IMPORTANT POINT
The Prevention of Money-Laundering Act applies to ongoing money laundering activities, allowing prosecution regardless of when the predicate offence occurred, without violating constitutional protections against retrospective penal laws.

JUDGMENT :

P. Krishna Kumar, J.

The primary issue in these cases is the constitutional validity of the criminal proceedings initiated under Section 3 of the Prevention of Money-Laundering Act, 2002 (‘PMLA’, for short). According to the appellant/petitioners, at the time when the act of money laundering was allegedly committed, either (i) the PMLA itself was not in force, or (ii) the predicate offences were not included in the schedule of the said Act, and thus all the proceedings initiated against them by the Enforcement Directorate are in the teeth of Article 20(1) of the Constitution of India.

2. The Writ Appeal is preferred against the judgment of the Single Bench of this Court, upholding such an action initiated by the Enforcement Directorate. All the above Writ Petitions are placed before us for disposal together with the Writ Appeal, as the petitioners also challenge the investigation and further proceedings under Section 3 of the PMLA on the above grounds.

3. We heard the learned counsel appearing for the appellant/petitioners as well as the Retainer Counsel appearing for the Enforcement Directorate.

4. The question whether the offence of money laundering under Section 3 of the PMLA can be extended to a predicate offence which happened prior to the coming into the force of PMLA or before the inclusion of such offences in the schedule of the PMLA, is no longer re integra. In Vijay Mandalal Chaudharay and Others v. Union of India & Ors. [ (2023) 12 SCC 1 ], the Apex Court held that it is possible, as the offence under Section 3 is a continuing offence. However, the learned counsel appearing for the appellant/petitioners forcefully submitted that the question of retrospective application of Section 3 of the PMLA was not directly in question in the said case. However, the Honourable Supreme Court in its judgment dated 17.03.2025 in SLP(Crl.) No. 6185/2023 (Pradeep Nirankarnath Sharma v. Directorate of Enforcement & Another) answered this question pointedly and in the affirmative. The Court held 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 and thus if the accused commits any of the acts as defined in Section 3 of the PMLA after its commencement, the Enforcement Directorate could maintain a criminal action against him, irrespective of the fact that the predicate offence allegedly took place before the commencement of the PMLA. The court held thus:

“21. A significant ground raised by the appellant pertains to the nature of the alleged offence under the PMLA. The appellant has contended that the alleged acts do not constitute an offence under the PMLA as the same was not in force during the relevant period, or the predicate offences as alleged were not included in the schedule to the PMLA at the relevant time and, therefore, cannot be subject to proceedings under the PMLA. It has also been argued that these instances do not constitute continuing offences. This contention, however, is untenable. 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. The legislative intent behind the PMLA is to combat the menace of money laundering, which by its very nature involves transactions spanning over time.

22. The concept of a continuing offence under PMLA has been well-settled by judicial precedents. An offence is deemed continuing when the illicit act or its consequences persist over time, thereby extending the liability of the offender. Section 3 of the PMLA defines the offence of money laundering to include direct or indirect attempts to indulge in, knowingly assist, or knowingly be a party to, or actually be involved in any process or activity connected with the proceeds of crime. Such involvement, if prolonged, constitutes