The Prior Antecedents Practice Directions on Bail - An Unfair Burden

A specific instance of a person who lied about his previous involvements in crime to get bail comes to the Supreme Court. Going by available empirical metrics, the person is by no means an ordinary accused who finds himself entangled in the Indian criminal justice system. I say this, because most accused persons are from socio-economically marginalised sections of society, whereas the person here claimed to be a lawyer and the head of educational institutions. 

Now, upon seeing that this extraordinary accused person—one with a lot of social and political capital, we can assume—has gamed the system and suppressed facts to get bail, any right-thinking person would be angry, even enraged. But should the sharp practices resorted to by this specific accused person, become the basis either for making observations or passing directions, that would apply to the entire gamut of accused and convicted persons who turn to courts for bail? Probably not. As bad a case of inductive reasoning as any you might see used by partisan policymakers. 

Yet, this is exactly what the Supreme Court recently did in Zeba Khan v. State of Uttar Pradesh [Crl. A. No. 825/2026 decided on 11.02.2026]. The Petitioner had challenged the bail granted to her brother-in-law by the High Court. One of the grounds for challenging the bail order was that this accused person, facing allegations of forgery and fraudulent representations, had lied about his prior criminal history before the High Court. No discussion appears to have been made in the Supreme Court's judgment as to what, if any, steps were taken by the prosecution or Petitioner in highlighting these suppressions before the High Court itself. Nevertheless, upon seeing such conduct, the Supreme Court used the chance to reiterate a feeling that the conduct of this specific accused reflected a "growing and disturbing trend of accused persons securing discretionary relief by suppressing material facts" (Para 43). The answer for the Court was to issue sweeping directions, that an accused person was under "an obligation to disclose all material particulars, including criminal antecedents and the existence of any coercive processes such as issuance of non-bailable warrants, declaration as proclaimed offender, or similar proceedings, duly supported by an affidavit, so as to promote uniformity, transparency and integrity in bail adjudication." (Para 48). An illustrative framework for disclosure was also given (Para 49), along with directions to all High Courts to make necessary rules for their respective areas.

Nobody can have any problem with the idea that courts should not be hoodwinked by a party seeking reliefs. But there are many pathways to achieve this objective of securing "transparency and integrity in bail adjudication", as the Supreme Court puts it. Sadly, the pathway adopted by the Court in Zeba Khan is arguably the worst of the lot. It places an impossibly onerous obligation upon most accused persons, and is likely to delay adjudication of bail petitions and prolong custody, proving that the medicine is definitely worse than the disease.

Firstly, let us be clear that the directions in Zeba Khan are unprecedented. The Supreme Court cites two decisions in its discussion on this aspect. Neither took this drastic a step. The first case, Kushal Duruka, required accused persons to disclose prior bail applications filed in a specific case. The second case, Kaushal Singh, referred to the Punjab & Haryana High Court's Rules which required bail petitions to detail the antecedents of an accused. Notably, the Rules also state that details are not given, an appropriate noting must be made for the bench alerting it to this absence of data. Thus, at no point had any judgment, rule, or guideline, required accused persons to swear an affidavit as to their prior antecedents as a condition for moving a plea for bail. 

Since nobody apart from defence lawyers and judges care about the rights of accused persons, surely many people would have had this idea of demanding an affidavit of clean pasts. Why not do it then? Because it just doesn't work well enough given how the criminal justice system is structured. Discounting the fact of the accused persons who knowingly cheat the system, there are far more persons who simply have absolutely no idea about the specifics of their 'criminal history' as the law calls it. Whatever affidavit they may give may be incomplete. In many cases, since the accused is in custody making filing an affidavit quite difficult and time-consuming, the affidavit may be filed by their next-friend who will know even lesser. What happens in that case: Does a court assume bad faith, or not?  

That accused persons are simply in the dark is down to a mixture of the fact that most accused persons are disadvantaged and disenfranchised, and the fact that the criminal justice system is premised upon a notoriously unfair balance of power where the State holds all the cards when it comes to information. It is not mere rhetoric, but a matter of rule that accused persons are not entitled to copies of even an FIR without running through hoops. They do not get a copy or alert about warrants or other coercive processes, let alone case papers which are kept with lawyers who are frequently changed during the life of a case. 

Compare the ordinary, hapless, accused, with the leviathan which is the State in this scenario. A power to forcefully obtain biographic details about persons accused in offences has existed with the Indian State for more than a century. The most recent statutory version of this power, seen in the Criminal Procedure Identification Act 2022, provides for taking and retaining data for up to 75 years. All this data is then synchronised digitally using a system called the CCTNS. Which leads me to state the obvious: It is a lot easier for the State rather than an accused to provide details about criminal history in 21st Century India.       

For all these reasons, I am highly skeptical that the system will make any great strides towards ensuring either greater transparency or integrity in bail adjudication by this affidavit of past antecedents being filed by accused persons. What is much more likely, as is already being seen in Delhi, is that bail applications will take longer to get heard. The courts may ask police to now verify details in this affidavit — in effect, unnecessarily wasting everyone's time because it is something that police can do at the outset. Then, if there are discrepancies, which there will be in many cases, it will give the prosecution more opportunity for time-wasting and distractions by alleging bad faith on part of an accused, requiring a court to spend time on this issue rather than the primary issue of whether a person should be in custody on allegations of having committed a crime.

The real question to probe in Zeba Khan was why did the existence of such a notorious rapsheet go unnoticed by the prosecution before all courts, and then formulating guidelines which placed a duty upon the state agencies to undertake a verification of criminal antecedents in bail cases. A step like would meet the desired objective, in a fair and reasonable manner. Instead, as has been often the case, the legal system has simply erected fresh obstacles for persons trying to restore their liberty, while making it easier for the State to continue their incarceration by default.

Guest Post: Erroneous Procedures in the Law of Criminal Defamation

(This is a guest post by Rahul Machaiah)

The recent decision of a two-judge bench of the Supreme Court in State of Telangana v. Nalla Balu contains an erroneous interpretation of the procedural law governing criminal defamation. In September 2025, the Telangana High Court issued eight “operational guidelines”/directions to be followed by magistrates and the police when criminal cases are sought to be filed against political speech, particularly through social media posts. The High Court issued these directions while quashing three First Information Reports (“FIRs”) registered against Dhurgam Shashidhar Goud @ Nalla Balu under provisions pertaining to hate speech, defamation, obscenity, etc., in connection with his social media posts criticising the Chief Minister of Telangana and the ruling party.

Directions issued by the Telangana High Court

The directions issued by the High Court may be summarised as follows:

• The police must verify whether the informant is a “person aggrieved” before registering an FIR for defamation or similar offences.
• The police must conduct a preliminary enquiry before registering an FIR so as to ascertain whether the alleged act attracts the ingredients of a cognizable offence, prima facie.
• The police must not register cases under provisions pertaining to sedition, promotion of enmity or public mischief unless the social media post or speech incites violence, hatred or public disorder.
• The police must not mechanically register cases pertaining to harsh or critical political speech unless the speech incites violence.
• The police must not immediately register an FIR when defamation is alleged. Instead, the informant must be “directed to approach the magistrate” and the police may register a case only after the magistrate passes an order under Section 174 (2) of the Bharatiya Nagarik Suraksha Sanhita (“BNSS”), referring the case for investigation.
• The police must follow the Supreme Court’s directions in Arnesh Kumar vs State of Bihar (AIR 2014 SC 2756) and refrain from arresting the accused mechanically.
• The police must seek a legal opinion from the prosecutor before registering an FIR pertaining to political speech.
• The police must close frivolous cases without embarking on an investigation, by invoking Section 176 of the BNSS.

Problematic Order of the Supreme Court

The State of Telangana assailed the judgment by filing Special Leave Petitions (“SLPs”) before the Supreme Court. While the State did not assail the judgment on merits i.e. quashing of the cases, it was contended that the broad directions issued by the High Court were “inconsistent with each other” and warranted interference from the Supreme Court. On 2 February, 2026, the Supreme Court dismissed the SLPs. Though the order does not set out the State’s contentions in detail, it reads as follows:

“We have looked into para 29 threadbare. We are of the view that we should not interfere with the impugned judgment and order passed by the High Court including the guidelines issued by the High Court.”

The Supreme Court’s refusal to interfere has subsequently resulted in the Director General & Inspector General of Police of Karnataka issuing a circular dated 07-02-2026, endorsing and reproducing the High Court’s directions pertaining to registration of FIRs in connection with social media posts and directing compliance thereof, by all the police stations in Karnataka.

Flawed interpretation of procedural law pertaining to criminal defamation

A perusal of the Direction No.1 and Direction No.5 issued by the High Court would indicate that the High Court has recognised the power of the police to investigate cases of defamation, albeit with prior permission of the magistrate under Section 174 (2) of the BNSS. With due respect, the directions are erroneous in view of the prohibition contained in Section 222 of the BNSS which stipulates that a court shall not take cognizance of an offence punishable under Section 356 (criminal defamation) of the Bharatiya Nyaya Sanhita (“BNS”) “except upon a complaint made by some person aggrieved by the offence”. The term ‘Complaint’ has been defined under Section 2(h) of the BNSS as “any allegation made orally or in writing to a Magistrate, with a view to his taking action.. but does not include a police report”.

This clearly indicates that a case of criminal defamation may be instituted only by way of a complaint before the magistrate/competent court and the magistrate/competent court may take cognizance of the offence only if the complaint is filed by a “person aggrieved”. It precludes the police from registering an FIR in respect of defamation and the magistrate from referring the case for investigation under Section 174 (2) as such a course would nullify the mandate of Section 222 of the BNSS and lead to a police report being filed in respect of criminal defamation. At the cost of repetition, ‘complaint’ has been defined to explicitly exclude a police report.

Though Explanation to Section 2(h) of the BNSS stipulates that “A report made by a police officer in a case which discloses, after investigation, the commission of a non-cognizable offence shall be deemed to be a complaint”, this Explanation applies to a post-investigation scenario where an investigation reveals commission of a non-cognizable offence alone. In such a case, the Explanation creates a fiction through which a police report is deemed to be a ‘complaint’ in respect of the non-cognizable offence, so as to enable the court to take cognizance of the police report. More importantly, the Explanation also stipulates that in such a case the police officer filing the report “shall deemed to be a complainant”. Consequently, if the police were to draw support from the Explanation to Section 2(h) in a case of criminal defamation, it would fall foul of the mandate of Section 222 as the police officer would be deemed to be the ‘complainant’ as opposed to the person aggrieved. Therefore, even the Explanation to Section 2(h) of the BNSS does not empower the police to file a police report in respect of criminal defamation.

To appreciate this proposition and for a broader perspective on the scheme of procedural law, it would be useful to refer to Section 186 of the Indian Penal Code (“IPC”) which criminalises the act of obstructing a public servant in discharging public functions. Section 195 of the Code of Criminal Procedure, 1973 (“CrPC”) stipulates that a court may take cognizance of an offence under Section 186 IPC only based on a ‘complaint’ filed by the public servant concerned or his senior officer. In Devendra Kumar v. State by NCT of Delhi (2025 INSC 1009) and Umashankar Yadav v. State of UP (2025 INSC 653), the Supreme Court held that the Explanation to the definition of ‘Complaint’ under Section 2 (d) of the CrPC (similarly worded as Section 2 (h) of the BNSS) would not enable a police officer to file a police report in respect of an offence under Section 186 in light of the bar imposed by Section 195 of CrPC. In Umashankar Yadav, it was contended that in a scenario where an FIR is registered under Sections 353 (cognizable offence of assaulting a public servant) and 186 of IPC, a police report disclosing the commission of an offence under Section 186 would be sustainable as a ‘complaint’ under the Explanation, even if Section 353 is quashed. The Supreme Court repelled the contention by ruling:

“Even then, the legal embargo under section 195 Cr.PC is not dispelled as the legal fiction deems the police officer and not the aggrieved public servant as the complainant.”

Section 222 of the BNSS is similar to Section 199 of CrPC. Section 199 has been interpreted authoritatively in several judgments of the Supreme Court and various High Courts. In Subramanian Swamy v. Union of India (AIR 2016 SC 2728), wherein the Supreme Court upheld the constitutional validity of Section 499 & 500 of the IPC (criminal defamation) and Section 199 of the CrPC, the Supreme Court categorically held that it would be impermissible to register an FIR in respect of defamation and even a magistrate must not refer cases of defamation for investigation by the police. These prohibitions were traced to the mandate of Section 199 of the CrPC. The Supreme Court also held that there is a “heavy burden” on the magistrate to scrutinize complaints of defamation and permit further proceedings only if the allegations attract the ingredients of the offence of defamation, as the law of defamation must not be allowed to turn into an instrument of vendetta.

Thereafter, in Arnab Goswami v. Union of India (AIR 2020 SC 2386), a three-judge bench of the Supreme Court reiterated the law laid down in Subramanian Swamy (supra). The police had registered an FIR against anchor Arnab Goswami for the offence of defamation under Section 500 of the IPC along with other provisions such as Sections 153, 153A and 295A of the IPC. The Supreme Court held that the scope of the FIR and the investigation must not extend to the offence of defamation in light of the bar contained in Section 199 of the CrPC and the Court’s decision in Subramanian Swamy.

Therefore, the Telangana High Court erred in recognizing the power of the police to register an FIR when defamation is alleged and the power of the magistrate to permit investigation in such cases, under Section 174(2) of BNSS. Strangely, the High Court arrived at this erroneous conclusion despite observing in paragraph 21 of the judgment that cognizance of defamation ought to be taken only based on a ‘complaint’ filed by an aggrieved person.

Unfortunately, the Supreme Court failed to notice Section 222 of the BNSS and engage with the law laid down in the cases of Subramanian Swamy (supra) and Arnab Gowswami (supra). Instead, the Court observed that it had examined the High Court’s directions “threadbare” and no interference was warranted.

Impact on free speech and judicial discipline

Suppose an application is filed before the magistrate under Section 174 (2) seeking investigation into allegations of defamation arising out of a political post on social media, the magistrate would be faced with conflicting propositions of law laid down by the constitutional courts. In the interest of freedom of speech and judicial discipline, it is imperative that the Supreme Court exercises its power of review and rectifies the patent error of permitting registration of an FIR in respect of defamation.

The legislature has consciously incorporated safeguards against stifling of free speech and misuse of law of defamation, by prescribing a distinct procedure to initiate criminal defamation proceedings i.e. filing of a complaint before a magistrate, recording of the complainant’s sworn statement by the magistrate, hearing of the accused etc. before the accused is summoned for trial. The Telangana High Court’s directions, as upheld by the Supreme Court, may have a chilling effect on free speech as they enable these crucial safeguards to be circumvented.

Some Notes on the 'Inherent Powers' Clause in Indian Criminal Procedure

Most people unfamiliar with law do not believe that the bulk of criminal litigation facing most High Courts is not complex appeals but various petitions filed under Section 482 of the Criminal Procedure Code, 1973 [Cr.P.C.] — which was earlier Section 561-A of the 1898 Code, and is now Section 528 of the Bharatiya Nagarik Suraksha Sanhita 2023 [BNSS]. This clause, bearing a marginal heading 'Saving of Inherent Powers of High Courts', recognises that nothing in the statute can abridge the inherent powers of High Courts to pass orders for preventing the abuse of process of any court or for securing the ends of justice. 

The breadth of the heading is an indicator of the vast variety of reliefs that are sought by litigants through this clause. They range from petitions challenging police action challenging registration of cases, issuance of notices, seizure of property etc., to petitions challenging judicial orders of all hues. A sense of this dizzying breadth of inherent powers jurisdiction can be gained by turning to any standard commentary on the criminal procedure code.

This post is not a mini commentary on Section 482 Cr.P.C. / Section 528 BNSS. It is just some notes on this most interesting of clauses.

Genesis of the Clause and its Initial Days

Recently, a petition was filed before the Delhi High Court challenging an order discharging all the accused persons in the highly publicised case involving a former Chief Minister of Delhi, amongst others. Besides this challenge to the finding on discharge, a separate petition was filed which asked for expunging remarks that were made by the court against an investigating agency. 

Today, nobody doubts that such a petition can be filed, and that a High Court can direct expunction of the remarks. But it was a controversy over precisely this issue which led to the inherent powers clause being added to the 1898 Cr.P.C. The issue arose because the Allahabad High Court held in 1922 that there was no clause within the procedure code which conferred any power to expunge remarks when an aggrieved Station Master from Benaras had filed a revision petition against an order carrying unflattering remarks about how the Station Master had discharged his duties. As it so happened, the Colonial Government was in the midst of considering revisions to the Cr.P.C. at the time. This experience prompted adding another clause to the proposed amendments, which became Section 561-A of the 1898 Code in 1923 [see pg. 1199 here].

Looking at the legal commentaries from 1925 till around India's independence [pg. 1199-1200 here, pg. 1301 here, pg. 202-203 here, pg. 415-416 here]. The commentary is barely more than a couple of pages across these books spanning the first 20 years. It seems that the initial significant development was to recognise that this clause conferred no new powers upon the High Court but those which had always existed. The contours of what were these powers got determined on a case to case basis, as litigants tried their luck. Thus, a petition seeking directions to block access to a bank account got rejected as there were parallel civil remedies for this, but a petition seeking quashing of judicial proceedings at an interlocutory stage was accepted. The plea to quash proceedings at an interlocutory stage by inviting the High Court to decide whether there were any merits in the allegation was seen as an exercise of its powers to secure ends of justice. To permit continuation of proceedings where no case existed was seen as running a "mock trial" which defeated the ends of justice. 

What about a stage anterior to legal proceedings instituted in a court; could a petition be filed to quash a case still being investigated by police? This led to perhaps the most famous, and important, decision on Section 561-A prior to independence; the 1944 opinion of the Privy Council in Nazir Ahmed (for more about the litigation itself, see here). While the Privy Council reiterated that the clause gives no new powers and held that the order quashing an ongoing investigation was improper in the facts of that case, it simultaneously implied that quashing of cases where no offence is disclosed would be proper. 

The Story after Independence 

One can say that the trial-and-error approaching has continued post independence, and that after a specific point in time the novelty of petitions grew thin. The categories in commentaries such as the AIR Manual flesh out and then have remained more-or-less similar over time. Our interest shifts to considering how did courts exercised this power while dealing with the categories of cases. Also, the changes to legal practice surrounding inherent powers brought about by a new Criminal Procedure Code coming in 1973. 

On the exercise of this jurisdiction, the post-independence judiciary largely struck the same notes, and it held that the inherent powers clause did not confer new powers and it should be resorted to sparingly. One might argue that there has been some dilution of the limitation in respect of entertaining petitions for which other remedies may be available as well as using powers seemingly contrary to other provisions of the Code. For instance, the Supreme Court in 2016 has affirmed that an alternate remedy of revision does not prohibit institution of petitions invoking the inherent powers clause. It has also held that identification of only some offences as compoundable within the criminal procedure code does not prevent the closure of cases on settlement basis invoking the inherent powers clause.   

In the specific context of quashing investigations, the Supreme Court developed upon the principles that had been indicated in Nazir Ahmed. A good example of this was the 1960 decision in R.P. Kapur where the Supreme Court illustratively identified cases in which it would be justified to quash investigations, and we see that litigants relied upon the judgment across High Courts (as also the Supreme Court) thereafter with varying degrees of success. The further crystallisation of law in 1990 with Bhajan Lal (and expansion of the quashing of FIR power) which is liberally cited today can be traced back to the first steps taken by the Court in R.P. Kapur. 

Despite the greater affirmation of powers to close cases at an interlocutory stage, and recognition of some new kinds of inherent powers, one gets a sense that the total volume of petitions under Section 561-A was still manageable during the life of the 1898 Code. Especially, compared to numbers we get on databases after the 1980s. One thing that changed was the scope of revisional powers being whittled down in the new Cr.P.C. which was introduced in 1973. Earlier, a revision petition could be filed against any order. It is for this reason that older cases find a reference to both the inherent powers clause as well as the revisional powers clause in the same petition. The 1973 Cr.P.C. limited the scope of revisional powers and excluded any interlocutory order from the scope of revisional jurisdiction. Limiting the scope of revision mean that the litigant now only had one remedy against those orders — inherent powers.

The above explanation only gives a partial answer to the increase in litigation seen invoking the inherent powers clause after the 1973 Code. I wonder whether there are other reasons as well, such as new kinds of offences which were brought on to the statute book after 1973 and also situational factors such as delays in final adjudication of cases. Perhaps it is of no coincidence that the spike in quashing cases tallies with the introduction of Section 498A on the Indian Penal Code, and the Supreme Court's recognition of criminal liability for retaining stridhan. All of which occurred together with steady increase in judicial delays that have marked the decades since the introduction of the 1973 Cr.P.C. [discussed elsewhere].  

Is the 'Inherent Powers' Clause a Problem?          

Section 561-A was added to address a specific problem — recognising that the Cr.P.C. was not exhaustive, and preventing situations resulting in injustice because courts had refrained from exercising powers which even the government thought that they had. One wonders, though, whether the clause which was initially seen as a stopgap measure has itself become a problem over time. 

Litigants resort to the inherent powers clause to either challenge police action or judicial action. With the express recognition of writs under the Constitution in 1950, courts now had clear and established powers against executive action. In fact, there were decisions after 1950 recognising writ power to seek quashing of an FIR as well. In some cases against police actions like registration of an FIR, there was an invocation of Article 226 as well as Section 561-A / Section 482 of the Code. In respect of judicial action too, there came Article 227 of the Constitution which gave powers to a High Court concerning administration of justice in subordinate courts. Which then begets the question — why continue with the inherent powers clause when there was now an apparently clear remedy in law for the same action?

I also want to flag a different point. Since 1923, we have now had two full revisions (includes one revision and renaming) of the code of criminal procedure. There were also the significant revisions in 1955. During this time, the flow of litigation invoking the inherent powers clause solidified into some distinct areas. It shows to any reasonable person that some areas were unaddressed by existing provisions of the criminal procedure code, prompting invocation of the inherent powers clause. If it is so clear, why not add specific provisions to the criminal procedure code if you are going about amending it? Not only would it benefit litigants, it might even reduce the mountain of miscellaneous work brought upon High Courts because of the inherent powers clause. 

Perhaps, if the next round of revisions to the criminal procedure law has a meaningful consultation process — defined as consultations not conducted only through submission of online forms the outcome of which is not determined by secret reports not been published even two years after the law was passed — some of these issues could be discussed and considered as well to improve the administration of justice and reduce the abuse of process of law.

Guest Post: 'Complaint Cases' as Scheduled Offences under the PMLA

(This is a Guest Post by Sandeep Dash)

On 16.12.2025, a Court of the Special Judge, PMLA, in Rouse Avenue Courts, Delhi, passed a detailed order refusing to take cognizance of the Prosecution Complaint (‘PC’) under provisions of the Prevention of Money Laundering Act, 2002 (‘PMLA’) by the Enforcement Directorate (‘ED’) in the National Herald case.

The investigation and PC in the case stemmed from an order by the Court of a Metropolitan Magistrate taking cognizance of offences on a ‘private complaint’ by Dr. Subramanian Swamy against Sonia Gandhi, Rahul Gandhi and others alleging commission of offences under Sections 403, 406 & 420 read with Section 120B of the IPC, 1860. The details of the allegations in the said complaint are secondary to the present discussion.

During the pre-cognizance hearing (introduced under the BNSS), the proposed accused argued against maintainability of the PC, arguing that the ED had no jurisdiction to commence investigation under the PMLA in the absence of a First Information Report (‘FIR’) for the scheduled offence. Since the scheduled offence was based only on a complaint filed by a ‘private person’ under Section 200 Criminal Procedure Code 1973, it failed to meet the threshold requirement of an ‘FIR’ to initiate investigation and prosecution. On the contrary, the ED argued that PC was maintainable, as the scheduled offence could arise under three situations – either from a FIR, or a statutory complaint by a public servant or a private complaint.

The Court’s order hinges on the determination of a question of law that it frames early in the order – whether the registration of a FIR for the scheduled offence is a threshold requirement for investigation and consequent prosecution under the PMLA? Answering in the affirmative, the court reasoned that the ‘investigative potential of a FIR’ was much more than a ‘complaint’. In the facts of the case, I agree with the decision of the court. However, by framing the issue only around the necessity of an FIR, the court created an impression that an FIR is the only condition under which investigation and prosecution under the PMLA can be initiated.

I argue that a more general line of enquiry, with the question formulated as – ‘what is a threshold requirement for investigation and consequent prosecution under the PMLA?’ yields more appropriate answers to the when a scheduled offence is said to have been committed for triggering a PMLA investigation. In this, I argue firstly, that while it is correct that institutional investigation is a sine qua non for triggering PMLA investigation, the same can be done through ‘complaint cases’ and not necessarily only through FIRs; and secondly, that the law laid down in Vijay Madanlal Chaudhary indicates additional safeguards in such non-FIR scheduled offences.

The law on money laundering, as it is now understood in India, is hinged upon two key concepts – the ‘scheduled offence’ and ‘proceeds of crime’. Money laundering is variously described to be a ‘piggy-backing’ offence; others have called it a ‘parasitic’ and ‘dependent’ offence. What this means is that an offence of money laundering can come into the picture if and only if another offence has already taken place. This latter offence is called a ‘Scheduled Offence’, and ought to be one or more from among the various offences listed in the Schedule to the PMLA.

For instance, for laundering murder ransom money, the commission of murder is a prerequisite. The offence of ‘murder’ then becomes the ‘Scheduled Offence’ and the ransom ‘derived and obtained’ by committing this ‘Scheduled Offence’ becomes ‘Proceeds of Crime’. As soon as any dealing is done with these ‘Proceeds of Crime’ (handling, concealing, transferring, transforming, etc.), an offence under the PMLA can be said to be made out. What that means is that you may not have murdered anybody, and hence, will not be liable for the offence of murder u/s 302 of the Indian Penal Code, 1860 (S. 101 of the Bharatiya Nyaya Sanhita, 2023), but still be liable for helping move the ransom money under Section 3 of the PMLA.

For the purpose of the PMLA, when is a scheduled offence said to have been committed? Can it be said to have been committed at the moment of its actual physical commission, as in when the murderer’s axe lands on the neck of the victim, and he dies? Or can it be said to have been committed when the law is set in motion against such a murderer, as in his arrest or the making of a complaint about the murder by an eyewitness, or registration of an FIR? Or, further still, can it be said to have been committed when the issue is investigated by the police, and a formal charge is filed before the court?

Answering this question is key to understanding and answering the question facing us – at which stage can the ED jump in and initiate proceedings under the PMLA? Can it initiate PMLA proceedings, when –

1. Though a ‘Scheduled Offence’ has been committed, it has neither been reported nor investigated.
2. Though not investigated, it has been reported.
3. It has been investigated, and the perpetrator has been formally accused.

The bare statute of PMLA is not very helpful in answering this question. However, some help came in the form of Paragraph 31 in Vijay Madanlal Chaudhary: “The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression “derived or obtained” is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence.”

What we see in these paragraphs is some narrowing down of the situations when the ED can exercise the full range of its powers. Two situations emerge:

• A scheduled offence has been committed, and the said offence is registered with the jurisdictional police, i.e., an FIR under Section 154 Cr.P.C.OR
• A scheduled offence has been committed, and it is pending inquiry/trial by way of a Complaint (There is a 3rd, very important situation where the ED may jump in to a limited extent, i.e., through disclosure u/s 66(2) of PMLA, which is beyond the scope of this discussion).

Situation (i) is straightforward, and the registration of a FIR is enough for the ED to get going. This is not disputed by anybody. Situation (ii) is the tricky bit, and it is essential to understand what the words ‘Complaint’ and ‘pending inquiry’ mean here. First, what is a ‘Complaint’? Under the criminal procedure in India, the criminal law can generally be set in motion either through the police/other Law Enforcement agencies competent to file Final Reports u/s 173 Cr.P.C. or by way of complaints, made directly to the Magistrate u/s 200. We are not concerned about the police here, but rather with the route of ‘complaint’.

These complaints can be made by two kinds of persons: firstly, by private persons and secondly, by certain authorities. In case of private persons, for instance, anyone may initiate criminal proceedings by filing a ‘private complaint’ before the Magistrate, who can then either order the registration of an FIR and investigation by the police, or may take cognizance and proceed for a trial based on the material in the complaint itself. This latter route is the way that Dr. Subramaniam Swamy’s complaint came to be.

Would such a complaint, disclosing offences mentioned in the schedule to the PMLA, confer jurisdiction to the ED? Would that not mean that a complaint filed by anybody (which includes a ‘nobody’) can become the basis for subsequent action by the ED? Dr. Subramaniam Swamy perhaps has nothing to do with the National Herald, and in that sense, is not even a ‘victim’. Can such complaints, often political, be enough for the ED to move in? Will it not be an affront to justice if anybody and everybody is handed the power to potentially become the architect of a money laundering investigation?

These are legitimate questions; however, the court’s order does not venture into this territory of enquiry. Instead, it looks at the bare statute of PMLA and accompanying rules. The first proviso to Section 5(1) of the PMLA in the context of a provisional attachment order says that – “Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country”

Reading this (this is the only remaining place in the entire act, where this issue finds mention) suggests that it is only the complaints filed by the authorities investigating under the respective offences mentioned in the schedule that can be the basis of action by the ED. A similar provision is part of Rule 3(2) of the Prevention of Money-Laundering (Forms, Search and Seizure or Freezing and Manner of Forwarding the reasons and Material to the Adjudicating Authority, Impounding and the period of Retention) Rules, 2005.

A contextual reading of the order, where it interprets Vijay Madanlal Chaudhary, does reveal that the court was cognizant of the possibility of such non-FIR-based scheduled offences (See Para 151 of the order). However, the restrictive framing of the question prevented the court from delving deep into why it is only the kind of private ‘complaint’ case filed by Dr. Subramaniam Swamy that fails to meet the threshold for the ED to investigate, and not all complaint cases in general.

In the order, the court misattributes wide investigative powers (arrest, search, recording of statements, etc.) only to an Investigating Officer investigating under an FIR. The discussion by the court gives an impression of a blanket exclusion of complaint cases. But if that is the case, how would non-IPC offences, which are part of the schedule to the PMLA, but require no FIR for investigation, and are prosecuted through ‘complaints’ under Section 200 Cr.P.C., trigger a PMLA investigation?

An illustrative list of offences in the schedule that are investigated by ‘authorities’ other than police, and prosecuted by way of ‘complaints’, is useful:

Sr. No.	Act in the PMLA Schedule	Offences in the Schedule	Investigative Authorities	Empowering Section
1.	Environment Protection Act, 1986	Section 15 r/w 7 and Section 15 r/w 8	Several officers, including the District Collector, Secretary to the Ministry/Department of Environment, the Seed Inspector, Officers in the Central & State Pollution Control Boards, etc.	Section 19 r/w Notification No. S.O. 394(E), published in Gazette No. 185, dt.16.4.1987 & further amendments
2.	Customs Act, 1962	Section 135	Officers of the Customs Department	Section 137
3.	Securities and Exchange Board of India Act, 1992	Section 12A r/w 24	Securities and Exchange Board of India	Section 26 r/w 2(1)(a)
4.	Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015	51	Income Tax Department	Section 55

 

Note that many of these authorities can also exercise powers of arrest, search, and seizure, recording of statements, collection of specimens, etc., under their respective special laws, despite not being ‘police’. A cumulative reading of the statute, the schedule and the law laid down by the Supreme Court in Vijay Madanlal Chaudhary points to the fact that not all scheduled offences arising out of complaint cases are out of bounds for the ED. Complaint cases by persons authorized to investigate those offences, where there is no provision for an ‘FIR’ can be the basis for investigation by the ED.

Insofar as a ‘complaint case’ by a private person is concerned, the court was right in its order to hold that it cannot be the basis for action by the ED. Apart from the reasons discussed above, there are other logistical and ethical reasons for not allowing something like this. From the perspective of the state, collusive and weak complaints are often filed to defeat a genuine complaint, which would then defeat the PMLA case. From the perspective of the accused, as is the situation in the present case, Mr. Swamy allegedly delaying the trial in the complaint case, thereby also potentially compromising the progress of the PMLA case, is also a case in point.

The second leg of my argument is that in complaint cases, the ED cannot investigate until the court before which the complaint has been filed by the concerned authority has taken cognizance of the complaint. There are two legs to this argument. The first needs us to understand what the phrase ‘pending inquiry’ used above in Paragraph 31 in Vijay Madanlal Chaudhary. I argue that the stage of inquiry in a Complaint case is always post-cognisance by a magistrate, in terms of the ratio laid down by the Hon’ble Supreme Court in Rameshbhai Pandurao Hedau & Pradeep S. Wodeyar. In fact, in most places, complaint cases are not formally registered/numbered till the court has taken cognizance of the case. Dr. Abhishek Manu Singhvi, in an election affidavit filed before getting elected to the Rajya Sabha, gave a glimpse into this practice. The image is attached below.

This means that the ED, in case the scheduled offence is not registered by way of a FIR/Chargesheet but rather, a ‘Complaint pending inquiry’ filed by a person authorized to investigate that offence, can exercise jurisdiction if and only if the magistrate/court has taken cognizance of such a complaint. Where no cognizance has been taken in a complaint case, the ED cannot prosecute, as it would have no locus to investigate the case.

There is also a logical answer to why cognizance is important in ‘complaint cases’. Time and again, the highest courts of the country have decisively held that there ought to be a judicial application of mind before passing an order of cognizance. The summoning of an accused in a criminal trial is a serious matter, which must be done after a thorough examination of the evidence, both oral and documentary. A summoning order can be passed only after providing cogent reasons – this position of law was most recently reiterated and summarized by the Supreme Court in JM Laboratories. 

In complaint cases, this threshold must be strictly enforced. The reason is simple – investigations by the police are technically supposed to be monitored by the area magistrate where the police station falls, and thus, at least theoretically, the investigation is judicially monitored. In complaint cases, even by authorities, no such monitoring exists, and thus, greater scrutiny is warranted.