The agency invoked the provision once and then dropped it. Rajasthan High Court orders the Enforcement Directorate to apply for committal

Justice Mukesh Rajpurohit holds that an accused may compel the statutory step under Section 44(1)(c) of the PMLA, and that directing it is not a transfer of a criminal case.

A man facing proceedings in two States asked the Rajasthan High Court for an unusual kind of relief: not to stop a prosecution, but to make the Enforcement Directorate take a step the statute provides for. The scheduled offence against him is being tried at Gurugram on a Serious Fraud Investigation Office complaint; the money laundering complaint arising from the same facts is before the Special Court at Jaipur. Section 44 of the PMLA exists to bring the two together. The agency had once applied under it and then abandoned the application. The Court has directed it to apply again.

The architecture of Section 44

Money laundering under the PMLA is a parasitic offence: it depends on a “scheduled offence” — here, the fraud case — having been committed, and the proceeds of that offence being dealt with. The two cases therefore rest on overlapping facts and often on the same witnesses.

Section 44 addresses the obvious consequence. Clause (c) provides the mechanism by which a scheduled offence pending before another court may be committed to the Special Court that is seized of the money laundering complaint, on an application by the authority authorised to file the complaint. The purpose is to avoid two courts in two places trying the same substratum of fact, with the risks of inconsistent findings and duplicated evidence that follow.

In this case cognizance of the scheduled offence was taken by the Additional Sessions Judge at Gurugram, in Haryana, and cognizance of the money laundering complaint by the Special Judge (PMLA and CBI Cases) at Jaipur, in Rajasthan. The Court recorded that the existence of separate proceedings before two courts is not by itself impermissible — but that the Act provides a specific statutory mechanism for bringing the scheduled offence before the Special Court, and this case falls squarely within the situation Section 44(1)(c) contemplates.

The jurisdictional objection

The Directorate's answer was territorial. The prayer, it argued, substantially concerns the committal or transfer of proceedings pending before a court in Haryana; the Rajasthan High Court has no jurisdiction to issue directions about a court outside its territory; and the power to transfer criminal proceedings between courts under different High Courts vests in the Supreme Court.

The Court rejected that, and the distinction it drew is the legal core of the judgment. The petitioner is not seeking a transfer of the SFIO proceedings by this Court in the exercise of any power of transfer. The relief sought is narrower: a direction to the respondent agency, which is amenable to the writ jurisdiction of this Court, to take the statutory step contemplated by Section 44(1)(c). What happens next is for someone else — the question of committal is thereafter to be considered by the court before which the scheduled offence is pending.

That is a clean separation between compelling an application and granting it. A High Court ordering the Directorate to move an application does not decide whether the Gurugram court should allow it; that court retains the decision, and with it whatever objections the parties wish to raise there.

The Court also recorded the factual nexus with its own territory: the petitioner is a resident of Sirohi, the property and bank account under attachment are situated within its jurisdiction, and he had been in custody at Jodhpur. Those facts were held sufficient to ground territorial jurisdiction independently of where the scheduled offence is pending.

The agency's own earlier application

What appears to have weighed most heavily is the Directorate's change of position.

The respondent had itself earlier invoked Section 44(1)(c), and had failed to disclose any cogent reason for subsequently abandoning it. In those circumstances the Court held that the agency ought to take the statutory course the provision contemplates.

It is a narrow but useful principle for litigants facing investigating agencies. Where a statute gives the agency a procedural step, and the agency has taken the view that the step is appropriate by invoking it, an unexplained withdrawal is not simply a matter of prosecutorial discretion beyond review. The Court did not hold that the Directorate must always apply under Section 44(1)(c); it held that having applied and then dropped it without reasons, it should proceed.

The judgment was careful about the limits of what it was doing. Such a direction, it said, would neither determine the merits of either prosecution nor amount to a transfer of the criminal case by this Court. Both trials remain exactly where the law leaves them on their merits.

Order

The writ petition was allowed and the Enforcement Directorate directed to file an appropriate application under Section 44(1)(c) of the PMLA before the court seized of the scheduled offence. The Court added that the application, when filed, is to be considered and decided by the competent court in accordance with law, uninfluenced by any observation made in the judgment on the merits of either proceeding. The stay application and all pending applications were disposed of.

For accused persons caught between a scheduled offence in one State and a PMLA complaint in another, the practical value of this judgment is that the consolidation mechanism is not purely at the agency's option. The cost of parallel trials falls mainly on the defence: the same evidence has to be met twice, in two cities, with two sets of counsel, and a finding in one court does not bind the other. Section 44 was enacted to prevent that, and this judgment holds that a court may require the agency to use it.

It is worth noting what the judgment does not decide. Whether the Gurugram court will commit the case is open; so is every argument the Directorate or the co-accused may wish to make there. All that has been settled is that the application must be made, and that a High Court exercising writ jurisdiction over an agency within its territory does not exceed itself by saying so.