JUNE 29, 2024

By Dr M S Krishna Kumar, Advocate

Introduction

THE Criminal Procedure Code, 1973 (CrPC) and Indian Penal Code, 1860 (IPC) is being replaced by Bharatiya Nagarik Suraksha Sanhita, 2023 (Act 46 of 2023) and Bharatiya Nyaya Sanhita, 2023 (Act 45 of 2023) respectively. Both new criminal laws above are expected to be brought into force from 1st July 2024 though representations pour in from certain sections, for deferment and amendment of the new laws. If the above laws are brought into force from the proposed date of 01.07.2024, important legislative amendments have to be in place in other statutes which has interplay or draws power from the erstwhile IPC and CrPC, especially the Prevention of Money Laundering Act, 2002 (PMLA 2002). Certain crucial amendments are to be placed simultaneously in PMLA 2002, as enumerated hereunder to avoid legal hassles that may crop up at a later date, more so when important provisions of PMLA have inextricable link to the erstwhile IPC and CrPC.

Scheduled offence or Predicate offence

A 'predicate offence' is the underlying crime that produces the proceeds Legal terminology ‘proceeds of crime' - PoC which when laundered falls under the definition of 'money laundering offence'. Money laundering offence is a derivative offence while the predicate offence is the offence which generates 'proceeds of crime', and hence in the absence of a predicate offence there is no generation PoC and consequently offence of money laundering, cannot exist as a "standalone offence."

'Predicate offence' or 'scheduled offence' are synonymous terms used in Anti Money Laundering (AML) regime in domestic laws of countries. As far as India is concerned, under PMLA 2002 it is referred as 'scheduled offence' as defined so under Sec.2 (1)(y) of the Act and listed in Part A to Part C of Schedule.

When the Act was brought into force, the Schedule contained Part A - Paragraph 1 (offences under IPC 1860) to Para 2 (Offences under NDPS Act 1985) and Part B - Paragraph 1 to 5. Later on, by Act 21 of 2009 w.e.f 01.06.2009 certain more offences were added in the list of Part A Para 1 and Para 2 and Para 3 - Offences under Explosive Substances Act 1908, Para 4 Offences under Unlawful Activities Prevention Act 1967. Part B of Scheduled was substituted/re aligned and Para 1 to Para 25. List of scheduled offence include 156 offences from 28 different statutes. The amendment also added Part C - offences of cross border implications - (i) offences listed in in Part A -, (ii) Part B - without monetary threshold, or (iii) offences against property in Chapter XVII of IPC 1860.

The Schedule as stated above has been amended by Act 21 of 2009, Act 2 of 2013, Act 22 of 2015, Act 13 of 2018 and Act 16 of 2018, thereby inserting new offences to be regarded as scheduled offences. When the approach of listing of predicate offence/scheduled offence and its amendment as above was challenged in batch of cases, the Hon'ble Apex Court in Vijay Madanlal Choudhary & Others Vs UOI (2022 SCC online SC 929) 2022-TIOL-60-SC-PMLA-LB held that classification or grouping of offences is the wisdom of the Parliament, and prosecution under PMLA is not in relation to the scheduled offence but limited to property derived or obtained out of criminal activity relating to commission of scheduled offence.

At present, the Schedule to PMLA consist of Part A - Paragraph 1 to 29 (Statute 1 to Statute 29) which refers to 'Section" of the corresponding Act and the "description of offence", Part B with One Paragraph, listing only Sec. 132 of Customs Act 1962 (with threshold limit of 1 crore of value) and Part C with "offences of cross border implication"

Bharatiya Nyaya Sanhita 2023 replacing IPC 1860 - impact on PMLA 2002

Under Part A of Schedule to PMLA, Paragraph 1 refers to Indian Penal Code 1860 wherein the 'Section' and 'description of offence' (around 60 offences listed under description) is listed. For example Sec.120B - Criminal Conspiracy, Sec.302- Murder, Sec. 420- Cheating and dishonestly inducing delivery or property, Sec.467- forgery of valuable security, will etc, are among those listed offences. Under the Bharatiya Nyaya Sanhita 2023 (BNS 2023) Sec.61 defines Criminal Conspiracy, Sec.62 - attempt to commit criminal conspiracy, Sec.316 - Cheating (which combines Sec.415 and Sec.420 of IPC 1860), and Sec.336 - forgery of security will etc.

The offence of money laundering under Sec.3 is dependent on ill-gotten gains termed as 'proceeds of crime' as defined under Sec. 2 (1)(u) of PMLA 2002. On a plain reading of Sec.3 an offence under Sec.3 is committed after a scheduled offence is committed and not vice-versa. In other words, the condition precedent for existence of PoC is existence of a 'scheduled offence', which forms the fulcrum of the PMLA, 2002. The conditions precedent for attracting the offence under Section 3 of the PMLA are that there must be a scheduled offence and that there must be proceeds of crime in relation to the scheduled offence as defined in clause (u) of sub-section (1) of Section 3 of the PMLA. Therefore, there exists an inextricable link between the 'scheduled offence' and money laundering offence, and in this context the definition of 'scheduled offence' assumes more importance.

Now let us assume a person attempts to commit "cheating" in August 2024 and the jurisdictional Police authorities happen to register an FIR (First Information Report) invoking Sec.316 of BNS 2023, and not the erstwhile IPC 1860. The term "cheating" is defined under Sec.316 (1) of BNS 2023, while Sec.316(2) provides for punishment of the said offence. Whereas Sec.415 of IPC, 1860 defines the term 'cheating', and Sec.420 provides for punishment of 'cheating and dishonestly inducing delivery of property'.

Taking the above example, if the corresponding offence Sec.316 of BNS 2023 under BNS 2023 along with the Act, is not part of scheduled offence in Part A of PMLA 2002, the said offences though were scheduled offence under erstwhile IPC 1860 prior to 1st July 2024 may not fall under the definition of 'scheduled offence' post 1st July 2014, and the enforcement authorities may not have the legislative backing to proceed against such offenders under Sec.3 of PMLA 2002 in the absence of the Act and corresponding Section listed as 'scheduled offence'. If a corresponding amendment in Part A of PMLA, 2002 if not put in place simultaneously from 1st July 2024, a legislative vacuum is created to the detriment of the State. Therefore, a need arises to add in Part A of schedule., BNS 2023 along with list of offences. However, Sec.358 (1) of BNS 2023 which repeals the IPC, 1860, but Sec.358 (2) provides saving clause that it shall not affect anything done under IPC, right, privilege, liability accrued, penalty or punishment, any investigation or proceeding under the erstwhile Code (IPC) the saving clause will also apply to Part A - Paragraph 1 - IPC 1860 listed offences under PMLA 2002 and protect the past proceedings. The repeal and saving clause will not protect the Scheduled Offences under the new enactment BNS 2023 in Schedule to Part A of PMLA.

Interplay of PMLA 2002 and Bharatiya Nagarik Suraksha Sanhita 2023 (BNSS 2023)

PMLA being a special enactment and also a quasi-criminal statute, as it provides for prosecution and punishment of money laundering offence, apart from civil proceedings such as attachment, forfeiture and confiscation of properties acquired out of PoC Proceeds of Crime. PMLA 2002 derives certain powers from CrPC, 1973 wherever reference is made in the respective statutory provisions as below.

Sec.65 of the PMLA 2002 provides that provisions of CrPC 1973 shall apply insofar as they are not inconsistent with provisions of PMLA 2002 to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under the Act. Sec.44 of PMLA contains a non-obstante clause for offences to be tried be Special Courts, with reference to CrPC, while Sec.45 contains a non obstante clause for release of a person accused, on bail., again with reference to CrPC 1973. Sec.46 of PMLA 2002 states that save as otherwise provided in PMLA 2002 the provisions of CrPC including provisions as to bails or bonds, shall apply to proceedings before Special Court. The reference in the above provisions in PMLA has to incorporate the corresponding provisions under BNSS 2023 post 1st July 2024.

Conclusion

Therefore, a need arises to add in Part A of Schedule BNS 2023 along with description of offences (corresponding to IPC 1860) while retaining the IPC portion of offences already listed in Part A to cover past cases (legacy issues), such as cases of pending investigation, prosecution launched, in progress etc. While doing so, the offences listed in Part A in Paragraph 1 - Indian Penal Code has to be retained necessarily in the Schedule to take care of past cases. Simultaneously, amendments are required under Sec.42. Sec.44, Sec.45, Sec.46 and Sec.65 of PMLA also with a reference to BNSS 2023 (corresponding CrPC 1973)

[The views expressed are strictly personal.]