In a detailed and meticulously reasoned 117-page order dated December 16, 2025, a Special Court in Delhi, presided over by Dr. Vishal Gogne, delivered a significant legal ruling with profound implications for high-profile financial crime prosecutions in India. The court declined to take cognizance of a Prosecution Complaint (essentially a chargesheet) filed by the Enforcement Directorate (ED) against prominent political figures, including Smt. Sonia Gandhi and Sh. Rahul Gandhi, and others, in the long-standing National Herald-Young Indian case.
At its core, the order is not an
acquittal on the merits of the allegations. It is a procedural and
jurisdictional verdict, a gatekeeping judgment that answers a fundamental legal
question: Can the ED initiate a prosecution for money laundering based solely
on a private criminal complaint filed by a citizen, without a formal First
Information Report (FIR) for the underlying "scheduled offence"?
The court's resounding answer was
"No." This blog post dissects the court's legal reasoning, making it
accessible for both legal professionals and lay readers interested in the
intricate interplay between criminal procedure, the Prevention of Money
Laundering Act (PMLA), and the powers of investigative agencies.
The Core Legal Dispute: The
Missing FIR
The ED's case alleged a complex
scheme of money laundering involving the takeover of the assets of Associated
Journals Limited (AJL), the publisher of the National Herald, worth hundreds of
crores, by a private company, Young Indian (YI), for a nominal sum of ₹50
lakhs. The ED claimed this act generated "proceeds of crime."
Crucially, the ED did not base
its case on an investigation initiated by a primary law enforcement agency like
the CBI or state police. Instead, its entire foundation was a private complaint
filed by Dr. Subramanian Swamy in 2013 before a Magistrate. In 2014, the
Magistrate had taken cognizance of offences like cheating (Section 420 IPC) and
criminal conspiracy (Section 120B IPC) in that complaint and summoned the
accused. The ED argued that since these IPC offences are "scheduled
offences" under the PMLA, and a court had already taken cognizance of
them, it had the jurisdiction to independently investigate and prosecute the
money laundering aspect.
The accused, through a battery of
senior advocates including Dr. A.M. Singhvi and Mr. R.S. Cheema, challenged
this very premise. Their central argument was that for the ED to validly
investigate money laundering under Section 3/4 of the PMLA, there must first be
a FIR registered by a competent law enforcement agency (like the CBI or police)
for the predicate scheduled offence. A private complaint, even one where
cognizance was taken, could not serve as this foundational trigger.
The court framed this as the
pivotal "question of law" that would determine the fate of the ED's
complaint.
The Court's Step-by-Step Legal
Reasoning
Justice Gogne's order is a
masterclass in statutory interpretation, examining the issue through multiple,
converging lenses. He structured his analysis around seven key metrics:
1. The Investigative Potential
of a FIR vs. a Private Complaint
The court began with a practical,
real-world distinction. It held that the registration of a FIR unleashes a
comprehensive state machinery for investigation:
a. Powers: Arrest, search,
seizure, forensic analysis, inter-agency coordination, and international
cooperation.
b. Resources: Access to
experts, technical tools, and continuous judicial oversight for warrants.
c. Outcome: A chargesheet
based on a wide evidence pool.
In stark contrast, a private
complainant under Section 200 Cr.P.C. (now Section 223 BNSS) has severely
limited capacity:
a. No Investigative Powers:
Cannot arrest, search, or compel evidence.
b. Limited Evidence:
Relies mostly on publicly available material.
c. Magisterial Inquiry is
Limited: Even a Magistrate's inquiry under Section 202 Cr.P.C. is
"minuscule" compared to a police investigation.
The Court's Finding: "A
complaint case and the incidents of a FIR are chalk and cheese." The
complex, layered allegations of financial fraud are "certainly not amenable
to trial as a complaint case." Therefore, a FIR-based investigation is
qualitatively superior and a necessary first step to unearth the complex
linkages needed for a consequential money laundering probe.
2. Statutory Provisions of the
PMLA
The court then dove into the text
of the PMLA itself, focusing on two critical provisions:
a. First Proviso to Section
5(1): States that no attachment order for proceeds of crime can be made
unless a report (chargesheet) under Section 173 Cr.P.C. has been forwarded to a
Magistrate (which presupposes a FIR) OR a complaint has been filed by a person
authorised to investigate the scheduled offence.
b. Proviso to Rule 3(2) of
PMLA Rules: Similar condition for conducting searches.
The court performed a literal
interpretation:
1. The statute deliberately uses
the phrase "person authorised to investigate the scheduled offence."
This clearly means an investigating officer from a law enforcement agency (like
CBI, Police), not a private citizen.
2. While these provisions deal
specifically with attachment and search, they offer the clearest legislative
insight into the PMLA's envisioned sequence: action on proceeds of crime
follows either a FIR or a complaint by an investigating agency.
3. The court rejected the ED's
argument that the deletion of similar provisos from Sections 17 & 18 of the
PMLA in 2019 signaled a de-linking from a FIR. It noted that the proviso to
Section 5(1) was consciously retained, and its twin requirements remain the
"norm."
The Court's Finding: The PMLA's
own provisions guide that the jurisdictional trigger for ED action is a FIR or
a complaint by an investigating officer for the predicate offence. A private
citizen's complaint does not satisfy this statutory condition.
3. The Supreme Court's Judgment in Vijay
Madanlal Chaudhary & Ors. vs. Union of India (2022)
This landmark Supreme Court
judgment upholding the core PMLA provisions was heavily relied upon by both
sides. The Special Court meticulously analyzed its holdings:
a. The Supreme Court stated:
"The authorities under the 2002 Act cannot resort to action against any
person for money laundering on an assumption... unless the same is registered
with the jurisdictional police or pending inquiry by way of complaint before
the competent forum."
It also clarified that for
initiating prosecution under the PMLA, registration of the scheduled offence is
a prerequisite.
The ED argued the phrase
"complaint before the competent forum" included Dr. Swamy's private
complaint. The court disagreed. It held that the Supreme Court's use of the
term "complaint" must be understood in the context of the PMLA's own
phrasing discussed above—i.e., a complaint by an authorized investigating
officer. The Supreme Court was paraphrasing the proviso to Section 5(1).
The Court's Finding: Vijay
Madanlal Chaudhary reinforces the necessity of a FIR registered by the
jurisdictional police as a sine qua non (essential condition) for a PMLA
prosecution. It does not elevate a private complaint to the same status.
4. Objects of the PMLA &
FATF Reports
The court examined the
international context. The PMLA was enacted to fulfill India's commitments to
global bodies like the Financial Action Task Force (FATF). The court reviewed
FATF Mutual Evaluation Reports for India (2010 & 2024), which highlighted:
a. The Indian system's historical
tight linkage between money laundering and a predicate offence investigated by
a Law Enforcement Agency (LEA).
b. The 2009 PMLA amendment was
praised for allowing ML investigations "immediately after the registration
of a predicate offence by the LEA, facilitating parallel and simultaneous
investigations."
c. The 2024 report details the
"direct referral mechanism" and two-way information flow between LEAs
(like CBI, Police) and the ED.
The Court's Finding: The FATF
framework, which informs the PMLA's object and purpose, is built on
inter-agency coordination. It envisages the registration and investigation of a
predicate offence by an LEA as the first step, which then triggers the ED's
parallel money laundering investigation. A private complainant has no place in
this official, confidential, inter-agency ecosystem.
5. & 6. The ED's Own Consistent Stance
(Elsewhere and in this Case)
This was perhaps the most damning
part of the order for the ED. The court noted:
1. In Other Fora: In
responses to the Central Information Commission (CIC) in 2013 and again in
2024, the ED itself had stated that "registration of FIR is mandatory for
a case made under PMLA" and that it "cannot initiate investigation...
unless the FIR is registered by law enforcement agency."
2. In This Case's Diaries:
The court inspected the ED's internal case diaries. They revealed that from
2014 (when Dr. Swamy first complained to the ED) until 2021, the ED's own legal
officers repeatedly advised against registering an ECIR because there was no
FIR in the predicate offence. The ED even wrote to the CBI in 2014 and 2015,
forwarding Dr. Swamy's complaint and suggesting the CBI take action. For seven
years, the ED consistently held the view that a FIR was necessary.
The Court's Finding: The
ED's own longstanding and consistent interpretation, both generally and in this
specific case, was that a FIR is a jurisdictional prerequisite. Its sudden
reversal in 2021 to register an ECIR was an "ill advised out pacing of the
scheme of the PMLA itself."
7. The CBI's Inaction
The court observed that the CBI,
the premier agency for such complex economic offences, was aware of the
allegations since 2014 but, exercising its professional discretion, never
registered a FIR. The ED waited for seven years in step with the CBI's
assessment before unilaterally deciding to proceed.
The Court's Finding: The
deference shown by the ED to the CBI's assessment for years underscored the
conventional understanding that the predicate offence investigation by a
competent LEA must lead the process.
The Curious Case of the Subsequent
EOW FIR
During the pendency of the case,
a fascinating development occurred. In September 2025, the ED, under Section
66(2) of the PMLA, shared information with the Economic Offences Wing (EOW) of
Delhi Police. In October 2025, the EOW registered a FIR based on largely the
same allegations.
The court asked the ED if this
new FIR now formed the predicate offence for its complaint. The ED's counsel,
the Learned ASG, explicitly said No. He stated the EOW FIR was a
"prospective exercise" and did not alter the basis of the existing
prosecution complaint.
The court, therefore, consciously
ignored this subsequent FIR in its decision, as the ED did not seek to amend
its foundational premise. However, the court noted that this development made
it "imprudent" to comment on the factual merits of the allegations,
as fresh investigations were now underway.
The Final Holdings and the
Dismissal
Synthesizing all seven metrics,
the Special Court arrived at its conclusive findings:
1. A FIR for the scheduled offence is a
mandatory threshold requirement for investigating and prosecuting money
laundering under the PMLA.
2. A private complaint under Section 200
Cr.P.C., even with a summoning order, cannot substitute for this FIR
requirement.
3. Consequently, since the ED's prosecution
complaint was founded solely on a private complaint (Dr. Swamy's), the court
lacked jurisdiction to take cognizance of it.
The complaint was therefore
dismissed. Importantly, the court did not rule on whether the alleged
transactions constituted money laundering or not. It left those factual
questions open, especially in light of the new EOW FIR.
Implications and Conclusion: A
Reinforced Procedural Bastion
This judgment is a significant reaffirmation
of procedural safeguards within the criminal justice system, even in the
context of a stringent law like the PMLA. It underscores several key
principles:
1. Hierarchy of Offences:
Money laundering is a consequence of a predicate crime. The legal process for
the consequence cannot legitimately run ahead of the process for the primary
crime.
2. Role of Specialized
Agencies: The court recognized the distinct roles of different LEAs. The
CBI/Police investigate the primary crime; the ED investigates the financial
trail and proceeds. One cannot usurp the core function of the other.
3. Agency Accountability:
The court held the ED to its own publicly and internally stated legal
standards, preventing an ad hoc expansion of its powers.
4. Not an End, But a
Procedural Reset: The dismissal does not mean the end of the National
Herald case. The new EOW FIR creates a potential new, and procedurally sound,
pathway for investigation. If the EOW investigation proceeds to a chargesheet,
the ED may then have the requisite predicate offence foundation to launch a
fresh PMLA case.
For the legal community, the
order serves as a crucial precedent on the interpretation of the PMLA's
jurisdictional triggers. For the layperson, it is a reminder that in the rule
of law, the process is as important as the pursuit of the alleged crime. The
court, in this instance, acted as a vital check, ensuring that the formidable
powers under the PMLA are exercised within the framework designed by Parliament
and the Constitution.
Case Title: ED Vs. Sonia
Gandhi & Ors., CC No. 14/2025, Order dated 16.12.2025 by the Court of Dr.
Vishal Gogne, Special Judge (PC Act) CBI-24 (MP/MLA Cases), RADC, New Delhi.
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