Provision of PMLA Attracts on Offence Committed prior to June 1, 2009 as proceeds of Crime Continue till Amendment: Calcutta HC [Read Order]

Two appeals are taken up for analogous hearing, as the same are directed against the same Final Order dated February 25, 2025 passed by the Appellate Tribunal under SAFEMA at New Delhi in two appeals. The appellants submitted that, the offences alleged as against the appellants were committed allegedly for the period between June 13, 2005 to June 16, 2007. He points out that the schedule of offences to the Prevention of Money Laundering Act, 2002 were amended with effect from June 1, 2009. Therefore, the Enforcement Directorate (ED) acted without jurisdiction in proceeding under the Act of 2002.

Relying upon the value of the properties appearing from the title deeds, advocate appearing for the appellants submits that, such value was less than Rs.30 lakhs and, therefore, again the same were not within the jurisdiction of the authorities under the Act of 2002. In response to a query of the Court, advocate for the appellants submitted that, there is a proposal for settlement with the bank. He points out that proceedings under the Recovery of Debts due to Banks and Insolvency Act, 1993 are pending. He also points out that there are criminal proceedings pending as against the appellants.

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The ED submitted that, the offences of the appellants are continuing till date. They are in possession of the proceeds of the crime till date. Therefore, the proceeding under the Act of 2002 cannot be said to be without jurisdiction. Referring to Section 2 (y) of the Act of 2002 learned advocate for the ED submits that the appellants are being proceeded against for offences described in part A of the schedule and therefore, there is no pecuniary limit as sought to be contended.

Materials on record establish that, the appellants were borrowers of Indian Overseas Bank. By mortgaging 11 several immovable properties with Indian Overseas Bank, the appellants obtained loan from such bank. Loan was not repaid by the appellants. Despite our requests to the appellants to inform the Court as to the time period within which the liability to the bank will be discharged, it is contended on behalf of the appellants, since proceedings before the Debts Recovery Tribunal are pending and that there are settlement proposals, they would not commit to any payment schedule. The appellants did not exhibit any intention to repay the bank in course of hearing of the appeals. Till date the proceeds of the crime are yet to be recovered. Appellants are in possession of the proceeds of the crime.

Stand of the appellants, if accepted, is one of a repayment holiday in respect of a loan obtained by the appellants from a public sector bank. Transactions between the appellants and the Bank are not simplicities to one transaction. Central Bureau of Investigation (CBI), Bank Securities and Fraud Cell, Kolkata registered a first information report (FIR) against the appellants amongst other persons, with active facilitation by employee of the bank for commission of fraud on the bank.

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The first information report speaks of fraud being committed for the period from June 13, 2005 to May 16, 2007. Based on the first information report, Enforcement Directorate recorded case against the accused persons. ED recorded the statement of the accused persons including the appellants. Based on the materials collected during investigation, ED attached 11 several properties as described in the order under appeal under the Provisional Attachment Order dated April 3, 2014. Thereafter Original Complaint No.320/2014 was filed before the adjudicating authority for confirmation of the Provisional Attachment Order. The adjudicating authority confirmed the attachment by its order dated June 30, 2016.

With regard to the issue of the period of alleged offences and the schedule of offences are concerned, we find that, the period of the offences is alleged to be between June 13, 2005 to May 16, 2007. It is alleged that within this period that fraud was committed. By perpetrating such fraud, the appellants along with other persons, denuded a public sector bank, Indian Overseas Bank, of money legitimately belonging to Indian Overseas Bank, on the plea of obtaining loan by mortgaging several immovable properties.

A division bench of Justice Debangsu Basak and Justice Shabbar Rashidi observed that the proceeds of the crime remain with the appellants till date. It remained with the appellants on the date when the Schedule to the Act of 2002 was amended with effect from June 1, 2009. Therefore, it cannot be said that, as on the date when the Schedule to the Act, 2002 was amended, the appellants were not in possession of the proceeds of the crime of an offence within the meaning of the Act of 2002 disentitling the authorities under the Act, 2002 to invoke the provisions of the Act of 2002 as against any of the appellants before us.

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The plea that by virtue of the Schedule to the Act, 2002 being amended with effect from June 1, 2009 and the offences alleged to be committed for a period prior thereto is not accepted.

The court viewed that, the Act of 2002 attempts to deal with and prevent money laundering. It is this essence which should be kept in mind while deciding the issue as to whether or not the period of the commission of the offence, is beyond the Act of 2002. The test would be whether or not with the coming into force of the Act of 2002 as also the subsequent amendments thereto, the persons charged under the Act, 2002 are in possession of the proceeds of the crime.

If the answer to the issue as to whether the persons charged are in possession of the proceeds of the crime, after the Act, 2002 and its amendment came into effect, is in the affirmative then the invocation of the Act, 2002 against such charged persons cannot be faulted.

It was evident that the appellants were dealing with immovable properties concerned as well as the proceeds of the crime subsequent to June 1, 2009. Therefore, the court diagreed with the contention of the appellants that the period of offence being prior to June 1, 2009, therefore, the provisions of Act of 2002 are not attracted.

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Section 2(1)(y) of the Act of 2002 defines a scheduled offence. Clause (ii) thereof speaks of total value involved in offences to be in excess of Rs. 1 crore or more. Clause (ii) was amended by the amending Act of 2015 and Rs. 30 lakhs was substituted with Rs. 1 crore.

The proceedings initiated by ED as against the appellants herein relates to Section 2(1)(y) Clause (i) of the Act of 2002 which does not prescribe any pecuniary value. That apart, Clause (ii) prior to its amendment stood at Rs. 30 lakhs whereas, the proceeds of the crime are in excess of Rs. 5.24 crores.

The bench further held that “Even taking the value prescribed by way of the amendment to Clause (ii) then also, the proceedings are in respect of proceeds of crime far in excess of the prescribed limit. We hasten to add that, the proceedings of the ED against the appellants, are in respect of offences specified under Part A of the Schedule of the Act of 2002 which does not prescribe any pecuniary limit.”

In a proceeding under the Act, 2002 so as to adjudicate whether the subject-matter falls within the pecuniary jurisdiction or not, one should be concerned with the quantum of the fraud committed rather the value of the immovable properties concerned. The bench held that the contention that the proceedings being below the prescribed pecuniary limit is without any basis.