BNS Offences as PMLA Predicate Offences: Bombay High Court Applies Section 8 of the General Clauses Act

The replacement of the Indian Penal Code, 1860 by the Bharatiya Nyaya Sanhita, 2023 created an immediate interpretive question for special statutes that still referred to IPC provisions. Could the Enforcement Directorate invoke the Prevention of Money-Laundering Act, 2002 where the scheduled offence was registered under the corresponding provisions of the BNS, although the PMLA Schedule had not yet been textually amended?

In Nagani Akram Mohammad Shafi v. Union of India, Bail Application No. 728 of 2025, 2025:BHC-AS:27479, decided on 8 July 2025, the Bombay High Court answered that question in the affirmative. Justice Amit Borkar held that a BNS offence corresponding in substance to an IPC offence listed in the PMLA Schedule can operate as a scheduled offence. The Court based that conclusion on Section 8(1) of the General Clauses Act, 1897 and treated the Schedule as legislation by reference rather than legislation by incorporation.

The decision is also important for what it did not accept. Although a Central Government communication dated 16 July 2024 had sought to clarify the substitution of old-code references, the High Court held that Section 8 is an interpretive rule and not a source of executive law-making power. The result therefore rested on judicial construction of the statutes, not on the executive communication.

Factual and procedural background

The Enforcement Directorate's case arose from FIR No. 295 of 2024, registered on 7 November 2024 for alleged offences under Sections 318(4), 338 and 340(2) of the BNS. According to the prosecution account recorded in paragraphs 2 and 3 of the judgment, more than Rs. 100 crore was allegedly deposited into fourteen newly opened accounts at Nashik Merchant Co-operative Bank, Malegaon, and routed through transactions said to conceal its illicit origin.

The ED registered ECIR/MBZO-II/20/2024 on 11 November 2024 and arrested the applicant on 20 November 2024. The Special Court rejected his bail application on 6 February 2025. Before the High Court, the applicant confined the challenge to a legal contention: because the PMLA Schedule expressly referred to IPC provisions and had not been amended to insert the BNS provisions, the ED allegedly lacked jurisdiction to treat the BNS offences as scheduled offences. No argument on the evidentiary merits of the laundering allegation was advanced.

The statutory problem

Section 2(1)(u) of the PMLA defines proceeds of crime by reference to criminal activity relating to a scheduled offence. Section 2(1)(y) explains what constitutes a scheduled offence, while the Schedule identifies the predicate offences. The continued existence of a qualifying scheduled offence is therefore foundational to a PMLA prosecution.

The FIR invoked the following BNS provisions:

Section 318(4) BNS concerns cheating accompanied by dishonest inducement to deliver property or to make, alter or destroy a valuable security. It corresponds substantially to Section 420 IPC.

Section 338 BNS concerns forgery of a valuable security, will, authority to adopt, or specified financial and legal documents. It corresponds substantially to Section 467 IPC.

Section 340(2) BNS punishes fraudulent or dishonest use as genuine of a forged document or electronic record, with the punishment applicable to the forgery of that document or record. It corresponds substantially to Section 471 IPC, while the BNS text expressly includes an electronic record.

These are correspondences in the legal field addressed by the provisions; they should not be treated as permission to replace old and new section numbers mechanically in every case. The date of the alleged conduct, the ingredients actually invoked, and the repeal-and-savings provisions remain material.

Section 8 of the General Clauses Act

Section 8(1) of the General Clauses Act provides that where a Central Act refers to another Central Act which is repealed and re-enacted, the reference is ordinarily construed as a reference to the provision so re-enacted, unless a different intention appears.

At paragraphs 19 to 20, the Bombay High Court treated this rule as the starting point. It found no contrary intention in the PMLA and observed that the Schedule identifies IPC offences without reproducing their operative text. The Court then examined the distinction between legislation by reference and legislation by incorporation.

Where one enactment merely refers to another, the reference ordinarily remains capable of following the referred law after repeal and re-enactment. Where the later enactment bodily incorporates provisions of the earlier law, the incorporated text is generally treated as fixed, subject to recognised exceptions. The High Court concluded at paragraphs 32 to 38 that the PMLA Schedule falls on the reference side of that distinction: it points to categories of offences defined elsewhere instead of reproducing and freezing their statutory text.

The independently examined precedents

The High Court's analysis engaged several Supreme Court authorities. Each serves a different and limited function.

In Collector of Customs, Madras v. Nathella Sampathu Chetty, (1962) 3 SCR 786, the Supreme Court considered the legal effect of importing provisions of one enactment into another. The judgment explains that incorporated provisions are treated as if enacted in the later statute. That principle supplied part of the doctrinal background for distinguishing incorporation from a mere statutory reference.

In Mahindra & Mahindra Ltd. v. Union of India, (1979) 2 SCC 529, decided on 24 January 1979, the Supreme Court directly distinguished a mere reference or citation from incorporation. The relevant discussion explains that Section 8(1) applies to a mere reference following repeal and re-enactment, whereas a bodily incorporated provision ordinarily remains unaffected by subsequent change. In that case, the Court held that the reference in Section 55 of the Monopolies and Restrictive Trade Practices Act, 1969 to the grounds in the then-existing Section 100 CPC operated as incorporation. The Bombay High Court applied the doctrine but reached the opposite classification for the structure of the PMLA Schedule.

In Insolvency and Bankruptcy Board of India v. Satyanarayan Bankatlal Malu, 2024 INSC 319, decided on 19 April 2024, the Supreme Court revisited both doctrines. Paragraphs 87 onward explain that a general reference will ordinarily permit later changes in the referred enactment to operate, while a specific incorporation normally carries only the incorporated provision, subject to recognised exceptions. The authority reinforces that classification depends on statutory language, context and legislative purpose rather than on a label alone.

In Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929, the Supreme Court examined the PMLA's architecture at length. Paragraphs 31 to 33 of the judgment explain that property becomes proceeds of crime only when it is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence. The authorities cannot proceed on a bare assumption that a scheduled offence exists. The Bombay High Court used this dependence to frame the consequence of accepting the applicant's argument: post-1 July 2024 conduct under re-enacted BNS provisions would fall outside the PMLA despite involving substantially continued scheduled criminality.

In K.P. Varghese v. Income Tax Officer, Ernakulam, (1981) 4 SCC 173, decided on 4 September 1981, the Supreme Court rejected an interpretation of a tax provision that produced manifestly unreasonable and absurd consequences when a rational construction was available. The Bombay High Court relied on that interpretive principle at paragraphs 56 to 58. It considered a construction that would disable the PMLA merely because the penal code's name and section numbers had changed to be contrary to the Act's workable operation.

Rai Sahib Ram Jawaya Kapur v. State of Punjab, (1955) 2 SCR 225, decided on 12 April 1955, concerned the constitutional reach and limits of executive power. The Supreme Court explained that the Constitution differentiates legislative, executive and judicial functions and does not permit one organ to assume a function essentially belonging to another. That authority became relevant to the Bombay High Court's separate treatment of the Central Government communication.

The High Court's holding on the PMLA Schedule

The principal holding appears in paragraphs 42 to 44 and 46 to 51. References in the PMLA Schedule to IPC offences are to be read as references to corresponding BNS offences where the substance and field of the offence continue after repeal and re-enactment. The Court specifically accepted Section 318(4) BNS in place of Section 420 IPC for the cheating offence at issue and treated Sections 338 and 340(2) BNS as substantially corresponding to Sections 467 and 471 IPC.

The Court did not declare that every BNS offence automatically enters the PMLA Schedule. Its reasoning depends on correspondence with an offence already scheduled under the IPC and on the absence of a different statutory intention. A newly created BNS offence without a scheduled IPC counterpart, or a provision whose ingredients have materially changed, would require a separate analysis. That limitation is essential when applying the decision beyond its facts.

Why the executive communication did not control

At paragraphs 59 to 69, the High Court separately considered the Central Government communication dated 16 July 2024. It held that Section 8 of the General Clauses Act supplies a rule for courts and statutory authorities to interpret references after repeal and re-enactment; it does not delegate power to the executive to amend legislation.

The Court further held that Articles 73 and 77 of the Constitution did not cure the problem. The communication had not been shown to be issued and authenticated in the constitutionally required manner, and an executive opinion could not acquire the force of legislation merely by being styled as a notification. The communication therefore did not qualify as law under Article 13(3)(a). This conclusion did not defeat the ED's case because the statutory result followed independently from Section 8 as applied by the Court.

Outcome of the bail application

At paragraphs 70 to 72, the High Court held that corresponding BNS offences could be regarded as scheduled offences for PMLA purposes even without a textual amendment to the Schedule. It rejected the jurisdictional objection and dismissed the bail application. Because the applicant had not advanced submissions on the factual merits, the judgment did not decide whether the prosecution evidence independently satisfied the twin conditions for bail under Section 45 PMLA.

The Supreme Court position

The applicant challenged the decision in Nagani Akram Mohammad Shafi v. Union of India, SLP (Crl.) No. 13982 of 2025. On 22 September 2025, the Supreme Court declined interference. Importantly, its short order recorded that the petition was confined to the question of law decided by the High Court and stated that the Court was in agreement with that determination. It nevertheless permitted the applicant to seek bail afresh before the trial court on the merits.

The order therefore preserves an important distinction. The legal conclusion concerning corresponding BNS offences and the PMLA Schedule was left standing with express agreement, while the applicant's entitlement to bail on facts remained open for independent adjudication.

Practical implications

For the Enforcement Directorate, the ruling supports the registration and continuation of PMLA proceedings where the post-1 July 2024 predicate case invokes a BNS provision that substantially re-enacts an IPC offence already listed in the PMLA Schedule.

For the defence, the decision does not eliminate scrutiny of correspondence. Counsel should compare the ingredients, explanations, punishment structure and factual allegations under the particular IPC and BNS provisions. Section 8 itself preserves the inquiry whether a different intention appears. A broad assertion that every new-code offence is automatically scheduled would go beyond the ruling.

For trial courts, the judgment separates jurisdiction from bail merits. Establishing a legally cognisable scheduled offence answers only the threshold objection. The prosecution must still connect property to criminal activity relating to that offence, establish the alleged process or activity under Section 3 PMLA, and meet the applicable procedural requirements. Bail must be considered under the governing statutory and constitutional standards on the material in the individual case.

Conclusion

Nagani Akram Mohammad Shafi addresses a genuine transitional gap without treating an executive communication as a substitute for legislation. Its central proposition is narrower than a blanket judicial amendment of the PMLA Schedule: where the BNS has re-enacted the substance of an IPC offence already identified by the PMLA, Section 8(1) of the General Clauses Act carries the statutory reference forward unless a different intention appears.

The decision preserves continuity, but it also demands provision-by-provision analysis. The correct inquiry is not simply whether an IPC number has acquired a new BNS number. It is whether the new provision re-enacts the relevant field and ingredients of the scheduled offence, whether the transition rules permit its application, and whether the prosecution can prove the distinct statutory elements of money laundering.

Sources

Nagani Akram Mohammad Shafi v. Union of India, Bail Application No. 728 of 2025, 2025:BHC-AS:27479, Bombay High Court, decided 8 July 2025: https://bombayhighcourt.nic.in/generatenewauth.php?bhcpar=cGF0aD0uL3dyaXRlcmVhZGRhdGEvZGF0YS9qdWRnZW1lbnRzLzIwMjUvJmZuYW1lPTIzMzEwMDAwNzI4MjAyNV85LnBkZiZzbWZsYWc9TiZyanVkZGF0ZT0mdXBsb2FkZHQ9MDgvMDcvMjAyNSZzcGFzc3BocmFzZT0wODA3MjUxNjMyNTEmbmNpdGF0aW9uPTIwMjU6QkhDLUFTOjI3NDc5JnNtY2l0YXRpb249JmRpZ2NlcnRmbGc9WSZpbnRlcmZhY2U9Tw%3D%3D

Nagani Akram Mohammad Shafi v. Union of India, SLP (Crl.) No. 13982 of 2025, Supreme Court order dated 22 September 2025, reproduced in Jasir Bilal Wani @ Danish v. National Investigation Agency, CRL.A. 444 of 2026, Delhi High Court, paragraphs 61 to 62.

Mahindra & Mahindra Ltd. v. Union of India, (1979) 2 SCC 529.

Collector of Customs, Madras v. Nathella Sampathu Chetty, (1962) 3 SCR 786: https://api.sci.gov.in/jonew/judis/1540.pdf

Insolvency and Bankruptcy Board of India v. Satyanarayan Bankatlal Malu, 2024 INSC 319: https://api.sci.gov.in/supremecourt/2022/7992/7992_2022_3_1501_52325_Judgement_19-Apr-2024.pdf

Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929: https://api.sci.gov.in/supremecourt/2014/19062/19062_2014_3_1501_36844_Judgement_27-Jul-2022.pdf

K.P. Varghese v. Income Tax Officer, Ernakulam, (1981) 4 SCC 173.

Rai Sahib Ram Jawaya Kapur v. State of Punjab, (1955) 2 SCR 225.

The Prevention of Money-Laundering Act, 2002: https://www.indiacode.nic.in/indiacode/handle/123456789/2036?view_type=browse

The Bharatiya Nyaya Sanhita, 2023: https://www.indiacode.nic.in/bitstream/123456789/20062/1/a2023-45.pdf

The General Clauses Act, 1897: https://www.indiacode.nic.in/bitstream/123456789/2328/1/A1897-10.pdf

This article is for general information and does not constitute legal advice. The application of the law depends on the facts, procedural history and governing provisions of each case.

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