CBI Court Bound To Transfer Scheduled Offence Case To PMLA Special Court Upon Application U/S 44(1)(c) PMLA: Madras High Court

The Court was hearing a petition challenging an order of a Special Court dealing with the scheduled offence, which had refused to transfer the case to the designated Special Court under the Prevention of Money Laundering Act despite an application filed by the authorised authority under the statute.

A Bench comprising Chief Justice Manindra Mohan Shrivastava and Justice G. Arul Murugan observed that “when an application is filed before the CBI Court dealing with the scheduled offence, seeking to transfer the scheduled offence to the designated Special Court under Section 44(1)(c) of the PMLA, the CBI Court is mandated and left with no other option than to transfer the scheduled offence case to the designated Special Court under the PMLA.”

Background

The case arose from proceedings relating to offences under the Prevention of Corruption Act, which constituted the scheduled predicate offence under the Prevention of Money Laundering Act. Following an investigation into the scheduled offence, prosecution proceedings were initiated before the Special Court dealing with such offences.

Subsequently, the Enforcement Directorate initiated proceedings under the Prevention of Money Laundering Act on the basis of the predicate offence and filed a complaint before the Special Court designated under the PMLA alleging commission of the offence of money laundering.

In view of the pendency of both proceedings, the Enforcement Directorate filed an application before the court dealing with the scheduled offence seeking transfer of the predicate offence case to the Special Court designated under the Prevention of Money Laundering Act in terms of Section 44(1)(c) of the statute.

The court dealing with the scheduled offence rejected the application on the ground that the trial in the predicate offence had already progressed and that transferring the case at that stage would delay the proceedings.

Aggrieved by the refusal to transfer the case, the Enforcement Directorate approached the High Court challenging the order.

Court’s Observation

The High Court examined the statutory scheme governing the trial of offences under the Prevention of Money Laundering Act, particularly Sections 43 and 44 of the statute.

The Court noted that Section 43 provides for the constitution of Special Courts for the trial of offences under the Prevention of Money Laundering Act and also enables such courts to try other offences with which the accused may be charged at the same trial.

Referring to Section 44(1), the Court observed that the statute provides that an offence of money laundering and any scheduled offence connected with it shall be triable by the Special Court constituted for the area in which the offence has been committed.

The Court further examined Section 44(1)(c), which provides that where the court taking cognizance of the scheduled offence is different from the Special Court which has taken cognizance of the offence of money laundering, the court dealing with the scheduled offence shall, upon an application by the authorised authority under the Act, commit the case relating to the scheduled offence to the Special Court.

Interpreting the provision, the Court held that the language of the statute leaves no discretion with the court dealing with the scheduled offence once such an application is made by the authorised authority.

The Court also referred to the decision of the Supreme Court in Rana Ayyub v. Directorate of Enforcement, where the Supreme Court clarified the scheme of Section 44 of the Prevention of Money Laundering Act and held that the trial of the scheduled offence should follow the trial of the offence of money laundering before the Special Court constituted under the statute.

According to the High Court, the legal position laid down by the Supreme Court made it clear that once the authorised authority files an application under Section 44(1)(c), the court dealing with the scheduled offence must transfer the case to the Special Court dealing with the offence of money laundering.

The Court held that the refusal of the trial court to transfer the case on the ground that the trial had reached an advanced stage was contrary to the statutory mandate and the law laid down by the Supreme Court.

The Court further examined the factual situation where the court dealing with the predicate offence was also a court competent to try cases under the Prevention of Money Laundering Act, while the Special Court dealing with the money laundering case was not designated to try offences under the Prevention of Corruption Act.

Taking note of a decision of the Supreme Court where, in similar circumstances, proceedings under the Prevention of Money Laundering Act were directed to be transferred to the court trying the predicate offence, the High Court considered it appropriate to adopt the same course in the present case.

“The impugned order of the trial court rejecting the application, holding that the trial in the scheduled offence is in an advanced stage and that the transfer to the designated Special Court under the PML Act would delay the trial, is in the teeth of the decision of the Hon’ble Supreme Court in Rana Ayyub v. Directorate of Enforcement (supra) and as such, the impugned order is perverse and cannot be sustained”, the Court concluded.

Conclusion

Allowing the petition, the High Court set aside the order refusing transfer of the scheduled offence case.

The Court directed that the proceedings under the Prevention of Money Laundering Act be transferred to the court dealing with the predicate offence so that both matters could be tried by the same court.

Cause Title: Deputy Director, Directorate of Enforcement v. Deputy Superintendent of Police, Central Bureau of Investigation (Neutral Citation: 2026:MHC:922)

Appearances

Petitioner: Rajnish Pathiyil, Special Public Prosecutor

Respondent: B. Mohan (Special Public Prosecutor, CBI), Advocate R. Sathish Kumar

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