Case Note & Summary
The petitioners, accused in Crime No.23 of 2018 registered at Ashoknagar Police Station, Hubballi, filed a writ petition under Articles 226 and 227 of the Constitution of India seeking to quash proceedings in ECIR/BGZO/85/2022 initiated by the Bangalore Zonal Office of the Enforcement Directorate on the ground of lack of territorial jurisdiction. The factual background involved multiple FIRs against the petitioners between June and October 2018 arising out of real estate transactions with the complainant. The Dharwad Bench of the Karnataka High Court had earlier quashed all FIRs except Crime No.23/2018 and directed that the other crimes be treated as additional charge sheets. Subsequently, the CID investigated and filed a charge sheet on 09-09-2022 for offences under Sections 409, 411, 420 read with Sections 34 and 37 of the Indian Penal Code, and the court took cognizance. After cognizance, the Enforcement Directorate registered the ECIR and issued summons to some accused, prompting the petitioners to approach the High Court apprehending coercive action. The sole legal issue was whether the Bangalore Zonal Office had territorial jurisdiction given that no money laundering transactions allegedly occurred in Karnataka, all having taken place in Mumbai. The petitioners contended that the offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 is a standalone offence and must be investigated where the activity connected with proceeds of crime actually occurred, relying on the Supreme Court’s decision in Vijay Madanlal Choudhary v. Union of India. The respondent Enforcement Directorate argued that registration of an ECIR is intrinsically linked to the predicate offence; since the FIR was registered and charge-sheeted at Hubballi within Karnataka, the Bangalore Zonal Office alone had jurisdiction. The court analyzed Section 3 of the PMLA, emphasizing that the offence of money laundering is dependent on ‘proceeds of crime’ which cannot exist without a scheduled offence. The court held that registration of a crime is a sine qua non for registration of an ECIR, and therefore the place where the predicate offence is registered becomes the territorial jurisdiction for the ED proceedings. The court further observed that if the trial court were later to find that the IPC case also lacked territorial jurisdiction and transfer it to Mumbai, the ED proceedings would follow suit as they are intertwined. Ultimately, the court dismissed the writ petition, upholding the jurisdiction of the Bangalore Zonal Office to proceed with the investigation.
Headnote
A) Criminal Procedure - Territorial Jurisdiction of Enforcement Directorate - Registration of ECIR - Prevention of Money Laundering Act, 2002, Sections 3, 2(1)(p) - The court considered whether the Bangalore Zonal Office of the Enforcement Directorate had territorial jurisdiction to register an ECIR when the underlying predicate offence was registered in Hubballi, Karnataka, and the alleged money laundering transactions occurred outside the state. The court noted that the offence of money laundering is contingent upon a scheduled offence and that the ECIR cannot exist without an FIR. Therefore, the place where the predicate offence is registered determines the territorial jurisdiction for the ED proceedings. Held, the ECIR registration by the Bangalore Zonal Office did not suffer from want of territorial jurisdiction because the FIR was registered within Karnataka, and the proceedings are intertwined (Paras 9-11). B) Criminal Law - Offence of Money Laundering - Nature of Offence - Prevention of Money Laundering Act, 2002, Section 3 - The court examined the contention that money laundering is a standalone and independent offence. It held that while it is an independent offence, it cannot be initiated without the foundation of a registered scheduled offence, as the proceeds of crime are derived from such predicate offence. The court relied on Vijay Madanlal Choudhary v. Union of India to confirm the scope of Section 3 and the necessity of a predicate offence. Held, mere depiction as standalone does not detach it from the need for a predicate FIR, which serves as the cornerstone for territorial jurisdiction (Paras 5, 10, 12). C) Criminal Procedure - Multiple FIRs - Consolidation - The petitioners initially faced multiple FIRs for related transactions. The High Court earlier quashed the additional FIRs and directed that they be treated as additional charge sheets in Crime No.23 of 2018 to prevent multiplicity of proceedings. This consolidation was upheld to avoid harassment (Para 8).
Issue of Consideration
Whether the Bangalore Zonal Office of the Enforcement Directorate had territorial jurisdiction to register and investigate ECIR/BGZO/85/2022 under the Prevention of Money Laundering Act, 2002, given that the alleged money laundering transactions occurred outside Karnataka.
Final Decision
Writ petition dismissed. The court held that the ECIR registered by the Bangalore Zonal Office does not suffer from want of territorial jurisdiction because the predicate offence is registered at Hubballi, Karnataka. Since registration of a scheduled offence is a sine qua non for initiating proceedings under PMLA, the jurisdiction follows the place of the registered FIR. Consequently, the investigation and proceedings under ECIR/BGZO/85/2022 were upheld.
Law Points
- territorial jurisdiction for ECIR derived from location of predicate offence
- money laundering is independent but dependent on scheduled offence
- registration of predicate FIR is sine qua non for ECIR
- place of FIR determines ED jurisdiction
- PMLA Section 3 requires proceeds of crime which spring from scheduled offence
