Uttarakhand HC Upholds Court's Power to Return PMLA Complaint Pre-Cognizance, Validates Subsequent Separate Trials in NH-74 Scam Cases - 2025-04-26

Uttarakhand High Court Upholds Return of PMLA Complaint Pre-Cognizance, Allows Separate Trials in NH-74 Scam

Nainital: The Uttarakhand High Court, in a significant ruling concerning a multi-crore money laundering case linked to alleged irregularities in the acquisition of land for National Highway 74, has upheld the power of a Special Judge under the Prevention of Money Laundering Act (PMLA) to return a complaint before taking cognizance. The court dismissed petitions filed by Dinesh Pratap Singh and several others, who had challenged both the initial order returning a joint PMLA complaint and the subsequent separate complaints filed against them by the Directorate of Enforcement (ED).

The judgment, delivered orally by the bench of Hon'ble Ravindra Maithani , J. , addressed a common question of law raised in twelve separate criminal miscellaneous applications challenging the ED's prosecution.

Case Background: Alleged NH-74 Land Acquisition Scam

The case originates from an alleged scam involving the acquisition of land for the widening of NH-74. Land notified as 'Agricultural' under Section 3D of the National Highways Act, 1956 (NH Act) was allegedly shown as 'Non-Agricultural' using forged and backdated government records and orders. This manipulation, reportedly done in conspiracy between landowners, revenue officials, and others, resulted in compensation being granted at much higher rates, causing an estimated loss of approximately Rs. 500 crores to the government treasury.

An initial FIR led to charge sheets being filed under various sections of the IPC and the Prevention of Corruption Act. The ED subsequently initiated an investigation under the PMLA, alleging money laundering of the 'Proceeds of Crime' generated from this scheduled offence.

The Challenged Orders

The ED initially filed a single joint complaint against the petitioners and others before the Special Judge (PMLA), Dehradun. On April 28, 2022, the Special Judge returned this complaint, observing that the accused did not commit the offence of money laundering in the course of the same transaction, as different 'Proceeds of Crime' were generated from different transactions, and not all accused were involved in laundering every instance of POC. The judge directed the ED to file fresh and separate complaints under Section 223 of the Code of Criminal Procedure, 1973 (CrPC).

Pursuant to this order, the ED filed seven separate complaints. In some of these complaints, cognizance has been taken, and summoning orders have been issued against the petitioners. The petitioners challenged both the initial return order and the subsequent separate complaints and summoning orders.

Petitioners' Arguments: Lack of Jurisdiction and Prima Facie Case

The petitioners argued that a court has no power to return a complaint with directions on how it should be filed, citing precedents stating that the court can only take cognizance, refuse cognizance (dismiss/reject/return), or order further investigation. They contended that the April 28, 2022 order was non est (void) and without jurisdiction, thus rendering the subsequent separate complaints invalid. They further argued that forcing them to face multiple separate trials infringed their right to life under Article 21.

Specific to the subsequent complaints, petitioners, including Dinesh Pratap Singh (the then Competent Authority under the NH Act), argued that no prima facie case was made out against them. Dinesh Pratap Singh contended that he merely determined the market rate based on reports and that changing land use was not his power. Other petitioners, including revenue officials and farmers, similarly denied involvement in forgery or illegal acts, asserting that compensation was received legitimately or that they merely followed superiors' orders. They also highlighted Section 44(1)(c) of the PMLA, which allows for joint trial of scheduled and money laundering offences.

ED's Counter-Arguments: Pre-Cognizance Return Valid, Distinct Transactions

The ED countered that the rules regarding return of complaints in the CrPC primarily apply to Magistrate courts and that, in any case, a complaint can be returned before cognizance is taken. They argued that filing separate complaints did not prejudice the petitioners and that the accused had no right to be heard at the pre-cognizance stage. Crucially, the ED maintained that the alleged offences were not part of the "same transaction" as different farmers obtained different forged orders through distinct dealings, justifying separate complaints. They asserted that the complaints and investigation material established a strong prima facie case against the petitioners.

High Court's Analysis: Pre-Cognizance Return and Prima Facie Findings

The High Court extensively discussed the concept of 'cognizance' and the procedure for dealing with complaints under the CrPC, noting that cognizance is taken when the court applies its mind to initiate judicial proceedings. Relying on Supreme Court precedents, the court affirmed that a Magistrate (or here, a Special Judge before taking cognizance) can indeed return a complaint in certain situations before taking cognizance, such as when it is not entertainable or requires sanction. The court rejected the argument that merits cannot be considered at this preliminary stage, noting that issues like sanction inherently involve a degree of merit examination.

While acknowledging that provisions concerning joint trials (Sections 218, 219, 223 CrPC) typically apply post-cognizance, the court characterized the Special Judge's observations regarding the need for separate trials in the returned order as a tentative finding made at the pre-cognizance stage.

The court addressed the petitioners' concerns about facing multiple trials and observed that while joint trial is the exception and separate trial the rule, the possibility of joint trial could still be explored. It noted that the petitioners have the option to file applications for joinder of charges or joint trial before the trial court in the separate cases, and the court below would be better placed to decide such applications after hearing all sides. The High Court deliberately refrained from making a conclusive determination on whether a joint trial should be held, leaving that to the discretion of the trial court upon application.

Turning to the challenge against the subsequent separate complaints and summoning orders, the High Court examined the complaints and the alleged roles of each petitioner in detail. The court found that the complaints contained specific averments detailing the involvement of petitioners (including revenue officials allegedly facilitating forged backdated orders and entries, and others receiving or dealing with the alleged 'Proceeds of Crime') in activities directly or indirectly connected with the generation and handling of the proceeds from the alleged scheduled offence.

Citing the Supreme Court's interpretation of Section 3 PMLA in Vijay Madanlal Chaudhary v. Union of India , which defines the offence broadly to include various activities like concealment, possession, acquisition, or use of proceeds of crime, the High Court concluded that the complaints and the material placed before the Special Judge did make out a prima facie case against the summoned petitioners. The court reiterated that summoning is not a routine act but found that in these cases, there was sufficient material regarding the "grave involvement" of the petitioners.

Conclusion: Petitions Dismissed, Trials to Proceed Separately (for now)

Based on its analysis, the Uttarakhand High Court found no illegality or jurisdictional error in the Special Judge's order returning the initial joint complaint. It also found that the separate complaints and the cognizance/summoning orders issued in some of them were valid, as they disclosed a prima facie case against the petitioners based on the material presented.

Consequently, all the petitions challenging the return order and the subsequent proceedings were dismissed. The court clarified that the question of whether the separate trials should be conducted jointly remains open for the petitioners to pursue by filing appropriate applications before the trial court.

This judgment clarifies that a court dealing with a PMLA complaint can, before taking cognizance, return it if it deems it necessary, and such an order, even if referencing trial-related provisions, is considered tentative at that stage. It also reinforces that subsequent proceedings initiated based on such a return order are valid if they meet the threshold of establishing a prima facie case for the alleged offence of money laundering.