2018 (3) TMI 2018 - HC - Money Laundering

HC dismisses money laundering petitions for lack of territorial jurisdiction, imposes exemplary costs for misusing legal process

The HC dismissed petitions challenging money laundering proceedings for lack of territorial jurisdiction. Petitioners argued jurisdiction based on their ... Money Laundering - territorial jurisdiction - summons and complaint have been served at Panchkula/Chandigarh and the entire transactions as per the complaint took place within the territory of State of Punjab - HELD THAT:- The submission made by the counsel for the petitioners that the petitioners reside at Chandigarh/Panchkula/Ludhiana or that the attachment of properties at Ludhiana was made and that the petitioners received summons at Chandigarh/Panchkula/Ludhiana, is wholly misconceived and misplaced and must be rejected outright. The residence of the accused persons cannot give cause of action. The attachment of factory/warehouses, etc. located at Ludhiana does not give any cause of action. Section 42 of the Act relates to appeal against the order of Appellate Tribunal and the provision has no relevance. The submission that there is an electronic exchange also at Ludhiana of National Spot Exchange Limited and, therefore, this Court has jurisdiction is again misplaced. Thus, no part of cause of action at all arose within the territorial jurisdiction of Punjab and Haryana High Court and there was no question of filing any petition in respect of PMLA Case No. 4 of 2015, pending in the court of designated City Civil Court and Additional Sessions Judge, Greater Bombay, or to challenge the summons issued by the said court to the petitioners - Punjab and Haryana High Court does not have any territorial jurisdiction over these matters, and the territorial jurisdiction is that of Bombay High Court. The custodial interrogation in the alleged huge scam like the present one could be most essential. However, in order to abuse the entire process of interrogation and investigation, these petitions were lodged in this Court and interim orders were obtained. In our opinion, therefore, the petitioners are fully guilty of misusing the process of law and interfering in the administration of justice. The petitioners are, therefore, liable to pay exemplary costs to the Union of India through the Enforcement Directorate. It is already found that the petitioners have successfully obtained interim orders from this Court i.e. exemption from personal appearance and bail, it is necessary to set the things right keeping in mind the principle 'actus curiae neminem gravabit' - the grant/furnishing of bail pursuant to the interim order made by this Court, becomes inconsequential. Petition dismissed for want of territorial jurisdiction. Issues Involved:1. Territorial jurisdiction of Punjab and Haryana High Court.2. Validity of interim orders exempting personal appearance and granting bail.3. Allegations of abuse of process of law and fraud.4. Vires of Sections 3, 4, and 45 of the Prevention of Money-Laundering Act, 2002.5. Custodial interrogation and investigation by the Enforcement Directorate.Detailed Analysis:1. Territorial Jurisdiction:The primary issue was whether the Punjab and Haryana High Court had the territorial jurisdiction to entertain the petitions. The court noted that the case arose from a scam involving the National Spot Exchange Limited (NSEL) in Mumbai, with the FIR and subsequent complaint filed there. The petitioners argued that their residence and properties in Chandigarh/Panchkula/Ludhiana, and the receipt of summons there, conferred jurisdiction on the Punjab and Haryana High Court. However, the court concluded that the cause of action arose entirely in Mumbai, making the Bombay High Court the appropriate jurisdiction. The court cited the Supreme Court’s decision in Rajasthan High Court Advocates' Association vs. Union of India to support this conclusion.2. Validity of Interim Orders:The court examined the interim orders that exempted the petitioners from personal appearance and granted bail. It found that these orders were obtained without filing the order dated 13.01.2016, which issued the process. The court held that the petitioners had suppressed material facts and misled the court, thereby fraudulently obtaining these interim orders. Consequently, all interim orders were vacated.3. Allegations of Abuse of Process and Fraud:The court observed that the petitions were filed in Punjab and Haryana High Court to avoid the Special Court at Mumbai and the Bombay High Court. This was seen as a deliberate attempt to obstruct the investigation and interrogation by the Enforcement Directorate. The court noted the petitioners' conduct as 'suppressio veri suggestio falsi' and a clear abuse of the process of law. As a result, the court imposed exemplary costs of Rs. 50 lakhs per petitioner for this abuse.4. Vires of Sections 3, 4, and 45 of the Prevention of Money-Laundering Act, 2002:The petitioners challenged the constitutionality of Sections 3, 4, and 45 of the Act. However, the court did not find this challenge sufficient to confer jurisdiction on the Punjab and Haryana High Court. It noted that any High Court could examine the validity of these provisions, but this did not override the specific jurisdictional rules applicable to the criminal case at hand.5. Custodial Interrogation and Investigation:The court emphasized the importance of custodial interrogation in the context of the alleged Rs. 5600 crore scam. It noted that due to the interim orders, the Enforcement Directorate was unable to conduct custodial interrogation. The court directed the petitioners to surrender before the Special Court at Mumbai and granted liberty to the Special Court to decide on the necessity of custodial interrogation within four weeks of their surrender.Conclusion:The petitions were dismissed for lack of territorial jurisdiction, and all interim orders were vacated. The petitioners were directed to pay exemplary costs and surrender before the Special Court at Mumbai. The Special Court was given the liberty to decide on custodial interrogation. The court's decision underscores the importance of adhering to jurisdictional rules and the consequences of abusing the legal process.