ED filed money laundering case in Lucknow. Accused from Kerala wanted it moved. Supreme Court says no.

He was arrested in Kerala, the crime happened in Kerala, most witnesses were in Kerala. But the ED filed the case in Lucknow. The Supreme Court just told him — that's exactly why he can't move it.

KA Rauf Sherif has been sitting in a Lucknow courtroom since December 2022, watching a trial unfold 2,500 kilometres from his home state. The Enforcement Directorate filed its money-laundering complaint against him not in Kerala, where he was arrested and where the original crime was committed, but in Uttar Pradesh. When he asked the Supreme Court to transfer the case back to Kerala, the answer came back sharp and unexpected: a jurisdictional defect, if it exists at all, works in your favour. You cannot use it to get a transfer to your own detriment.

When the Kerala convictions reached the ED

The story begins in Kannur District, Kerala. A criminal case ended with 22 persons convicted by a Special NIA Court in Ernakulam in January 2016. The Kerala High Court partly confirmed and partly acquitted those convictions on appeal. The Supreme Court dismissed the final appeal. By then, the Enforcement Directorate had already registered a money-laundering case under the Prevention of Money-Laundering Act, 2002 (PMLA — the law that targets the proceeds of crime).

The ED's case was built on money transfers linked to PFI members arrested by the Uttar Pradesh Police. The agency filed its prosecution complaint — the PMLA equivalent of a chargesheet — before the Special PMLA Court in Lucknow, not in Kerala. KA Rauf Sherif was arrested in Kerala in December 2020 and initially produced before a local court there. But the ED chose Lucknow as the venue for trial.

Why Lucknow and not Ernakulam

The petitioner argued that the underlying crime — the predicate offence (the original criminal activity that generated the proceeds) — happened entirely in Kerala. The accused were from Kerala. The witnesses were from Kerala. His initial remand was granted by a Kerala magistrate. How could a Lucknow court possibly have jurisdiction?

The ED's answer was rooted in the structure of the PMLA itself. Under Section 3 of the Act, money-laundering is defined not as a single event but as a process: concealing, possessing, acquiring, using, or projecting tainted property as untainted. The ED argued that some of these activities — particularly the money transfers traced through PFI members arrested by UP Police — occurred in Uttar Pradesh. That, they said, gave the Lucknow court jurisdiction under Section 44(1)(a) of the PMLA (the provision that determines which Special Court can hear a money-laundering case).

The legal question the Supreme Court had to answer

The transfer petition was filed under Section 406 of the CrPC (the High Court's and Supreme Court's power to move a case from one court to another) read with Section 65 of the PMLA (which makes CrPC procedures apply to PMLA cases). The petitioner wanted the case moved from the Special Judge, PMLA, Lucknow to the Special Judge, PMLA, Ernakulam.

The core question was simple: does the jurisdiction of a PMLA court depend on where the original crime — the scheduled offence — was committed, or on where the money-laundering activities themselves took place?

The petitioner said the first. The ED said the second. The Supreme Court had already answered this question in a recent judgment: Rana Ayyub v. Directorate of Enforcement (2023). That case had held that territorial jurisdiction under Section 44(1)(a) PMLA is determined by where the activities constituting the offence under Section 3 PMLA occurred, not by where the scheduled offence was committed.

What the court found in Rana Ayyub

The Supreme Court applied that ratio directly. A PMLA court's jurisdiction, the bench of Justice V. Ramasubramanian and Justice Pankaj Mithal held, depends on the place where any part of the money-laundering process — concealment, possession, acquisition, use, or projecting tainted property as untainted — took place. It does not matter where the FIR for the original crime was filed or which court took cognizance of the scheduled offence.

In this case, the ED had traced money transfers linked to PFI members arrested by UP Police. That gave the Lucknow court a basis to claim jurisdiction. The fact that the petitioner was arrested in Kerala and initially produced before a Kerala magistrate did not change this.

The surprising argument about jurisdiction

The court then made a second, more striking point. Even if the Lucknow court lacked jurisdiction — the court did not decide this definitively — that defect, by its very nature, benefits the accused. A case tried in a court without jurisdiction can be challenged later. The accused can argue that the entire trial was void. That is a protection, not a burden.

Therefore, the court held, a jurisdictional defect cannot be used by the accused to seek a transfer. "A congenital defect of lack of jurisdiction, assuming that it exists, inures to the benefit of the accused and hence it need not be cured at the instance of the accused to his detriment," the bench observed.

In plain terms: if the Lucknow court has no jurisdiction, that helps you, not hurts you. You cannot ask the Supreme Court to fix a problem that works in your favour.

Why residence and witnesses didn't matter

The petitioner also argued that most accused and witnesses were from Kerala, making a Lucknow trial inconvenient and expensive. The court dismissed this ground as insufficient by itself. The fact that accused and witnesses live in one state is not, by itself, a valid reason to transfer a case from the court where it is pending to a court in that state.

The court also rejected the argument about the initial remand. The petitioner had been remanded by a Kerala magistrate under Section 167(2) CrPC (the provision that allows a magistrate to order custody when investigation cannot be completed within 24 hours). The court noted that Section 167(2) itself contemplates remand by a magistrate "whether he has or has not jurisdiction to try the case." A remand in one jurisdiction does not prevent the prosecution complaint from being filed in another.

The final order

The Supreme Court dismissed the transfer petition. "We find no legally valid and justifiable grounds to order this transfer," the bench concluded. The trial in Lucknow would continue. Charges had already been framed in December 2022 under Section 3 punishable under Section 4 of the PMLA. The examination of the first prosecution witness had begun in March 2023.

THE PLAY: If you are an accused in a PMLA case, do not assume the case must be tried where the original crime happened — the ED can file its complaint wherever any part of the money-laundering process occurred, and you cannot use a potential jurisdictional defect to move the case to a court you prefer.

The money trail had spoken. And it led to Lucknow.