Vijay Pal Dalmia, Advocate

Supreme Court of India & Delhi High Court

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In this case (titled White Water Foods (P) Limited and Ors. v. Directorate of Enforcement, Mumbai reported at MANU/PH/0249/2018), two petitions, filed before the Punjab and Haryana High Court (Court), arose out of the complaint under Prevention of Money Laundering Act, 2002 (PMLA) titled 'Directorate of Enforcement vs. M/s. National Spot Exchange Limited and others', which arose out of an FIR and process issued thereon vide summons pending in the Special Court in Mumbai under PMLA.

The facts of the case were that a scam, involving an amount of Rupees 5600 crores, had taken place in Mumbai in respect of National Spot Exchange Limited, which was the platform for trading into various commodities under various segments.

Additional Solicitor General of India had raised a preliminary objection as to the territorial jurisdiction of this Court to entertain these petitions and submitted that the jurisdiction to entertain any such petition lies only with the Bombay High Court.

The Court heard arguments on the issue of territorial jurisdiction.

The petitioners contended that their place of residence is within Punjab and summons had been served at their place of residence. The attached properties are located in Punjab and the Electronic Exchange is also in Punjab, where some of the transactions had taken place. Moreover, they contended that since they were challenging the vires of the provisions of the PMLA, therefore, any High Court in India could exercise jurisdiction.

Counsel for the respondent had vehemently opposed the petitions and had submitted that filing of the petitions in this Court in respect of a criminal complaint case pending in the designated court at Mumbai was a sheer abuse of process of law and was a deliberate attempt at avoiding the Special Court at Mumbai and the Bombay High Court.

The Court had questioned the petitioners on their failure to file the order passed in PMLA Complaint by which process was issued and held that it was the basic order giving rise to cause of action. Furthermore, the judges questioned the petitioners on their failure to appear before the designated court at Mumbai and challenge the jurisdiction and the demerits of the complaint before that court. The Court was of the opinion that the petitioners had employed a ploy to stop their interrogation and arrest in the alleged huge scam and that they had clearly played subterfuge by filing these petitions before this Court which were clearly not maintainable.

It was undisputed that the criminal complaint had been filed in the Court of City Civil Court and Additional Sessions Judge, Greater Bombay at Mumbai, and order issuing process and accused summons had been made at Mumbai. The offences had taken place at the National Spot Exchange Limited, Mumbai. Thus, the Court held that the cause of action arose within the territorial jurisdiction of Mumbai courts and that it was the place of jurisdiction in the present matter.

The petitioner's mala fide intention to lodge the petitions and obtain interim orders which inadvertently prevented custodial interrogation did not go unnoticed before the Court and was held as abuse of process of law. The petitioners were guilty of misusing the process of law and interfering with the administration of justice and therefore, were ordered to pay 50 Lacs per petitioner as exemplary costs to the Union of India through the Enforcement Directorate.

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