Mohammed Asadulla S/o Late Mohammed Yousuff and Sri K. Rahman Khan and Sri Maqsood Ali Khan V. The Assistant Director, Directorate of Enforcement, Govt. of India, Ministry of Finance, Department of Revenue

WP/10840/2023

AI Insights

The case involves multiple writ petitions filed by different petitioners who were accused in Special C.C.No.711 of 2023 under the Prevention of Money Laundering Act, 2002. The petitions challenged the order taking cognizance of the offence and issuing summons against them. The main legal contention was whether the acts alleged, which occurred between August 1, 1985, and December 12, 2002, could be prosecuted under a law that was not in force at the time of the alleged acts. The Directorate of Enforcement argued that the offences were continuing and thus applicable under the PMLA. However, the court found that applying the PMLA retrospectively to these acts was unconstitutional, leading to the quashment of the proceedings.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 798217 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 13-12-2024
• Assessment Year: misc
• Other Referred Cases: DHANASHREE RAVINDRA PANDIT v. INCOME TAX DEPARTMENT, Kumaran v. State of Kerala, Rao Shiv Bahadur Singh v. State of Vindhya Pradesh, Union of India v. Gautam Khaitan
• Laws Referred To: Prevention of Money Laundering Act, 2002, Cr.P.C.
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JAYAKARA SHETTY
• Assessee Lawyers: C V NAGESH; B PRAMOD
• Keywords: Cognizance of offence; Prevention of Money Laundering; Summons; Quashment of Proceedings
• Section: 3; 4; 226; 70; 482; 227

Judgement Text

" - 1 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF DECEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 18217 OF 2024 (GM-RES) C/W WRIT PETITION NO. 10806 OF 2023 (GM-RES) WRIT PETITION NO. 10840 OF 2023 (GM-RES) IN WP No. 18217/2024 BETWEEN: MOHAMMED ASADULLA S/O LATE MOHAMMED YOUSUFF AGED ABOUT 70 YEARS OCC:EX-GENERAL MANAGER AMANATH CO-OP. BANK, R/O NO. 1022, 38TH CORSS, 4TH ‘T’ BLOCK JAYANAGAR BENGALURU – 560 011. …PETITIONER (BY SRI C.V.NAGESH, SENIOR COUNSEL FOR SRI. CHETAN JADHAV, ADVOCATE) AND: THE ASST. DIRECTOR THE DIRECTORATE OF ENFORCEMENT GOVT. OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE Digitally signed by VISHAL NINGAPPA PATTIHAL Location: High Court of Karnataka - 2 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 BENGALURU ZONAL OFFICE 3RD FLOOR, B-BLOCK, BMTC SHANTHINAGAR TTMC, K H ROAD BENGALURU – 560 027 REPRESENTED BY ITS SPECIAL PROSECUTOR. …RESPONDENT (BY SRI JAYAKARA SHETTY H., ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF CR.P.C., PRAYING TO SET ASIDE THE ORDER DTD. 27.03.2023 PASSED BY THE PRL.CITY CIVIL AND SESSIONS JUDGE, AND SPL.JUDGE FOR PREVENTION OF MONEY LAUNDERING ACT, BANGALORE CITY IN SPL.C.C.NO.711/2023 THEREBY TAKING COGNIZANCE OF THE OFFENCE U/S 3 AND 70 OF THE PREVENTION OF MONEY LAUNDERING ACT PUNISHABLE U/S 4 OF THE PREVENTION OF MONEY LAUNDERING ACT AND ORDERED SUMMONS AGAINST PETITIONER WHO IS ARRAYED AS ACCUSED-1 IN SPL.C.C.NO. 711/2023 ON THE FILE OF THE SAID COURT WHICH IS PRODUCED AT ANNX-A AND A1 IN SO FAR AS PETITIONER IS CONCERNED AND ETC., IN WP NO. 10806/2023 BETWEEN: 1. SRI K.RAHMAN KHAN AGED ABOUT 82 YEARS, - 3 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 S/O LATE KHASIM KHAN RESIDENT OF NO. 200/C, 7th MAIN, III BLOCK, JAYANAGAR, BENGALURU – 560 011. ...PETITIONER (BY SRI C.V.NAGESH, SENIOR COUNSEL FOR SRI. RAGHAVENDRA K., ADVOCATE) AND: 1. DIRECTORATE OF ENFORCEMENT MINISTRY OF FINANCE GOVERNMENT OF INDIA DEPARTMENT OF REVENUE BENGALURU ZONAL OFFICE, 3RD FLOOR, “B” BLOCK, BMTC, SHANTHINAGAR, TTMC, K.H.ROAD, BENGALURU – 560 027. ...RESPONDENT (BY SRI JAYAKARA SHETTY H., ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF CR.P.C., PRAYING TO SETTING ASIDE THE ORDER DTD 27.03.2023 PASSED BY THE PRL.CITY CIVIL AND SESSION JUDGE AND SPECIAL JUDGE FOR PREVENTION OF MONEY LAUNDERING ACT, BENGALURU BY WHICH ORDER, THE TRAIL COURT HAS TAKEN COGNIZANCE OF THE OFFENCE UNDER SECTION 3 R/W SEC.70 OF THE PREVENTION OF MONEY LAUNDERING ACT, PUNISHABLE UNDER SEC.4 OF THE PREVENTION OF MONEY LAUNDERING ACT, AND ORDERED SUMMONS AGANIST THE PETITIONER WHO IS ARRAIGNED AS ACCUSED NO.4 IN SPL.C.C. NO.711/2023 ON THE FILE OF THE SAID COURT, WHICH ORDER IS PRODUCED AT ANNX- - 4 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 A IN SO FAR AS THE PETITIONER IS CONCERNED AND ETC., IN WP NO. 10840/2023 BETWEEN: 1. SRI MAQSOOD ALI KHAN S/O K. RAHMAN KHAN, AGED ABOUT 52 YEARS, MANAGING DIRECTOR OF M/S AL-AMEEN HOUSING DEVELOPMENT COMPANY LTD., RESIDING AT NO.200/C, 7TH MAIN, 3RD BLOCK, JAYANAGAR, BENGALURU – 560 011. 2. M/S AL-AMEEN HOUSING DEVELOPMENT COMPANY LTD., THE REGISTERED COMPANY UNDER THE COMPANIES ACT, 1956 HAVING ITS OFFICE AT NO.3/12, PATALAMMA STREET, BASAVANAGUDI, BENGALURU – 560 004 REPRESENTED BY ITS MANAGING DIRECOTR SRI. MAQSOOD ALI KHAN S/O SRI K.RAHAMAN KHAN, AGED ABOUT 52 YEARS. ...PETITIONERS (BY SRI B.PRAMOD, ADVOCATE) AND: 1. THE ASSISTANT DIRECTOR DIRECTORATE OF ENFORCEMENT, - 5 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 MINISTRY OF FINANCE, GOVERNMENT OF INDIA, DEPARTMENT OF REVENUE, BENGALURU ZONAL OFFICE, 3RD FLOOR, “B” BLOCK, BMTC, SHANTINAGAR, TTMC, K.H. ROAD, BENGALURU – 560 027. ...RESPONDENT (BY SRI JAYAKARA SHETTY H., ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA READ WITH SECTION 482 OF CR.P.C., PRAYING TO QUASH THE ORDER DTD 27.03.2023 PASSED BY THE PRINCIPAL CITY CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE FOR PREVENTION OF MONEY LAUNDERING ACT, BENGALURU IN SPL.C.C.NO.711/2023, FOR TAKING COGNIZANCE OF THE OFFENCE U/S 3 R/W SECTION 70 OF THE PREVENTION OF MONEY LAUNDERING ACT, PUNISHABLE U/S 4 OF THE PREVENTION OF MONEY LAUNDERING ACT AND ORDERED SUMMONS AGAINST THE PETITIONERS WHO ARE ARRAIGNED AS ACCUSED NO.5 AND 6 IN SPL.C.C.NO.711/2023 ANNEXURE-A AND ETC., THESE PETITIONS, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: - 6 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioners, in the cases at hand, who are accused in Special C.C.No.711 of 2023 pending before the Principal City Civil and Sessions Judge and Special Judge for Prevention of Money Laundering Act, Bangalore City are knocking at the doors of this Court seeking quashment of entire proceedings in the aforesaid special case. Since they are accused in one and the same crime, these petitions are taken up together and considered by this common order. 2. Heard Sri C.V.Nagesh, learned senior counsel appearing for the petitioners in W.P.Nos. 10806 of 2023 and Writ Petition No. 18217 of 2024, Sri B.Pramod, learned counsel appearing for the petitioner in Writ Petition No.10840 of 2023 and Sri H. Jayakara Shetty, learned counsel appearing for the respondent in all the cases. 3. The petitioners in Writ Petition Nos. 10806 of 2023, 10840 of 2023 and 18217 of 2024 are accused Nos. 4, 5, 6 and - 7 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 1 respectively in Special C.C.No.711 of 2023. For the sake of convenience facts in Writ Petition No.10806 of 2023 would be narrated. 4. Facts, in brief, germane are as follows:- The petitioner/accused No.4 is said to be a politician and has been a Member of Parliament and has held other positions in public life. The issue in the lis does not relate to his credentials. One Dr. Mumtaz Ahmed Khan, the then President of Amanath Co-operative Bank Limited registers a complaint on 22-03-2003 before the jurisdictional Police against several persons complaining certain acts of omissions and commissions on their part in discharge of their duties as officials of Amanath Co-operative Bank Limited, which was then existing between 1- 08-1985 and 12-12-2002 projecting the alleged loss caused to the banking institution on the alleged acts of the accused to the extent of 2.46 crores. The complaint becomes a crime in Crime No.101 of 2003 for the offences punishable under Sections 403, 406, 408, 419, 468, 477-A, 201, 120B r/w Section 34 of the IPC. The matter was then entrusted to the COD, Bangalore which is said to be conducting the investigation. The issue in - 8 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 the lis does not relate to the proceedings or the investigation by the COD. 5. On the basis of the crime so registered as afore-quoted in Crime No.101 of 2003, the COD filed its final reports based upon which different criminal cases are registered against several accused including the petitioners. Charges are framed against three persons who are labelled as accused in the case. The trial is in progress. The issue, as observed hereinabove, does not relate to the trial before the concerned Court. The respondent/Directorate of Enforcement registers Enforcement Case Information Report – ECIR/BGZO/8/2013 and takes up investigation. The proceedings are continued by the Directorate of Enforcement and final report is filed in Special C.C.No.711 of 2023. The registration of special criminal case is what has driven these petitioners to this Court in the subject petitions. 6. The learned senior counsel Sri C.V.Nagesh appearing for the petitioners in two of the cases would contend that in the crime the alleged acts are between 01-08-1985 and 12-12-2002, at which point in time the provisions of the - 9 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 Prevention of Money Laundering Act, 2002 (‘the Act’ for short) was not in force. The Act comes into effect from 17-01-2003. The alleged acts in the case at hand admittedly relate to the aforementioned period. He would contend that the allegations which were not scheduled offences under the Act, cannot now be said that the petitioners have to face the proceedings under the Act also, as there cannot be post-facto offence of a legislation that is not even in place during the period of commission of the offence. He would seek quashment of proceedings. 7. The learned counsel Sri B.Pramod appearing for the petitioners in Writ Petition No.10840 of 2023 would also adopt the submissions of the learned senior counsel. 8. The learned counsel appearing for the respondent would vehemently refute the submissions to contend that it is a continuing offence and the Directorate of Enforcement can enter into, at any time and seek dismissal of these petitions. - 10 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 9. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. 10. The afore-narrated facts are a matter of record. The only issue that falls for my consideration is: “Whether the proceedings in Special C.C.No.711 of 2023 as against the petitioners should be permitted to be continued?” 11. It is not in dispute that predicate offence relates to the period between 1985 and 12-12-2002. The Act comes into force on 17.01.2003. But, the acts of the petitioners are projected to be between the dates on which the Act was not in force. Therefore, as on the date of commission of offence, it was not an offence under the Act, as it was not in force. Later on, when the Act comes into force, the Directorate of Enforcement cannot exhume and make all predicate offences which have taken place prior to the Act coming into force to become an offence under the Act. The issue need not detain this Court for long or delve deep into the matter. - 11 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 12. This Court while answering an identical circumstance under the Black Money (Undisclosed Foreign Income and Assets) Imposition of Tax Act, 2015 has in the case of DHANASHREE RAVINDRA PANDIT v. INCOME TAX DEPARTMENT1, held as follows: “…. …. …. 12. It becomes germane, at this juncture, to consider where a legal fiction or a deeming fiction is created under section 72(c) of the Act or criminal liability under sections 50 and 52 could be imposed. The apex court in the case of Kumaran v. State of Kerala [(2017) 7 SCC 471; (2017) 3 SCC (Cri) 431; 2017 SCC OnLine SC 545.] considers what is deeming section or a legal fiction that is created and holds as follows: “27. These two judgments make it clear that the deeming fiction of section 431 of the Criminal Procedure Code extends not only to section 421, but also to section 64 of the Penal Code, 1860. This being the case, section 70 of the Penal Code, 1860, which is the last in the group of sections dealing with sentence of imprisonment for nonpayment of fine must also be included as applying directly to compensation under section 357(3) as well. The position in law now becomes clear. The deeming provision in section 431 will apply to section 421(1) as well, despite the fact that the last part of the proviso to section 421(1) makes a reference only to an order for payment of expenses or compensation out of a fine, which would necessarily refer only to section 357(1) and not section 357(3). Despite this being so, so long as compensation has been directed to be paid, albeit under section 357(3), section 431, section 70 of the Penal Code, 1860 and section 421(1) proviso would make it clear that by a legal fiction, even though a default sentence has been suffered, yet, compensation would be recoverable in the manner provided under section 421(1). This would, however, be without the 1 2024 SCC OnLine Kar 58 - 12 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 necessity for recording any special reasons. This is because section 421(1) proviso contains the disjunctive ‘or’ following the recommendation of the Law Commission, that the proviso to old section 386(1) should not be a bar to the issue of a warrant for levy of fine, even when a sentence of imprisonment for default has been fully undergone. The last part inserted into the proviso to section 421(1) as a result of this recommendation of the Law Commission is a category by itself which applies to compensation payable out of a fine under section 357(1) and, by applying the fiction contained in section 431, to compensation payable under section 357(3). 28. As is well known, a legal fiction is not to be extended beyond the purpose for which it is created or beyond the language of the section by which it is created. For example, see Prakash H. Jain v. Ms. Marie Fernandes [(2003) 8 SCC 431.] at p. 438. However, once the purpose of the legal fiction is ascertained, full effect must be given, and it should be carried to its logical conclusion. This is clear from the celebrated passage in East End Dwellings Co. Ltd. v. Finsbury Borough Council [[1952] A.C. 109; [1951] 2 All ER 587.] : (AC pp. 132-33) ‘If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of those in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.’ 29. The legal fiction enacted under section 431 is not limited to ‘the purpose of this Act’ unlike section 6A of the Central Sales tax Act, as was the case in Ashok Leyland Ltd. v. State of T.N. [(2004) 134 STC 473 (SC); (2004) 3 SCC 1.] , paras 32 and 76. Thus it is clear that the object of the legal fiction created by section 431 is to extend for the purpose of recovery of compensation until such recovery is completed — and this would necessarily - 13 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 take us not only to section 421 of the Criminal Procedure Code but also to section 70 of the Penal Code, 1860, a companion criminal statute, as has been held above.” (emphasis supplied) 12.1. The apex court holds that a legal fiction or a deeming fiction should not be extended beyond the purpose of the Act for which it is created or beyond the language deployed in the enactment. In the case at hand what is given effect to under section 72(c) is a deeming section which creates criminal liability. It is a matter of record that all the facts that become the offences are alleged to have happened five years prior to the Act coming into force. It now becomes germane to notice article 20 of the Constitution of India which makes it a fundamental right to a person who would be convicted for an offence except for violation of law in force at the time of commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force. The first part of it is what becomes necessary to be noticed to the facts obtaining in the case at hand. 13. It is apposite to refer to the Constitution Bench judgment of the apex court in the case of Rao Shiv Bahadur Singh v. State of Vindhya Pradesh [(1953) 2 SCC 111.] . In the said judgment the apex court interprets article 20 of the Constitution of India. The facts obtaining before the Supreme Court are noticed at paragraphs 1 to 5. Based upon the said facts, the apex court holds as follows: “17. This article in its broad import has been enacted to prohibit convictions and sentences under ex post facto laws. The principle underlying such prohibition has been very elaborately discussed and pointed out in the very learned judgment of Willes, J. in the well-known case of Phillips v. Eyre [[L.R.] 6 Q.B. 1.] at pp. 23 and 25 and also by the Supreme Court of USA in Calder v. Bull [1 L.Ed. 648 at p. 649; 3 US 386 (1798); 3 Dall. 386.] . In the English case it is explained that ex post facto laws are laws which voided and punished what had been lawful when done. There can be no doubt as to the paramount importance of the principle that such ex post facto laws, which retrospectively create offences and punish them are bad as being - 14 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 highly inequitable and unjust. In the English system of jurisprudence repugnance of such laws to universal notions of fairness and justice is treated as a ground not for invalidating the law itself but as compelling a beneficent construction thereof where the language of the statute by any means permits it. In the American system, however, such ex post facto laws are themselves rendered invalid by virtue of article 1, sections 9 and 10 of its Constitution. 18. It is contended by the learned Attorney General that article 20 of the Constitution was meant to bring about nothing more than the invalidity of such ex post facto laws in the post- Constitution period but that the validity of the pre- Constitution laws in this behalf was not intended to be affected in any way. The case in Keshavan Madhava Menon v. State of Bombay [1951 SCC 16; 1951 SCR 228] has been relied on to show that the fundamental rights guaranteed under the Constitution have no retrospective operation, and that the invalidity of laws brought about by article 13(1) of the Constitution relates only to the future operation of the pre-Constitution laws which are in violation of the fundamental rights. On this footing it was argued that even on the assumption of the convictions in this case being in respect of new offences created by Ordinance 48 of 1949 after the commission of the offences charged, the fundamental right guaranteed under article 20 is not attracted thereto so as to invalidate such convictions. This contention, however, cannot be upheld. 19. On a careful consideration of the respective articles, one is struck by the marked difference in language used in the Indian and American Constitutions. Sections 9(3) and 10 of article 1 of the American Constitution merely say that ‘No ex post facto law shall be passed…’ and ‘No State shall pass ex post facto law.’. But in article 20 of the Constitution the language used is in much wider terms, and what is prohibited is the conviction of a person or his subjection to a penalty under ex post facto laws. The prohibition under the article is not confined to the passing or the validity of the law, but extends to the conviction or the sentence and is based on its character as an ex post facto law. The fullest effect must therefore be - 15 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 given to the act\" actblocktype=\"\" sectionno=\"\" doi=\"\" match=\"no\">Indian Constitution the language used is in much wider terms, and what is prohibited is the conviction of a person or his subjection to a penalty under ex post facto laws. The prohibition under the article is not confined to the passing or the validity of the law, but extends to the conviction or the sentence and is based on its character as an ex post facto law. The fullest effect must therefore be given to the act actual words used in the article. Nor does such a construction of article 20 result in giving retrospective operation to the fundamental right thereby recognised. All that it amounts to is that the future operation of the fundamental right declared in article 20 may also in certain cases result from acts and situations which had their commencement in the pre-Constitution period. 20. In R. v. St. Mary's, Whitechapel Inhabitants [[1848] 12 Q.B. 120; 116 ER 811.] at p. 814 Lord Denman, C.J. pointed out that a statute which in its direct operation is prospective cannot properly be called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing. The general principle therefore that the fundamental rights have no retrospective operation is not in any way affected by giving the fullest effect to the wording of article 20. This article must accordingly be taken to prohibit all convictions or subjections to penalty after the Constitution in respect of ex post facto laws whether the same was a post-Constitution law or a pre-Constitution law. That such is the intendment of the wording used in article 20(1) is confirmed by the similar wording used in articles 20(2) and 20(3). Under article 20(2), for instance, it cannot be reasonably urged that the prohibition of double jeopardy applies only when both the occasions therefor arise after the Constitution. Similarly, under article 20(3) it cannot be suggested that a person accused before the Constitution can be compelled to be a witness against himself, if after the Constitution the case is pending.” (emphasis supplied) 13.1. The facts before the apex court were that accused Nos. 1 and 2 were Minister for Industries and Secretary of Commerce and Industries in the Government - 16 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 of Vindhya Pradesh. An agreement had been entered into on August 1, 1936 for carrying on diamond mining operation for 15 years. Accused Nos. 1 and 2 therein are alleged to have obtained illegal gratification in a sum of Rs. 25,000 on April 11, 1949 and had also indulged in certain forgery of documents to favour the Syndicate. The allegations were the offences punishable under sections 120B, 161, 465 and 466 of the Penal Code, 1860. The trial court acquitted the accused. The appellate court convicted accused Nos. 1 and 2 for offences punishable under sections 120B and 161 of the Penal Code, 1860 and in addition accused No. 1 was convicted for the offences punishable under sections 465 and 466 of the Penal Code, 1860. The foundation for the said charge was an Ordinance that was brought into effect on September 11, 1949. The contention before the apex court was that it violated articles 14 and 21 of the Constitution of India as by the time the matter was before the apex court, the Constitution had come into force. The apex court holds that the alleged date of illegal gratification was April 11, 1949 and the Ordinance based upon which the accused were charged comes into effect as on September 11, 1949, five months after the alleged act. Therefore, the apex court declined to accept the contention that the Ordinance would be deemed to have come into effect from August 9, 1948 as depicted therein and the conviction must be sustained. The apex court holds that law must actually be in force on the date of commission of the offence and not deemed to be in force. It further holds that the object of article 20 of the Constitution is law in force, actually in force and not a law deemed to be in force. The apex court further holds that, if the deeming section is given credence and criminal law is affirmed, it would defeat the tenor of article 20 of the Constitution, as every post-facto law could be made retrospective. Therefore, the Constitution Bench upturns the conviction and acquits accused Nos. 1 and 2 on the ground that the provision would not pass muster of article 20 of the Constitution of India. The said judgment has stood the test of time. 14. The apex court, after the Act coming into force, in the case of Union of India v. Gautam Khaitan [(2020) 420 ITR 140 (SC); (2019) 10 SCC 108; (2019) 4 SCC (Cri) 26; 2019 SCC OnLine SC 1342.] considering the - 17 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 tenor of the Act has held as follows (page 146 of 420 ITR): “It could therefore be seen, that where no declaration in respect of the asset covered under the Black Money Act is made, such asset would be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of the Act shall apply accordingly. The offences in respect of which sanction has been granted are under sections 50 and 51 of the Black Money Act, which read thus: ‘50. Punishment for failure to furnish in return of income, any information about an asset (including financial interest in any entity) located outside India.—If any person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income- tax Act, who has furnished the return of income for any previous year under sub-section (1) or sub- section (4) or sub-section (5) of section 139 of that Act, wilfully fails to furnish in such return any information relating to an asset (including financial interest in any entity) located outside India, held by him, as a beneficial owner or otherwise or in which he was a beneficiary, at any time during such previous year, or disclose any income from a source outside India, he shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine. 51. Punishment for wilful attempt to evade tax.—(1) If a person, being a resident other than not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be - 18 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine. (3) For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person— (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or (ii) makes or causes to be made any false entry or statement in such books of account or other documents; or (iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or (iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof.’ Section 50 provides that if any person, being a resident other than not ordinarily resident in India, who has furnished the return of income for any previous year under sub-section (1) or sub-section (4) or sub-section (5) of section 139 of the Income- tax Act, wilfully fails to furnish in such return any information relating to an asset (including financial interest in any entity) located outside India, held by a beneficial owner or otherwise or in which he was a beneficiary, at any time during such previous year, or disclose any income from a source outside India, he shall be punishable with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine. The penalty of the offences under section 51 is for wilful attempt in any manner whatsoever to evade the - 19 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 payment of any tax, penalty or interest chargeable or imposable under the Income-tax Act. The punishment provided under sub-section (1) is for rigorous imprisonment for a term which shall not be less than three years but which may extend to ten years and with fine. In respect to any other person not covered by sub- section (1) of section 51, the punishment provided is rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine. It could therefore be seen, that the scheme of the Black Money Act is to provide stringent measures for curbing the menace of black money. Various offences have been defined and stringent punishments have also been provided. However, the scheme of the Black Money Act also provided one-time opportunity to make a declaration in respect of any undisclosed asset located outside India and acquired from income chargeable to tax under the Income-tax Act. Section 59 of the Black Money Act provided that such a declaration was to be made on or after the date of commencement of the Black Money Act, but on or before a date notified by the Central Government in the Official Gazette. The date so notified for making a declaration is September 30, 2015 whereas, the date for payment of tax and penalty was notified to be December 31, 2015. As such, an anomalous situation was arising if the date under sub-section (3) of section 1 of the Black Money Act was to be retained as April 1, 2016, then the period for making a declaration would have been lapsed by September 30, 2015 and the date for payment of tax and penalty would have also been lapsed by December 31, 2015. However, in view of the date originally prescribed by sub-section (3) of section 1 of the Black Money Act, such a declaration could have been made only after April 1, 2016. Therefore, in order to give the benefit to the assessee(s) and to remove the anomalies the date July 1, 2015 has been substituted in sub-section (3) of section 1 of the Black Money Act, in place of April 1, 2016. This is done, so as to enable the assessee desiring to take benefit of section 59 of the Black Money Act. By doing so, the assessees, who desired to take the benefit of one-time opportunity, could have made declaration prior to September 30, 2015 and paid the tax and penalty prior to December 31, 2015. - 20 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 It would further be relevant to note that sub- section (3) of section 1 of the Black Money Act, itself provides that save as otherwise provided in this Act, it shall come into force on the 1st day of July, 2015. A conjoint reading of the various provisions would reveal that the Assessing Officer can charge the taxes only from the assessment year commencing on or after April 1, 2016. However, the value of the said asset has to be as per its valuation in the previous year. As such, even if there was no change of date in sub-section (3) of section 1 of the Black Money Act, the value of the asset was to be determined as per its valuation in the previous year. The date has been changed only for the purpose of enabling the assessee(s) to take benefit of section 59 of the Black Money Act. The power has been exercised only in order to remove difficulties. The penal provisions under sections 50 and 51 of the Black Money Act would come into play only when an assessee has failed to take benefit of section 59 and neither disclosed assets covered by the Black Money Act nor paid the tax and penalty thereon. As such, we find that the High Court was not right in holding that, by the notification/order impugned before it, the penal provisions were made retrospectively applicable.” 14.1. The crux of the case before the apex court or the finding as could be gathered from paragraph 20 supra is that an assessee if he fails to take benefit of section 59 and it remains a fact that the assets are not disclosed, penal provisions under sections 50 and 51 of the Act would kick in. A reading of the afore-quoted judgment of the apex court would make it clear that the question of retrospective applicability of sections 50 and 51 qua article 20 of the Constitution of India was not even an issue in the case before the apex court, though the apex court interprets all the sections that are quoted hereinabove including section 72(c). Therefore, the said judgment would not become completely applicable to the issue brought up before the court in the subject lis. 15. In the considered view of the court, the prosecution so initiated against these petitioners did not and cannot pass constitutional muster under article 20 of the Constitution of India. Non-disclosure of an assessment of the tax return for the year 2007-2008 or 2009-2010 cannot be used to criminally prosecute these petitioners, for an act that has come into force in the year - 21 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 2015. The law, as on the date alleged, was not the law of such disclosure of assessment. Therefore, the criminal law cannot be set into motion against the petitioners in the aforesaid facts of the case, as it cannot pass muster of article 20 of the Constitution of India. A caveat, this court is considering the criminal liability fastened upon the petitioners by the prosecution including under section 72(c) of the Act and the consideration has led to an unmistakable conclusion that it falls foul of article 20 of the Constitution of India. The Special enactment is a statute. Article 20 comes under Chapter III of the Constitution of India, a fundamental right. Constitution of India is not a statute. It is the fountain head of all statutes including the special statute. Therefore, the rigour of any provision of the Act should pass muster of article 20 of the Constitution of India and it fails to pass such muster in the case at hand and the failure leads to obliteration of the crime against the petitioners.” In the light of the admitted facts as quoted hereinabove and the settled principle of law as considered by this Court supra, the unmistakable inference would be quashment of proceedings under the Act in the impugned Special C.C.No.711 of 2023. 13. For the aforesaid reasons, the following: O R D E R (i) Writ Petitions are allowed. (ii) Impugned proceedings in Special C.C.No.711 of 2023 pending before the Principal City Civil and Sessions Judge and Special Judge for Prevention of - 22 - NC: 2024:KHC:51851 WP No. 18217 of 2024 C/W WP No. 10806 of 2023 WP No. 10840 of 2023 Money Laundering Act, Bangalore stand quashed qua the petitioners. (iii) It is made clear that this quashment will not come or aid the petitioners to claim quashment of proceedings in the predicate offence where trial is said to be in progress. Sd/- (M.NAGAPRASANNA) JUDGE BKP List No.: 1 Sl No.: 33 "