In a significant and precedent-setting judgment, the Bombay High Court has clarified the legal position surrounding the jurisdiction of the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA) in the context of India's criminal law reform. The question before the Court was whether, after the repeal of the Indian Penal Code (IPC), the ED could still initiate proceedings under the PMLA by relying on offences now enumerated in the Bharatiya Nyaya Sanhita (BNS), which has replaced the IPC. The petition challenged the maintainability of action by the ED where the scheduled offences were previously listed under the IPC but now find their place in BNS. The Bombay High Court, while rejecting the challenge, held that the ED is fully empowered to proceed under the PMLA on the basis of predicate offences committed under the BNS, thus maintaining the legislative intent and continuity of prosecution under anti-money laundering laws.
The matter arose when an accused approached the Court seeking to quash the ECIR (Enforcement Case Information Report) registered by the ED against him under the PMLA, arguing that since the scheduled offences previously fell under the IPC and the IPC stood repealed with the introduction of the BNS, the ED could not legally rely on the new provisions under BNS to initiate or continue proceedings. According to the petitioner, the Schedule to the PMLA still mentioned IPC sections, and since those sections had ceased to exist with the introduction of the BNS, the Schedule had become functionally inoperative. Therefore, he argued, the ED’s initiation of proceedings had no legal basis in the absence of a new Schedule reflecting the BNS equivalents.
Justice Amit Borkar of the Bombay High Court, however, delivered a comprehensive judgment that rejected this contention and upheld the legality of ED's action. The Court emphasized that merely because the IPC has been repealed and replaced by the BNS does not mean that corresponding provisions under the new law cannot be treated as scheduled offences for the purpose of initiating proceedings under the PMLA. The Court stated that the objective of the PMLA is to investigate and prevent the laundering of proceeds of crime and that this object cannot be frustrated due to a technical repeal of one law and its substitution with another that essentially retains the same criminal conduct under a different statutory number or title.
In his detailed reasoning, the judge invoked Section 8 of the General Clauses Act, 1897, which provides that references in any central law to an enactment which is subsequently repealed and re-enacted shall be construed as references to the re-enacted law. Relying on this principle, the Court held that the offences listed in the Schedule to the PMLA must be interpreted as referring not just to their former codification under the IPC but also to their present equivalents under the BNS. The legislative continuity provided under the General Clauses Act ensures that merely because the number or title of the statute has changed, its legal consequences and recognition under other laws like the PMLA do not lapse. Therefore, the repeal and replacement of the IPC by the BNS does not affect the enforceability of the PMLA in relation to predicate offences.
The judgment takes a purposive and harmonious approach to legal interpretation. Justice Borkar pointed out that if the petitioner’s argument were accepted, it would mean that for an indefinite period—until the legislature amends the Schedule to the PMLA to reflect the BNS—no offences under the BNS could trigger proceedings under the PMLA. This would lead to an absurd situation where enforcement of the anti-money laundering law could be paralyzed merely because the Schedule had not yet been formally updated. The Court categorically held that such an interpretation would defeat the entire object and purpose of the PMLA, which is to combat the laundering of proceeds arising out of serious crimes.
Justice Borkar's judgment also reaffirms the principle that statutory interpretation must advance the intention of the legislature and not lead to a situation where the operation of an important law like the PMLA is suspended due to procedural formalities. It underlined the importance of continuity in criminal jurisprudence, especially in the face of structural legislative changes like the enactment of BNS. The Court observed that the offences that were earlier mentioned in the Schedule to the PMLA under the IPC—such as cheating, criminal breach of trust, forgery, etc.—continue to be crimes under the BNS, albeit with different section numbers. The substance of the crime remains the same, and hence the effect of such offences for the purpose of invoking the PMLA also continues uninterrupted.
The Court also addressed concerns that the PMLA’s enforcement powers could not be exercised unless the legislature formally amended the Schedule to refer to BNS sections. It clarified that while legislative updating of the Schedule would certainly make the statute more precise, the absence of such a formal amendment does not create a legal vacuum. The Court noted that the interpretation of law must be practical and must not reduce a law like the PMLA into futility simply due to the substitution of penal codes. It said that the Court must read the Schedule as dynamically referring to the present-day equivalents of previously listed offences, especially where the crimes are essentially identical in form, definition, and punishment.
Another significant aspect of the judgment was its reaffirmation of the independent status of PMLA proceedings. The Court reiterated that proceedings under the PMLA are not automatically terminated just because the trial for the scheduled offence may be delayed, closed, or challenged. It pointed out that the PMLA is a special legislation that is designed to follow the proceeds of crime, and the action under it is not necessarily bound by the fate of the predicate offence. Thus, even as prosecution under BNS is underway or yet to be completed, the ED is entitled to proceed under the PMLA if it has reason to believe that the person is involved in money laundering activities arising from such crimes.
The judgment has important implications for law enforcement agencies, especially the ED, which had faced uncertainty regarding the sustainability of its actions in the transitional period between IPC and BNS. With this clarification, the ED is now on firm legal ground to continue registering ECIRs, attaching properties, and prosecuting persons accused of money laundering based on predicate offences under the BNS. This provides crucial operational clarity and ensures that money laundering investigations are not stalled due to the evolution of penal statutes.
Further, this decision serves as a reminder to all stakeholders that substantive criminal law changes do not automatically render connected laws ineffective, and courts are empowered to interpret statutes in a manner that keeps the legislative scheme alive and effective. The emphasis on a purposive and practical interpretation rather than a mechanical and literal one is a hallmark of the judgment. It also places trust in the judiciary to bridge the gap where the legislature has not yet acted, especially in the context of statutory references affected by repeal and substitution.
The judgment also addressed the petitioner’s prayer for bail on the ground that since the predicate offence under the IPC no longer existed and the BNS had not yet been reflected in the PMLA Schedule, there was no legal case against him. This argument too was rejected by the Court, which held that since the alleged act continues to be an offence under the BNS and is legally traceable as a predicate crime under the PMLA, the ED’s case remains valid. Therefore, the petitioner was not entitled to bail on the ground that the basis of the ECIR had vanished.
In conclusion, the Bombay High Court has delivered a far-reaching verdict that safeguards the effectiveness of the PMLA in the post-BNS era. By recognizing that predicate offences under the BNS can form the basis for ED action, the Court has ensured that the fight against money laundering remains vigorous and uninterrupted despite the seismic shifts in India’s criminal law framework. The judgment upholds the continuity of legal interpretation, the object of legislative intent, and the functionality of statutory schemes. It reassures both enforcement agencies and the judiciary that transitional legal frameworks can be managed with clarity and purpose without compromising the rights of the accused or the objectives of penal statutes. The Court has thus played a vital role in maintaining the legal and operational equilibrium in one of the country’s most sensitive areas of financial crime enforcement.
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