Money Laundering : A Magistrate taking cognizance of an offence must provide an opportunity of hearing before taking cognizance

D.S. Chawla, Advocate, +91 9416327678, Former Senior Public Prosecutor CBI

Supreme Court sets aside cognizance in Money Laundering case due to procedural non-compliance. Apex Court emphasized mandatory hearing for accused under Bharatiya Nagarik Suraksha Sanhita, 2023, non-compliance with this requirement invalidates the cognizance taken.

In a significant ruling, the Supreme Court of India has set aside the cognizance taken by a Special Court in a money laundering case involving Kushal Kumar Agarwal due to non-compliance with procedural requirements mandated by the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). The judgment, delivered by Justices Abhay S. Oka and Ujjal Bhuyan, underscores the importance of adhering to legal provisions that ensure an accused is given an opportunity to be heard before cognizance of an offence is taken.

The case, initially filed under Section 44(1)(b) of the Prevention of Money Laundering Act, 2002, saw the appellant accused in a complaint filed by the Directorate of Enforcement. The BNSS, which came into effect on July 1, 2024, introduced Section 223, which mandates that a Magistrate cannot take cognizance of an offence without first providing the accused an opportunity to be heard. The Supreme Court found that the Special Judge failed to comply with this requirement, thereby invalidating the cognizance taken.

Section 223 of the BNSS, which corresponds to Section 200 of the Code of Criminal Procedure, 1973, adds a crucial proviso that is absent in the CrPC. This proviso necessitates a hearing for the accused before cognizance, a safeguard aimed at ensuring fairness in the judicial process. The Court highlighted that complaints filed after July 1, 2024, are subject to this provision, emphasizing its applicability to the current case.

Mr. Suryaprakash V. Raju, the learned Additional Solicitor General, argued that the hearing under Section 223 is limited to assessing whether a case is made out based on the complaint and accompanying documents. He further contended that cognizance is of the offence rather than the offender, suggesting that subsequent complaints should not require repeated hearings. However, the Supreme Court opted not to address these arguments in detail, keeping them open for future consideration by the Special Court.

The Supreme Court's decision to set aside the order dated November 20, 2024, is based solely on the procedural lapse regarding the hearing requirement. The Court refrained from commenting on the merits of the complaint itself, directing the appellant to appear before the Special Court on July 14, 2025, to ensure compliance with Section 223's proviso.

This ruling reinforces the judiciary's commitment to procedural integrity and the protection of accused rights under new legislative frameworks. It serves as a reminder of the evolving landscape of criminal procedure in India, particularly in cases involving complex financial crimes.

Statutory provision(s): Bharatiya Nagarik Suraksha Sanhita, 2023 Section 223, Prevention of Money Laundering Act, 2002 Section 44(1)(b)

Kushal Kumar Agarwal v. Directorate of Enforcement, (SC) : Law Finder Doc Id # 2734777