Supreme Court dismisses transfer petition, upholds jurisdiction of PMLA court in money laundering case

On Monday, the Supreme Court made an observation that the lack of jurisdiction of a Court to entertain a complaint under the Prevention of Money Laundering Act 2002 (PMLA) cannot be a basis for ordering the transfer of the case to another State [KA Rauf Sherif v. Directorate of Enforcement (ED) and Others]. The Court dismissed a transfer petition moved by the General Secretary of Campus Front of India (CFI), which is now banned as an unlawful association, seeking transfer of a case of money laundering from the special PMLA court in Lucknow to the special PMLA court at Ernakulam in Kerala.

The petitioner contended that the proceedings pending before the Special Court in Lucknow are without jurisdiction, as all the alleged criminal activities took place in Kerala. Additionally, it was argued that the petitioner was lawfully remanded to custody by the special judge, Ernakulam, and hence the filing of the prosecution complaint at Lucknow is impermissible. However, the ED 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.

The Supreme Court considered the decision in Rana Ayyub and stated that regardless of where the First Information Report (FIR) relating to the scheduled offence was filed and regardless 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 any of the activities/processes which constitute the offence under Section 3 PMLA took place. Therefore, the Court held that it would be incorrect to say that the Special PMLA Court at Lucknow lacks jurisdiction in the instant case.

On the aspect of the majority of accused persons and witnesses being residents of Kerala or south India, the Court said that this can hardly be a ground for ordering the transfer of investigation. In this regard, the Court highlighted the timeline of events, where the petitioner was arrested in Kerala and was produced before the Magistrate in Kerala, who remanded him to judicial custody. Thereafter, the National Investigation Agency (NIA) moved an application under Section 167 CrPC before the Principal Sessions Judge, Ernakulam for the grant of ED custody. 

While emphasizing that an order under Section 167(2) CrPC had to be passed necessarily by the Magistrate to whom an accused person is forwarded, the Court was of the view that there is no legally valid and justifiable grounds to order transfer of complaint. The Special Court, PMLA, Lucknow cannot be said to be lacking in territorial jurisdiction to entertain the complaint. In any case, the lack of jurisdiction of a Court to entertain a complaint can be no ground to order its transfer. A congenital defect of lack of jurisdiction, assuming that it exists, inures to the benefit of the accused and hence it need not be cured at the instance of the accused to his detriment.

Case: KA Rauf Sherif v Directorate of Enforcement (ED) & Ors.

Counsel for Petitioner: Sr. Adv. S Nagamuthu

Counsel for Opposite Party: ASG KM Nataraj

Order Date: 10.04.2023 

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