per contra, Sri Rajeev Avasthi, learned special counsel, would submit that the PML Act has been enacted by the Parliament, as part of international treaty obligation, not only to prevent money laundering, but also to provide for confiscation of property derived from or involved in money laundering and for incidental matter connected thereto. The learned special counsel would submit that the PML Act is a special pie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into various financial streams of the country, thus, impacting fiscal and economic agendas set forth by the State for its governance. It would be further appropriate to notice that the Financial Action Task Force on Money Laundering (FATF), an intergovernmental body was established by the G-7 Summit that was held in Paris in 1989 and it was assigned with the task of setting standards and promotion of policies to combat the issues relating to money-laundering and terrorist funding, during 1990 drew up forty recommendations - as initiatives to fight the malice of money-laundering and terrorist funding important amongst them are: criminalise money laundering and enable authorities to confiscate the proceeds of money laundering Implement customer due diligence (e.g. identity verification), record keeping and suspicious transaction reporting requirements for financial institutions and designated non-financial businesses and professions establish a financial intelligence unit to receive and disseminate suspicious transaction reports, and cooperate internationally in investigating and prosecuting money laundering. These recommendations have been updated regularly and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied under Part B of the Schedule if the total value involved in such offences is thirty lakh rupees or more; From a conjoint reading of the expressions proceeds of crime and scheduled offence as defined, the offence must be one that should find a mention either under Part A or Part B of the Schedule appended to the PML Act. Para 1 of Part A of the Schedule listed out the offences under the Indian Penal Code. It is not in dispute that by the Prevention of Money-Laundering (Amendment) Act, 2009 (Act No.21 of 2009), amongst other things, para 1 of Part A of the Schedule has been amended introducing the offence under Section 120-B : criminal conspiracy, and offence under Section 420 : cheating and dishonestly inducing delivery of property, therein. It is further not in dispute that the amending Act No.21 of 2009 has been brought into force with effect from 01-06- 2009. Therefore, it coes not pose any difficulty that post 01-06-2009, any property derived or obtained, by any person, as a result of criminal activity, relating to offences punishable under Sections 120-B and 420 IPC, can be dealt with under the PML Act. It will be appropriate at this stage to notice that Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter; by order in writing, to provisionally attach such property for a period not exceeding one fifty days from the date of the order. However, the following conditions are required to be satisfied before a provisional attachment order is passed by the Director or any other Officer authorised by him occupying a rank not below that of a Deputy Director; (1) There should be adequate material before such Officer, which makes him believe that if the attachment of the proceeds of crime are not ordered, it might result in frustration of the confiscation. (2) A person must be in possession of the proceeds of crime; (3) Such person must have been charged of having committed one or the other of the scheduled offences under this Act; (4) Such proceeds of crime are likely to be concealed or transferred or dealt within any manner, which may result in frustrating any proceedings of their ultimate confiscation. In the instant case, with effect from 01-06-2009 Sections 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a scheduled offence or the value of any such property. Property is defined in Section 2 (v) to include property of every description corporeal, incorporeal, movable, immovable, tangible, and intangible and includes deeds and instruments evidencing title to or interest in such property or assets wherever located. The matrix of the relevant provisions of the Act compel the inference that the legislation subsumes that property which satisfies the definition of proceeds of crime , prima facie is considered as property whose transfer [defined in Section 2(za)] is subject to verification to consider whether the transfer is a stratagem of a money laundering operation and is part of a layering transaction. As the provisions of the Act target malfeasants charged of an offence under Section 3 and the proceeds of crime in the possession of a person so charged and any other person as well, the legislative intent is manifest that attachment and confiscation constitute a critical and clearly intended and specifically enacted strategy to combat the evil of money-laundering. A person though not accused/charged of an offence under Section 3, when in possession of any proceeds of crime, from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Constitution Bench of the Supreme Court observed (per B.P. Jeevan Reddy, J): Even apart from the protection of Article 31(B), we see no substance in the submission that the definition is arbitrary or discriminatory nor do we see any reason for reading down the said definition to confine it to the violation of the acts referred to in Section 2(2)(a) of SAFEMA. We can take note of the fact that persons engaged in smuggling and foreign exchange manipulations do not keep regular and proper accounts with respect to such activity or its income or of the assets acquired therefrom. If such person indulges in other illegal activity, the position would be no different. The violation of foreign exchange laws and laws relating to export and import necessarily involves violation of tax laws. Indeed, it is a well-known fact that over the last few decades, smuggling, foreign exchange violations, tax evasion, drugs and crime have all got mixed-up. Evasion of taxes is integral to such activity. It would be difficult for any authority to say, in the absence of any accounts or other relevant material that among the properties acquired by a smuggler, which of them or which portions of them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that any benefit obtained by a fiduciary through a breach of duty belongs in equity to the beneficiary. It is held that a gift accepted by a person in a fiduciary position as an incentive for his breach of duty constituted a bribe and, although in law it belonged to the fiduciary, in equity be not only became a debtor for the amount of the bribe to the person to whom the duty was owed but he also held the bribe and any property acquired therewith on constructive trust for that person. It is held further that if the value of the property representing the bribe depreciated the fiduciary had to pay to the injured person the difference between that value and the initial amount of the bribe, and if the property increased in value the fiduciary was not entitled to retain the excess since equity would not allow him to make any profit from his breach of duty. Accordingly, it is held that to the extent that they represented bribes received by the first respondent, the New Zealand properties were held in trust for the Crown, and the Crown had an equitable interest therein. The learned Law Lord observed further that if the theory of constructive trust is not applied and properties inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. This Article, in its broad import has been enacted to prohibit conviction and sentences under 'ex post facto' laws. The principle underlying such prohibition has been very elaborately discussed and pointed out in the very learned judgment of Justice Willes in the well known case of 'Phillips v. Eyre', (1870) 6 QB 1 at pp. 23 and 25 (D), and also by the Supreme Court of U. S. A. in - 'Calder v. Bull' (1798) 3 Dallas 386: 1 Law Ed 648 at p. 649 (E). In the English case it is explained that 'ex post facto' laws are laws which voided and punished what had been lawful when done. There can be no doubt as to the paramount importance of the principle that such 'ex post facto' laws, which retrospectively create offences and punish them are bad as being highly inequitable and unjust. In the English system of jurisprudence repugnance of such laws to universal n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the fundamental rights thereby recognized. All that it amounts to is that the future operation of the fundamental right declared in Art. 20 may also in certain cases result from acts and situations which had their commencement in the Pre- Constitution period In - 'The Queen v. St. Mary Whitechapel', (1848) 116 ER 811 at p. 814 (G), Lord Denman C. J. pointed out that a statute which in its direct operation is prospective cannot properly be called a retrospective statute because 'a part' of the requisite for its action is drawn from a time antecedent to its passing. The general principle, therefore, that the fundamental rights have no retrospective operation is not in any way affected by giving the fullest effect to the wording of Art. 20. This Article must accordingly be taken to prohibit all convictions or subjections to penalty after the Constitution in respect of 'ex post facto' laws whether the same was a post Constitution law or pre-Constitution law. That such is the intendment of the wording used in Art. 20 (1) is confirmed by the similar wording used in Arts. 20 (2) and 20 (3). Under Art. 20 (2)1 for instance, it cannot be reasonably urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, and it can well be urged that by such retrospective operation it becomes the law in force at the time of the commencement of the Act. It is obvious that such a construction which nullifies Art. 20 cannot possibly be adopted. It cannot, therefore, be doubted that the phrase law in force as used in Art. 20 must be understood in its natural sense as being the law in fact in existence and in operation at the time of the commission of the offence as distinct from the law deemed to have become operative by virtue of the power of legislature to pass retrospective laws. It follows that if the appellants are able to substantiate their contention that the acts charged as offence in this case have become such only by virtue of Ordinance No. 48 of 1949 which has admittedly been passed subsequent to the commission thereof, then they would be entitled to the benefit of Art. 20 of the Constitution and to have their convictions set aside. .. (Emphasis is generated now) The principle enunciated in this Judgment has subsequently been reiterated in G.P. NAYYAR s case cited (2 supra) and followed by Allahabad and Kerala High Courts cited (3 and 4 supra), the Judgments of which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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