Research issue 1 .
Absence of limitation period under PMLA: Violation of principles of legal
certainty and fairness.
INTRODUCTION
Before the introduction of PMLA India relied on other existing laws to combat money
laundering like, The Income Tax Act , The NDPS Act , SAFEMA Act and many more. But the
establishment of FATF and a 1990 UN general Assembly resolution , leading countries to
develop specific legislation like PMLA in India. (1). Prevention of money laundering Act (pmla)
enacted in 2002 but came into force on July 1, 2005. It is a special legislation to prevent money
laundering and to provide for confiscation of property derived from, or involved in, money
laundering and for matter connected therewith or incidental thereto. Despite its crucial objectives
, the PMLA remains silent on one essential procedural safeguard , the statute of limitations for
initiating proceedings. The PMLA permits the initiation of investigation , prosecution , or
attachment at any time, in contrast to other criminal statute which require time bound procedural
checks. This legislative gap poses serious concerns under the principle of legal certainty and
fairness which are crucial elements of rule of law and the protection of personal liberty under
Article 21 of Indian Constitution.(2) .In comparison to PMLA the other financial legislation
highlights a significant inconsistency. The FEMA,1999, (Foreign Exchange Management Act ),
(3) under section 49, The Income Tax Act ,1961,(4) under section 153 provide the clear
limitation guidelines for initiating proceedings. The absence of the same provision under PMLA
allows or gave authorities to unchecked discretion to authorities, enabling indefinite initiation of
proceedings.
What is PMLA
PMLA stands for the Prevention of Money Laundering Act, 2002.(5) It was enacted by the
Indian Parliament to prevent money laundering and to provide for the confiscation of property
derived from or involved in money laundering. The Act came into force on 1st July 2005, with
several amendments over the years to widen its ambit and strengthen its enforcement.
Sec 3 of PMLA defines Money laundering
“Whosoever directly or indirectly attempts to indulge or knowingly assists or is a party or is
actually involved in any process or activity connected with the proceeds of crime, including its
concealment, possession, acquisition or use and projecting or claiming it as untainted property
shall be guilty of the offence of money-laundering.” (6)
Sec 4 of PMLA defines punishment
Whoever commits the offence of money-laundering shall be punishable with rigorous
imprisonment for a term which shall not be less than three years but which may extend to seven
years and shall also be liable to fine
Provided that where the proceeds of crime involved in money-laundering relates to any offence
specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have
effect as if for the words which may extend to seven years, the words which may extend to ten
years had been substituted.(7)
What is limitation period.
Indian Law defines a period of limitation as a period prescribed in the Limitation Act for
institution of any suit, appeal, or application. The prescribed period is the period of limitation
computed in accordance with the provisions of the Limitation Act. (Section 2, Limitation Act,
1963 ). (8) The limitation period prevents deteriorated evidence , unreliable witness memory and
promotes finality ,fairness, protects prompt investigation and prosecution .
LEGAL FRAMEWORK UNDER CRMINAL LAW FOR LIMITATION.
In criminal law, a statute of limitations, as outlined in Chapter XXXVI (Sections 467–473) of
the Code of Criminal Procedure, 1973,(9) and maintained under Chapter XXXVII (Sections
514–520) of the Bharatiya Nagarik Suraksha Sanhita, 2023,(10) is essential for guaranteeing
prompt prosecution and shielding people from permanent exposure to legal risk. By avoiding the
pursuit of stale claims where the evidence may have deteriorated and witnesses' memory may no
longer be trustworthy, it embodies the fairness concept.(8) On the other aspect, regardless of how
long it takes to investigate an alleged offense, the Prevention of Money Laundering Act, 2002
(PMLA) allows the start of proceedings at any time.(5) The idea of legal certainty requires
predictability and finality, which could be compromised by such a lack of temporal limitation.
(11)
PMLA ‘s position – No limitation period :
Despite the gravity of offence PMLA does not prescribe any limitation period for initiating
proceedings, prosecution or attachment proceedings under its provisions. However, it is crucial
to note that provisions of section 468 of the CrPC, govern the limitation periods for categories of
offences in India. According to section 468, offences punishable with imprisonment exceeding
three years are not subject to any limitation period. Since the term ‘offense’ under the CrPC
encompasses any act or omission punishable by law, the offence of money laundering under the
PMLA falls within this purview. Since money laundering carries a penalty of imprisonment
ranging from three to 10 years, it aligns with section 468 of the CrPC, thereby rendering it
exempt from any limitation period. (12)
CONTINUING OFFENCE DOCTRINE –
In Vijay madanlal Chaudhary v. union of India , (13) the supreme court observed that
that the offence of money laundering is independent of the predicate offence and
continued as long as th proceeds of crime are concealed ,used or presented as untainted
property. (14)
Although money laundering is continuing offence and can not be set limitations but there should
still be outer time limits to initiate proceedings under PMLA , because indefinite liability creates
uncertainty.
Principle of legal certainty :
Legal certainty is a fundamental principle of rule of law that requires the law to be clear ,
predictable , and consistently applied. When there is predictability in law it’s a legal certainty.
Because citizen should know their legal position , duty , rights clearly. If there is legal certainty it
will not lead to then arbitrary state action. And in criminal law the legal certainty assumes
through limitation period.
IN PMLA the complete absence of limitation period directly contravenes to the principle of legal
certainty. There is no temporal boundaries , accused face perpetual threat of prosecution , it
violates legitimate expectation also. The court also not resolved the mater of whether PMLA
operates retrospectively or prospectively . creating further uncertainty .(15)
Article 20(1) says “ No person shall be convicted of any offence except for violation of law in
force at the time of commission of the Act charged as an offence”(16) but absence of limitation
in PMLA creates the problem- prosecution occur decades after the offence done, whenever legal
provision may have change substantially . this violates the constitutional principle that a person
should when their conduct will lead to an offence. (17)
Principle of fairness
The principle of fairness in criminal proceedings is an essential element of an recognized both
and internationally and under constitutional law .(18) Article 21Of the Indian constitution
guarantees that no person shall be deprived of life or personal liberty except through a procedure
that is 'just, fair and reasonable.'(19). The principle of fairness requires multiple interrelated
elements: presumption of offence, opportunity to present a defense , adequate notice of charges,
opportunity to present a defense , access to evidence and most importantly free from undue
delay. (20)
Among all the essential element pf fairness, the right to a speedy trial holds particular
significance. As supreme court explained in Hussainara Khatoon v. state of Bihar, 1979(21)
that prolonged delay and delay in trial violate the right to life under Article 21 , The judicial
recognition that fairness requires limitation period is in contrast to the unlimited prosecution
period of PMLA .
The absence of limitation period also raises fairness concerns regarding arbitrary prosecution.
Without limitation, authorities can revive ethe old case on current considerations rather than
contemporaneous evidence or public interest . and it lead to misuse of provision by authorities.
(22)
PMLA is also violating the international instrument which India is a signatory that is
International covenant of civil and political rights (ICCPR Article 21 of the constitution of India
solidified with the jurisprudence of fair trial rights enshrined under Article 14 ICCPR should not
be narrowly construed so as to limit the right to equality of arms provided to the accused. The
right to equality before courts and tribunals, which is a facet of Article 21, guarantees equal
access and equality of arms, and ensures that the parties to the proceedings in question are
treated without any discrimination. Furthermore, Article 14(3)(b) ICCPR provides that accused
persons must have adequate time and facilities for the preparation of their defence and to
communicate with their defence counsel. This provision is an important element of the guarantee
of a fair trial and an application of the principle of equality of arms. ( 23)
In recent case Pardeep Nirankar Nath Sharma V. Directorate Enforcement &Anr,2025
( 24)
The Court emphasized that the PMLA was enacted to combat money laundering, which by its
very nature involves transactions spanning over time. Therefore, the PMLA could be applied to
activities that continued after its enactment, even if the predicate offences occurred earlier.
Further, the Court clarified that the relevant date for determining the offence is not the date of the
predicate offence but the date on which the accused engages in activities connected to the
proceeds of crime.(25)
This case is the most recent case but in its critique its still the same arguments against the
PMLA the court did not substantively dealt with legal certainty and fairness principles requires
limitation period even the court explained that the PMLA is a continuing offence. There is a
complete constitutional analysis requires to balance the legitimate goal or object of combating
the money laundering against the fundamental rights of the citizens that is legal certainty and
fairness – the gap that remains incomplete in current jurisprudence should be fixed.
REFERENCES
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