Supreme Court Rejects Transfer of Money Laundering Case from Lucknow to Kerala
The Supreme Court of India, in the case of Ka Rauf Sherif vs. Directorate of Enforcement & Ors., addressed a transfer petition filed by the petitioner, who was accused in a money laundering case under the Prevention of Money Laundering Act, 2002 (PMLA). The petitioner sought to transfer his case from the Special Judge, PMLA, Lucknow to the Special Judge, PMLA, Ernakulam, Kerala.
The Court rejected the transfer plea, holding that the trial must proceed in Lucknow, where the investigation had been conducted. It relied on established principles regarding territorial jurisdiction under PMLA, emphasizing that the place where any part of the alleged money laundering offense occurred determines the appropriate trial court.
Background of the Case
The petitioner, Ka Rauf Sherif, was accused of being involved in financial transactions linked to an unlawful association under the Unlawful Activities (Prevention) Act, 1967 (UAPA). He was the General Secretary of Campus Front of India, an organization later banned under UAPA.
The Directorate of Enforcement (ED) initiated proceedings based on:
- An FIR registered in 2013 in Kerala under UAPA, later taken over by the National Investigation Agency (NIA).
- Conviction of 21 accused individuals in that case, although the petitioner was not initially named.
- A subsequent ECIR registered in 2018 by the ED against the petitioner and others for alleged money laundering.
- Another FIR in Mathura, Uttar Pradesh, in 2020 under IPC and UAPA, where the petitioner was also implicated.
- The ED’s prosecution complaint filed in Lucknow led to the petitioner’s arrest in December 2020.
Key Legal Issues
1. Whether the case should be transferred from Lucknow to Ernakulam based on the petitioner’s residence and the location of alleged transactions.
2. Whether territorial jurisdiction under PMLA is determined by the place of predicate offense or the location of financial transactions linked to money laundering.
3. Whether the petitioner was prejudiced by being tried in Lucknow instead of Kerala.
Arguments Presented
Petitioner (Ka Rauf Sherif) Arguments
- The alleged financial transactions occurred in Kerala, and most witnesses were from Kerala.
- Seven out of ten accused persons were residents of Kerala.
- The petitioner was first remanded to judicial custody by a Kerala court under Section 167(2) of the Code of Criminal Procedure.
- Continuing the trial in Lucknow caused inconvenience and hardship to the petitioner.
Respondents (Directorate of Enforcement) Arguments
- The money laundering offense was linked to a UAPA case in Uttar Pradesh.
- Financial transactions and transfers were made from different locations, including accounts used for activities linked to the alleged offense in UP.
- Under Sections 43 and 44 of PMLA, the Special Court, PMLA, Lucknow had proper jurisdiction.
- There was no legal basis to transfer the case merely because some accused and witnesses were in Kerala.
Supreme Court’s Observations
The Supreme Court, led by Justices V. Ramasubramanian and Pankaj Mithal, made the following key observations:
- The case involved money laundering linked to multiple transactions across states, including Uttar Pradesh.
- Territorial jurisdiction under PMLA is determined based on where any part of the money laundering offense occurred.
- There was no valid legal ground to transfer the case merely because some witnesses were from Kerala.
- Under PMLA, Special Courts can try cases where proceeds of crime are concealed, acquired, or used, irrespective of where the original offense was registered.
The Court noted:
“Involvement in any one or more of certain processes or activities connected with proceeds of crime constitutes the offense of money laundering. These include possession, concealment, acquisition, or projection as untainted property.”
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Final Judgment
The Supreme Court ruled as follows:
- The transfer petition was dismissed.
- The trial would continue in the Special Judge, PMLA, Lucknow.
- Proceedings in Lucknow were legally valid, and there was no basis to challenge the territorial jurisdiction of the Special Court.
Implications of the Judgment
The ruling has significant implications for PMLA cases:
- Clarification on territorial jurisdiction: Courts hearing PMLA cases have jurisdiction if any part of the alleged money laundering activity occurred within their territorial limits.
- Ensuring efficient trials: The ruling prevents unnecessary transfer of cases and delays in prosecution.
- Binding precedent for future cases: The ruling affirms that PMLA trials must take place where financial transactions linked to the offense are traced, rather than just where the predicate offense occurred.
Conclusion
The Supreme Court’s decision in Ka Rauf Sherif vs. Directorate of Enforcement establishes a clear precedent for determining territorial jurisdiction in PMLA cases. By dismissing the transfer petition, the Court reinforced that cases should be tried in locations where financial transactions related to money laundering are conducted.
This judgment serves as a significant ruling in money laundering cases, ensuring that trials proceed efficiently without unnecessary procedural delays.
Petitioner Name: Ka Rauf Sherif.Respondent Name: Directorate of Enforcement & Ors..Judgment By: Justice V. Ramasubramanian, Justice Pankaj Mithal.Place Of Incident: Lucknow, Uttar Pradesh.Judgment Date: 10-04-2023.
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