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2024 (11) TMI 1350 - HC - Money LaunderingMoney Laundering - cognizance of the offence by Trial Court - whether such cognizance was valid given the ongoing investigation? - retrospective applicability of Explanation-II to Section 44(1)(b) of the PMLA - impugned order passed without taking into consideration the entirety of the matter - violation of principles of natural justice - HELD THAT - In Devarapally Lakshminarayana Reddy v. V. Narayana Reddy, 1976 (5) TMI 101 - SUPREME COURT , the Hon ble Supreme Court elucidated the scope and purview of the term taking of cognizance and gave a detailed explanation thereof. It was observed that the stage, at which cognizance of an offence is taken, depends upon the facts and circumstance of the particular case - It was held that taking cognizance of an offence is subjective to each case and mere issuance of a search warrant or a warrant of arrest does not, by itself, mean that cognizance of the offence has been taken rather cognizance of the offence is said to be taken only when the Court applies his mind to proceed further under Section 200 (now Section 223 of the BNSS) or under Section 204 of Chapter XVII of the CrPC. Under the PMLA, a Special Court can only take cognizance of an offence under Section 3 of the PMLA, punishable under Section 4 of the PMLA, based on a complaint filed by the ED. It was held that while Section 46 of the PMLA stipulates that the provisions of the CrPC apply to proceedings before the Special Court as well since it functions like a Sessions Court as the phrase save as otherwise provided in PMLA allows exceptions - in the absence of any overriding provision in the PMLA, Sections 200 to 204 of the CrPC (now Section 223 to 227 of the BNSS) duly applies to complaints filed under the PMLA. This means that the Special Court must assess if a prima facie case exists for an offence under Section 3 of the PMLA. If no such case is found, the Court can dismiss the complaint under Section 203 of the CrPC, however, if a prima facie case is established, the Court may proceed under Section 204 of the CrPC. As per the settled position of law, cognizance under Section 44 (1) (b) of the PMLA is based on the prosecution complaint filed by the ED pursuant to an investigation and the said complaint duly incorporates the gist of the offences and the manner in which the offences were committed by the accused persons, accompanied with the evidence collected during the statement along with the statement of witnesses and accused. The CrPC provisions related to investigation are applicable to investigations under the PMLA. Furthermore, Section 46 of the PMLA states that the provision of the CrPC applies to proceedings in Special Courts under the PMLA, making the Special Court equivalent to a Court of Sessions. Unless stated otherwise in the PMLA, CrPC provisions, including those on bail and preliminary procedures (Sections 200 to 204 of the CrPC), apply to PMLA cases - there is no doubt that a supplementary complaint can certainly be filed by the respondent ED against an accused, who is already facing prosecution for offence under Section 3 of the PMLA before the Special Judge. It is evident that when an investigating agency is authorized to conduct the investigation and carries out additional investigation to collect further evidence, the concerned agency has the right to submit a supplementary complaint to present the newly collected material on record - Upon the perusal of Explanation-II to Section 44 (1) (b) of the PMLA, it is revealed that it has been explicitly stated that the ED has the right to include any subsequent complaint in order to conduct further investigation into an alleged offence against the accused persons. This is to bring forth additional evidence, oral or documentary against any accused person for which a complaint has been already filed, whether named in the original complaint or not. This Court is of the view that an initial complaint can be filed under Section 44 of the PMLA, even if the investigation is not fully completed, especially in light of the Explanation-II, introduced in the year 2019, which permits the filing of a supplementary complaint - this Court does not find any force in the arguments of the petitioner that the cognizance has been taken illegally as the complaint was filed pending investigation due to filing of subsequent complaints. There is no illegality in the order passed by the learned ASJ-03, North West District, Rohini Courts, Delhi, in Ct. Case No. 515651/2016 and the same is, hereby, upheld - Petition dismissed.
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.
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