2025 (4) TMI 889 - HC - Money Laundering

HC dismisses writ petition challenging PMLA arrest order due to lack of territorial jurisdiction over money laundering case

Gian Chand Versus State of Himachal Pradesh and others.

The HC dismissed a writ petition challenging an arrest order under PMLA for lack of territorial jurisdiction. The petitioner, allegedly involved in money ... Money Laundering - scheduled offence - Challenge to arrest order under PMLA - territorial jurisdiction of Himachal Pradesh High Court to entertain the writ petition - reasonable grounds for arrest or not - HELD THAT:- A perusal of the complaint (Annexure P-62) would go on to show that allegations as such in the complaint are against the petitioner and various other accused, who are residents of Uttar Pradesh, including one Deepak Chaudhary, who is partner in Star Mines, one of partnership firm, apart from other accused like Bhanu Karnwal and Ravinder Kumar Malik. The allegations as such mentioned about the fact that Rs.1.60 crores was paid in cash generated from sale of illegal mined mineral/sand of Jai Maa Jawala Stone Crusher situated within the jurisdiction this Court and tentative funds as such were invested in Uttar Pradesh. Details as such had been given of the companies involved in the money laundering including Ambey Stone crusher and Time Builder stone crusher, in which the petitioner has been associated either as partner or as proprietor of Jai Maa Jawala Stone crusher. In Kaushik Chatterjee vs. State of Haryana and Others [2020 (9) TMI 1305 - SUPREME COURT], the prayer was to seek transfer of three criminal cases pending on the files of Court of Additional Judicial Magistrate, Gurugram to a competent Court at New Delhi. The plea as such was raised that no part of cause of action arose in Gurugram for lodging a complaint in the Police Station at Gurugram since the loan had been sanctioned in Delhi and other loans had been sanctioned in Indore and Gujarat. Nothing had happened at Gurugram to invoke the jurisdiction and resultantly challenge as such had been laid to the criminal proceedings with an objection as such taken by the respondents/complainant that it was a question of fact to be established by evidence, which would not be gone into in a transfer proceedings and accordingly while placing reliance on Sections 177 to 184 of the erstwhile Cr.P.C, the petition was dismissed by holding that these questions have to be raised before the Court trying the offence and the Court is bound to consider the same and since it goes to the root of the matter. The said principle as such would also apply to the facts of this case. The Apex Court in similar circumstances in the case of Rana Ayyub [2023 (2) TMI 236 - SUPREME COURT] also has held that for the trial of the offence of money laundering, the same should take place before the Special Court, which has taken cognizance of the offence and the trial of the scheduled offences insofar as the question of territorial jurisdiction is concerned, should follow the trial of the offence of money-laundering and not vice versa. The scheduled offence had been lodged in District Saharanpur in FIR No. 360 of 2024 and the Special Court had passed the remand order, we are of the considered opinion that this Court as such would be denuded of jurisdiction to entertain the arrest having taken place at New Delhi and ECIR having been lodged in Delhi, merely because initially there was some notice of FIRs in the jurisdiction of this Court and a raid was carried out which has led to the trail of proceeds of crime, as such would not bring it within the ambit of part of cause of action by which this Court would test the merits as such of the arrest order as contended by Mr. Chaudhari. Conclusion - There is a lack of jurisdiction to entertain the writ petition due to the location of the predicate offence and subsequent proceedings in Uttar Pradesh. Petition dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:1. Whether the Himachal Pradesh High Court has the territorial jurisdiction to entertain the writ petition challenging the arrest under the Prevention of Money-Laundering Act, 2002 (PMLA).2. Whether the arrest order dated 18.11.2024 and subsequent remand orders are valid and lawful.3. Whether the petitioner's fundamental rights under Articles 21 and 22 of the Constitution were violated.4. Whether the proceedings and arrest were conducted in accordance with the legal framework established under the PMLA and other relevant laws.ISSUE-WISE DETAILED ANALYSIS1. Jurisdiction of the Himachal Pradesh High Court:Relevant legal framework and precedents: The Court considered Sections 177 to 180 of the Code of Criminal Procedure (Cr.P.C.) and corresponding Sections 197 to 200 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, which govern the territorial jurisdiction of criminal courts. Additionally, precedents such as Rana Ayyub vs. Directorate of Enforcement and Rahul Modi vs. Serious Fraud Investigation Office were examined.Court's interpretation and reasoning: The Court found that the predicate offence was committed in Saharanpur, Uttar Pradesh, and the FIR was lodged there, giving the Special Court at Ghaziabad jurisdiction over the matter. The Himachal Pradesh High Court determined it lacked jurisdiction as the arrest and subsequent proceedings occurred outside its territorial limits.2. Validity of the Arrest and Remand Orders:Relevant legal framework and precedents: The arrest was made under Section 19 of the PMLA, which requires a 'reason to believe' that the person is guilty of an offence. The Court referred to judgments such as Vijay Mandanlal Choudhary vs. Union of India and others to assess the legality of the arrest.Court's interpretation and reasoning: The Court chose not to delve into the merits of the arrest's legality due to its conclusion on jurisdiction. However, it acknowledged the need for compliance with the procedural safeguards under the PMLA and fundamental rights under the Constitution.3. Alleged Violation of Fundamental Rights:Relevant legal framework and precedents: Articles 21 and 22 of the Constitution safeguard personal liberty and the right to be informed of the grounds of arrest. The Court considered these provisions in light of the petitioner's claims.Court's interpretation and reasoning: The Court did not address the merits of the alleged violations due to its jurisdictional findings but recognized the importance of these constitutional protections in arrest procedures.4. Compliance with PMLA and Related Laws:Relevant legal framework and precedents: The PMLA's provisions, including Sections 3 and 4, were central to the analysis. The Court also considered the procedural requirements for arrest and remand under the Act.Court's interpretation and reasoning: The Court refrained from examining the compliance with PMLA provisions due to the jurisdictional conclusion. Nonetheless, it underscored the necessity for adherence to legal standards in enforcement actions.SIGNIFICANT HOLDINGSCore principles established: The judgment reaffirmed the principle that territorial jurisdiction is a fundamental consideration in determining the appropriate forum for legal challenges. The Court emphasized that jurisdictional issues must be resolved before addressing the merits of a case.Final determinations on each issue: The Court concluded that it lacked jurisdiction to entertain the writ petition due to the location of the predicate offence and subsequent proceedings in Uttar Pradesh. Consequently, it dismissed the petition, leaving the petitioner to seek remedies in the appropriate jurisdiction.