Bombay High Court: In the instant bail application, the Court had to consider whether the references made in the Prevention of Money Laundering Act, 2002 (‘PMLA’) to the provisions of the Penal Code, 1860 (IPC) and the Code of Criminal Procedure, 1973 (CrPC), had been rendered ineffective by virtue of their repeal through the Bharatiya Nyaya Sanhita, 2023 (BNS) and the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). A Single Judge Bench of Amit Borkar, J., held that references to the IPC offences in the PMLA Schedule must be interpreted as dynamically updated to their corresponding provisions under the BNS, considering Section 8(1) of the General Clauses Act, 1897 (the ‘1897 Act’). The Court further affirmed that the repeal and re-enactment of the Penal Code,1860 (‘IPC’) does not render the PMLA inoperative, and its enforcement remains fully valid and continuous.
Background:
The case arose from allegations of money laundering involving over ₹100 crore deposited in fourteen newly opened accounts at Nashik Merchant Cooperative Bank. The transactions were allegedly layered to conceal their illicit origin, giving rise to suspicion of money laundering. In 2024, an FIR was registered under Sections 318(4), 338, and 340(2) of the BNS. Eventually, an ECIR was registered by the Enforcement Directorate (‘ED’) under the PMLA, treating the BNS offences as scheduled offences under the PMLA. The applicant was arrested and after his bail plea was rejected by the Special Court (PMLA), he moved a bail application under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (‘BNSS’) and Section 45 of the Prevention of Money Laundering Act, 2002 (‘PMLA’) challenging the prosecution’s maintainability in light of the IPC’s repeal.
The applicant contended that the ED could not invoke the PMLA as the predicate/scheduled offences were under the BNS, which was not yet included as a scheduled offence in the PMLA. He submitted that the Schedule to the PMLA lists offences under statutes like the IPC, and the reference to scheduled offences in Section 2(1)(u) of the 1897 Act must be taken as a specific reference to the offences as listed in the Schedule of the PMLA. Since inclusion or exclusion of any offence from the PMLA Schedule was a matter of legislative policy reserved for Parliament, the ED could not treat BNS offences as scheduled under the PMLA. The applicant further alleged the notification dated 16-7-2024 issued by the Ministry of Law and Justice was characterised as ineffective to alter the PMLA, since such a notification could not be equated with an Act of Parliament.
The respondent counsel argued that under Section 8(1) of the 1897 Act, whenever an Act was repealed and re-enacted, then unless a different intention appeared, any reference in any other enactment to the provisions of the repealed Act should be construed as a reference to the provisions of the new Act. The counsel submitted that with the IPC being repealed and re-enacted as the BNS, any reference in the PMLA or its Schedule to an IPC provision should be read as referring to the corresponding provision of the BNS, and the principle of substantial continuity must be applied as long as the BNS covered the same field of offences with no change in substance or policy.
Analysis and Decision:
The Court emphasised that the PMLA was a special law focused on tracking and punishing the use of “proceeds of crime”, aimed at preventing money laundering and enabling attachment and confiscation of related property. The Court noted that the PMLA Schedule listed serious offences from various laws, especially the IPC, which was repealed and replaced by the BNS from 1-7-2024, re-enacting those offences under new section numbers.
The Court observed that Section 8(1) of the 1897 Act mandated that when a Central Act like the PMLA, referred to another Act like the IPC, and the IPC was repealed and re-enacted, then reference should be to the new enactment, unless a different legislative intention was apparent. The Court further noted that the offences charged under Sections 318(4), 338, and 340(2) of the BNS corresponded to the same offences previously under the IPC and though the IPC was repealed and the BNS enacted, only the numbering and placement changed, not the substance.
The Court emphasised that while the distinction between “legislation by incorporation” and “legislation by reference” was a well-recognised principle of statutory interpretation, its application was not absolute and must align with legislative intent and the nature of repealed and re-enacted statutes. The Court further pointed out that when an entire enactment was repealed and re-enacted, even with modifications, continuity was presumed, especially when the substance remained largely unchanged and by applying “legislation by incorporation” rigidly in such cases would lead to absurd results, rendering the PMLA toothless for predicate/scheduled offences committed after the BNS commenced, creating a major legal gap.
The Court opined that if the enforcement of the PMLA was disrupted just because the IPC had been replaced with a new code, the entire mechanism would come to a halt, and offenders would escape liability due to a technicality. The Court relied on K.P. Varghese v. ITO, (1981) 4 SCC 173, wherein it was held that where two interpretations were possible, one which led to absurdity and the other which led to a just, fair, and sensible result, the latter must be preferred.
The Court further addressed the notification in question and submitted that, without compliance with Article 77 of the Constitution, it could not be treated as law, as it did not satisfy valid executive action and could not be enforced as legally binding, though it might have reflected internal executive understanding, it was not an official legal clarification or amendment, and was not covered under ‘law’ in the Article 13(3)(a) of the Constitution as it lacked statutory authority and constitutional process.
The Court, therefore, rejected the application and held that offences under the BNS which corresponded to those in the PMLA Schedule as per the erstwhile IPC, were to be treated as scheduled offences under PMLA and the absence of a textual amendment did not bar prosecution since the new law covered the same field of criminality, thus, the applicant’s contention that the ED lacked jurisdiction was dismissed, and the prosecution was deemed lawful and valid as there was no illegality in the invocation of the PMLA.
[Nagani Akram Mohammad Shafi v. Union of India, 2025 SCC OnLine Bom 2586, decided on 8-7-2025]
Advocates who appeared in this case :
For the Applicant: Ajay Bhise with Deepali Kedar, Sandeep Salonkhe and Tejas Dhotre
For the Respondents: H. S. Venegavkar with Aayush Kedia and Leepika Basant – Respondent 1.
Supriya I. Kak, APP — Respondent-State.
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