Rana Ayyub vs Directorate of Enforcement through Its Assistant Director

45 – Penal Code, 1860 – ss. 4.3, 406, 418, 420 – Information Technology (Amendment) Act, 2008 – s. 66D – Black Money Act – s. 4 – Foreign Exchange Management Act, 1999 – s. 37 – Income Tax Act, 1961 – ss. 133(6) – Petitioner during the pandemic did the crowdfunding campaign using an online crowdfunding platform “Ketto” – Mumbai Zonal Office of the Enforcement Directorate (ED) initiated inquiry under FEMA – Also, a complaint was lodged by a person (private complainant) in Ghaziabad for the offences u/ss. 403, 406, 418, 420 of IPC, s. 66D of IT Act and s. 4 of the Black Money Act – In the meantime the Mumbai Zonal Office of the ED issued notice to the petitioner seeking response relating to certain documents and the petitioner in response to that complied with the notice – Thereafter, the Delhi Zonal Office of the ED lodged a complaint before the Special Judge at Ghaziabad citing that the complaint filed by the private complainant – After that the provisional order of attachment of the bank account of the petitioner located at Navi Mumbai was passed by the ED – Thereafter, the Special Judge, Ghaziabad took cognizance of the complaint lodged by the ED (the respondent) and summoned the petitioner for appearance – Aggrieved by the order of summoning the petitioner has approached the Supreme Court pleading that the Special Judge Ghaziabad has no territorial jurisdiction over the alleged offence – Held: Acquisition of the proceeds of crime has taken place in the virtual world, the places from where online transfers of money took place, are known only to the petitioner or their Bankers – The question of territorial jurisdiction in the instant case requires an enquiry into a question of fact as to the place where the alleged proceeds of crime were (i) concealed; or (ii) possessed; or (iii) acquired; or (iv) used – This question of fact will depend upon the evidence that unfolds before the Trial Court – 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 – Petitioner given liberty to raise the issue of territorial jurisdiction before the Trial Court. Prevention of Money-Laundering Act, 2002 – s. 44 – Jurisdiction of Special Court to try scheduled offences – Held: A combined reading of Section 44 of the PMLA and the provisions of Sections 177 to 184 of the Cr.P.C. will make it clear that in view of the specific mandate of clauses (a) and (c) of subsection (1) of 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.

Dismissing the Writ Petition, the Court

HELD: 1. What is dealt with by Section 44(1)(a) of Prevention of Money-Laundering Act, 2002 is a situation where there is no complication. Section 44(1)(a) lays down the most fundamental rule relating to territorial jurisdiction, by providing that an offence punishable under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence has been committed. It is relevant to note that Section 44(1)(a) uses the expression “offence” in three places in contradistinction to the expression “scheduled offence” used only once. This usage is not without significance. In all three places where the word “offence” alone is used, it connotes the offence of moneylaundering. The place where the expression “scheduled offence” is used, it connotes the predicate offence. By prescribing that an offence punishable under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which “the offence” has been committed, Section 44(1)(a) makes it crystal clear that it is the Special Court constituted under Section 43(1), which will be empowered to try even the scheduled offence connected to the same. [Para 23][903-A-D]

2. If the Court which has taken cognizance of the scheduled offence is different from the Special Court which has taken cognizance of the offence of money-laundering, then the authority authorised to file a complaint under PMLA should make an application to the Court which has taken cognizance of the scheduled offence. On the application so filed, the Court which has taken cognizance of the scheduled offence, should commit the case relating to the scheduled offence to the Special Court which has taken cognizance of the complaint of money-laundering. Therefore, it is clear that the trial of the scheduled offence should take place in the Special Court which has taken cognizance of 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 moneylaundering and not vice versa. [Paras 24, 25][903-E-H]

3. Since the Act contemplates the trial of the scheduled offence and the trial of the offence of money-laundering to take place only before the Special Court constituted under Section 43(1), a doubt is prone to arise as to whether all the offences are to be tried together. This doubt is sought to be removed by Explanation (i) to Section 44(1). Explanation (i) clarifies that the trial of both sets of offences by the same Court shall not be construed as joint trial. [Para 26][904-A-B]

4. A careful dissection of clauses (a) and (c) of sub-section

(1) of Section 44 shows that they confer primacy upon the Special Court constituted under Section 43(1) of the PMLA. These two clauses contain two Rules, namely, (i) that the offence punishable under the PMLA as well as a scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence of money-laundering has been committed; and (ii) that if cognizance has been taken by one Court, in respect of the scheduled offence and cognizance has been taken in respect of the offence of money-laundering by the Special Court, the Court trying the scheduled offence shall commit it to the Special Court trying the offence of money-laundering. [Para 27][904-C-D]

5. The whole picture is thus complete with a combined reading of Section 44 of the PMLA and the provisions of Sections

177 to 184 of the Cr.P.C. Once this combined scheme is understood, it will be clear that in view of the specific mandate of clauses (a) and (c) of subsection (1) of 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 moneylaundering. [Paras 35 and 36][908-E-G]

6. The involvement of a person in any one or more of certain processes or activities connected with the proceeds of crime, constitutes the offence of money-laundering. These processes or activities include, (i) concealment; (ii) possession; (iii) acquisition; (iv) use; (v) projecting as untainted property; or (vi) claiming as untainted property. In other words, a person may (i) acquire proceeds of crime in one place, (ii) keep the same in his possession in another place, (iii) conceal the same in a third place, and (iv) 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. [Paras 38, 39][909-A-C]

7. The question of territorial jurisdiction in this case requires an enquiry into a question of fact as to the place where the alleged proceeds of crime were (i) concealed; or (ii) possessed; or (iii) acquired; or (iv) used. This question of fact will actually depend upon the evidence that unfolds before the Trial Court. [Para 45][910-D]

Kaushik Chatterjee v. State of Haryana & Ors. (2020)

(10) SCC 92 – relied on.

Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. 2022 SCC Online SC 929 – referred to.