New Delhi: A Delhi Special Court has dismissed the Enforcement Directorate’s complaint against Congress leaders Sonia Gandhi and Rahul Gandhi in a money laundering case linked to the alleged acquisition of Associated Journals Limited by Young Indian, holding that prosecution under the Prevention of Money Laundering Act cannot be initiated in the absence of a First Information Report being registered for the scheduled offence by a law enforcement agency.
Special Judge Dr. Vishal Gogne delivered the order on December 16, 2025, declining to take cognizance of the ED’s complaint against Sonia Gandhi, Rahul Gandhi, Suman Dubey, Sam Pitroda, Young Indian, Dotex Merchandise Pvt. Ltd., and Sunil Bhandari for offences under Sections 3 and 4 read with Section 70 of the PMLA.
The case arose from allegations that the accused persons had fraudulently taken over properties worth over ₹2,000 crores belonging to Associated Journals Limited through Young Indian for merely ₹50 lakhs. The ED’s investigation stemmed from an order dated June 26, 2014, passed by a Metropolitan Magistrate at Patiala House Courts taking cognizance on a private complaint filed by Dr. Subramanian Swamy in 2013 against the accused persons under Sections 403, 406, 420 read with Section 120B of the IPC.
According to the allegations, Young Indian, incorporated in November 2010 as a Section 25 company (not-for-profit), acquired a loan of ₹90.21 crores that the All India Congress Committee had extended to Associated Journals Limited. Young Indian purchased the right to recover this loan for ₹50 lakhs, and AJL subsequently converted the outstanding loan into 9.02 crore equity shares in favour of Young Indian. Sonia Gandhi and Rahul Gandhi together held 76% of the shares in Young Indian.
The ED registered an Enforcement Case Information Report on June 30, 2021—seven years after the Magistrate’s summoning order—and filed the prosecution complaint alleging money laundering. The ED quantified the alleged proceeds of crime at ₹988.03 crores, comprising shares of AJL valued at ₹90.21 crores, immovable properties of AJL valued at ₹755.15 crores based on District Valuation Officer assessment, and rental income of ₹142.67 crores generated since the takeover.
The accused persons challenged the jurisdiction of the ED to investigate and prosecute under the PMLA, arguing that in the absence of a FIR being registered for the scheduled offence, the ED lacked the foundational instrument needed for conferring jurisdiction. The accused relied on the statutory provisions of the PMLA, the Supreme Court’s decision in Vijay Madanlal Choudhary, and reports of the Financial Action Task Force.
The ED contended that cognizance of an offence under the PMLA could be taken under Section 210 BNSS (formerly Section 190 Cr.PC) upon a complaint, including any complaint filed by a person authorised under any special law. The ED argued that a summoning order from a Magistrate upon a private complaint stood on a pedestal even higher than a FIR on account of the prima facie probity of allegations having found judicial acceptance. The ED maintained that no bar existed under the PMLA upon the Court from taking cognizance in the absence of a FIR concerning the scheduled offence.
The Court identified the pivotal legal question as whether registration of a FIR for the scheduled offence is a threshold requirement for investigation and consequent prosecution under the PMLA, holding that this question was determinative of the power of the Special Court to take cognizance of the offence of money laundering.
The Court examined the issue through seven distinct metrics: the investigative potential of a FIR; statutory provisions of the PMLA concerning investigation of scheduled offences; the law laid down in Vijay Madanlal Choudhary; the objects of the PMLA and FATF reports; the ED’s stance before various authorities; the ED’s consistent view in the present case between 2014–2021; and the non-registration of a FIR by the CBI.
On investigative potential, the Court held that registration of a FIR carries distinct, accentuated, and wider consequences in investigation compared to proceedings upon a complaint case. A FIR clothes investigating officers with powers to effect arrest, perform searches, secure evidence through witness statements, conduct forensic analyses, issue lookout circulars, and coordinate with other agencies through information sharing. The Court held that a complainant under Section 223 BNSS cannot conduct any investigation akin to police or investigating agencies and is fundamentally incapable of the investigation required for complex economic offences.
The Court observed:
“The incidents of a FIR are therefore dyed in a deeper hue and upon a wider canvas than a complaint by a public person before a Judicial Magistrate under Section 223 BNSS. Such complaints by public persons bring forth a limited spectrum or volume of evidence and an even more constricted toolkit for facilitating investigation of the allegations.”
Examining statutory provisions, the Court analysed the first proviso to Section 5(1) of the PMLA and the proviso to Rule 3(2) of the Prevention of Money-Laundering Rules, 2005. Section 5(1) provides that no order of attachment shall be made unless “a report has been forwarded to a Magistrate under Section 173 of the Code of Criminal Procedure” or “a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule.”
The Court held that the expression “person authorised to investigate the offence” refers exclusively to an investigating officer from a law enforcement agency, and not a public person filing a private complaint. The Court emphasised that being a special provision, the legislative intent derived from these provisions shall override the general legislation under Section 223 BNSS.
The Court stated:
“Since a public person, who may yet be entitled to institute a complaint under Section 223 BNSS, is not authorised to investigate any scheduled offence, this expression exclusively manifests the role only of an investigating agency (through its investigating officer) in the scheme of investigation and prosecution of the predicate offence highlighted by the PMLA.”
Addressing the ED’s argument that similar provisos to Sections 17 and 18 had been omitted by amendment, the Court held that the omission must be seen in the context of the continuation of the first proviso to Section 5, which was not omitted. The second proviso to Section 5(1), introduced by amendment, permits attachment where non-attachment would frustrate proceedings under the Act. The Court held that the exception must not define the rule, and that the twin requirements of the first proviso—either a FIR or a complaint by an investigating officer—remain the norm and not the exception.
The Court concluded:
“The guidance from the statutory provisions under the PMLA is in favour of a FIR being registered for the scheduled offence as the jurisdictional trigger for the ED to commence investigation pertaining to Section 3 by registration of an ECIR and to then file a prosecution complaint.”
On the decision in Vijay Madanlal Choudhary, the Court extensively examined the Supreme Court’s observations that “the authorities under the 2002 Act cannot prosecute any person on a notional basis or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial, including by way of criminal complaint before the competent forum.”
The Court clarified that when the Supreme Court used terms like “complaint” or “private complaint” in that judgment, it was paraphrasing the first proviso to Section 5 of the PMLA, which contemplates only complaints filed by persons authorised to investigate the scheduled offence, not complaints by public persons. The Court held that since the decision did not discuss or lend any alternate meaning to the expressions used in Section 5(1) of the PMLA, the terms must be understood in their literal statutory meaning.
The Court stated:
“The meaning of a statutory term, finding mention in a judicial decision, must be deciphered from the reading of the statute itself. Since the decision in Vijay Madanlal Choudhary did not discuss or lend any alternate meaning to the expression used in Section 5(1) of the PMLA, the Court can have recourse only to a literal meaning of the same.”
Examining the PMLA’s objects and FATF reports, the Court noted that the Statement of Objects and Reasons makes generous reference to FATF recommendations. The 2010 FATF report identified that money laundering investigations in India could be initiated after registration of a predicate offence by a law enforcement agency, facilitating “parallel and simultaneous investigations by the Directorate of Enforcement and the LEA into the offence of money laundering.”
The 2024 FATF report emphasised the role of nodal officers at LEAs in identifying and communicating potential money laundering cases to the ED. The report noted:
“The process in India for logging new investigations through the First Information Report (FIR), and conclusion of investigations through the Final Form Report (or ‘Charge Sheet’), provides nodal officers with information associated with the case.”
The Court held that an individual complainant like Dr. Swamy can neither be seen as a LEA capable of recording a FIR nor as an investigating officer who can investigate the predicate offence. Individual complainants lack the mandate or wherewithal to interact with specialised agencies dealing with money laundering and lack any authority to deal with evidentiary issues in coordination with the ED.
On the ED’s consistent stance, the Court noted that the agency has maintained before various authorities that investigation concerning money laundering cannot be initiated unless a FIR is registered. In proceedings before the Central Information Commission in 2013, the ED stated that “the Directorate of Enforcement cannot initiate investigation for money laundering unless the FIR is registered by a law enforcement agency.” As recently as August 2024, in proceedings before the CIC, the ED reiterated: “Registration of FIR is mandatory for a case made under PMLA and in the instant case, since the Appellant has not filed any FIR, cognizance under PMLA cannot be taken.”
Most significantly, the Court conducted an in-camera inspection of the ED’s case diaries, which revealed that Dr. Subramanian Swamy had filed a complaint dated July 4, 2014, with the Director of Enforcement, attaching the Magistrate’s summoning order and seeking ED investigation. The case diaries showed that between 2014 and 2021, the ED’s own legal officers consistently opined that no ECIR should be registered based solely on the summoning order in the absence of a FIR for the predicate offence.
The Court noted that the ED wrote to the CBI as early as July 28, 2014, stating that “no predicate offence for initiating investigation under the PMLA appeared to have been made out as there was no mention of any FIR in the complaint.” The ED forwarded Dr. Swamy’s complaint to the CBI for appropriate action. Despite this, the ED only registered the ECIR on June 30, 2021, seven years later, after receiving fresh legal opinion.
The Court observed:
“The consistency of seven years in not so recording an ECIR is more in consonance with the primacy of investigation of offences through a FIR, the import of the provisions under the PMLA, the FATF observations, and the decision in Vijay Madanlal Choudhary.”
On the CBI’s approach, the Court noted that despite being informed of Dr. Swamy’s allegations since 2014, including through Dr. Swamy’s own complaint to the CBI in September 2015, the CBI refrained from registering a FIR to date. The Court held that the ED’s deference to the CBI was abandoned when it proceeded with recording an ECIR on June 30, 2021, when no FIR existed with any law enforcement agency.
The Court stated:
“This act was not a mere expression of the independent nature of the ED as an agency to probe proceeds of crime. It rather reflected a unilateral overreach of the other law enforcement agency, namely the CBI, on one hand, and an ill-advised outpacing of the scheme of the PMLA itself.”
The Court noted a significant development during the pendency of proceedings. During inspection of case diaries, it emerged that the ED had shared information under Section 66(2) of the PMLA with the Economic Offences Wing, Delhi Police, on September 4, 2025, pertaining to Dr. Swamy’s complaint and the summoning order. Consequently, the EOW registered a FIR on October 3, 2025, after arguments on cognizance had concluded, against all the accused persons under Sections 120B, 403, 406, and 420 of the IPC.
When queried by the Court, the Additional Solicitor General clarified that the subsequent FIR was not being pleaded as the predicate offence in the present complaint, and that cognizance should be considered based on the prosecution complaint as filed. The ASG stated that the ED reserved the right to conduct further investigation and file subsequent complaints under Section 44(1) Explanation (ii) of the PMLA.
The Court declined to consider the subsequent FIR, holding that it would be imprudent to render any prima facie findings on merits when further investigation was underway. The Court held that since cognizance was being declined on a pure question of law regarding jurisdiction, it was not required to address arguments relating to the merits of the allegations.
The Court’s principal findings were:
- An investigation and consequent prosecution complaint under the PMLA is not maintainable in the absence of a FIR for the scheduled offence;
- Investigation under the PMLA is not maintainable based solely on a complaint under Section 200 Cr.PC (now Section 223 BNSS) filed by a public person; and
- Since the present prosecution complaint was founded on cognizance of a complaint filed by Dr. Subramanian Swamy and not upon a FIR, cognizance was impermissible in law.
Declining cognizance and dismissing the complaint, the Court clarified that the present order “does not efface either the existing allegations or curtail further investigation,” noting that ongoing investigation by the EOW and possible further investigation by the ED could lead to fresh proceedings.
Case Title: Enforcement Directorate v. Sonia Gandhi & Ors.
*[CC No. 14/2025, CNR No. DLCT11-000301-2025]
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