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Bombay High Court Voids Cognisance Order Against OctaFX India Over Non-Compliance with BNSS Procedure

By The Legal Alpha Web Desk · 29 October 2026 · 5 min read
Bombay High Court Voids Cognisance Order Against OctaFX India Over Non-Compliance with BNSS Procedure

The Bombay High Court has set aside a Special Court’s order taking cognisance of an Enforcement Directorate (ED) prosecution complaint against OctaFX India Private Limited (now known as Tauga Private Limited) in an alleged illegal forex trading and money laundering probe.

Justice Milind N. Jadhav ruled that the trial court failed to follow the mandatory statutory pre-cognisance procedure introduced under the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). Along with quashing the December 24, 2024 cognisance order, the High Court set aside all consequential coercive steps taken against the company, including non-bailable warrants and requests for Red Corner Notices. The matter has been remitted to the trial court to consider the objections of the accused persons strictly in accordance with statutory procedure before deciding whether to take cognisance afresh.

Legal Topic

  • Area of Law: Criminal Procedure / Financial Crimes

  • Sub-topic: Pre-Cognisance Hearing under BNSS / Prevention of Money Laundering Act (PMLA)

Core Legal Issue

The central question before the High Court was whether a Special Court can take cognisance of a prosecution complaint filed by an investigating agency without first adhering to the procedural mandate under Section 223(1) of the BNSS, which provides a proposed accused an opportunity of being heard before cognisance is taken.

The court had to determine whether non-compliance with this safeguard invalidates the cognisance order itself, and whether consequential coercive actions—such as non-bailable warrants and international notices—can survive once the root order is declared procedurally defective.

What Did the Court Decide?

  • Cognisance Order Set Aside: The High Court quashed the trial court's order dated December 24, 2024, holding that the statutory procedure for taking cognisance was not scrupulously observed.

  • Coercive Steps Quashed: All consequential actions arising from the defective cognisance order, specifically non-bailable warrants (NBWs) and requests for Red Corner Notices against the company, were nullified.

  • Remand for Fresh Consideration: The Special Court was directed to hear the objections raised by the company and co-accused after examining the prosecution's reply before taking an appropriate call on cognisance.

  • Appearance and Service Directions: The company was directed to appear before the trial court on November 18, 2026. The High Court waived fresh service of summons/notice under Section 223(1) of the BNSS for the company, while instructing the prosecution to ensure proper service to other co-accused.

  • Trial Court Discretion on Timelines: While the ED requested an eight-week deadline for completing the hearing, the High Court declined to bind the trial court, leaving scheduling to the magistrate's discretion based on workload and convenience.

Key Legal Points

  • Strict Adherence to Section 223 BNSS: The statutory safeguard under Section 223(1) of the BNSS requires courts to grant a hearing to the proposed accused before taking cognisance, making procedural compliance mandatory rather than discretionary.

  • Fruit of the Poisonous Tree in Process: Consequential coercive measures—such as non-bailable warrants or Interpol Red Corner Notices—cannot stand when the foundational judicial act of taking cognisance is legally unsustainable.

  • No Pronouncement on Substantive Merits: The ruling is strictly procedural; the High Court did not examine or adjudicate upon the substantive allegations of money laundering or unauthorised forex trading.

  • Harmonising New Criminal Procedure with Special Statutes: Even in matters investigated by central agencies under special statutes like the PMLA, the overarching procedural mandates of the BNSS govern the stage of cognisance unless expressly excluded.

Relevant Law

  • Section 223(1), Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS): Governs the examination of complaints and mandates giving an opportunity of being heard to the accused before a magistrate takes cognisance.

  • Section 44 & Section 45, Prevention of Money Laundering Act, 2002 (PMLA): Governs offences triable by Special Courts and cognisance of offences upon a written complaint by authorized officials.

  • Relevant Precedent: State of Punjab v. Davinder Pal Singh Bhullar (establishing that if the initial order is invalid, subsequent proceedings founded on it also fail).

Arguments of the Parties

Petitioner (OctaFX India / Tauga Pvt Ltd): The petitioner argued that the trial court passed the cognisance order in mechanical haste without fulfilling statutory prerequisites under the BNSS. It contended that Section 223(1) gives the accused a clear procedural right to submit objections before cognisance is initiated. Consequently, without completing this stage, issuing warrants or seeking Red Corner Notices was premature, arbitrary, and legally flawed.

Respondent (Directorate of Enforcement): The ED contended that the complaint disclosed significant financial irregularities, unauthorised forex transactions, and layering of illicit funds through domestic corporate entities. The agency maintained that the special court was justified in taking cognisance based on the material on record. While defending the merits of its probe, the agency urged that if the matter were remanded, the trial court should be bound by a strict eight-week timeline to avoid protracted delay.

Why Does It Matter?

This ruling underscores a significant procedural shift brought about by India's new criminal procedural code, the BNSS. Under the erstwhile Code of Criminal Procedure (CrPC), pre-cognisance hearings for proposed accused were largely absent, giving prosecuting agencies wider leeway to secure process and coercive warrants upon filing a charge sheet or complaint.

By enforcing Section 223(1) of the BNSS, the High Court makes it clear that trial judges must afford prospective accused a meaningful hearing before issuing process. This safeguard creates an early judicial checkpoint, directly impacting corporate defendants and foreign-linked entities facing white-collar or PMLA charges, protecting them against premature coercive measures like Red Corner Notices and NBWs before basic legal thresholds are met.

Legal Takeaway

Statutory procedural safeguards introduced under the BNSS are mandatory, not optional. A court cannot take cognisance or issue coercive processes without first hearing the prospective accused under Section 223(1), ensuring that administrative shortcuts do not replace due process.

Sources

  • Primary Source: Bombay High Court Order dated October 26, 2026, passed by Justice Milind N. Jadhav.

  • Additional Sources: ETLegalWorld Court Coverage; Enforcement Directorate Prosecution Records; The Bharatiya Nagarik Suraksha Sanhita, 2023.

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