Pre-Cognizance Hearing Of Accused Mandatory For PMLA Complaint When Cognizance Taken After BNSS : Supreme Court

In an important ruling, the Supreme Court has held that where cognizance of an alleged offence under the Prevention of Money Laundering Act, 2002 is taken by a magistrate after the commencement of the Bharatiya Nagarik Suraksha Sanhita (BNSS), such cognizance would stand vitiated in the absence of compliance with the first proviso to Section 223(1) of the BNSS, which mandates granting the accused a prior hearing before taking cognizance, even if the complaint itself had been filed before the BNSS came into force.

A bench of Justice MM Sundresh and Justice Nongmeikapam Kotiswar Singh set aside the Uttarakhand High Court's decision, which had affirmed the magistrate's order taking cognizance of an offence under the PMLA against the Appellant, without affording an opportunity of hearing to the Appellant-accused as mandated under first proviso to Section 223(1) of the BNSS.

“…non-compliance with the first proviso to Section 223(1) of the BNSS vitiates the very order taking cognizance, and the same cannot be sustained in the eyes of the law.”, the Court observed.

The case arose from an Enforcement Directorate complaint filed on June 24, 2024 under Sections 44 and 45 of the PMLA. Although the complaint was instituted before the BNSS came into force on July 1, 2024, the Special Court actually took cognizance only on July 2, 2024, after the CrPC stood repealed and replaced by the BNSS. Crucially, no opportunity of hearing was granted to the accused before cognizance was taken, a decision further upheld by the High Court.

Setting aside the concurrent findings, the judgment authored by Justice Sundresh held that once cognizance was taken after the commencement of the BNSS, compliance with the first proviso to Section 223(1) became mandatory.

The Court rejected the ASG SV Raju's contention, appearing for Enforcement Directorate, that the Magistrate's act of directing the complaint to be numbered and listing the matter for consideration on cognizance amounted to an “inquiry”, thereby attracting the savings clause under Section 531(2)(a) of the BNSS and continuing the application of the old CrPC regime. The Court held that a mere ministerial direction to register or number a complaint does not constitute an “inquiry” within the meaning of Section 2(1)(k) of the BNSS, as no judicial application of mind is involved at that stage. Consequently, the Court ruled that the savings clause preserving pending “appeals, applications, trials, inquiries or investigations” under the CrPC was not attracted.

In effect, the Court rejected the ED's argument that the complaint would continue to be governed by the CrPC merely because it had been filed prior to July 1, 2024.

“…though the complaint under the PMLA was filed earlier, the cognizance was only taken subsequently, on 02.07.2024, by which time the BNSS had come into force. Admittedly, the appellant has not been heard at the time of taking cognizance. The mandate of a legislation which ensures the right of an accused to a fair trial, whose liberty is at stake, cannot be dispensed with. Thus, the contention of the learned ASG that prejudice caused due to non-hearing at the stage of cognizance will have to be shown by the accused cannot be accepted, as it is not a mere irregularity that would attract either Section 506 or 511 of the BNSS, but is an illegality that would vitiate the very proceedings.”, the court observed.

Also, the Court faulted the impugned order for not allowing the Appellant's application to be heard under the first proviso to Section 223(1) of BNSS, which was filed immediately by the Appellant soon after the commencement of BNSS.

“In fact, the appellant has, at the earliest point in time, filed the application for recall of the order taking cognizance by placing reliance upon the said proviso. Had the Special Court allowed it, the trial would have proceeded further. Suffice it to state that the appellant cannot be faulted for any delay that has occasioned.”, the court said.

In terms of the aforesaid, the appeal was allowed. The order taking cognizance was set aside.

The Special Court was directed to afford an opportunity of hearing to the appellant by proceeding from the stage of taking cognizance. The aforementioned exercise must be completed within a period of 8 weeks from the date of receipt of a copy of this judgment.

Cause Title: PARVINDER SINGH VERSUS DIRECTORATE OF ENFORCEMENT

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Appearance:

For Petitioner(s) Mr. Sidharth Aggarwal, Sr. Adv. Mr. Ayush Kaushik, Adv. Ms. Shubhangni Jain, Adv. Mr. Sahil Dhingra, Adv. Mr. Karan Dhalla, Adv. Mr. Abhay Pratap Singh, AOR

For Respondent(s) Mr. Suryaprakash V. Raju, A.S.G. Mr. Zoheb Hussain, Adv. Mr. Annam Venkatesh, Adv. Mr. Samrat Goswami, Adv. Mr. Arvind Kumar Sharma, AOR Mr. Sai Shashank, Adv. Mr. Rohan Wadhwa, Adv. Mr. Vittal B, Adv. Mr. Ayush Anand, AOR Mr. Monu Kumar, Adv.