Money Laundering Case: SC Dismisses Rana Ayyub's Plea, Holds Issue Of Territorial Jurisdiction Cannot Be Decided In Writ Petition [Read Judgment]

The Supreme Court yesterday while dismissing the plea of Rana Ayyub said that the issue of territorial jurisdiction cannot be decided in a writ petition especially when there is a serious dispute regarding the place of commission of the offence.

The Court was dealing with a matter in which the petitioner challenged the jurisdiction of the Special Court, Ghaziabad under the Prevention of Money Laundering Act, 2002 to take cognisance of a complaint filed by the Enforcement Directorate against her for the violations in amounts collected through the crowdfunding for the COVID relief.

The two-Judge Bench comprising Justice V. Ramasubramanian and Justice J.B. Pardiwala held, “… we are of the view that 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. Hence, this question should be raised by the petitioner before the Special Court, since an answer to the same would depend upon evidence as to the places where any one or more of the processes or activities mentioned in Section 3 were carried out.”

The Bench also gave liberty to the petitioner to raise the issue of territorial jurisdiction before the Trial Court.

Advocate Vrinda Grover appeared on behalf of the petitioner while Solicitor General of India Tushar Mehta appeared for the respondent.

Facts of the Case –

During the pandemic, the petitioner initiated crowdfunding campaign through an online crowdfunding platform named “Ketto” and ran three campaigns from April 2020 to September 2021. In connection with the same, the Mumbai Zonal Office of the ED initiated an enquiry against her under the Foreign Exchange Management Act, 1992.

A complaint was lodged for alleged offences under Sections 403, 406, 418 and 420 IPC read with Section 66D of the Information Technology (Amendment) Act, 2008 and Section 4 of the Black Money Act. The ED, Delhi Zone-II Office registered a complaint in the Court of the Special Judge at Ghaziabad.

In a second writ petition filed by the petitioner, the Delhi High Court restrained the ED from taking further steps under Section 8 of the PMLA. Thereafter, the Court of the Special Judge, Anti-Corruption, CBI Court No.1, Ghaziabad, passed an order taking cognizance of the complaint lodged by the respondent and summoning the petitioner for appearance. Upon coming to know of the said Summoning Order, the petitioner came up with the writ petition before the Apex Court.

The two issues that arose for the consideration before the Supreme Court were –

1. Whether the trial of the offence of money-laundering should follow the trial of the scheduled/predicate offence or vice versa?

2. Whether the Court of the Special Judge can be said to have exercised extra-territorial jurisdiction, even though the offence alleged, was not committed within the jurisdiction of the said Court?

With regard to the first issue, the Court observed, “… 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 money-laundering and not vice versa.”

The Court further noted that 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.

While considering the second issue, the Court asserted, “If acquisition has taken place in the real physical world, the difficulty with respect to the question of jurisdiction would have been lesser. Since acquisition has taken place in the virtual world, the places from where online transfers of money took place, are known only to the petitioner or perhaps their Bankers.”

The Court also said that the area in which the property is derived or obtained or even held or concealed will be the area in which the offence of money laundering is committed.

Accordingly, the Court dismissed the plea and gave liberty to the Petitioner to raise the issue of territorial jurisdiction before the Trial Court.

Cause Title- Rana Ayyub v. Directorate of Enforcement through its Assistant Director

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