2025 (8) TMI 1749 - HC - Money Laundering

Post-July 2024 PMLA prosecution complaint: accused's pre-cognizance hearing u/s223 BNSS required; cognizance order set aside

For a PMLA prosecution complaint filed after 1 July 2024, cognizance is governed by the BNSS, 2023, and not the CrPC, by virtue of s.65 PMLA; the ... Seeking to set aside the impugned order of cognizance - cognizance must be governed by BNSS provisions rather than the CrPC, 1973 - whether Enforcement Directorate’s Prosecution Complaint is not a final report u/s 193(3) BNSS but squarely falls within the ambit of Section 223 BNSS? - HELD THAT:- Section 223 provides an added safeguard that no cognizance shall be taken without affording the accused an opportunity of being heard. In Kushal Kumar Agarwal [2025 (5) TMI 2001 - SUPREME COURT], the Supreme Court held that since the PMLA complaint was filed after 1 July 2024, Section 223 BNSS shall apply, mandating an opportunity of hearing to the accused before cognizance. As the Special Judge failed to provide such hearing, the impugned order was set aside solely on this ground, without touching the merits of the case. This Court is of the considered opinion that the impugned order of cognizance dated 25.09.2024 passed by the court of ASJ-03, Central, Tis Hazari Courts, Delhi in CC No. 01/2024 titled Directorate of Enforcement vs. M/s Sunstar Overseas Ltd. & Ors arising out of ECIR/GNZO/2021 dated 09.04.2021 cannot be sustained, as it fails to appreciate the applicability of Section 223 of the BNSS, 2023, to a prosecution complaint filed under the Prevention of Money Laundering Act, 2002, in light of Section 65 of the PMLA and the law laid down by the Supreme Court in Kushal Kumar Agarwal. The impugned order dated 25.09.2024 is set aside. The Trial Court is directed to afford the petitioner an opportunity to be heard before taking cognizance in terms of the proviso to Section 223 BNSS, 2023, and to proceed thereafter in accordance with law. Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether, for a prosecution complaint filed after 01.07.2024 under the Prevention of Money Laundering Act, 2002, the Court taking cognizance is governed by Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023, and consequently must comply with its proviso requiring that the accused be given an opportunity of being heard before cognizance. (ii) Whether the cognizance order is liable to be set aside where cognizance was taken without affording the accused an opportunity of hearing as mandated by the proviso to Section 223(1) BNSS. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Applicability of Section 223 BNSS to a PMLA prosecution complaint filed after 01.07.2024, and the requirement of pre-cognizance hearing Legal framework (as discussed by the Court): The Court examined that BNSS came into force on 01.07.2024, and addressed the governing provision for taking cognizance on a 'complaint'. It noted the judicial position that an Enforcement Directorate complaint under the relevant PMLA provision is governed by the complaint-procedure corresponding to Sections 200-204 of the prior procedure, and therefore, for complaints filed after 01.07.2024, the corresponding BNSS provision (Section 223) applies. The Court specifically focused on the proviso to Section 223(1) BNSS which places an embargo on taking cognizance 'without giving the accused an opportunity of being heard'. Interpretation and reasoning: The Court treated the Enforcement Directorate's prosecution complaint filed on 29.08.2024 as attracting Section 223 BNSS because it was filed after BNSS came into effect. It further held that Section 223 BNSS, being the corresponding provision for examination of complainant while taking cognizance on complaint, governs the manner of cognizance in such PMLA complaints filed after 01.07.2024. The Court accepted that the added safeguard in Section 223-mandatory opportunity of hearing to the accused prior to cognizance-must be complied with. In reaching this conclusion, the Court applied the law laid down by the Supreme Court that for PMLA complaints filed after 01.07.2024, Section 223 BNSS is applicable and its proviso is mandatory. Conclusion: Section 223 BNSS applies to the prosecution complaint filed after 01.07.2024, and the Court taking cognizance must provide the accused an opportunity of being heard before taking cognizance in terms of the proviso to Section 223(1) BNSS. Issue (ii): Validity of the cognizance order passed without pre-cognizance hearing under Section 223(1) proviso BNSS Legal framework (as applied by the Court): The Court applied the proviso to Section 223(1) BNSS which prohibits taking cognizance without giving the accused an opportunity of being heard. It applied the Supreme Court's determination that non-compliance with this proviso necessitates setting aside the cognizance order, without examining merits of the prosecution. Interpretation and reasoning: The Court found that the impugned cognizance order could not be sustained because it 'fails to appreciate the applicability of Section 223' BNSS to a PMLA prosecution complaint filed after 01.07.2024, and because the mandatory safeguard of hearing prior to cognizance was not complied with. The Court treated this defect as sufficient in itself to invalidate the cognizance order, without going into the merits of the underlying allegations. Conclusion: The cognizance order was set aside solely on the ground of non-compliance with the proviso to Section 223(1) BNSS. The Trial Court was directed to afford the petitioner an opportunity to be heard before taking cognizance and then proceed in accordance with law. The Court further concluded that any bail application, if moved, must be decided independently on its own merits.