Territorial Jurisdiction of PMLA Special Court Based on Offense Location u/s 3: SC

Case Details: KA Rauf Sherif v. Directorate of Enforcement - [2023] 149 taxmann.com 143 (SC)

Judiciary and Counsel Details

• • V. Ramasubramanian & Pankaj Mithal, JJ.

Facts of the Case

In the instant case, the petitioner filed a transfer petition in the Supreme Court seeking to transfer a criminal case against him from the Court of the Special Judge, PMLA (Prevention of Money Laundering Act), Lucknow to the Court of the Special Judge, PMLA at Ernakulam, Kerala.

The petitioner claimed that he was the General Secretary of Campus Front of India, which has been banned as an unlawful association by the Union of India, Ministry of Home Affairs on 27.09.2021.

The petitioner approached the Apex Court, arguing that the proceedings pending before the Special Court in Lucknow lack jurisdiction, as all the alleged criminal activities by the prosecution took place in Kerala.

The petitioner pointed out that the majority of accused persons and witnesses are residents of Kerala. It was also highlighted that most of the witnesses cited in the prosecution complaint and supplementary complaint are from Kerala or South India.

The petitioner further argued that he was lawfully remanded to custody by a special judge in Ernakulam under Section 167(2) of the Criminal Procedure Code (CrPC), and hence filing the prosecution complaint in Lucknow is impermissible.

On the other hand, the Enforcement Directorate (ED) (hereinafter referred to as the ‘Respondent’) argued that the question of territorial jurisdiction is already settled by the decision in Rana Ayyub v. Directorate of Enforcement through its Assistant Director (2023), and that the petition for transfer, filed after the commencement of examination-in-chief of the first prosecution witness and after the dismissal of the discharge application of one of the co-accused, is an abuse of the process of law.

Supreme Court Held

The Supreme Court considered the decision in Rana Ayyub and stated that the territorial jurisdiction of a special court to take cognizance of a complaint under the Prevention of Money Laundering Act (PMLA) should be decided with reference to the place(s) where any of the activities/processes constituting the offense under Section 3 of the PMLA took place, irrespective of where the First Information Report (FIR) was filed or which court took cognizance of the scheduled offense.

The Court held that the Special PMLA Court in Lucknow has jurisdiction in the instant case, and the argument of the petitioner that he was remanded to custody by a special judge in Ernakulam under Section 167(2) CrPC and, therefore, the special judge in Lucknow lacks jurisdiction, is not legally founded.

The Court also stated that the fact that the majority of accused persons and witnesses are residents of Kerala or South India cannot be a ground for ordering the transfer of investigation. Therefore, the Court concluded that there are no legally valid and justifiable grounds to order the transfer of the complaint.

“Irrespective of where the FIR relating to the scheduled offence was filed and irrespective of which Court took cognizance of the scheduled offence, the question of territorial jurisdiction of a Special Court to take cognizance of a compliant under PMLA should be decided with reference to the place/places where anyone of the activities/processes which constitute the offence under Section 3 took place.

Transfer of PMLA case before a Special Judge to the Court of PMLA Special Judge at another place cannot be sought/ordered on the grounds of (i) lack of jurisdiction of the Special Judge who has taken Cognizance (ii) Most of the accused being residents of the other place; (iii) Most of the witnesses being residents at the other place; (d) The petitioner accused was remanded to Judicial custody u/s 167(2) of Cr.PC by a Court at that other place.”

Court Ruled.