Supreme Court rejects the transfer plea of journalist Rana Ayyub in ED case

While hearing the Rana Ayyub vs Directorate of Enforcement case, the Supreme Court of India dismissed the plea challenging the jurisdiction of Ghaziabad’s Special Court under the Prevention of Money Laundering Act, 2002. The writ petition was filed by journalist Rana Ayyub against the summons issued by the Ghaziabad Court in a money laundering case claimed by the Enforcement Directorate (ED). The case was presented before the two-judge bench of the Supreme Court comprising Justice V. Ramasubramanian and Justice J.B. Pardiwala. The bench further stated that the questions regarding the fact of the matter are required to be addressed on the basis of evidence; therefore, they were to be decided during the trial.  

In this case, the petitioner (Rana Ayyub) initiated a crowdfunding campaign during the pandemic through an online crowdfunding platform named “Ketto” and ran three campaigns from April 2020 to September 2021. In connection with the same, the Mumbai Zonal Office of the Enforcement Directorate initiated an inquiry against the petitioner under the Foreign Exchange Management Act, 1999 through an Office Order. The petitioner received this order under Section 37 of the FEMA read with Section 133(6) of the Income-tax Act, 1961 from the Mumbai Zonal Office of the Enforcement Directorate seeking certain documents. In addition to the documents submitted by the petitioner in response to the previous Office Order issued by the very same Mumbai Zonal Office, the challenge to the impugned Summoning Order was limited to the question of territorial jurisdiction alone, and the impugned Summoning Order was not being challenged on any ground other than the lack of territorial jurisdiction. 

It was the contention of the learned Counsel for the petitioner that “no part of the alleged offence of money-laundering was committed within the jurisdiction of the Special Court, Ghaziabad and that the petitioner’s bank account where the alleged proceeds of crime were deposited, is located in Navi Mumbai, Maharashtra”. Even though the procedure for the provisional attachment of the bank account was initiated it was clear that the trial of the scheduled offence should take place in the Special Court which has taken cognizance of the offence of money laundering. 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. Since acquisition has taken place in the virtual world, the places from where online transfers of money took place, were known only to the petitioner or perhaps their Bankers. 

The top Court was 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”. Hence,  they illustrated that this question should be raised by the petitioner before the Special Court since an answer to the same would depend upon evidence.