Sanchayita Lahkar

The High Court of Kerala held that prosecution under Section 3 of the Prevention of Money-Laundering Act, 2002 (PMLA) can be validly initiated even if the predicate offence was committed prior to the enactment or inclusion of such offence in the Act’s Schedule, provided that the accused continues to engage in activities outlined under Section 3 post-enactment. The Division Bench of Justice A. Muhamed Mustaque and Justice P. Krishna Kumar stated that “money laundering is not a static event but an ongoing activity, as long as illicit gains are possessed, projected as legitimate, or reintroduced into the economy.” Dismissing multiple writ petitions and a writ appeal challenging criminal proceedings under the PMLA, the Court relied upon recent Supreme Court authority to hold that such actions do not attract the bar under Article 20(1) of the Constitution of India and directed that trials may proceed in accordance with procedural law.

The matters before the High Court comprised a writ appeal and several writ petitions challenging actions initiated by the Enforcement Directorate under Section 3 of the PMLA. The primary ground raised was that the predicate offences in question occurred before the PMLA was enacted or before they were notified in its Schedule. Petitioners contended that initiating penal proceedings under such circumstances amounted to retrospective application of a penal statute, in violation of Article 20(1) of the Constitution.

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The petitioners included A.K. Samsuddin, a retired Deputy Chief Controller of Explosives, Harshad B Patel, Chandramouli V., S. Vadivelu, and Nithin R., all of whom were either individuals or former officials linked with the companies allegedly involved. They submitted that the Enforcement Directorate could not sustain proceedings under the PMLA as the statute was not in force or the predicate offences were not scheduled at the time of the alleged criminal acts.

It was further argued that the allegations did not constitute a continuing offence, and therefore, the benefit of the “continuing offence doctrine” under Section 3 of the PMLA was inapplicable. Reference was made to Article 20(1) which, according to the petitioners, prohibits conviction for any offence except under a law that was in force at the time the act was committed.

The respondents, including the Union of India and the Enforcement Directorate, opposed the petitions, contending that the offence of money laundering is a continuing offence. They relied on judicial decisions to assert that as long as the proceeds of crime are used, possessed, or projected as untainted after the enactment of the PMLA, proceedings can be lawfully initiated.

The Bench noted that the principal legal question was whether a criminal prosecution under Section 3 of the PMLA could be initiated if the predicate offence occurred before the Act was brought into force or before the relevant offence was added to the Schedule. The Court observed that the issue was no longer res integra, citing Vijay Madanlal Chaudhary v. Union of India [(2023) 12 SCC 1] and the subsequent decision in Pradeep Nirankarnath Sharma v. Directorate of Enforcement (SLP (Crl.) 6185/2023, decided on 17.03.2025).

The Court reproduced relevant paragraphs from the Supreme Court's judgment, stating: “It is well established that offences under the PMLA are of a continuing nature, and the act of money laundering does not conclude with a single instance but extends so long as the proceeds of crime are concealed, used, or projected as untainted property.”

Further quoting paragraph 135 of Vijay Madanlal Chaudhary, the Court noted: “It would be an offence of money laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence.”

The Court concluded that as long as any act described under Section 3 of the PMLA—such as concealing, possessing, acquiring, or projecting the proceeds of crime as untainted—is carried out after the statute came into effect, proceedings can be validly initiated.

On the constitutional issue, the Court observed: “The expression 'law in force' refers to a law that is factually in operation at the time when the offence is committed… This interdiction cannot be extended to a case of the above nature where a person is allegedly using the proceeds of crime or projecting or claiming it as untainted property, after the commencement of the relevant statutory provision.”

The Bench held that there was no retrospective application of the penal law. It reasoned that “there is only a reference in the statute to a past action, which is only for the identification of the subject—the proceeds of crime. There is no penal consequence for the past act done by him under the PMLA.”

On the issue of trial sequencing, petitioners submitted that the prosecution under the PMLA should be kept in abeyance until there is a conviction in the predicate offence. In contrast, the Enforcement Directorate argued that such an approach would prejudice the investigation and delay justice, as crucial witnesses might not be available later.

The Court found merit in both submissions and held: “Depending upon the nature of each case, [the trial court] can take a balanced course. The court may, in its discretion, permit the Enforcement Directorate to examine those witnesses who are required to prove the most important elements of the crime… while the trial of the predicate offence is pending.”

It further observed that the trial court could proceed under Section 253 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), which provides discretion to the Judge regarding which witnesses to summon and in what order. The Court held: “The procedural and adjective law applicable to the criminal trial permits the criminal courts to adopt such a course when it is essential.” It also referred to Section 140 of the Bharatiya Sakshiya Adhiniyam for similar discretion.

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Regarding sufficiency of evidence, the Court noted that except in one matter, all cases were at the investigation stage. It recorded that “the materials available before us prima facie indicate that the Directorate initiated actions against the appellant/petitioners under the PMLA on the basis of some materials.” The Court therefore declined to interfere at this stage and held that sufficiency of evidence would be determined by the trial court.

Concluding, the Bench held that “the challenge raised in the above cases deserves no merit, except to the extent we noticed above.” The writ appeal and connected writ petitions were accordingly dismissed.

Advocates Representing the Parties

For the Petitioners: Sri. B. Raman Pillai (Senior Advocate), Sri. K. Jaju Babu (Senior Advocate), Sri. N. Raghuraj (Senior Advocate), Sri. R. Anil, Sri. T. Anil Kumar, Sri. B. Krishna Kumar, Sri. A. Rajesh, Sri. M. Sunilkumar, Sri. Sujesh Menon V.B., Sri. Thomas Abraham Nilackappillil, Sri. M. Vivek, Sri. Babu Karukapadath, Smt. Amrin Fathima, Sri. K.M. Faisal Kalamassery, Sri. Mithun Baby John, Sri. J. Ramkumar, Smt. M.A. Vaheeda Babu, Sri. P.U. Vinod Kumar, Sri. K. Anand,  Sri. Rahul Ipe Prasad, Smt. M.U. Vijayalakshmi, Rance R.,  Smt. Sayujya, Sri. Vivek Menon

For the Respondents: Smt. C.G. Preetha (Central Government Counsel), Sri. Jaishankar V. Nair (Standing Counsel for the Enforcement Directorate), Sri. Girish Kumar V.

Case Title: A.K. Samsuddin v. Union of India & Ors. and connected matters
Neutral Citation: 2025:KER:24506
Case Number: WA No.2076/2016 & W.P.(C) Nos. 5562/2017, 5647/2017, 8373/2017 & 26120/2017
Bench: Justice A. Muhamed Mustaque, Justice P. Krishna Kumar

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