Mumbai: Would money laundering charges stand even though the mandatory predicate offence under the new Bharatiya Nyaya Sanhita (BNS), which replaced the Indian Penal Code, is not included in the Prevention of Money Laundering Act (PMLA)? A special court hearing money laundering cases under the PMLA recently ruled in favour of the Enforcement Directorate (ED).
Referring to the General Clauses Act 1897, the court held that if a law is replaced with a new one, references to the old law will be treated as references to the new one.
The PMLA mentions a list of scheduled offences under IPC sections, and the commission of a scheduled offence is a prerequisite for prosecution under the PMLA.
Although the defence referred to the Supreme Court ruling stating that PMLA prosecution was not viable without a scheduled offence, the special court disagreed.
The ED had submitted a request for incorporating the BNS provision in the PMLA through amendments, but it is pending with the Centre.
The special court clarified that under Section 8(1) of the General Clauses Act, the corresponding BNS provisions must be interpreted as scheduled offences within PMLA’s framework. It is expected that the defence will appeal this ruling in the high court.
The ED had arrested several accused in a money laundering case it is investigating against a cold-drink distributor, Seraj Ahmed Mohammad Harun Memon from Malegaon, and had chargesheeted them. The accused allegedly fraudulently withdrew Rs 198 crore in cash from Axis Bank accounts in Ahmedabad over four months. The majority of these funds were transferred to the city via angadias and hawala channels for distribution.
One of the arrested accused, Rajkot resident Nagani Akram Mohammad Shafi alias Monu, sought bail in the case saying that the ED money-laundering case based on an FIR registered in Malegaon under BNS sections was not a predicate offence under the PMLA.
The court, while denying bail, stated: “As such, by applying Section 8(1) of General Clauses Act, this court has to read the corresponding provisions of the BNS in the schedule of PMLA as scheduled offence. Therefore, it cannot be said that there is no scheduled offence. As scheduled offence which classifies registration of instant ECIR (money laundering case) is there, therefore, no case is made out by the applicant/accused for grant of bail on the technical point raised in the application.”
Nagani had sought bail through a petition that stated: “The (bail) application is not on the merits of the matter but only on the ground that the offences under BNS are not scheduled offences, as no incorporation by legislation in PMLA of the BNS, and therefore, only on this count, in absence of any scheduled offence, the applicant is entitled to be released on bail.”
He submitted that in the PMLA, sections of the IPC have been incorporated in the schedule and, therefore, unless and until by subsequent legislation these are amended, merely by government resolution the same cannot be read into.
The special public prosecutor countered this. “It is legislation by reference and only by making reference of provisions in IPC, in the schedule of PMLA, there is no incorporation of the provisions of IPC in the PMLA. Hence, submitted that as it is legislation by reference, therefore, provisions of Section 8 of the General Clauses Act, 1897, applies in this matter. Accordingly, government resolution relied upon by the complainant is sufficient.”
The court concluded: “Considering the law laid down by the Hon’ble Apex Court, from time to time in all judgments referred supra, it is settled position of law that where there is mere reference to or a citation of one enactment by another without incorporation then Section 8(1) of the General Clauses Act applies and where a statute is incorporated by reference, into a second statute the repeal of the first statute by a third does not affect the second.”