Bombay High Court Maintains PMLA’s Validity After Repeal of IPC

In a major shot in the arm for anti-money laundering jurisprudence the Bombay HC on July 8 2025, rejected a bail application in a ₹100 crore money laundering case and held that offences under the newly enacted Bharatiya Nyaya Sanhita (BNS) 2023, would remain predicate offences under the Prevention of Money Laundering Act (PMLA), 2002. The ruling guarantees the enforceability of PMLA not withstanding the repeal of the Indian Penal Code (IPC), 1860.

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Case Background

The candidate was arrested by the Enforcement Directorate (ED) on November 20 2024 for apparently being involved in a money laundering case of more than ₹100 crore. The money was invested into 14 new accounts that were opened at Nashik Merchant Cooperative Bank and were reported to have been layered to conceal their illegal source. First, FIRs were being registered under the sections of IPC, but since the IPC was abrogated on July 1 2024, and BNS replaced it, FIRs are now being re-registered under BNS Sections 318(4), 338, and 340(2), which correspond to offences of cheating, forgery, and forgery of documents. The Special PMLA Court had already turned down the bail, and the accused went to the High Court.

Important Legal Questions

The primary legal questions before the Court were:

1. Whether offences under BNS can be treated as valid predicate offences under PMLA despite the repeal of IPC.
2. Whether the PMLA Schedule requires express legislative amendment to replace IPC references with BNS provisions.
3. Whether PMLA proceedings can continue in the absence of such a statutory update.

The petitioner argued that:
       • The PMLA Schedule mentions only IPC offences, and as the IPC has been repealed,

           the corresponding BNS provisions do not automatically qualify as predicate offences.
       • There has been no legislative amendment to revise the PMLA Schedule after repeal.

• Under the principle of legislation by incorporation, the references to IPC are fixed and cannot dynamically adapt to new laws unless amended by Parliament.
• Emboldened by the judicial precedents in Mahindra & Mahindra Ltd. v. Union of India (1979) and Vijay Madanlal Choudhary v. Union of India (2022), the petitioner argued that enlarging the scope of PMLA without support from Parliament would be ultra vires.

Respondent’s Arguments

The ED replied that:

 • References to enactments repealed by this Act shall be construed to refer to the re-enacted enactments unless a contrary intention otherwise appears under Section 8(1) of the General Clauses Act, 1897.

• BNS retains the substance of IPC provisions; hence, predicate offences under PMLA remain valid through equivalency.

• A contrary interpretation would create a dangerous legal vacuum, allowing offenders to escape liability during the legislative transition.
• The doctrine of updating construction mandates that statutes must be interpreted in light of current enactments.

Court’s Analysis and Reasoning

Justice Amit Borkar delivered the ruling, emphasizing that the PMLA Schedule’s references to IPC sections constitute legislation by reference, not incorporation. As such, these references are dynamic and automatically adapt to the re-enacted provisions under BNS. The Court noted:

The references to IPC offences in the Schedule to the PMLA must now be read as references to the corresponding offences under the Bharatiya Nyaya Sanhita, 2023, to maintain legal continuity and prevent absurd results.

The Court examined Section 8(1) of the General Clauses Act, which mandates that references to repealed laws should be construed as references to the new laws replacing them. It also considered the purpose of PMLA — a law aimed at continuously combating the laundering of illicit proceeds. A narrow reading, the Court observed, would defeat this objective and cause an unintended enforcement gap.

The Court further used the case of K.P. Varghese v. ITO (1981) to uphold the requirement of purposive interpretation rather than literal stiffness in statutory interpretation.

Judgment and Implications

The Court dismissed the bail application, holding that:

• BNS offences are valid predicate offences under PMLA by operation of Section 8(1) of the General Clauses Act.
• PMLA prosecutions remain valid even after the repeal of IPC.
• No express legislative amendment is required to update the PMLA Schedule to include BNS.

This verdict closes any possible legal loopholes that could have allowed suspected criminals to escape punishment during the legal transition from IPC to BNS.

Conclusion

The Bombay HC ruling is a guarantee of continuity of anti money laundering enforcement and provides critical clarity on how previous laws interact with newly enacted legislation. By preferring a dynamic and purposive approach to interpretation, the Court has ensured the principle that regimes within statutes need to keep up with legal reform in order to vindicate legislative purpose and protect public interest is well entrenched.

References

1. Bar & Bench Report – July 8, 2025
2. The Times of India – Legal News Section
3. K.P. Varghese v. ITO, (1981) 4 SCC 173
4. General Clauses Act, 1897 – Section 8(1)
5. PMLA, 2002 – Sections 2(1)(u), 2(1)(y), and the Schedule