The Supreme Court has held that the sanction from the government under Section 197 of Code of Criminal Procedure (Cr. PC) is mandatory to take cognizance against public servants for money laundering offences under Prevention of Money Laundering Act (PMLA).
The bench of Justice Abhay S. Oka and Justice Augustine George Masih has while upholding the judgement of Telangana High Court has observed that the cognizance of the offence under Section 3, punishable under Section 4 of the PMLA, has been taken against the respondents accused without obtaining previous sanction under Section 197(1) of CrPC.
Table of Contents – Money Laundering
Background
The appellant/Enforcement Directorate (ED) has filed complaints against the respondents and others under Section 44(1)(b) of the Prevention of Money Laundering Act, 2002 (PMLA). The complaint is for an offence under Section 3 of the PMLA, which is punishable under Section 4.
Both private respondents are accused in the complaints. They are Bibhu Prasad Acharya and Adityanath Das. The Special Court took cognizance of the complaints and issued summons to the respondents and other accused persons.
Both of them filed writ petitions before the High Court challenging the cognizance taken by the Trial Court and inter alia prayed for quashing the complaints on the ground that both of them were public servants and, therefore, it was necessary to obtain prior sanction under sub-section (1) of Section 197 of the Code of Criminal Procedure, 1973 (CrPC).
By the judgment, the High Court upheld the respondents’ contentions and quashed the orders of taking cognizance passed by the Special Court on the complaints only as against the said respondents.
ED’s Arguments
The ED contended that In view of Section 71 of the PMLA, the provisions thereof have an overriding effect over the provisions of the other statutes, including the CrPC. The requirement of obtaining a sanction under Section 197(1) of CrPC will be inconsistent with the provisions of the PMLA.
The ED urged that the accused public servant was the Vice Chairman and Managing Director of Andhra Pradesh Industrial Infrastructure Corporation Ltd. He was not a public servant within the meaning of Section 197(1) of CrPC, as it cannot be said that while holding the said position, he was not removable from the office save by or with the sanction of the Government.
The ED argued that the issue of the requirement of sanction will have to be decided at the time of the trial. He submitted that the respondents’ act of money laundering cannot be considered to have been done in the discharge of their official duties.
Public Servant’s Arguments
The accused public servant argued that power to appoint a Director of the Corporation and power to remove him vested in the State Government. Therefore, the first respondent continued to be a public servant as contemplated by Section 197(1) of CrPC. She submitted that the plea of absence of sanction can be raised at any stage of the proceedings, and it is not necessary to wait till the final hearing of the complaint.
Relevant Provisions – Money Laundering
Section 197 of CrPC (which corresponds to Section 218 of Bhartiya Nagrik Suraksha Sanhita, 2023) relates to Prosecution of Judges and public servants. Section 197 (1) of CrPC states that when any person who is or was a Judge/Magistrate/a public servant not removable from his office save by or with the sanction of the Government, is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty, no Court shall take cognizance of such offence except with the previous sanction.
The object of Section 197(1) must be considered here. The object is to protect the public servants from prosecutions. It ensures that the public servants are not prosecuted for anything they do in the discharge of their duties. This provision is for the protection of honest and sincere officers. However, the protection is not unqualified. They can be prosecuted with a previous sanction from the appropriate government.
Subject Matter Of The Dispute
After completing the investigation, the appellant has filed exhaustive complaints under Section 44(1)(b) of the PMLA. Cognizance has been taken based on the complaints. Therefore, the issue of the absence of sanction will arise at this stage.
Ratio Decedendi
The court noted that Section 65 makes the provisions of the CrPC applicable to all proceedings under the PMLA, provided the same are not inconsistent with the provisions contained in the PMLA. The words ‘All other proceedings’ include a complaint under Section 44 (1)(b) of the PMLA. We have carefully perused the provisions of the PMLA. We do not find that there is any provision therein which is inconsistent with the provisions of Section 197(1) of CrPC.
Considering the object of Section 197(1) of the CrPC, its applicability cannot be excluded unless there is any provision in the PMLA which is inconsistent with Section 197(1). No such provision has been pointed out by the ED.
Section 71 gives an overriding effect to the provisions of the PMLA notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Section 65 is a prior section which specifically makes the provisions of the CrPC applicable to PMLA, subject to the condition that only those provisions of the CrPC will apply which are not inconsistent with the provisions of the PMLA. Therefore, when a particular provision of CrPC applies to proceedings under the PMLA by virtue of Section 65 of the PMLA, Section 71 (1) cannot override the provision of CrPC which applies to the PMLA.
Conclusion
The court held that there is no embargo on considering the plea of absence of sanction, after cognizance is taken by the Special Court of the offences punishable under Section 4 of the PMLA.
The court concluded that the provisions of Section 197(1) of CrPC are applicable to a complaint under Section 44(1)(b) of the PMLA.
Case Details
Case Title: Directorate of Enforcement versus Bibhu Prasad Acharya, etc.
Case No.: CRIMINAL APPEAL NOS. 4314-4316 OF 2024
Date: 06/11/2024
Counsel For Appellant: S.V. Raju, learned Additional Solicitor General for India
Counsel For Respondent: Kiran Suri, Senior Counsel
