He asked to move his money laundering trial to Kerala. The Supreme Court said no — and explained why that helps him.

The Supreme Court just told an accused: 'Your trial court might lack jurisdiction — and that's exactly why we won't move your case.' Here's why.

KA Rauf Sherif, the former General Secretary of Campus Front of India, wanted his money laundering trial shifted from Lucknow to Kerala. He argued the Lucknow court had no business hearing his case. The Supreme Court agreed there might be a jurisdictional problem. Then it refused to move the case. The reasoning was as counterintuitive as it was legally precise: a defect that helps the accused is not a defect the accused gets to fix.

When the Kerala case left him out

The story begins in Kannur, Kerala, in 2013. A criminal case involving 22 persons was registered there for arms and unlawful activities offences. It led to convictions. KA Rauf Sherif was not among those 22 accused. He was not charged, not tried, not convicted in that case.

But the Enforcement Directorate (ED) — India's financial crime investigation agency — saw a money trail. In 2018, it registered a money laundering case (called an ECIR, or Enforcement Case Information Report) linked to those same predicate offences (the original crimes from which the alleged dirty money came). The ED's theory was that the proceeds of those unlawful activities had been concealed, possessed, or used — all activities that constitute the offence of money laundering under Section 3 of the Prevention of Money-laundering Act, 2002 (PMLA).

Meanwhile, a separate FIR (a written complaint that starts a police investigation) was registered in Mathura, Uttar Pradesh, in 2020 for offences related to unlawful activities and violations of the Information Technology Act. Rauf Sherif was arrested in December 2020 — in Kerala. He was produced before a Kerala court, which sent him to custody under Section 167(2) of the CrPC (a provision that allows a magistrate to remand an accused even if the magistrate lacks jurisdiction to try the case).

The Lucknow complaint that surprised everyone

Then came the twist. The ED filed its formal prosecution complaint — the document that actually starts the trial — not in Kerala, but in Lucknow, Uttar Pradesh. Rauf Sherif was named Accused No.1. The Special Judge for PMLA cases in Lucknow took cognizance (accepted the complaint for trial) and framed charges in December 2022. The trial had begun.

Rauf Sherif filed a transfer petition before the Supreme Court under Section 406 of the CrPC (the power of the Supreme Court to move a case from one court to another) read with Section 65 of the PMLA (which makes the CrPC apply to PMLA proceedings). He wanted the case shifted from the Special Court in Lucknow to the Special Court in Ernakulam, Kerala.

His arguments were straightforward. First, the Lucknow court lacked territorial jurisdiction — the predicate offences happened in Kerala, not Uttar Pradesh. Second, the majority of accused persons and witnesses were from Kerala, making travel to Lucknow a hardship. Third, the earlier remand order by the Kerala court under Section 167(2) CrPC meant the case should have been filed there, not in Lucknow.

Why the court saw a flaw — and kept it

The Supreme Court bench — Justice V. Ramasubramanian and Justice Pankaj Mithal — did not dismiss the jurisdictional argument outright. Instead, it engaged with it seriously, applying its own recent judgment in Rana Ayyub v. Directorate of Enforcement (2023).

In Rana Ayyub, the Supreme Court had held that the territorial jurisdiction of a PMLA Special Court is determined not by where the predicate offence FIR was filed, but by where any of the activities that constitute money laundering under Section 3 PMLA took place. Those activities include concealment, possession, acquisition, use, or projecting/claiming tainted property as untainted.

The ED's allegations in Rauf Sherif's case showed that money had been transferred to accused persons based in Uttar Pradesh. That was enough, the court said, for the Lucknow court to potentially have jurisdiction. The place where the predicate offence occurred was not the only factor.

But the court went further. It said that even if the Lucknow court lacked jurisdiction — and it left that question open — that very defect worked in Rauf Sherif's favour.

The counterintuitive logic of jurisdiction

Here is the core of the judgment. The court held that a lack of jurisdiction is a "congenital defect" — a flaw that exists from the birth of the proceedings. Such a defect, the court said, "inures to the benefit of the accused." In plain English: if the trial court has no legal authority to hear the case, that is a problem for the prosecution, not the defence. The accused can raise it later in an appeal to get the entire trial thrown out.

If the Supreme Court transferred the case to a court that clearly had jurisdiction, it would be doing the prosecution's job for it — curing a defect that should benefit the accused. The court refused to do that. "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 other words: if you are being tried in the wrong court, that is a weapon you keep in your pocket for later. You don't ask the Supreme Court to hand you a different weapon.

When convenience is not enough

The court also dismissed the argument about the convenience of accused persons and witnesses. The majority of the 22 accused and their witnesses were from Kerala. Travel to Lucknow was expensive and disruptive. The court was sympathetic — but not persuaded.

It held that the fact that most parties are from a particular state is not, by itself, a ground to transfer a criminal case. The Supreme Court's power to transfer cases under Section 406 CrPC is meant to prevent a failure of justice or to serve the ends of justice — not merely to reduce travel costs. No evidence of actual prejudice or bias was shown. The inconvenience, the court said, was not enough.

As for the Section 167(2) remand argument — that the Kerala magistrate's remand order somehow fixed the jurisdiction — the court clarified that Section 167(2) itself contemplates remand by a magistrate "whether he has or has not jurisdiction to try the case." A remand order does not determine where the prosecution complaint must be filed.

What this means for every PMLA accused

The judgment in KA Rauf Sherif v. Directorate of Enforcement delivers a sharp lesson for defence lawyers in money laundering cases. A jurisdictional challenge is a powerful tool — but it is a tool for appeal, not for transfer. If you ask the Supreme Court to move your case to a court that clearly has jurisdiction, you may be giving up your best argument for later.

For practitioners, the takeaway is this: before filing a transfer petition on jurisdictional grounds, ask whether the alleged defect helps or hurts your client. If the trial court might lack jurisdiction, that is a potential ground to quash the entire proceeding — but only if you preserve it. Moving the case to a proper court may seem like a win today, but it could cost you the case tomorrow.

THE PLAY: Never file a transfer petition to cure a jurisdictional defect that benefits your client — preserve that defect for appeal instead.

The trial in Lucknow continues. The jurisdictional question remains open. And KA Rauf Sherif walks into court each day knowing that the very flaw he complained about might be the key to walking out free.