PMLA Accused Can't Be Kept In Custody If Order Taking Cognizance Of ED Complaint Has Been Quashed : Supreme Court

The Supreme Court on Wednesday (February 12) granted bail to an accused in a case under the Prevention of Money Laundering Act (PMLA) after noting that the order taking cognizance of the prosecution complaint filed by the Enforcement Directorate (ED) has been quashed.

The Court questioned the ED for continuing the custody of the accused, who has been in custody since August 2024, after the order taking cognizance was quashed on February 7, 2025.

A bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan was hearing a case concerning Arun Kumar Tripathi, an Indian Telecommunications Service Officer, who was arrested by the ED on August 8, 2024 in a money laundering case connected with the Chhattisgarh liquor scam.

The supplementary prosecution complaint naming Tripathi as accused was filed on October 5, 2024. On the same date, the Special PMLA Court took cognizance of the complaint. However, on February 7, 2025, the High Court quashed the Special Court's order which took cognizance of the complaint for the reason that no sanction for prosecution was obtained. The High Court's decision was based on the Supreme Court's judgment delivered in November last year in Directorate of Enforcement Etc. v. Bibhu Prasad Acharya Etc. which mandated that sanction was necessary to prosecute public servants under the PMLA.

The bench today quizzed the ED for continuing the custody of the accused when the order taking cognizance has been quashed. Additional Solicitor General SV Raju argued that quashing of the cognizance would not make the arrest illegal. The ASG further stated that sanction has been obtained now and the ED has applied for fresh cognizance on that basis.

"If cognizance has been quashed, why should the accused be in jail?," Justice Oka asked.

Justice Oka also wondered if the PMLA was being misused like Section 498A IPC to merely keep persons in jail.

"Concept of PMLA cannot be to ensure that a person should remain in jail. I will tell you frankly, looking at several cases, See what happened in 498A cases, if this is the approach of the ED...very very serious offence, but if the tendency is to keep the person somehow in jail, even after cognizance is quashed, what can be said?", Justice Oka observed.

The bench also expressed its displeasure at the ED for not being upfront in informing the Court about the cognizance being quashed. It was Senior Advocate Meenakshi Arora, the counsel for the accused, who informed the bench about that fact.

"It is shocking that ED knows that the cognizance was quashed, yet this was suppressed. After 5 questions, this was informed to us. We should summon the officers. ED must come clean," Justice Oka said.

When the ASG stated that the High Court's order is yet to be made available, Justice Bhuyan replied, "The order (quashing cognizance) was dictated in court. Your officer was present in court. Yet this was not told to us!"

The bench also pointed out that the ED acted upon the High Court's order by applying for fresh cognizance based on a sanction obtained subsequently.

"What kind of signals are we giving? Order taking cognizance is quashed and the person is in custody since August 2024!" Justice Oka wondered.

"Order taking cognizance was quashed not on the ground that offence wasn't made out. It was for lack of sanction, and sanction is there now," ASG contended.

"Crooks cannot get away on technicalities. These are officers who ran a parallel liquor business and siphoned off money to Dubai," the law officer added.

Justice Bhuyan was quick to point out that the accused has not been convicted yet.

ASG argued that the requirement of sanction was laid down by the Supreme Court's judgment in Bibhu Prasad Acharya case last year, and many complaints were filed before that without taking sanction. The order quashing cognizance will not make the accused entitled to regular bail, the ASG argued.

The bench however disagreed with the ASG's submission and observed that no complaint is now existing in the eye of the law.

The bench observed :

"As on today, the position is, no complaint is filed on 5th October 2024 as the order taking cognizance is not in existence. The respondent has acted upon order dated 7 February 2025 by making application dated 7 February 2025 before the Special Court requesting the Court to take cognizance.  Now the Special Court will have to examine the case in the light of the stand taken by the respondent that there is a sanction. Whether the sanction is valid or not will have to be examined by the Special Court. 

Appellant is in custody since August 8, 2024. Order taking cognizance passed by the Special Court has been set aside by the High Court and by acting upon the order of the High Court, now a fresh application has been made by the respondent for taking cognizance. In view of these peculiar facts, custody of the appellant cannot be continued."

However, considering that the allegations are serious, the Court observed that stringent bail conditions can be imposed by the Special Court. The appellant was directed to be produced before the Special Court within one week and the Special Court was directed to release him on bail subject to stringent conditions, including the condition of surrender of passport. The appellant should also give an undertaking to regularly attend the court proceedings.

Case : Arun Pati Tripathi v. Directorate of Enforcement | SLP(Crl) No. 16219/2024