Kerala High Court Quashes Cognizance in Money Laundering Case | Says Accused Must Be Heard Before Taking Cognizance Under BNSS Section 223(1)
Safiya Malik
The High Court of Kerala Single Bench of Justice A. Badharudeen has quashed the cognizance order passed by the Special Court (SPE/CBI), Ernakulam in a prosecution launched by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002. The court found that the Special Judge failed to comply with the mandatory requirement under the first proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which mandates an opportunity of hearing to the accused prior to cognizance. As a result, the entire cognizance order dated 27 March 2025 was set aside, and the case was reverted to the pre-cognizance stage. The Special Court was directed to comply with procedural safeguards under Section 223(1) of BNSS and examine the requirement of sanction under Section 218 of BNSS or Section 197 of the Criminal Procedure Code before proceeding further.
The criminal miscellaneous case was instituted under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking quashment of all proceedings in S.C. (PMLA) No. 2 of 2025 pending before the Special Court (SPE/CBI), Ernakulam. The case originated from ECIR/KCZO/07/2020, registered following FIR No. V.C.02/2014/SCE by the Vigilance and Anti-Corruption Bureau (VACB), Special Cell, Ernakulam. The petitioners in the criminal miscellaneous case were arraigned as accused Nos. 1 and 2 in the prosecution under the Prevention of Money Laundering Act, 2002.
The first petitioner, Saji John, was a public servant during the period from 1 January 2000 to 17 January 2014. It was alleged that during his tenure, he amassed assets worth ₹1,43,58,155, which was 113.45% in excess of his known sources of income. The prosecution under the Prevention of Corruption Act, 1988 and subsequently under the PMLA, 2002, was based on this allegation.
The Enforcement Directorate filed a complaint under Section 44(1)(b) of the PMLA before the Special Court, Ernakulam, which took cognizance without issuing a hearing notice under Section 223(1) of the BNSS or obtaining prior sanction under Section 218 of the BNSS. This action formed the basis of the petitioners’ grievance before the High Court.
The petitioners contended that the Special Judge’s act of taking cognizance without granting an opportunity of hearing, as now mandated by the BNSS, rendered the entire cognizance illegal. It was also submitted that no prior sanction as required under Section 218 of the BNSS was obtained, and therefore, the prosecution was unsustainable.
To support their arguments, the petitioners relied on the Supreme Court’s decision in Kushal Kumar Agarwal v. Directorate of Enforcement [2025 (4) KHC 559 (SC)], which involved a similar factual matrix. In that case, the Supreme Court had held that non-compliance with the first proviso to Section 223(1) rendered the cognizance legally infirm. The complainant, being the Enforcement Directorate, had filed the complaint after the BNSS came into force on 1 July 2024. The Supreme Court ruled that a pre-cognizance hearing to the accused was now a mandatory procedural safeguard.
The petitioners also relied on Tarsem Lal v. Directorate of Enforcement, Jalandhar Zonal Office [2024 (3) KHC 524], which held that the provisions in Sections 200 to 205 of the Code of Criminal Procedure (now mirrored in Sections 223 to 228 of the BNSS) were applicable to PMLA complaints.
Further support was drawn from Directorate of Enforcement v. Bibhu Prasad Acharya [2024 KHC OnLine 6609], wherein the apex court reiterated the applicability of Section 197 of Cr.P.C. (now analogous to Section 218 of BNSS) in matters involving prosecution of public servants under the PMLA.
The learned Standing Counsel for the Enforcement Directorate conceded the legal position advanced by the petitioners. It was submitted that the matter could be remanded to the pre-cognizance stage for fresh consideration in compliance with Section 223(1) of the BNSS.
Annexures filed along with the petition included:
- A copy of the charge sheet dated 6 March 2020 filed by VACB, Special Cell, Ernakulam;
- A copy of the complaint in S.C. (PMLA) No. 2/2025 dated 6 March 2025 filed by the Enforcement Directorate;
- A copy of the summoning order dated 7 March 2025 passed by the Special Court (SPE/CBI) 1, Ernakulam.
Upon consideration of the submissions and documents, the High Court determined that the essential precondition of giving the accused an opportunity to be heard prior to cognizance under Section 223(1) of the BNSS had not been met.
The High Court noted that the core legal question concerned compliance with the newly introduced Section 223(1) of the BNSS. Quoting the provision, the court observed: “A Magistrate having jurisdiction while taking cognizance of an offence on complaint shall examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced to writing and shall be signed by the complainant and the witnesses, and also by the Magistrate.”
The court stressed the impact of the first proviso: “Provided that no cognizance of an offence under this section shall be taken by the Magistrate without giving the accused an opportunity of being heard.”
The judgment recorded that the procedural requirement was a significant departure from the earlier Code of Criminal Procedure and now forms a mandatory safeguard for the accused.
Referring to Kushal Kumar Agarwal, the High Court extracted: “Only on the ground that 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, the impugned order dated 20th April, 2024, will have to be set aside.”
The High Court also acknowledged the submission based on Tarsem Lal, that the scheme of Sections 223 to 228 in BNSS must be applied to PMLA complaints. Furthermore, the decision in Bibhu Prasad Acharya was invoked to support the view that sanction under Section 218 of BNSS (analogous to Section 197 Cr.P.C.) is necessary when prosecuting public servants.
Evaluating the summons order dated 27 March 2025, the court concluded: “It is emphatically clear that, in this case, the cognizance taken by the learned Special Judge is without complying with the mandate of the first proviso to Section 223(1) of the BNSS and therefore, the same is non est.”
The High Court stated: “The crucial aspect of Section 223(1) is the first proviso, which mandates that the Magistrate cannot take cognizance of the offence without first giving the accused an opportunity to be heard.”
It further held: “This is a significant departure from the provisions of the Cr.P.C, which did not mandate this pre-cognizance hearing for the accused.”
The court clarified that the exemptions under Section 223(1) did not apply to the present case, as the complaint was not initiated by a court or a public servant in the discharge of official duties.
On the question of sanction, the court noted: “Before taking cognizance, the Special Court shall also consider the question of sanction under Section 197 of Cr.P.C. or under Section 218 of the BNSS.”
Accordingly, the court held that the failure to comply with mandatory procedural safeguards rendered the cognizance unsustainable in law.
The High Court, upon finding procedural non-compliance, issued a set of specific directives. It ruled: “Accordingly, this petition stands allowed and thereby, the cognizance taken by the Special Judge as per the order dated 27.03.2025 stands set aside and the case is reverted back to the pre-cognizance stage, with direction to the Special Judge to comply first proviso to Section 223(1) of the BNSS, before taking cognizance in this case.”
The court also stated: “In consideration of the argument advanced by the learned counsel for the petitioners, supported by the decisions of the Apex Court, before taking cognizance, the Special Court shall also consider the question of sanction under Section 197 of Cr.P.C. or under Section 218 of the BNSS.”
Further, the registry was instructed: “Registry is directed to forward a copy of this order to the Special Court, forthwith, for information and further steps.”
Advocates Representing the Parties
For the Petitioners: Shri Arjun Varma, Advocate; Shri Rohith R., Advocate
For the Respondents: Jaishankar V. Nair, Standing Counsel for the Directorate of Enforcement
Case Title: Saji John & Another v. Assistant Director, Directorate of Enforcement
Neutral Citation: 2025:KER:55025
Case Number: Crl.M.C. No. 5631 of 2025
Bench: Justice A. Badharudeen
