The Supreme Court ruled that a number of actions, including concealment, possession, acquisition, use, projecting as unadulterated property or claiming as unspoiled property, constitute the crime of money laundering. Therefore, the places where any of these activities have occurred can hold trials for the offence. The court made this determination despite dismissing journalist Rana Ayyub's contention that the crime of money laundering may only be tried where the purported proceeds of crime are deposited (Navi Mumbai).

Ayyub's petition challenging the Special PMLA Court's jurisdiction to take cognizance of the prosecution complaint filed by the Directorate of Enforcement for allegedly misappropriating funds collected for relief work was being decided by a bench of Justices V. Ramasubramanian and J.B. Pardiwala.

In response to the argument that the territorial jurisdiction would be established by the place where the proceeds of crime have been deposited, the court concluded that the locations where the accused concealed, obtained, used, or came into possession of the proceeds of crime, as well as the locations where they projected or claimed the proceeds as untainted property, would all be locations where the crime of money-laundering has occurred.

So, the supreme court decided: “In other words, a person may first, acquire proceeds of crime in one place, second, keep the same in his possession in another place, third, conceal the same in a third place, and fourth, use the same in a fourth place. The area in which each one of these places is located, will be the area in which the offence of money laundering has been committed. To put it differently, the area in which the place of acquisition of the proceeds of crime is located or the place of keeping it in possession is located or the place in which it is concealed is located or the place in which it is used is located, will be the area in which the offence has been committed. In addition, the definition of the words ‘proceeds of crime’ focuses on ‘deriving or obtaining a property’ as a result of criminal activity relating to a scheduled offence. Therefore, the area in which the property is derived or obtained or even held or concealed will be the area in which the offence of money laundering is committed.”

Additionally, the special PMLA court was given the authority to try even the scheduled offences under Clauses (a) and (c) of Sub-section (1) of Section 44. Even if another court has already recognised the scheduled offence, the court will "commit" it to the special court handling the money-laundering offence upon the concerned authority's request. “In other words, the trial of the scheduled offence, insofar as the question of territorial jurisdiction is concerned, should follow the trial of the offence of money-laundering and not vice versa,” Justice Ramasubramanian clarified.

As a result, the court determined that Navi Mumbai was the location of just one of the six actions and procedures listed in Section 3—namely, obtaining the proceeds of crime—by applying legal principles to the facts of the case. On the other hand, the court highlighted that the alleged acquisition of the profits of crime happened virtually through online money transfers made by thousands of people from all over the world. Justice Ramasubramanian acknowledged that based on the record of pleadings, they were unable to “make out the number of persons who provided funds, and the places where the donors were located”.

The top court noted that in order to answer the question of territorial jurisdiction, it would be necessary to look into a factual issue regarding the location of the alleged proceeds of crime's concealment, possession, acquisition, or use. This factual issue could only be resolved by the trial court's evaluation of the available evidence. Thus, the court determined to dismiss the petition and stated:

“Therefore, we are of the view that the issue of territorial jurisdiction cannot be decided in a writ petition, especially when there is a serious factual dispute about the place/places of commission of the offence. This question should be raised by the petitioner before the special court, since an answer to the same would depend upon evidence as to the places where any one or more of the processes or activities mentioned in Section 3 were carried out. Therefore, giving liberty to the petitioner to raise the issue of territorial jurisdiction before the Trial Court, this writ petition is dismissed. There will be no order as to costs.”

Case Title: Rana Ayyub v. Directorate of Enforcement 
Citation: Writ Petition (Criminal) No. 12 of 2023