2022 (10) TMI 635 - HC - Money Laundering

Writ petition dismissed for lack of territorial jurisdiction; petitioner advised to seek relief elsewhere.

Kakulamarri Kalyan Srinivasa Rao Versus The Deputy Director and Another and Union Of India

The High Court dismissed the writ petition due to lack of territorial jurisdiction, advising the petitioner to seek relief from the appropriate court. The ... Territorial jurisdiction to entertain the writ petition under Article 226 (2) of the Constitution of India - Criminal conspiracy - defrauding and cheating the Consortium of Banks led by the Central Bank of India - in furtherance of the criminal conspiracy induced the Central Bank of India, Corporate Finance Branch, Chennai by submitting fraudulent Letter of Credit documents without any physical movement of goods and unlawfully availed credit facilities for which they were not eligible. Whether this court is having territorial jurisdiction to entertain the writ petition under Article 226 (2) of the Constitution of India? - HELD THAT:- The High Court of Madras in A. John Kennedy and Ors. v. Joint Director, Directorate of Enforcement, Cochin Zonal Office [2020 (12) TMI 1351 - MADRAS HIGH COURT] extracting the judgment of the Hon’ble Apex Court in KUSUM INGOTS & ALLOYS LTD. VERSUS UNION OF INDIA [2004 (4) TMI 342 - SUPREME COURT] observed that, even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be a determinative factor to decide the matter on merit. All these cases would show how the legal position under Article 226(2) is evolving, how the concept of cause of action is incorporated in Article 226, the history behind it and though initially it is stated that even if a small fraction of the cause of action arises within the jurisdiction of the Court, that Court would have territorial jurisdiction to entertain the suit/petition to the extent that the petition is not maintainable before the Court where a small part of cause of action had arisen and the major part of cause of action shall be considered for applicability of territorial jurisdiction of the Court and had taken a full circle in observing that the concept of part of cause of action is irrelevant and had no application in criminal proceedings and only that High Court could entertain a prayer for quashing which has the supervisory jurisdiction over the jurisdictional court which is monitoring the investigation as per Cr.P.C. The issue whether a writ petition under Article 226 is maintainable against a Criminal Court situated outside the territorial jurisdiction of the Court as well as whether the Court could judicially review the action of the Magistrate in taking cognizance of the offence located outside the territorial jurisdiction of the court is considered by the High Court of Kerala in Augustine Babu P.M. Vs. Mohd. Samiur Rahman Ansari and Ors. [2017 (8) TMI 1680 - KERALA HIGH COURT]. It held that There cannot be any dispute that the complaint before the Coimbatore court and taking cognizance of the same by the said court cannot be challenged under S.482 of the Cr.P.C or under Art.227 of the Constitution of India, before this Court. The only contention raised is that a Writ Petition under Article 226 will lie, in view of clause (2) thereof, as part of the cause of action in the transaction regarding issuance of the cheque, its dishonour etc., arose in Kerala. Thus, even though a part of cause of action arises in this State, as the investigation was culminated in filing the charge sheet and the case is also taken cognizance by a competent court situated outside the territorial limits of this State, this Court cannot exercise its jurisdiction to entertain the writ petition under Article 226(2) of the Constitution of India. Whether taking cognizance of the offence under PMLA by the Principle Session Judge, Chennai in CC 1 of 2021 against the petitioner is in accordance with law? - HELD THAT:- Since the question of territorial jurisdiction is answered against the petitioner, it is considered not appropriate to deal with the merits of the matter to answer this question. The writ petition is dismissed. Issues Involved:1. Territorial Jurisdiction of the High Court.2. Legality of the Cognizance Taken by the Principal Sessions Judge, Chennai under the PMLA.Issue-wise Analysis:1. Territorial Jurisdiction of the High Court:The primary issue was whether the Telangana High Court had the territorial jurisdiction to entertain the writ petition under Article 226(2) of the Constitution of India. The petitioner argued that part of the cause of action arose within the jurisdiction of the Telangana High Court because the Andhra Bank, part of the consortium of banks that sanctioned the loan, had its headquarters in Hyderabad. The petitioner also cited previous protection from arrest granted by the Telangana High Court in a related matter.The respondent contended that the entire cause of action arose in Tamil Nadu, where the investigation was conducted, the final report was filed, and the company involved had its registered office. The respondent cited several Supreme Court judgments, including *ONGC v. Utpal Kumar Basu* and *Alchemist Ltd. v. State Bank of Sikkim*, emphasizing that the essential cause of action must arise within the jurisdiction of the court for it to entertain the writ petition.The court examined the legal position and history behind Article 226(2), referencing key judgments that clarified the concept of 'cause of action' and its relevance to territorial jurisdiction. The court noted that while a small part of the cause of action could confer jurisdiction, it must be a substantial and integral part of the cause of action. The court also considered the doctrine of forum conveniens, which allows a court to refuse jurisdiction if another forum is more appropriate for the case.The court concluded that even though part of the cause of action arose in Telangana, the major part of the cause of action, including the investigation and cognizance of the offence, occurred in Tamil Nadu. Therefore, the Telangana High Court lacked the jurisdiction to entertain the writ petition.2. Legality of the Cognizance Taken by the Principal Sessions Judge, Chennai under the PMLA:The petitioner argued that the cognizance taken by the Principal Sessions Judge, Chennai, was contrary to law and violated the petitioner's fundamental rights. The petitioner contended that the allegations were civil in nature and did not constitute a criminal offence. The petitioner also argued that the proceedings under the PMLA were unwarranted and illegal, as there was no evidence of money laundering or proceeds of crime.The respondent countered that the investigation revealed a criminal conspiracy to defraud the consortium of banks and that the petitioner was involved in the laundering of proceeds of crime. The respondent provided detailed evidence of the diversion of funds and the involvement of shell companies. The respondent also highlighted that the cognizance taken by the Principal Sessions Judge was based on substantial evidence gathered during the investigation.Given that the court had already concluded that it lacked territorial jurisdiction, it did not delve into the merits of the petitioner's arguments regarding the legality of the cognizance taken by the Principal Sessions Judge, Chennai.Conclusion:The writ petition was dismissed on the grounds of lack of territorial jurisdiction. The petitioner was advised to approach the appropriate court for relief. The court did not address the merits of the case due to the jurisdictional issue.