Delhi HC validates Special Court's cognizance of money laundering charges under Section 44(1)(b) PMLA despite ongoing investigation

Sanjay Aggarwal Versus Directorate of Enforcement

Sanjay Aggarwal Versus Directorate of Enforcement - 2024:DHC:8689 Issues Involved:

1. Whether the learned Trial Court took cognizance of the offence under the Prevention of Money Laundering Act (PMLA) and whether such cognizance was valid given the ongoing investigation.
2. The retrospective applicability of Explanation-II to Section 44(1)(b) of the PMLA.
3. The legality of filing a complaint under Section 44(1)(b) of the PMLA before the completion of the investigation.
4. The petitioner's contention regarding the absence of his name in the FIR and initial complaint.

Detailed Analysis:

1. Cognizance of Offence:

The petitioner argued that the learned Trial Court did not formally take cognizance of the offence under the PMLA, as no explicit order was passed to that effect. It was contended that the complaint filed by the Enforcement Directorate (ED) was premature as the investigation was incomplete, violating Section 44(1)(b) of the PMLA. The petitioner relied on various judgments to assert that cognizance requires the magistrate to apply their mind to the alleged offence, which was not evident in this case.

In contrast, the respondent ED argued that cognizance was taken on 11th December 2015, the date the complaint was filed, as evidenced by the Court's actions to register and proceed with the case. The Court noted that cognizance does not necessitate a formal order but occurs when the Court applies its mind to the alleged offence. The Court found that the learned Trial Court had indeed taken cognizance by registering the complaint and supplying copies to the defense counsel, thereby proceeding with the case.

2. Retrospective Applicability of Explanation-II:

The petitioner contended that Explanation-II to Section 44(1)(b) of the PMLA, introduced by the 2019 amendment, does not apply retrospectively to the present case. The respondent ED argued that the explanation is clarificatory and applies retrospectively, allowing for supplementary complaints during ongoing investigations.

The Court referred to the Supreme Court's judgment in State of Bihar v. Ramesh Prasad Verma, which held that clarificatory provisions generally apply retrospectively. The Court concluded that Explanation-II is clarificatory, permitting supplementary complaints and applies retrospectively, supporting the ED's position.

3. Legality of Filing Complaint Before Completion of Investigation:

The petitioner argued that the ED's complaint was unlawful as it was filed before completing the investigation, contrary to Section 44(1)(b) of the PMLA. The Court examined the definition of 'investigation' under the PMLA and the applicability of the Code of Criminal Procedure (CrPC) provisions to PMLA proceedings. The Court noted that the ED is authorized to conduct further investigations and file supplementary complaints, as permitted by Explanation-II to Section 44(1)(b) of the PMLA.

The Court found that the initial complaint could be filed under Section 44 of the PMLA even if the investigation is not fully completed, especially in light of the Explanation-II, which allows for supplementary complaints.

4. Absence of Petitioner's Name in FIR and Initial Complaint:

The petitioner contended that his name was not mentioned in the FIR or the initial complaint, questioning the validity of the proceedings against him. The Court noted that the complaint filed by the ED disclosed the petitioner's alleged role in facilitating fraudulent export-import practices and money laundering, thus justifying the proceedings against him.

The Court upheld the learned Trial Court's decision, finding no illegality in the cognizance taken or the filing of the complaint. The petitioner's arguments were rejected, and the petition was dismissed, affirming the order dated 7th April 2022.