Authored By: Vaishali Singh
City Academy Law College, Lucknow University
The Prevention of Money Laundering Act, 2002 (PMLA), was introduced in India to handle the risk of money laundering and fight the financing of illegal activities. As economic crimes evolved the complexities of investigating and prosecuting such offenses increased creating the need for a strong judicial mechanism. Special Courts under the PMLA were established to speed up the adjudication process and ensure immediate justice.
Money laundering involves advance techniques, financial transactions, and criminal networks that require specialized attention. The traditional court system, burdened with cases of varying nature, lacked the necessary infrastructure to deal with the technicalities involved in prosecuting money laundering offenses.
To address this gap Section 43 of the PMLA provides for the establishment of Special Courts. These courts are specifically appointed to handle offenses under the Act, ensuring that the focus is maintained on the complication of money laundering cases.
Special Courts under the PMLA are constituted in consultation with the Chief Justice of the High Court. They are usually District or Sessions Courts designated by the Central Government to try offenses related to money laundering. The jurisdiction of these courts extends to:Offenses under the PMLA: Including prosecution of individuals or entities involved in money laundering.Connected Offenses: Crimes that may be directly or indirectly linked to money laundering such as economic fraud, corruption, or tax evasion.
These courts function with the same powers and jurisdiction as a Sessions Court, empowered to take cognizance of complaints filed by authorities like the Enforcement Directorate (ED).
The primary objective of Special Courts is to ensure the speedy trial of money laundering cases. Money laundering is often linked to large-scale economic fraud, affecting not just individuals but the integrity of financial systems. By providing focused attention to these cases Special Courts can:-Avoid Procedural Delays: The backlog of cases in traditional courts often delays justice. Special Courts work to bypass this issue by exclusively focusing on money laundering cases, ensuring timely hearings and resolution.
Specialized Expertise: These courts handle cases that require an understanding of complex financial transactions, international banking, and legal frameworks related to economic crimes. The judges presiding over these courts often gain expertise in these subjects, making them better suited to deliver just and informed rulings.
Efficient Prosecution: The PMLA Special Courts work in collaboration with the Enforcement Directorate (ED) and other investigating agencies ensuring that evidence is rapidly collected, examined, and prosecuted without undue delays.
Case laws:-
Under the Case Law- Ka Rauf Sherif v. Directorate of Enforcement & Ors. (2023)
“The lack of jurisdiction of a Court to entertain a complaint can be no ground to order its transfer. 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.”
This ruling clarifies that even if there is a lack of jurisdiction, it cannot be used to transfer a case to a different Special Court under the PMLA. The Special Court’s role is to adjudicate cases immediately and jurisdictional issues should not delay proceedings. This is crucial to the PMLA’s objective of expedited justice, as unnecessary transfers could extend trials and disrupt the timely conclusion of cases.
For the territorial jurisdiction –“It is the Special Court constituted under the PMLA that would have jurisdiction to try even the scheduled offence. Even if the scheduled offence is taken cognizance of by any other Court, that Court shall commit the same, on an application by the concerned authority, to the Special Court which has taken cognizance of the offence of moneylaundering.”
This quote strengthens that Special Courts under the PMLA have exclusive jurisdiction over both the scheduled offense and money laundering offenses. It supports the objective of consolidated, efficient trials within Special Courts, avoiding duplication of proceedings in multiple jurisdictions. This is essential for expediting justice, as it prevents the division of cases across different courts, which could lead to delays.
Under the case law- Arun Ramchandran Pillai v. Directorate of Enforcement & Ors. (2024)
“It is alleged that all the accused persons are found to have been involved in multiple activities related to or connected with proceeds of crime of scheduled offences in regard to which the ED registered the case in terms of Section 3 of PMLA, 2002. It is alleged that all the accused persons have dealt with the proceeds of crime and they are guilty of the offence of money laundering punishable under Section 4 of the PMLA, 2002.”
This reflects the seriousness of money laundering offenses under the PMLA, which often involve extensive financial schemes. Special Courts under the PMLA are equipped to handle such complex matters due to their specialized focus on the complex details of financial crimes. The specialized nature of these courts ensures that such cases are not delayed due to the general overload of regular courts, thereby expediting justice.
“The investigations are complete, and the Prosecution Complaint and Supplementary Prosecution Complaints contain 16,576 pages of relied upon documents. Further two other Supplementary Prosecution Complaints have been filed.”
Special Courts under the PMLA are designed to handle cases with massive volumes of evidence, which are typical in money laundering offenses. Their expertise in dealing with such voluminous and complex evidence helps expedite the trial process, ensuring that justice is not delayed by the technicalities and scope of financial documentation involved Under the PMLA, the Enforcement Directorate plays a crucial role in investigating and prosecuting money laundering offenses. The ED files a complaint before the Special Court after completing an investigation. Notably, the Special Court can take cognizance of the offense based on the complaint directly from the ED, without the need for the accused to be committed for trial by a Magistrate, expediting the judicial process.
Furthermore, Special Courts are empowered to handle applications for the attachment of property under the PMLA. This provision is essential as it allows the court to freeze or seize assets derived from money laundering, thereby preventing their dissipation during the trial process.
Despite their critical role in expediting justice, Special Courts under the PMLA face certain challenges:Case Backlog-Although designed to expedite cases, the growing number of money laundering investigations has led to some level of backlog even in Special Courts,Coordination Issues: Efficient prosecution often requires close coordination between investigative agencies, banks, financial institutions, and international law enforcement bodies. Delays in gathering evidence, especially from foreign jurisdictions, can slow down the trial process,Legal Complexity: Money laundering cases often involve complex financial structures, shell companies, and international money trails, which require substantial time and expertise to decode The establishment of Special Courts under the PMLA has been a significant step toward ensuring faster adjudication of money laundering cases. By providing a focused judicial platform with specialized knowledge, these courts have contributed to the effective enforcement of anti-money laundering laws. However, there remains room for improvement, particularly in addressing the increasing volume of cases and enhancing coordination between investigative bodies. As financial crimes become more sophisticated, the role of Special Courts in delivering expedited and just outcomes will continue to be crucial in maintaining the integrity of India’s financial systems.
References:
[1] Prevention of Money Laundering Act, 2002, No. 15, Acts of Parliament, 2003 (India).
[3] Id. At § 43.
[4] Directorate of Enforcement v. Ramesh Chandra, (2015) 2 SCC 456 (India).
[5] PMLA, § 44.
[7] Directorate of Enforcement v. Vikram, (2020) 6 SCC 33 (India).
[8] Ka Rauf Sherif v. Directorate of Enforcement & Ors., (2023) SCC OnLine SC 134.
[11] Arun Ramchandran Pillai v. Directorate of Enforcement & Ors., (2024) SCC OnLine SC 56.
[14] PMLA, § 45.
[17] Directorate of Enforcement v. Mohan, (2018) 9 SCC 312 (India).
