Area where property was derived, obtained, held, or concealed is also considered where money-laundering occurred - SC

Supreme court held in the recent judgement (RANA AYUB VS DIRECTORATE OF ENFORCEMENT THROUGH ASSISTANT DIRECTOR D.D 07/02/2023) that area in which the property is derived, obtained, held, or concealed will also be considered the area where the offence of money-laundering was committed.

The petitioner initiated a crowdfunding campaign through an online platform during the pandemic and ran three campaigns from April 2020 to September 2021. The Mumbai Zonal Office of the Enforcement Directorate initiated an inquiry against the petitioner under the Foreign Exchange Management Act, 1999. A complaint was then lodged with the Indirapuram Police Station for alleged offenses under various sections of the Information Technology (Amendment) Act, 2008, the Black Money Act, and the Indian Penal Code. After the petitioner submitted a response to the Mumbai Zonal Office, a complaint was registered with the Delhi Zone-II Office of the Directorate of Enforcement. The petitioner was summoned to the Delhi Zone-II Office and her statement was recorded. A provisional order of attachment of the petitioner's bank account was passed by the Directorate of Enforcement. The High Court of Delhi issued a writ petition against the issuance of a Look Out Circular against the petitioner and later restrained the Directorate of Enforcement from taking further steps. The Court of the Special Judge, Anti-Corruption, CBI Court No. 1, Ghaziabad took cognizance of the complaint and summoned the petitioner for appearance on December 13, 2022. The petitioner has come up with a writ petition claiming that no summons have been received by her. However, a printout of the copy of the Summoning Order is filed along with the writ petition.

The summoning order was challenged on the ground lack of territorial jurisdiction only. The petitioner argues that no part of the alleged money-laundering offense occurred within the jurisdiction of the Special Court in Ghaziabad and that the bank account in question is located in Navi Mumbai, leading to abuse of the court process.

The Solicitor General argues that the complaint for money-laundering should follow the complaint for the scheduled offense, which was registered in Ghaziabad. A part of the cause of the action also occurred within the jurisdiction of the Ghaziabad court.

The two questions for consideration are: (i) whether the trial of money-laundering should precede or follow the trial of the scheduled/predicate offense, and (ii) whether the Ghaziabad court can exercise extra-territorial jurisdiction.

Supreme Court observed that the jurisdiction to try a scheduled offence in view of clauses (a) and (c) of subsection (1) of Section 44 of the Prevention of Money-Laundering Act (PMLA) lies with the Special Court constituted under the PMLA. The offence of money-laundering is triable only by the Special Court in the area in which the offence was committed. The six processes or activities defined under Section 3 of the PMLA that constitutes the offence of money-laundering are: concealment, possession, acquisition, use, projecting as untainted property, or claiming as untainted property. The area where each of these processes or activities takes place will be considered the area where the offence of money-laundering was committed.

The Supreme Court further observed that the area in which the property is derived, obtained, held, or concealed will also be considered the area where the offence of money-laundering was committed.

Supreme Court dismissed the petition and held that the contention that the offence of money-laundering was committed in Maharashtra, based on the attachment of the petitioner's bank account in Navi Mumbai, overlooks the other five processes or activities defined under Section 3 of the PMLA .The bank account in Navi Mumbai is where the proceeds of crime were taken possession of, but it is unknown where the other five processes or activities took place. The question of territorial jurisdiction in the case requires an inquiry into the facts of where the alleged proceeds of crime were concealed, possessed, acquired, or used. The determination of territorial jurisdiction will depend on the evidence presented in the Trial Court.

Petition Dismissed.

RANA AYYUB VS DIRECTORATE OF ENFORCEMENT

THROUGH ITS ASSISTANT DIRECTOR