Jurisdiction of PMLA Court To Try Money Laundering Offence Not Limited to Place Where Proceeds Of Crime Come Into Possession Of Accused : Supreme Court

Before the apex court, on the limited question of territorial jurisdiction, Advocate Vrinda Grover, appearing for the embattled journalist, argued that an offence punishable under the Prevention of Money Laundering Act would be triable only by the special court constituted for the area in which the offence has allegedly been committed, notwithstanding anything contained in the Code of Criminal Procedure, 1973. Not only did Sub-section (1) of Section 44 of PMLA begin with a non-obstante clause, Section 71 explicitly gave an overriding effect to the Act. Thus, it was contended by the senior counsel that only a special court in Maharashtra could have taken cognizance of the federal agency’s complaint since the bank accounts of the petitioner-accused was in Navi Mumbai. Grover placed heavy reliance on Vijay Madanlal Choudhary v. Union of India, 2022 LiveLaw (SC) 693, in which the top court had held that the trial of the offence of money-laundering would proceed before the regional special court and, in the event that the scheduled offence is triable by a special court under a special enactment elsewhere, both the trials need to proceed independently, but in the area where the offence of money-laundering has allegedly been committed.

In response, Solicitor-General for India, Tushar Mehta, argued that a complaint of money-laundering should follow the complaint in respect of the scheduled offence. Therefore, since in the present case, the complaint in respect of the scheduled offence was registered at the Indirapuram Police Station, Ghaziabad, the Enforcement Case Information Report had to be lodged in a court, within whose jurisdiction the scheduled offence had become triable. In addition, Mehta argued, Ayyub received donations through an online crowdfunding platform from Ghaziabad and Uttar Pradesh as well, which meant that a part of the cause of action arose there.

Disputing the contention that the territorial jurisdiction would be determined by the location where the proceeds of crime have been deposited, the court held that the places where the accused concealed, came into possession, acquired, or used the proceeds of crime, and where they projected or claimed the proceeds as untainted property, would all be areas in which the offence of money-laundering has taken place.

Thus, the apex court held:

“In other words, a person may first, acquire proceeds of crime in one place, second, keep the same in his possession in another place, third, conceal the same in a third place, and fourth, use the same in a fourth place. The area in which each one of these places is located, will be the area in which the offence of money laundering has been committed. To put it differently, the area in which the place of acquisition of the proceeds of crime is located or the place of keeping it in possession is located or the place in which it is concealed is located or the place in which it is used is located, will be the area in which the offence has been committed. In addition, the definition of the words ‘proceeds of crime’ focuses on ‘deriving or obtaining a property’ as a result of criminal activity relating to a scheduled offence. Therefore, the area in which the property is derived or obtained or even held or concealed will be the area in which the offence of money laundering is committed.”

Further, Clauses (a) and (c) of Sub-section (1) of Section 44 conferred a special PMLA court with the power to try even the scheduled offence. Even if another court has taken cognizance of the scheduled offence, on an application by the concerned authority, the court would ‘commit’ the same to the special court trying the offence of money-laundering. “In other words, the trial of the scheduled offence, insofar as the question of territorial jurisdiction is concerned, should follow the trial of the offence of money-laundering and not vice versa,” Justice Ramasubramanian clarified.

Therefore, applying the legal principles to the facts of the present case, the court held that Navi Mumbai was the place where only one of the six activities and processes delineated in Section 3 had allegedly taken place, i.e., taking possession of the proceeds of the crime. On the other hand, the alleged acquisition of the proceeds of crime took place virtually with thousands of people from different parts of the world transferring money online, the court noted. Justice Ramasubramanian accepted that they were, from the pleadings on record, not able to “make out the number of persons who provided funds, and the places where the donors were located”. “If acquisition has taken place in the real physical world, the difficulty with respect to the question of jurisdiction would have been lesser. Since acquisition has taken place in the virtual world, the places from where online transfers of money took place, are known only to the petitioner or perhaps their bankers,” the judge wrote. The question of territorial jurisdiction would, hence, require an enquiry into a question of fact as to the place where the alleged proceeds of crime were concealed, possessed, acquired, or used and this question of fact could only be determined by the appreciation of evidence by a trial court, the top court observed. Therefore, dismissing the petition, the court held:

“Therefore, we are of the view that the issue of territorial jurisdiction cannot be decided in a writ petition, especially when there is a serious factual dispute about the place/places of commission of the offence. This question should be raised by the petitioner before the special court, since an answer to the same would depend upon evidence as to the places where any one or more of the processes or activities mentioned in Section 3 were carried out. Therefore, giving liberty to the petitioner to raise the issue of territorial jurisdiction before the Trial Court, this writ petition is dismissed. There will be no order as to costs.”

Case Title

Rana Ayyub v. Directorate of Enforcement | Writ Petition (Criminal) No. 12 of 2023

Citation : 2023 LiveLaw (SC) 86

For Petitioner(s) Ms. Vrinda Grover, Adv. Mr. Soutik Banerjee, Adv. Mr. Aakarsh Kamra, AOR Ms. Devika Tulsiani, Adv. Ms. Mannat Tipnis, Adv.

For Respondent(s) Mr. Tushar Mehta, Solicitor General Mr. Mukesh Kumar Maroria, AOR Mr. Zoheb Hussain, Adv. Mr. Kanu Agarwal, Adv. Mr. K. Parmeshwar, Adv. Mr. Padmesh Mishra, Adv.

Headnotes

Territorial Jurisdiction of Special PMLA Court – Prevention of Money Laundering Act (Act 15 of 2003) – Sections 3 and 44 – Place of commission of the offence of money-laundering – The involvement of a person in any one or more of certain processes or activities connected with the proceeds of crime, namely, concealment, possession, acquisition, use, projecting as untainted property, or claiming as untainted property, constitutes the offence of money-laundering – All the places where any one or more of these processes or activities take place are the places where the offence of money-laundering has been committed – Triable by the special court(s) constituted for the area(s) in which the offence of money-laundering has been committed – Held, the petition could not be entertained since the issue of territorial jurisdiction could not be decided in a writ petition, especially in the presence of a serious factual dispute about the place or places of commission of the offence – Petition dismissed - Paras 38 to 40

Prevention of Money-laundering Act, 2002 ; Section 44 - It is the Special Court constituted under the PMLA that would have jurisdiction to try even the scheduled offence. Even if the scheduled offence is taken cognizance of by any other Court, that Court shall commit the same, on an application by the concerned authority, to the Special Court which has taken cognizance of the offence of money-laundering. (Para 36)

Code of Criminal Procedure, 1973 - Prevention of Money-laundering Act, 2002 ; Section 46(1), 65,71 - The provisions of the Cr.P.C. are applicable to all proceedings under the Act including proceedings before the Special Court, except to the extent they are specifically excluded. Hence, Section 71 of the PMLA providing an overriding effect, has to be construed in tune with Section 46(1) and Section 65. (Para 28-29)

Prevention of Money-laundering Act, 2002 ; Section 3 -The area in which the property is derived or obtained or even held or concealed, will be the area in which the offence of moneylaundering is committed. (Para 39-40)

Constitution of India, 1950 ; Article 32, 226 - Prevention of Money-laundering Act, 2002 ; Section 3 - The issue of territorial jurisdiction cannot be decided in a writ petition, especially when there is a serious factual dispute about the place/places of commission of the offence - This question should be raised by the petitioner before the Special Court, since an answer to the same would depend upon evidence as to the places where any one or more of the processes or activities mentioned in Section 3 were carried out. (Para 46)

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