Justice Sanjay Parihar made the observation while partly allowing a revision petition filed by the Directorate of Enforcement (ED) challenging the dismissal of its plea seeking addition of charges under Sections 411 and 424 of the erstwhile Ranbir Penal Code (RPC) against, among others, former Jammu & Kashmir Chief Minister and former Jammu & Kashmir Cricket Association (JKCA) president Dr. Farooq Abdullah.

The Court, however, rejected the ED's substantive prayer, holding that the material presently forming part of the CBI charge-sheet did not prima facie disclose the essential ingredients of either offence.

The case arises out of allegations concerning the alleged misappropriation of funds received by the JKCA from the Board of Control for Cricket in India (BCCI).

According to the prosecution case, the BCCI had remitted approximately ₹112.13 crore to the JKCA, of which the CBI allegedly found around ₹43.69 crore to have been misappropriated. The CBI charge-sheet alleged that Ahsan Ahmad Mirza, in conspiracy with then JKCA President Dr. Farooq Abdullah, then General Secretary Mohammad Saleem Khan and bank official Bashir Ahmad Misger, diverted JKCA funds into personal accounts through allegedly unauthorised transactions.

The CBI eventually filed its charge-sheet in 2018, alleging criminal conspiracy, criminal breach of trust and misappropriation under Sections 120-B, 406 and 409 RPC. The ED subsequently sought addition of Sections 411 and 424 RPC, contending that the material in the CBI charge-sheet also disclosed receipt of stolen property and dishonest or fraudulent removal or concealment of property. This was declined by the trial court.

Aggrieved, the ED challenged the Trial Court's order contending that it had been granted liberty by the High Court and Supreme Court to approach the Trial Court for addition of charges.

It argued that the Trial Court had itself earlier treated its application as maintainable and therefore could not subsequently reject it on the ground that the ED lacked locus standi.

The respondents, on the other hand, argued that the CBI investigation had disclosed only offences under Sections 120-B, 406 and 409 RPC and that the ED could not effectively reopen the investigation by seeking addition of offences that the investigating agency itself had not found to be made out.

The CBI also maintained that its investigation had not yielded material warranting incorporation of Sections 411 or 424 RPC.

ED's locus could not be rejected merely because it was not investigating agency

Adjudicating the matter Justice Parihar found that the Trial Court had erred in altogether rejecting the ED's application on the ground of locus standi. He noted that the Trial Court had earlier observed that the ED's application could not be said to be non-maintainable after liberty had been granted to it to approach the Court for addition of charges.

The High Court held that even if the ED were treated as a stranger to the predicate-offence proceedings, its application could at least be considered as bringing relevant information to the Court's notice. The Court observed,

“The answer to that limited question has necessarily to be in the affirmative.”

It clarified, however, that the grant of liberty to approach the Trial Court did not establish that Sections 411 or 424 RPC were made out, nor did it compel the Trial Court to frame those charges. The Trial Court was only required to independently determine whether the material disclosed their ingredients prima facie.

Section 216 CrPC vests power in Court, not applicant

The Court then examined the scope of Section 216 CrPC. Relying upon Anant Prakash Sinha v. State of Haryana, Justice Parihar held that an informant or another permissible party may bring an omission in the charge to the Court's notice, but the statutory power to alter or add a charge remains that of the Court.

“Section 216 CrPC is a procedural source of power to alter or add a charge; it cannot supply substantive ingredients of an offence which are otherwise absent from the material on record,” the Court observed.

The Court further held that the expression “at any time before judgment is pronounced” permits addition or alteration of charge even on the basis of material already on record. However, such power must be exercised on the basis of prima facie material and with procedural safeguards to ensure a fair opportunity to the accused.

No prima facie case under Section 411 RPC

On the merits, the High Court drew a distinction between a person alleged to have participated in the principal offence of criminal breach of trust and a person who subsequently receives or retains property knowing it to be stolen.

It held that although property involved in criminal breach of trust may acquire the character of “stolen property” under Section 410 RPC, that fact by itself does not attract Section 411 RPC against every person implicated in the underlying offence.

For Section 411, there must be material showing receipt or retention of the stolen property, coupled with knowledge or reason to believe that it was stolen, the Court emphasised and remarked,

“The principal offender in respect of the offence by which the property becomes 'stolen property' does not, merely on that account, become a receiver of such stolen property.”

It found that the alleged movement of JKCA funds through different accounts formed part of the very transaction constituting the alleged conspiracy, misappropriation and criminal breach of trust. There was no distinct subsequent receipt or retention of stolen property sufficient to attract Section 411 RPC, the bench underscored.

The Court accordingly held that no prima facie case for addition of Section 411 RPC was made out on the material presently available.

The Court similarly found that the material did not establish the factual foundation necessary for Section 424 RPC, which concerns dishonest or fraudulent concealment or removal of property, or assistance in such concealment or removal.

Justice Parihar held that the allegations in the CBI charge-sheet were essentially founded upon the alleged criminal conspiracy, criminal breach of trust and misappropriation. The material presently available did not prima facie establish the distinct ingredients necessary for either Section 411 or Section 424 RPC.

PMLA consequences cannot determine whether charge should be added

The Court also made an important distinction concerning the ED's PMLA jurisdiction. It noted that Sections 406 and 409 RPC are not scheduled offences under the PMLA and that, following Pavana Dibbur v. Directorate of Enforcement, mere reference to Section 120-B RPC does not make every conspiracy a scheduled offence. The conspiracy must relate to an offence which itself falls within the PMLA Schedule, the court observed.

However, the High Court stressed that the possible consequences for the ED's PMLA jurisdiction could neither justify adding a charge nor justify refusing to add one and the question had to be decided solely on the material in the predicate-offence proceedings and the ingredients of the proposed offences.

The High Court ultimately partly allowed the ED's revision. It set aside the Trial Court's finding that the ED had no locus standi to move the application seeking addition of charges.

However, it rejected the ED's substantive prayer to add Sections 411 and 424 RPC, holding that the material presently available did not prima facie satisfy their essential ingredients.

The Court however clarified that the rejection was confined to the material presently before the Trial Court. If evidence emerging during trial subsequently discloses an offence under Sections 411 or 424 RPC, or any other penal provision, the Trial Court would remain free to exercise its power under Section 216 CrPC in accordance with law and after observing the safeguards available to the accused, the court concluded.

Case Title: Directorate of Enforcement v. Md. Saleem Khan & Others

Citation: 2026 LiveLaw (JKL) 326

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