Offences Triable by Special Courts under PMLA: SCs Recent Judgement

Shubhangi Jain

28 May, 2024

The Apex Court recently pronounced a judgement in the case titled Rana Ayyub vs. Directorate of Enforcement through its Assistant Director” dated 07.02.23  wherein the petitioner had challenged a summoning order issued by the Court of the Special Judge, Anti Corruption, CBI Court No.1, Ghaziabad,   (Special Court)  based on a complaint lodged by the respondent u/s 45 r/w Section 44 of the PMLA, which was regarding the offences triable by Special Courts under PMLA, the provisions of which is provided in Section 44 of the PMLA, The present article shall discuss the aspects covered in the case which majorly focuses on the Offences Triable by Special Courts under PMLA to provide clarity on the same.

Facts of the Case

• During the pandemic, the petitioner had initiated a crowd-funding campaign through an online crowd-funding platform named “Ketto” running 3 campaigns from April 2020 to September 2021, due to which there was the initiation of the enquiry against the petitioner under FEMA 1999 by the Mumbai Zonal Office of the ED vide an Office Order dated 3.8.2021.
• After that, a complaint was lodged on 7.9.2021 by one Vikas Sankritayan,  who claimed of being the founder of Hindu IT Cell, in the FIR  No.2049/2021 with  PS – Indirapuram, Ghaziabad, for alleged offences u/s  403, 406, 418 and 420 IPC r/w Section 66D of the IT (Amendment) Act, 2008 and Section 4 of the Black Money Act.
• Meanwhile, there was the receipt of an order under Section 37 of the FEMA r/w  Section 133(6) of the ITA, 1961^[1], from the Mumbai Zonal Office of the ED  for furnishing certain documents, in addition to the documents submitted by the petitioner responding to the previous Office Order dated 3.8.2021 issued by the same Office.
• Upon the submission of the detailed response by the petitioner to the Mumbai Zonal Office of the ED, the registration of the complaint was done by the  Delhi Zone-II Office of the ED on 11.11.2021, in the Court of the Special Judge at Ghaziabad,  the complaint stated that the  ED’s complaint was based on the  FIR registered on 7th September 2021 on the file of the Indirapuram Police Station, Ghaziabad.
• Subsequent to the registration of the aforesaid complaint by the ED, the petitioner was summoned to the Delhi Zone-II Office, followed by her statement being recorded u/s 50 of the PMLA  on 15.12.2021.
• Thereafter, on 4.2.2022, a provisional order was passed by the ED for the attachment of the petitioner’s bank account in HDFC Bank, Koperkhairane Branch, Navi Mumbai, Maharashtra. Pursuant to the order of provisional attachment, there was the issuance of a show cause notice dated 8.3.2022 by the Adjudicating Authority.
•  There had been the issuance of a  Look Out Circular against the petitioner, but it was set aside by the Delhi HC  in a WP filed by the petitioner. In a 2^nd  W. P  filed by the petitioner, the Delhi HC restrained the ED from taking further steps u/s 8 of the PMLA on the ground of the end of the provisional attachment order’s validity on 4.8.2022.
• Thereafter, Special Court passed a judgement dated 29th November 2022, taking cognizance of the respondent’s complaint and summoned the petitioner for an appearance on 13.12.2022. Upon the intimation of the said Summoning Order, the petitioner filed the present writ petition
• It was claimed by the petitioner in paragraph 5(v) of the writ petition that “she hadn’t received the summons and that the petitioner had annexed a screenshot of the e-court website reflecting the case details. However, a printout of the copy of the Summoning Order was filed along with the writ petition.

Issues

• Whether the trial of the offence of money laundering should follow the trial of the scheduled/predicate offence or vice versa;
• Whether the Special Court can be considered to have exercised extra-territorial jurisdiction, despite the offence alleged not being committed within the jurisdiction of the said Court.

Contentions of the Petitioner

• The Learned Counsel for the petitioner cleared the fact at the starting of the proceedings that the impugned Summoning Order was challenged to the extent of the question of territorial jurisdiction alone, and the order wasn’t being challenged on any ground other than the lack of territorial jurisdiction.
• Briefly, the counsel for the petitioner contended that such Offences Triable by Special Courts constituted under PMLA section 44(1), depending upon the area regarding the commission of the offence despite the provisions contained in the Cr.Pc.
• Apart from the non-obstante clause at the beginning of Section 44(1), Section 71 of the Act also provides for an overriding effect to PMLA. Therefore, the first contention of the petitioner’s learned Counsel for the petitioner was that the Special Court in Maharashtra could have taken cognizance of the complaint alone.
• The petitioner’s counsel placed heavy reliance on the Court’s point of view in paragraphs 353 to 358 of the judgement in Vijay Madanlal Choudhary & Ors. Vs Union of India & Ors wherein it was held that the trial of the offence of money laundering should take place before the Special Court constituted for the area of the commission of the crime of money laundering and if the scheduled offence is triable by the Special Court under a special enactment somewhere else, both the trials must proceed independently, instead of the area of the commission of the crime of money laundering.
• Based on these facts, the petitioner’s counsel contended that neither any part of the alleged offence of money laundering was committed within the  Special Court of Ghaziabad’s jurisdiction nor the bank account of the petitioner where the alleged proceeds of crime were so deposited falls in the jurisdiction of such court as the same was deposited in the bank located in Navi Mumbai, Maharashtra. Even the initiation of proceedings for the provisional attachment of the bank account was made in New Delhi.
• Therefore, the petitioner’s counsel contended that the complaint being lodged at Ghaziabad was an abuse of the court’s process and the same was done at the instance of the Hindu IT Cell’s founder, is completely vitiated.
• It was also contended that the complaint of the respondent should have been returned by the Special Court, pursuant to Sec- 201 of the CrPc and that the order taking cognizance is also vitiated by non-application of mind.

Contentions of the Respondent

• Responding to the petitioner’s contention, the learned Solicitor General contended that as per the scheme of the Act, the complaint of money laundering should follow the complaint regarding the scheduled offence.
• Since the complaint for the scheduled offence was registered on 7^th September 2021 in Indirapuram Police Station, Ghaziabad, it was necessary for the respondent to lodge the ECIR on 11^th November 2021, on the file of the exact same court, within whose jurisdiction the scheduled offence had became triable.
• Additionally, the learned Solicitor General contended that the petitioner was alleged for the receipt money by way of an online crowdfunding platform, and several victims who had made the contribution of money were within the territorial jurisdiction of the Special Court Simply put, the counsel for the responded submitted that a part of the COA actually arose within the jurisdiction of the Special Court, Ghaziabad.

Judgement

While dealing with the first issue, the Apex Court analysed Section 43, which provides for the provision of the constitution of courts for hearing cases under PMLA and Section 44, dealing with the provision of territorial jurisdiction of the courts constituted under Section 43 of the PMLA and their power of taking cognizance of offences under the PMLA. The Apex Court discussed two broad distinctions in that Section 44 contemplated cases.

• Where the commission of the  scheduled offence and the PMLA offence was within the territorial jurisdiction of the same court, and
• Where the commission of the scheduled offence and the PMLA offence was within the jurisdiction of different courts. 

Section 44, i.e. Offences Triable by Special Courts under PMLA, used the terms “offence” and “scheduled offence” with very clear intent so as to avoid them from being used interchangeably.

On the basis of the reading of Sec – 44, the  Apex Court observed that the “scheduled offence” would be required to follow the “offence” of money laundering, and therefore,  as far as the territorial jurisdiction is concerned, the court taking the cognizance of the PMLA offence must be the court taking cognizance of the scheduled offence, and not vice versa.

The Apex Court further observed the general provisions of the CrPC, 1973  would be applicable to the proceedings under the PMLA, except in cases wherein they were specifically excluded, such as in Section 44 of the PMLA. The CrPC, which would otherwise ascertain the territorial jurisdiction of criminal courts, would have to yield to the provisions of the PMLA.

 With regard to the 2^nd issue, the Apex Court discussed the 6 circumstances wherein the criminal court could exercise territorial jurisdiction

• Place of commission of the offence,
• A place where the offence’s consequences are felt
•  Location of the accused
•  Location of the victim
•  Location of the property  with regard to the subject matter of the offense
• The location of the property forming part of the property was required to be returned.

The Apex Court compared this with the circumstances u/s 3 of the PMLA that held money laundering occurred in

• concealment
• possession,
• acquisition,
• use
• Projection as untainted or
• claimed as untainted, proceeds of crime.

The Apex Court held that the mere existence of a bank account at Navi Mumbai wouldn’t alone suffice for ascertaining the commission of the offence under PMLA since the other actions discussed above could have been held at any other place, including within the jurisdiction of the Special Court.

The Apex Court was particularly persuaded by the fact that the petitioner was running the crowd-funding campaigns through an online platform, and the issues of possession, acquisition and use should be matters to be ascertained by the Special Court consequential to the same and couldn’t be decided summarily in proceedings before it, considering there were factual issues regarding the location of the commission of the offence under the PMLA.

 Consequently, the Apex Court dismissed the petition along with directing the petitioner to raise these contentions before the Special Judge.

Conclusion

 This judgement clearly explains the issue of Offences Triable by Special Courts under PMLA  along with broadly explaining the scope of commencement of a proceeding under the PMLA, thereby opening up the possibilities of a case being filed in a place even prior to the determination of the offence being committed in that location.

Also Read:
Provisions of Bail under PMLA
PML Act 2002: Special Courts, Role of Police, Duty of other Departments