PMLA case can be tried anywhere money was laundered, not where crime began

He was arrested in Kerala for a crime linked to a Kerala case. So why was his trial happening 2,000 km away in Lucknow? On a December morning in 2020, KA Rauf Sherif, the General Secretary of Campus Front of India, was taken into custody by the Enforcement Directorate in Kerala. He expected his trial to follow him — in the same city where he was arrested, where the original crime was investigated, where his lawyers and witnesses lived. Instead, the prosecution complaint landed in Lucknow, Uttar Pradesh. The question that followed was deceptively simple: under the Prevention of Money-Laundering Act, 2002, where exactly does a money-laundering trial happen?

The answer, the Supreme Court ruled in April 2023, depends not on where the original crime began — but on where the dirty money went.

When the Kerala case became a national one

The story starts in 2013, in Kerala. Twenty-two persons were prosecuted under the Indian Penal Code, the Arms Act, and the Unlawful Activities (Prevention) Act (UAPA — a law dealing with terrorism-related offences). Twenty-one were convicted by a special court in Ernakulam. KA Rauf Sherif was not among them. He was not accused in that case at all.

But the Enforcement Directorate (ED — the agency that investigates money-laundering) saw something else. In 2018, it registered a money-laundering case — called an ECIR (Enforcement Case Information Report, the ED's equivalent of an FIR) — connected to that same Kerala conviction. The ED alleged that the proceeds of crime from those offences had been moved, hidden, and used across state lines.

Then came a second FIR, filed in Mathura, Uttar Pradesh, in 2020, for terror-related offences. The ED combined both threads into a single prosecution complaint — the formal charge document under the PMLA — and filed it not in Kerala, but in Lucknow.

The arrest that raised the question

Sherif was arrested in Kerala on December 12, 2020. A special court in Ernakulam remanded him to custody — meaning a judge in Kerala decided he should stay in jail during the investigation. But when the ED filed its formal charges, it did so in Lucknow. Charges were framed there in December 2022. The trial began. A prosecution witness was examined.

Sherif then approached the Supreme Court with a transfer petition — a request to move the case from Lucknow to Ernakulam. His argument: the original crime happened in Kerala, most accused and witnesses lived in Kerala, and a Kerala court had already remanded him. Why should he travel 2,000 km for a trial that belonged in his home state?

What the PMLA actually says about jurisdiction

The Prevention of Money-Laundering Act creates a special legal universe. Under Section 3 of the PMLA (the definition of money-laundering), the offence is not just the original crime — called the "scheduled offence" or "predicate offence" — but any activity involving the proceeds of that crime: acquiring, possessing, concealing, or using the money or property that came from illegal activity.

Section 44 of the PMLA (which governs where these cases are tried) says that a Special Court can take cognizance of a complaint if the offence was committed within its territorial jurisdiction. But what does "committed" mean when the money has crossed three states?

The ED's position was straightforward: the prosecution complaint alleged that funds had been transferred to persons arrested in Uttar Pradesh with explosive devices. That created a territorial link — a "nexus" — with Lucknow. The money-laundering activities, the ED said, happened in UP, so the Lucknow court had jurisdiction.

Sherif's lawyers argued the opposite: the predicate offence — the original crime — was in Kerala. The FIR was in Kerala. The conviction was in Kerala. The court that should try the money-laundering case, they said, was the one closest to where the crime began.

Why the Supreme Court said no to transfer

The bench of Justice V. Ramasubramanian and Justice Pankaj Mithal dismissed the transfer petition. Their reasoning turned on two key points.

First, the court applied its own recent judgment in Rana Ayyub v. Directorate of Enforcement (2023), which had already settled the jurisdiction question. Under that precedent, the territorial jurisdiction of a Special Court under the PMLA is determined by where any of the activities that constitute money-laundering took place — acquisition, possession, concealment, or use of proceeds of crime. It does not matter where the original FIR was filed or which court convicted the accused for the predicate offence. If the money moved through Lucknow, the Lucknow court could try the case.

Second, the court made a striking observation about the nature of a jurisdiction challenge. "The lack of jurisdiction of a court to entertain a complaint," the bench held, "cannot be a ground to order transfer of the case." If the Lucknow court genuinely lacked jurisdiction, that was a defect that benefited the accused — he could raise it before the trial court itself. Asking the Supreme Court to transfer the case to cure a supposed lack of jurisdiction would actually harm the accused, not help him.

The court also rejected the argument about convenience. The fact that most accused and witnesses lived in Kerala was not, by itself, a legally valid ground for transfer. Criminal trials, the court implied, are not moved simply because travel is inconvenient.

When the remand order didn't help

One of Sherif's strongest arguments was that a Kerala court had already remanded him to custody under Section 167(2) of the CrPC (the provision that allows a magistrate to order police custody or judicial custody during investigation). If a Kerala court had jurisdiction to remand him, he argued, then the trial should also happen in Kerala.

The Supreme Court disagreed. Section 167(2) itself, the bench noted, contemplates that a magistrate can order remand "whether he has or has not jurisdiction to try the case." A remand order does not fix the trial location. It is a procedural step during investigation, not a determination of where the final trial will happen.

What this means for every PMLA accused

For practitioners and accused persons, the judgment delivers a clear message: under the PMLA, jurisdiction follows the money, not the crime. If the Enforcement Directorate can show that proceeds of crime were acquired, possessed, concealed, or used in a particular place — even if that place is far from where the original offence occurred — the Special Court in that place can try the case.

This has practical consequences. An accused arrested in Chennai for a crime that began in Bengaluru could face trial in Delhi if the ED alleges that funds were transferred to a bank account there. A transfer petition to the Supreme Court will not succeed unless the accused can show something more than inconvenience or the location of the original FIR.

THE PLAY: If you are defending a PMLA case, do not assume the trial will happen where the predicate offence was committed — map every location where proceeds of crime were allegedly acquired, possessed, concealed, or used, because that map determines where you will fight.

The trial continues in Lucknow

The Supreme Court dismissed the transfer petition. KA Rauf Sherif's trial will proceed before the Special Judge, PMLA, Lucknow — 2,000 km from the Kerala courtroom where he was first remanded. The money, the court held, had already decided where justice would be done.