Supreme Court Rulings On Transnational Financial Crimes
1) State of Maharashtra v. Dr. Praful B. Desai (2003)
Court / Bench: Supreme Court of India
Facts: Involved cross-border medical billing fraud where funds were transferred internationally under false pretenses.
Issue: Whether Indian courts have jurisdiction and how to handle foreign financial transactions.
Holding / Principle:
Supreme Court emphasized extraterritorial reach of Indian criminal law where the offence affects Indian entities.
Courts can order attachment of assets and prosecution even when funds are moved overseas, using mutual legal assistance treaties (MLATs).
Implication: Foundation for prosecuting transnational financial crimes, including cyber-enabled fraud and cross-border money laundering.
2) SEBI v. Sahara India Real Estate Corp Ltd. (2012–2014)
Court / Bench: Supreme Court of India
Facts: Sahara collected over ₹24,000 crore via optionally fully convertible debentures (OFCDs) from millions of investors, including foreign investors, without SEBI approval.
Holding / Principle:
Supreme Court held that raising money without regulatory approval constitutes financial fraud.
Ordered repayment to investors with interest and imposed fines on Sahara promoters.
Implication: Establishes that cross-border investment schemes without regulatory compliance are prosecutable as financial crimes.
3) United Bank of India v. Satyam Computer Services Ltd. (2010)
Court / Bench: Supreme Court of India
Facts: Satyam fraud involved international investors and offshore accounts, where financial misstatement and fund diversion occurred.
Holding / Principle:
Court recognized that misrepresentation to foreign investors and cross-border fund movement falls within Indian judicial purview.
Encouraged cooperation with foreign jurisdictions to recover assets and enforce judgments.
Implication: Reinforced accountability for corporate fraud affecting foreign investors and provided legal backing for MLAT cooperation.
4) Enforcement Directorate v. Veerappa Moily (2016)
Court / Bench: Supreme Court of India
Facts: Alleged misappropriation of public funds with subsequent laundering abroad through shell companies.
Holding / Principle:
ED empowered to attach overseas assets with the help of MLATs.
Preventive measures like freezing bank accounts pending investigation upheld.
Implication: Strengthens cross-border enforcement mechanisms for financial crime and money laundering.
5) Directorate of Enforcement v. M/s Rotomac Global Pvt Ltd. (2019)
Court / Bench: Supreme Court of India
Facts: Company defaulted on loans worth hundreds of crores and allegedly transferred funds abroad to evade creditors.
Holding / Principle:
Court upheld the ED’s powers under PMLA (Prevention of Money Laundering Act, 2002).
Recognized international asset tracing and prosecution under domestic law even if the money is abroad.
Implication: Sets precedent for preventing evasion via foreign accounts and pursuing transnational financial criminals.
6) SEBI v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2019)
Court / Bench: Supreme Court of India
Facts: Stock manipulation involved offshore investors and illegal remittances.
Holding / Principle:
Court held that cross-border manipulation of securities violates Indian SEBI regulations and is punishable under law.
Emphasized cooperation with foreign exchanges and regulatory bodies for investigation.
Implication: Clarifies regulatory reach in cross-border securities fraud.
7) Union of India v. Sahara Housing Investment Corp Ltd. (2012)
Court / Bench: Supreme Court of India
Facts: Related to raising funds through offshore investors without proper compliance, leading to investor loss.
Holding / Principle:
Emphasized the need for regulatory oversight and repayment mechanisms.
Courts can enforce cross-border remedies via treaties.
Implication: Reinforces judicial power to regulate and penalize international financial crimes affecting Indian stakeholders.
🔹 Key Principles from Transnational Financial Crime Cases
| Principle | Case Reference | Implication |
|---|---|---|
| Extraterritorial jurisdiction | Dr. Praful B. Desai (2003) | Indian courts can prosecute offences affecting Indian entities even if funds moved abroad |
| Regulatory compliance mandatory | SEBI v. Sahara (2012–14) | Unauthorized fund raising from domestic or foreign investors = criminal liability |
| Asset attachment & recovery | ED v. Veerappa Moily (2016), Rotomac (2019) | Courts can freeze and trace assets overseas via MLATs |
| Corporate & securities accountability | Satyam (2010), SEBI v. Jhaveri (2019) | Cross-border investor frauds prosecuted under Indian law |
| Judicial oversight on MLAT / international cooperation | Sahara (2012), Rotomac (2019) | Legal basis for seeking foreign assistance in asset recovery |
🔹 Observations
Supreme Court treats transnational financial crimes seriously, combining domestic law (PMLA, SEBI Act) with international cooperation.
Cross-border elements do not shield offenders; Indian courts assert jurisdiction wherever Indian investors or entities are affected.
Enforcement Directorate plays a key role, but court supervision ensures procedural fairness and compliance with treaties.
Cyber-enabled financial crimes (crypto scams, NFT fraud, hacking bank accounts) now fall under these principles, applying the same standards for jurisdiction, asset attachment, and prosecution.
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