The Enforcement Directorate needed a scheduled offence in somebody else’s charge-sheet, and asked the trial court to add one
The Jammu and Kashmir and Ladakh High Court holds the agency had standing to be heard — the trial court could not shut it out after ruling its application maintainable — and then refuses the charges it asked for.
Money laundering is a parasitic offence. The Prevention of Money Laundering Act bites only where there is a scheduled offence generating proceeds of crime, and if the predicate prosecution carries no scheduled offence, the Enforcement Directorate has nothing to attach itself to. That dependence produces an unusual spectacle: an investigating agency with a direct interest in what charges a different agency’s charge-sheet attracts.
On 25 September 2026 Justice Sanjay Parihar, sitting at Srinagar, separated the two questions that situation raises — whether the ED may be heard, and whether it should get what it asks for — and answered them differently.
The application, and what it was for
The CBI had filed a charge-sheet arising from FIR No. 05/2015 registered by CBI Special Crime-II, New Delhi, for offences under Sections 120-B, 406 and 409 of the Ranbir Penal Code. The Directorate of Enforcement, Srinagar, applied to the Chief Judicial Magistrate (CBI Cases), Srinagar to add charges under Sections 411 and 424 RPC, on the footing that the charge-sheet already contained material disclosing them.
The ED was not a party to those proceedings, and the charge-sheet was not its own. Its position was that both this Court and the Supreme Court had granted it liberty to move the application, and that the trial court had earlier upheld its maintainability.
By an order of 22 March 2026 the trial court dismissed the application, and by an order of 30 March 2026 framed charges under Sections 120-B, 406 and 409 RPC alone, omitting the two provisions sought. The ED came in revision. Mr. S.V. Raju, Additional Solicitor General, appeared for it with Mr. Zoheb Hussain, Special Counsel; Mr. Syed Faisal Qadri, Senior Advocate, and others appeared for the respondents.
Why the addition mattered so much
The judgment is candid about the stakes, and the candour is what makes it useful.
The ED’s proceedings under Sections 3 and 4 of the PMLA had already been quashed by a judgment which, though under challenge before the Supreme Court, was not stayed — so, the Court held, unless altered or stayed by a superior forum it continues to operate and its legal consequences cannot be ignored.
The reason the quashing bit is Pavana Dibbur v. Directorate of Enforcement, 2023 SCC OnLine SC 1586, which explains when criminal conspiracy under Section 120-B can constitute a scheduled offence. Merely because Section 120-B appears in Part A of the Schedule does not make every conspiracy a scheduled offence: the conspiracy must relate to the commission of an offence which is itself scheduled. On the offences presently in the CBI prosecution — Sections 120-B, 406 and 409 RPC — the ED cannot derive PMLA jurisdiction by treating Section 120-B in isolation as the scheduled offence.
Sections 411 and 424 would change that. So the application to add charges was, in substance, an application that would restore the ED’s own jurisdiction.
The Court met that squarely. The consequence for the ED’s jurisdiction, it held, can neither constitute a ground for adding a charge nor, by itself, furnish a ground for refusing to add one. The question must be determined solely on the material forming part of the predicate-offence proceedings and the ingredients of the offences invoked; the jurisdictional consequences that may follow under the PMLA are distinct from the exercise a criminal court undertakes in deciding whether to frame or alter a charge.
That is the sentence practitioners will take from the judgment. A charge is not added because it would help an agency, and it is not withheld because it would.
The trial court could not un-decide maintainability
On standing, the Court found an internal contradiction in the order under challenge.
Once the trial court had recorded that the ED’s application was maintainable — having regard to the liberty reserved by the High Court and the Supreme Court — it could not later decline to consider the application by simply holding that the ED lacked locus standi, without addressing the effect of those orders and of its own earlier determination.
The ASG pressed a wider proposition: that the superior courts’ orders had recognised the ED as an interested and necessary party in proceedings relating to the scheduled offence. The Court declined to decide it, holding it unnecessary. The limited question was whether, having been permitted to approach the trial court and having placed a contention that the CBI charge-sheet disclosed additional offences, the ED was entitled to have that contention examined under the settled principles governing framing or alteration of charge.
The answer was necessarily yes — with an equally clear limit. The grant of liberty did not establish that the offences stood made out, nor could it compel the trial court to frame them. It required only that the trial court consider the contention and independently determine, on the record, whether the ingredients were prima facie disclosed.
The ED’s locus, at least for the limited purpose of bringing relevant material or information to the trial court’s notice, could not be altogether negatived. Rejecting the application purely on locus was an unduly restrictive approach, and the failure to address the merits rendered the order vulnerable to that extent.
Decided here rather than remitted
The obvious course was a remand. The Court put that to the parties — and counsel on both sides, the ASG for the ED and Senior Counsel and others for the respondents, fairly submitted that instead of remanding, the High Court might itself examine the issue and correct any error, particularly as the material required to determine it was already before the Court.
So it did, and the ED lost on the merits.
Principal offender or receiver — not both
The respondents’ argument, which the Court accepted, rests on the structure of the offences. Sections 411 and 424 target persons who receive, retain, deal with or assist in dealing with property having the character of stolen property — not the principal offender alleged to have committed theft, criminal misappropriation or criminal breach of trust in respect of that same property. Having been arraigned as principal offenders under Sections 406 and 409 read with 120-B, the respondents could not simultaneously be brought within Sections 411 and 424 in respect of the very same property on the same factual foundation. Counsel pointed to paragraph 181 of Mir Nagvi Askari, relied on by the ED itself, as supporting rather than answering that distinction.
Examining the ingredients, the Court held that Section 411 contemplates dishonest receipt or retention of stolen property with the requisite knowledge or reason to believe as to its character, while Section 424 requires material satisfying its distinct ingredients of dishonest or fraudulent concealment or removal of property, or assistance in such concealment or removal. On the material presently in the charge-sheet, the necessary factual foundation for either had not been demonstrated: the accusations are essentially founded on alleged criminal misappropriation and criminal breach of trust committed pursuant to a conspiracy among the principal offenders.
The order
The petition was partly allowed. The trial court’s order, insofar as it held that the ED had no locus standi to move the application, was set aside. The prayer for addition of charges under Sections 411 and 424 RPC was rejected on the material presently available.
The Court was careful to keep the future open. The rejection is confined to the material presently before the trial court and will not impede the exercise of powers under Section 216 CrPC if, at any later stage, further material or evidence emerges warranting alteration or addition of charge — an exercise the trial court is to undertake independently, on its own merits, uninfluenced by this rejection, and after observing the procedural safeguards available to the accused.
The shape of the result is worth noting. The agency won the point of principle it needed for the future — that having been given liberty to approach a court, it cannot then be told it has no standing to be heard — and lost the relief it actually wanted. Those are not in tension. Being entitled to make an argument is not the same as being entitled to succeed in it, and a court that conflates the two, in either direction, gets both wrong.