Introduction

The landmark judgment in Rana Ayyub v. Directorate of Enforcement (2023 INSC 101) delivered by the Supreme Court of India on February 7, 2023, addresses significant questions regarding the territorial jurisdiction of Special Courts under the Prevention of Money Laundering Act, 2002 (PMLA). The petitioner, Rana Ayyub, challenged a summoning order issued by the Court of the Special Judge, Anti-Corruption, CBI Court No. 1, Ghaziabad, arguing that the court lacked territorial jurisdiction over her alleged money-laundering offenses.

The core issues revolved around the interpretation of territorial jurisdiction under PMLA, especially in cases where the acquisition and possession of proceeds of crime span multiple geographical locations, including virtual platforms.

Summary of the Judgment

The Supreme Court dismissed the writ petition filed by Rana Ayyub, holding that the issue of territorial jurisdiction is contingent upon factual determinations regarding where specific components of the money-laundering offense—such as acquisition, possession, or concealment of proceeds—occurred. The Court emphasized that such factual disputes should be adjudicated in the trial court rather than through a writ petition.

In essence, the Court affirmed that Special Courts constituted under PMLA have primary jurisdiction to try offenses of money laundering, and any challenges to their jurisdiction must be resolved based on evidence presented during the trial.

Analysis

Precedents Cited

The judgment heavily relied on the precedent set by Vijay Madanlal Choudhary v. Union Of India (2022 SCC OnLine SC 929), wherein the Supreme Court elucidated that money-laundering offenses must be tried in the Special Court designated for the area where the offense was committed. This case underscored the principle that both the predicate offense and the money-laundering offense should be tried independently within the appropriate Special Courts.

Additionally, the Court referenced Kaushik Chatterjee v. State of Haryana (2020) 10 SCC 92, which provided a comprehensive analysis of territorial jurisdiction under the Criminal Procedure Code, 1973 (CrPC). This case outlined the various parameters that determine the territorial jurisdiction of criminal courts, such as the place of commission of the offense, location of the accused or victim, and the place where the property involved in the offense is found.

Legal Reasoning

The Supreme Court’s reasoning focused on the statutory provisions within PMLA, particularly Sections 43, 44, and 71, which govern the establishment and jurisdiction of Special Courts. The Court dissected Section 44(1), which outlines the territorial jurisdiction of Special Courts, emphasizing a two-pronged approach:

• Primacy of Special Courts: Offenses and connected scheduled offenses are primarily triable by the Special Court within the jurisdiction where the money-laundering offense was committed.
• Independent Trials: Clarification that simultaneous trials of predicate and money-laundering offenses should not be construed as joint trials, ensuring procedural clarity and maintaining the integrity of the judicial process.

The Court highlighted that determining the exact location where the money-laundering offense was committed requires factual evidence, which is beyond the purview of a writ petition. Hence, such jurisdictional questions must be resolved in the trial court where evidence is presented and examined.

Impact

This judgment reinforces the established framework under PMLA regarding the jurisdiction of Special Courts, ensuring that money-laundering offenses are tried in the appropriate forum based on the factual matrix of each case. Future cases will benefit from this clarity, as legal practitioners will have a definitive guide on where jurisdictional challenges should be raised—predominantly within the trial proceedings rather than through extrajudicial writ petitions.

Moreover, the strict adherence to territorial jurisdiction as per the processes outlined in PMLA ensures consistency and fairness in the prosecution of financial crimes, strengthening the legal mechanisms to combat money laundering effectively.

Complex Concepts Simplified

Conclusion

The Supreme Court’s decision in Rana Ayyub v. Directorate of Enforcement serves as a pivotal reference point for understanding the territorial jurisdiction of Special Courts under PMLA. By delineating the boundaries and emphasizing the primacy of Special Courts in handling money-laundering offenses, the Court has reinforced the structured approach envisaged by the legislature to tackle financial crimes.

Furthermore, the judgment underscores the necessity of addressing jurisdictional challenges within the trial court framework, thereby preserving the integrity and efficiency of the judicial process. Legal practitioners and stakeholders must take heed of this ruling to navigate jurisdictional complexities effectively, ensuring that cases of financial misconduct are prosecuted in the most appropriate and legally sound forums.

Overall, this judgment not only clarifies existing legal provisions but also fortifies the judiciary’s role in upholding stringent measures against money laundering, thereby contributing to the broader fight against financial crimes in India.