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IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. SUBBIAH, R. PONGIAPPAN, JJ.
A. John Kennedy & Others - Appellant
Versus
Joint Director Directorate of Enforcement Cochin Zonal Office Kanoos Castle Mullassery Canal Road West Cochin - Respondent
W.P. Nos. 25177 & 25231 of 2019 & W.M.P.Nos. 24748, 24800, 24751 & 24801 of 2019
Decided On : 17-12-2020
The High Court held that the writ petitions filed by the companies challenging the validity and legality of the registration of Enforcement Case Information Report (ECIR) and the Provisional Attachment Order (PAO) issued under the Prevention of Money Laundering Act (PMLA) were not maintainable. The Court found that the petitioners had an alternative remedy available to them under the PMLA Act, 2002, and they should have exhausted that remedy before approaching the Court. The Court also held that it did not have territorial jurisdiction to entertain the writ petitions as the alleged offences were committed in the State of Kerala and the properties attached were situated within the State of Tamil Nadu. The Court further held that the petitioners could not invoke the jurisdiction of the High Court under Article 226 of the Constitution of India merely because a small fraction of the cause of action arose within its jurisdiction.
Fact of the Case:
The petitioners, companies involved in the sale and distribution of Sikkim State Lotteries, challenged the registration of an ECIR and the issuance of a PAO under the PMLA. The petitioners argued that the ECIR was registered without jurisdiction and that the PAO was passed without valid reasons. The petitioners also contended that the High Court had jurisdiction to entertain the writ petitions as a part of the cause of action arose within its jurisdiction.
Finding of the Court:
The High Court held that the writ petitions were not maintainable as the petitioners had an alternative remedy available to them under the PMLA Act, 2002. The Court also held that it did not have territorial jurisdiction to entertain the writ petitions as the alleged offences were committed in the State of Kerala and the properties attached were situated within the State of Tamil Nadu. The Court further held that the petitioners could not invoke the jurisdiction of the High Court under Article 226 of the Constitution of India merely because a small fraction of the cause of action arose within its jurisdiction.
Issues: 1. Whether the writ petitions were maintainable in light of the alternative remedy available under the PMLA Act, 2002? 2. Whether the High Court had territorial jurisdiction to entertain the writ petitions? 3. Whether the petitioners could invoke the jurisdiction of the High Court under Article 226 of the Constitution of India based on a small fraction of the cause of action arising within its jurisdiction?
Ratio Decidendi: 1. The Court held that the writ petitions were not maintainable as the petitioners had an alternative remedy available to them under the PMLA Act, 2002. The Court relied on several Supreme Court and High Court decisions which held that when a statutory remedy is available, a writ petition under Article 226 of the Constitution of India is not maintainable. 2. The Court held that it did not have territorial jurisdiction to entertain the writ petitions as the alleged offences were committed in the State of Kerala and the properties attached were situated within the State of Tamil Nadu. The Court noted that only a small fraction of the cause of action arose within its jurisdiction and that the larger and substantial part of the cause of action had arisen in the State of Kerala. 3. The Court held that the petitioners could not invoke the jurisdiction of the High Court under Article 226 of the Constitution of India merely because a small fraction of the cause of action arose within its jurisdiction. The Court relied on the principle of 'forum conveniens' and held that the appropriate Court to entertain the writ petitions was the High Court of Kerala, where the alleged offences were committed and the trial was pending.
Final Decision: The High Court dismissed the writ petitions filed by the companies challenging the validity and legality of the registration of ECIR and the issuance of PAO under the PMLA.
ORDER :
R. Subbiah, J.
(Prayer: Writ Petitions filed under Article 226 of the Constitution of India, praying for issuance of Writs of Certiorari to call for the records from the respondent herein relating to registration of Enforcement Case Information Report (ECIR) in his proceedings ECIR.No.KCZO/4/2014, dated 19.08.2014 and the Provisional Attachment Order No.02-/2019 issued in ECIR/04/KCZO/2014/1137, dated 22.07.2019 under Section 5(1) of the Prevention of Money Laundering Act (PMLA) and quash the same.)
1. Both these Writ Petitions are filed questioning the validity and/or legality of the registration of Enforcement Case Information Report (ECIR) in proceedings in ECIR.No.KCZO/4/2014, dated 19.08.2014 and consequential Provisional Attachment Order No.02-/2019 (for short, ‘the PAO’) issued in ECIR/04/KCZO/2014/1137, dated 22.07.2019 under Section 5(1) of the Prevention of Money Laundering Act (for short, ‘PMLA’) on the file of the respondent and quash the same.
2. Both the writ petitions are filed by the companies, which are represented by Mr.A.John Kennedy, the first petitioner in W.P. No. 25177 of 2019. Since the Writ Petitions are filed with identical prayer and the issues involved in these Writ Petitions are inter-related to each other, they are taken up for hearing together and are disposed of by this common order.
3. The case of the petitioners is as follows:
(b) In exercise of the powers conferred under Section 12 of the Act, the State of Sikkim framed Rules for regulating the Lottery sale and distribution. Based on the said Rules, the State of Sikkim organised and promoted its Lottery sale, inter-alia, decided to sell its Lottery tickets through the Distributors or Selling Agents. For this purpose, the State Government of Sikkim invited tenders to nominate Distributors to sell the State Lottery tickets to the public under their own arrangements. In the tender floated by the State of Sikkim, M/s. Martin Lottery Agencies Limited (in short, ‘the MLAL’) was the highest tenderer. The MLAL is now known as Future Gaming Solutions and Hotels Pvt. Ltd. As a highest bidder, they were appointed as sole Distributor to sell the Lottery tickets in any State, which was not a Lottery free State. The said MLAL was also authorised to appoint sub-agents.
(c) The State of Kerala was also organising, promoting and conducting its own Lotteries within the State and so, it is not a Lottery free zone. MLAL, the sole distributor authorised by the State of Sikkim, sought to sell the Sikkim State Lotteries in the State of Kerala by complying with all the Rules and Regulations. For this purpose, several contracts were entered into between the State of Sikkim and MLAL and the last contract was entered into between them on 10.08.2009, which came into effect from 18.10.2009 and was valid for a period of five years, i.e. upto 17.10.2014. In the meantime, The Lotteries (Regulation) Rules, 2010 were framed and notified with effect from 01.04.2010. However, the sale of Lottery business was stopped within the State of Kerala after 31.08.2010.
(d) As the State of Kerala organised its own Lottery and is not a Lottery-free State by then, the other States, such as State of Sikkim, which organises its own Lott
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