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of <h1>Section 44 PMLA governs territorial jurisdiction; transfer order quashed for ignoring PMLA and case re-transferred to designated forum</h1> <h3>Directorate of Enforcement through Assistant Director, Nagpur Versus Shri Tapas, State of Maharashtra.</h3> The HC held that Section 44 of the PMLA governs territorial jurisdiction of the Special Court and, following the Apex Court's interpretation, the Special ... Money Laundering - scheduled offences - siphoning of gunds - misappropriation of funds of personal gain - territorial jurisdiction of the Special Court - interpretation of Section 44(1)(c) of the PMLA - HELD THAT:- Section 44 of the PMLA deals with question of territorial jurisdiction of the Special Court and Section 44(1) of the PMLA considers contingencies namely; (i) cases where the scheduled offence as well as the offence of money laundering are committed within the territorial jurisdiction of the same Special Court constituted under Section 43(1); and (ii) cases where the Court which has taken cognizance of the scheduled offence, is other than the Special Court which has taken cognizance of the complaint of the offence of money laundering. In the case of Rana Ayyub vs. Directorate of Enforcement [2023 (2) TMI 236 - SUPREME COURT], the Hon’ble Apex Court was considering two questions (1) whether the trial of the offence of money-laundering should follow the trial of the scheduled/predicate offence or vice versa; and (ii) whether the Court of the Special Judge can be said to have exercised extra-territorial jurisdiction, even though the offence alleged, was not committed within the jurisdiction of the said Court. While answering these questions, the Hon’ble Apex Court held that, “what is dealt with by Section 44(1)(a) is a situation where there is no complication. Section 44(1)(a) lays down the most fundamental rule relating to territorial jurisdiction, by providing that an offence punishable under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which the offence has been committed. It is relevant to note that Section 44(1)(a) uses the expression “offence” in three places in contradistinction to the expression “scheduled offence” used only once - By prescribing that an offence punishable under Section 4 of the PMLA and any scheduled offence connected to the same shall be triable by the Special Court constituted for the area in which “the offence” has been committed, Section 44(1)(a) makes it crystal clear that it is the Special Court constituted under Section 44(1), which will be empowered to try even the scheduled offence connected to the same. Though the PMLA contains a non-obstante clause in relation to the Cr.P.C. both in Section 44(1) and in Section 45(1), there are two other provisions where the Code of Criminal Procedure is specifically declared to apply to the proceedings before a Special Court. Section 46(1) specifically makes the provisions of the Cr.P.C. applicable to proceedings before a Special Court. Similarly, Section 65 of the PMLA makes the provisions of Cr.P.C. apply to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under the Act. Therefore, it is clear that the provisions of the Cr.P.C. are applicable to all proceedings under the Act including proceedings before the Special Court, except to the extent they are specifically excluded. Hence, Section 71 of the PMLA providing an overriding effect, has to be construed in tune with Section 46(1) and Section 65. Admittedly, learned Principal District and Sessions Judge, while considering the application for transfer, ignored the provisions of the PMLA and without giving an opportunity to the petitioner passed the order and, therefore, the order impugned deserves to be quashed and set aside and Criminal Case No. 1/2023 requires to be re-transferred to the Special Court designated under the PMLA. The order dated 20.2.2025 passed by learned Principal District and Sessions Judge, Nagpur in Criminal Misc. Application No. 21/2025 transferring Criminal Case No. 1/2023 from the Court of District Judge-2 and Additional Sessions Judge, Nagpur to the Court of District Judge-1 and Additional Sessions Judge, Nagpur is hereby quashed and set aside. Petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether a transfer of a scheduled-offence trial (committed to a Special Court under the PMLA) by the Principal District and Sessions Judge, without hearing or making the authority/agency which invoked Section 44(1)(c) of the PMLA a party, is legally permissible. 2. Proper interpretation and effect of Sections 43 and 44(1)(c) of the PMLA on territorial/subject-matter jurisdiction and primacy of the Special Court in respect of trials of offences under the PMLA and connected scheduled offences. 3. Whether the court dealing with a transfer application may ignore the statutory scheme of the PMLA, particularly the committal mechanism in Section 44(1)(c), and the consequences of doing so. 4. Treatment of the decision relied upon by parties concerning sequencing and territorial reach of trials under the PMLA (the cited apex authority) and its applicability to the facts. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Legality of transfer without hearing the PMLA authority/agency which invoked Section 44(1)(c) Legal framework: Section 44(1)(c) of the PMLA requires that where a court (other than the Special Court which has taken cognizance of the money-laundering complaint) has taken cognizance of a scheduled offence, it shall, on an application by the authority authorised to file a complaint under the Act, commit the case relating to the scheduled offence to the Special Court; Section 43 designates Special Courts for trial under the Act. The PMLA contains non-obstante provisions and explanatory clauses clarifying trial allocation and that trials before the Special Court are to be accorded primacy. Precedent treatment: The Court follows the apex decision relied upon which interprets Sections 43 and 44, giving primacy to the Special Court and prescribing that the scheduled offence, where cognizance has been taken elsewhere, is to be committed to the Special Court on application by the authorised authority; that decision is treated as binding and is applied to the present facts. Interpretation and reasoning: The legislative scheme contemplates that the authority under the PMLA (the prosecuting agency) is the appropriate party to seek committal under Section 44(1)(c) and must be heard in matters affecting the allocation of a scheduled-offence trial to a Special Court. A transfer by a Sessions Judge of a case already committed to or properly before a Special Court, effected without notice to or joinder of the PMLA authority which secured committal, ignores the statutory role of that authority and undermines the scheme that accords primacy to the Special Court. Ratio vs. Obiter: Ratio - where the statutory scheme vests primacy in the Special Court and contemplates committal on application by the authorised authority, that authority is a necessary party whose absence from transfer proceedings and non-hearing renders the transfer vulnerable to quashing. Obiter - procedural particulars beyond the case facts (e.g., modes of notice) are illustrative only. Conclusion: The transfer effected without hearing or adding the PMLA authority as a necessary party was contrary to the statutory scheme and invalid; offending order is to be quashed and the matter restored to the Special Court/appropriate docket as contemplated by the PMLA. Issue 2 - Interpretation and effect of Sections 43 and 44(1)(c): territorial/subject-matter jurisdiction and primacy of the Special Court Legal framework: Section 43(1) enables the Central Government, in consultation with the High Court, to designate one or more Courts of Session as Special Courts for trial of offences punishable under Section 4; Section 43(2) extends to the Special Court jurisdiction to try other offences with which the accused may be charged at the same trial. Section 44(1)(a)-(d) (and Explanation (i)) deal with triability and territorial considerations, and Section 44(1)(c) prescribes committal where cognizance of the scheduled offence has been taken by another court. Precedent treatment: The Court follows the authoritative exposition that Sections 43 and 44 confer primacy on the Special Court and that Section 44(1)(c) addresses the contingency where cognizance of the predicate offence lies with a non-Special Court, directing committal to the Special Court which has taken cognizance of the money-laundering complaint. The apex ruling supplied is adopted and applied rather than distinguished or overruled. Interpretation and reasoning: The PMLA's non-obstante language and explanatory provisions are to be read together with the Cr.P.C. applicability clauses in the Act. The statutory scheme prescribes: (i) the Special Court is the primary forum for money-laundering offences and connected scheduled offences; (ii) if cognizance of a scheduled offence exists elsewhere, the authorised PMLA authority must apply for committal; and (iii) once committed, the Special Court proceeds from the stage of committal. Explanation (i) further clarifies that co-trial before the same court does not constitute a joint trial, removing ambiguity about simultaneous jurisdiction over related offences. Ratio vs. Obiter: Ratio - the correct reading of Sections 43 and 44 places primacy and territorial priority with the Special Court in the circumstances contemplated by the Act and requires the committal mechanism to be followed. Obiter - commentary on interplay with other provisions of Cr.P.C. or hypothetical permutations not necessary for the decision. Conclusion: Sections 43 and 44(1)(c) must be construed to ensure that trials of scheduled offences follow the procedure of committal to the Special Court where the PMLA complaint has been preferred; the Special Court's primacy cannot be displaced by ad hoc transfers inconsistent with the Act. Issue 3 - Validity of transfer order that ignored statutory scheme and failed to hear the prosecuting authority; remedial consequence Legal framework: The PMLA's allocation and committal provisions, read with applicable Cr.P.C. provisions as made applicable by the Act, constrain transfer and trial allocation decisions affecting PMLA proceedings. Precedent treatment: The judgment applies the apex court's ruling which emphasises that the trial of the scheduled offence should follow the trial of the offence of money-laundering (territorially and procedurally) and that the Special Court holds primacy; the present Court treats the transfer order as inconsistent with these principles. Interpretation and reasoning: A transfer that relocates a matter away from the Special Court or the court to which a matter was committed, without due regard to Section 44(1)(c) and without hearing or joining the authorised PMLA authority, frustrates the statutory purpose and is an error of law. The absence of notice and hearing to the prosecuting authority was material and prejudicial, particularly given the declared primacy of the Special Court under the PMLA. Ratio vs. Obiter: Ratio - material non-compliance with the PMLA's committal/primacy scheme and failure to hear the PMLA authority render a transfer order voidable/quashable. Obiter - observations about convenience of parties or incumbent judges' prior exposure to facts are subordinate to statutory mandates. Conclusion: The impugned transfer order was quashed and set aside; the criminal matter is to be retransferred to the court consistent with the PMLA scheme (i.e., the Special Court/appropriate designated court as per Sections 43 and 44). Issue 4 - Application of the apex authority on sequencing and territorial jurisdiction of PMLA trials Legal framework: The apex ruling addresses sequencing (which trial should follow) and territorial competence of Special Courts, construing Sections 43 and 44 and explanatory clauses to resolve doubts about co-trial and primacy. Precedent treatment: The Court follows and applies the apex decision, adopting its construction that Section 44(1)(a) lays down the fundamental territorial rule and Section 44(1)(c) addresses the complication where cognizance of scheduled offences lies elsewhere; the apex analysis is treated as determinative and binding on the issues before the Court. Interpretation and reasoning: The apex decision confirms that the trial of a scheduled offence should follow the Special Court's cognizance in cases where the PMLA complaint has been preferred, and that the Special Court's primacy is recognized expressly by the statutory scheme; this reasoning is applied to invalidate any transfer inconsistent with that primacy. Ratio vs. Obiter: Ratio - the apex construction of Sections 43 and 44, including that scheduled-offence trial follows the Special Court's cognizance and that committal under Section 44(1)(c) must be given effect, is binding and forms the basis of the Court's decision. Obiter - ancillary remarks in the apex judgment not necessary to the holding are noted but not relied upon. Conclusion: The apex authority governs the interpretation of Sections 43 and 44; its principles require that the Special Court's primacy be respected and that transfers inconsistent with the PMLA's committal mechanism be set aside.
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