Madras High Court Upholds Cognizance of Supplementary Complaints in Money Laundering Case

Court affirms that supplementary complaints under PMLA are part of the main complaint, negating the need for pre-cognizance hearing for accused in supplementary cases.

In a significant ruling, the Madras High Court has dismissed a Criminal Revision Case filed by Rahul Surana, challenging the order of cognizance taken by the Special Court under the Prevention of Money Laundering Act (PMLA). The case, involving a massive alleged fraud of Rs. 1,301 crores by Surana Industries Limited, highlights the intricate legal interpretations of supplementary complaints under the PMLA.

The bench, comprising Justices S.M. Subramaniam and Mohammed Shaffiq, clarified that supplementary complaints, as provided under Section 44(1) and Explanation (ii) of the PMLA, are considered an extension of the main complaint, where cognizance has already been taken. The judgment emphasized that cognizance is of the offence itself, not the individuals accused, which is a well-established principle of criminal law.

Rahul Surana, who was named in the Second Supplementary Prosecution Complaint as Accused No. 42, argued that he was not provided an opportunity for a pre-cognizance hearing as mandated by Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. However, the court noted that the provision for pre-cognizance hearings applies only to fresh complaints, not to supplementary ones.

The Enforcement Directorate (ED) had filed the supplementary complaint based on fresh evidence, including a Serious Fraud Investigation Office (SFIO) complaint and a forensic audit report, which the court deemed valid. The ruling underscored that the new material gathered constituted a fresh scheduled offence, justifying the supplementary complaint's legal standing.

The court also addressed the procedural aspects of issuing process, stating that at the cognizance stage, detailed reasoning is not required. It is sufficient for the Magistrate to be satisfied that the complaint discloses an offence, a stance supported by several Supreme Court precedents.

In dismissing the revision case, the court maintained that the ongoing legal processes should not be delayed by procedural technicalities, ensuring that the trial proceeds uninfluenced by the observations made during the case.

Bottom Line:

Money Laundering - Cognizance of offence under PMLA - Supplementary complaints under Section 44(1) and Explanation (ii) of PMLA are considered part of the main complaint, and cognizance of offence is taken only once - Pre-cognizance hearing under Section 223(1) of BNSS not applicable to supplementary complaints - Supplementary complaint based on fresh evidence and new scheduled offence is legally maintainable.

Statutory provision(s): Prevention of Money Laundering Act, 2002 Sections 3, 4, 44(1)(b); Bharatiya Nagarik Suraksha Sanhita, 2023 Section 223(1); Companies Act, 2013 Section 447

Rahul Surana v. Assistant Director, Directorate of Enforcement, Chennai, (Madras)(DB) : Law Finder Doc Id # 2810769