Fight over jurisdiction holds up trials in PMLA cases

Ever since the city got its first special court set up under the Prevention of Money Laundering Act (PMLA) in 2012, trials have completed in only one case. The remaining cases, numbering 101, have been caught in a battle of jurisdiction between two special courts.

Section 44(1) of the PMLA stipulates that the trials in the money-laundering case and the predicate or scheduled offence be conducted together by the special PMLA court.

However, the special Central Bureau of Investigation (CBI) court has shot down some of the Enforcement Directorate (ED)’s applications to transfer cases on the grounds that the PMLA court is not competent to try case registered under the Prevention of Corruption Act.

A good case in point is the fraud linked to Surat-based Siddhi Vinayak Logistics Limited (SVLL).

SVLL had in 2015 allegedly taken around ₹2,000 crore in loans from 13 banks and never paid it back. The CBI registered an FIR in August that year and filed a charge-sheet against 21 people in February 2018.

The ED had in November 2016 initiated a money-laundering probe based on the CBI’s case. It filed its charge-sheet or prosecution complaint in June 2017 against one Rupchand Baid and nine others. The ED also filed a supplementary charge-sheet in December 2020, naming two more accused.

Since both the agencies had completed their probe, the special PMLA court asked the ED to get the predicate offence transferred to it for a joint trial.

Accordingly, earlier this month, the ED moved a plea before the special CBI court. It was strongly opposed by the CBI who contended that the special PMLA court was not authorised to conduct trials in cases registered by the agency under the Prevention of Corruption Act.

On the contrary, the agency claimed, a notification issued in February 2016 had empowered every court in Bombay City Civil and Sessions Court to hold trials in money-laundering cases as well.

The special CBI court accepted the agency’s contention and rejected the ED’s plea.

“The PMLA court is a designated court but it is not notified in the official gazette to try the offences under the Prevention of Corruption Act,” it said.

Similarly, the case involving Yes Bank promoter Rana Kapoor and the Wadhawan brothers of Dewan Housing Finance Corporation Limited (DHFL) has been awaiting trials for the last few years.

According to the CBI, between April and June 2018, Yes Bank had invested around ₹4,727 crore in short-term non-convertible debentures and “masala bonds” of DHFL promoted by Kapil Wadhawan and his brother Dheeraj. The bank subsequently also sanctioned a term loan of ₹750 crore to a DHFL group firm. In return, the then Yes Bank MD and CEO, Rana Kapoor, received a kickback of ₹600 crore from DHFL in the form of a loan to his family firm, Do It Urban Ventures (India) Private Limited, the agency had said.

Kapoor had in September 2021 approached the principal sessions judge to transfer the loan fraud case registered by the CBI and the connected money-laundering case to one court so that joint trials could begin.

His plea was, however, rejected on the grounds that it was not maintainable. The principal sessions judge said Kapoor, as an accused, could not file the plea, and if at all, such request should come from the prosecuting agency.

“The ED has not made any request. Furthermore, the request has to be made before the CBI court where the scheduled offence is being tried and then the statute casts an obligation on the special court to commit the matter to the PMLA court,” the judge had said.

However, in February 2022, when the ED approached the principal sessions judge, seeking an order to transfer the case to the PMLA court, the plea was rejected and the agency was asked to approach the special CBI court. When the ED moved an application before the CBI court, it was rejected in July last year. Now, both the ED and Kapoor have moved the Bombay high court.

Previously too, it was only after the intervention of the Bombay high court that the cases registered against fugitive diamantaire Nirav Modi and Mehul Choksi in the ₹13,850 crore fraud at Punjab National Bank, and Vijay Mallya were transferred to one court.