2025 (5) TMI 2001 - SC - Money Laundering

Money Laundering - complaint filed under Section 44(1)(b) of the Prevention of Money Laundering Act 2002 - HELD THAT - This Court has taken a consistent view that a complaint filed by the Enforcement Directorate under Section 44 (1)(b) of the PMLA will be governed by Sections 200 to 204 of the CrPC. This view has been taken by this Court in the cases of Yash Tuteja v/s Union of India and others 2024 (5) TMI 468 - SUPREME COURT and Tarsem Lal v/s Enforcement Directorate 2024 (5) TMI 837 - SUPREME COURT . Therefore the provisions of Chapter XVI containing Sections 223 to 226 will also apply to a complaint under Section 44 of the PMLA. As the complaint has been filed after 1st July 2024 Section 223 of the BNSS will apply to the present complaint. In this case admittedly an opportunity of being heard was not given by the learned Special Judge to the appellant before taking cognizance of the offence on the complaint. Only on that ground the impugned order dated 20th April 2024 will have to be set aside. The impugned order dated 20th November 2024 is set aside only on the ground of non-compliance with the proviso to sub-section (1) of Section 223 of the BNSS - Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this judgment include:

• Whether the provisions of Section 223 of the Bhartiya Nagarik Suraksha Sanhita, 2023 (BNSS), which came into force on July 1, 2024, apply to complaints filed under Section 44(1)(b) of the Prevention of Money Laundering Act, 2002 (PMLA), particularly in light of the established precedent that such complaints are governed by Sections 200 to 204 of the Code of Criminal Procedure, 1973 (CrPC).
• Whether the proviso to sub-section (1) of Section 223 of the BNSS, which mandates that no cognizance of an offence shall be taken by the Magistrate without giving the accused an opportunity of being heard, is mandatory and was complied with in the present case.
• The scope and nature of the hearing to be provided to the accused before taking cognizance under Section 223(1) of the BNSS, including whether it is limited to consideration of the complaint and accompanying documents.
• Whether cognizance taken once on a complaint precludes the need to give the accused an opportunity of being heard upon supplementary or further complaints relating to the same offence.

2. ISSUE-WISE DETAILED ANALYSIS

Applicability of Section 223 of the BNSS to Complaints under Section 44(1)(b) of the PMLA

The Court noted that the BNSS came into force on July 1, 2024, and Section 223 thereof corresponds to Section 200 of the CrPC, which deals with examination of complainants and witnesses upon taking cognizance of an offence on complaint. The Court highlighted that while Section 223 of BNSS incorporates a proviso requiring the Magistrate to give the accused an opportunity of being heard before taking cognizance, Section 200 of the CrPC does not contain a similar proviso.

It was reiterated that this Court has consistently held that complaints filed by the Enforcement Directorate under Section 44(1)(b) of the PMLA are governed by Sections 200 to 204 of the CrPC, as affirmed in recent precedents. Consequently, the Court reasoned that since the BNSS provisions correspond to CrPC provisions and have come into force after the complaint was filed, Section 223 of BNSS would apply to the present complaint.

Mandatory Nature of Opportunity of Hearing under Section 223(1) of BNSS

The Court emphasized the mandatory nature of the proviso to sub-section (1) of Section 223 BNSS, which states: "no cognizance of an offence shall be taken by the Magistrate without giving the accused an opportunity of being heard." The Court found that in the present case, the learned Special Judge took cognizance of the offence without affording the appellant any opportunity of being heard, which constituted non-compliance with the mandatory statutory requirement.

This non-compliance was held to be sufficient ground to set aside the impugned order dated April 20, 2024.

Scope of Hearing to be Given to the Accused

The learned Additional Solicitor General submitted that the hearing mandated by the proviso to Section 223(1) BNSS should be confined to the question of whether a case is made out to proceed on the basis of the complaint, and that only the complaint and accompanying documents should be considered at this stage. The Court declined to decide on this submission at the present stage, leaving it open for consideration by the Special Court in the future.

Effect of Taking Cognizance on Subsequent Complaints

The Additional Solicitor General further contended that cognizance is taken of the offence and not the offender, and hence once cognizance is taken following the procedure prescribed, there would be no occasion to again take cognizance or give the accused an opportunity of being heard upon supplementary complaints. The Court did not decide on this contention, explicitly leaving it open for future adjudication.

Application of Law to Facts and Directions

Given the admitted failure to provide the accused an opportunity to be heard before taking cognizance, the Court set aside the impugned order solely on this procedural ground without expressing any opinion on the merits of the complaint or the other submissions raised. The Court directed the appellant to appear before the Special Court on a specified date to be afforded the opportunity of being heard in compliance with Section 223(1) BNSS. It was clarified that no further notice would be issued to the appellant by the Special Court.

3. SIGNIFICANT HOLDINGS

The Court held:

"The proviso to sub-section (1) of Section 223 puts an embargo on the power of the Court to take cognizance by providing that no cognizance of an offence shall be taken by the Magistrate without giving the accused an opportunity of being heard."

"Admittedly, an opportunity of being heard was not given by the learned Special Judge to the appellant before taking cognizance of the offence on the complaint. Only on that ground, the impugned order dated 20th April, 2024, will have to be set aside."

"The impugned order dated 20th November, 2024, is set aside only on the ground of non-compliance with the proviso to sub-section (1) of Section 223 of the BNSS. We make it clear that we have not expressed any opinion on the merits of the complaint and the aforesaid contentions raised by the learned Additional Solicitor General."

Core principles established include:

• The mandatory requirement under Section 223(1) BNSS that the accused must be given an opportunity to be heard before cognizance of an offence is taken by the Magistrate.
• The applicability of BNSS provisions, including Section 223, to complaints filed under Section 44(1)(b) of the PMLA after the BNSS came into force.
• The procedural safeguard of hearing the accused is a condition precedent to taking cognizance and failure to comply warrants setting aside the cognizance order.

Final determinations:

• The impugned order taking cognizance without hearing the accused was set aside.
• The accused is to be given an opportunity of being heard before cognizance is taken afresh.
• Other substantive and procedural contentions raised remain open for future consideration.