Proceedings under PMLA Quashed for Violating Section 223(1) BNSS's Pre-Cognizance Hearing Requirement

The HC quashed the proceedings under the PMLA against the petitioners, holding that taking cognizance without affording a pre-cognizance hearing, as mandated by the first proviso to Section 223(1) of the BNSS, violates Article 21 and renders the cognizance order and subsequent proceedings null and void. The court rejected the contention that complaints under the PMLA are akin to charge sheets and affirmed that the right to hearing applies to complaints filed under special laws. It further held that the accused need not demonstrate prejudice or miscarriage of justice to vitiate cognizance taken without hearing, as the denial itself constitutes such prejudice. Divergent stands or concessions by the ED were deemed irrelevant. Consequently, the impugned cognizance order dated February 15, 2025, was set aside.

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ISSUES:

Whether violation of the first proviso to Section 223(1) of the Bhartiya Nagarik Suraksha Sanhita, 2023 (BNSS) vitiates the order of taking cognizance and consequential proceedings.Whether the absence of the words "including any complaint filed by a person authorised under Special Law" in Section 223, BNSS excludes the operation of the first proviso to Section 223 to cognizance in respect of such complaints.Whether the accused bears the burden to show "prejudice" and "miscarriage of justice" to vitiate an order taking cognizance on the ground of depriving the accused of a pre-cognizance opportunity of hearing.Whether complaints under the Prevention of Money-Laundering Act, 2002 (PMLA) are in the nature of charge sheets and not "complaints" under Sections 210 and 223 of the BNSS.Whether concessions given by the Enforcement Directorate (ED) and divergent stands taken by it in previous cases can be taken note of while deciding the issues involved.

RULINGS / HOLDINGS:

The denial of opportunity of hearing to the accused prior to taking cognizance under Section 210, BNSS, in violation of the first proviso to Section 223(1), BNSS, is fatal and vitiates the order of cognizance as well as subsequent proceedings; such non-compliance is not a mere irregularity but an incurable illegality.The absence of the phrase "including any complaint filed by a person authorised under Special Law" in Section 223, BNSS does not exclude the operation of the first proviso to Section 223(1) in respect of complaints under Special Laws; the first proviso applies to such complaints.The accused is not required to demonstrate "prejudice" or "miscarriage of justice" to vitiate cognizance taken without affording the pre-cognizance opportunity of hearing; the right to hearing is a substantive right and its denial itself constitutes prejudice and miscarriage of justice.Complaints under the PMLA are to be treated as "complaints" within the meaning of Sections 210 and 223 of the BNSS and not as charge sheets; the PMLA does not treat such complaints as charge sheets, and the procedural provisions of BNSS apply accordingly.Concessions made by the ED or divergent stands taken by it before different courts, including consent orders, are not binding precedents and are immaterial for statutory interpretation; counsel's concessions cannot override legal interpretation.

RATIONALE:

The Court applied the statutory framework of the BNSS, particularly Sections 210 and 223, which govern the power and procedure for taking cognizance of offences, emphasizing that Section 223 circumscribes Section 210 and mandates a pre-cognizance hearing as a mandatory procedural safeguard.The Court relied on constitutional principles under Article 21, holding that deprivation of personal liberty must be "according to procedure established by law," which includes the right to be heard before cognizance is taken, reflecting the principle of audi alteram partem embedded in natural justice.Precedents from the Supreme Court, including Kushal Kumar Agarwal v. Directorate of Enforcement and related judgments, were applied to affirm that complaints under the PMLA are subject to procedural safeguards under the BNSS and that non-compliance with mandatory provisions vitiates cognizance.The Court distinguished between "empowerment" of Magistrates under Section 210 and procedural requirements under Section 223, clarifying that Section 506(e) BNSS, which mitigates irregularities relating to lack of authority, does not apply to non-compliance with the first proviso to Section 223.The Court rejected the ED's argument that prejudice must be shown, holding that the right to pre-cognizance hearing is substantive and mandatory, and that denial of such right itself constitutes prejudice and miscarriage of justice.The Court noted the legislative intent to balance the authority to take cognizance under special laws with safeguards against abuse by introducing the first proviso to Section 223 simultaneously with amendments to Section 210, thereby applying the hearing requirement to complaints under special laws like the PMLA.Regarding conflicting stands by the ED, the Court referenced the principle that consent orders and counsel's concessions are not binding precedents and cannot alter statutory interpretation or constitutional mandates.The Court emphasized the severity of PMLA offences and the reverse burden on the accused, underscoring the necessity of strict compliance with procedural safeguards to protect fundamental rights.

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