A) ABSTRACT / HEADNOTE

The Supreme Court evaluated the applicability of prior sanction under Section 197(1) of the Code of Criminal Procedure, 1973 (CrPC) to proceedings initiated under Section 44(1)(b) of the Prevention of Money Laundering Act, 2002 (PMLA). The respondents, public servants, argued that the cognizance taken by the Special Court without such sanction was impermissible. The Court upheld the High Court’s judgment, emphasizing the protective intent of Section 197, extending it to PMLA proceedings by virtue of Section 65 of the PMLA, and limiting Section 71’s overriding effect to cases of direct inconsistency. Consequently, the orders of cognizance against the respondents were quashed.

Keywords: Prior Sanction, Public Servants, Prevention of Money Laundering Act, Section 197 CrPC, Discharge of Duties.

B) CASE DETAILS

i) Judgment Cause Title: Directorate of Enforcement v. Bibhu Prasad Acharya, etc.
ii) Case Number: Criminal Appeal Nos. 4314-4316 of 2024
iii) Judgment Date: 06 November 2024
iv) Court: Supreme Court of India
v) Quorum: Justices Abhay S. Oka and Augustine George Masih
vi) Author: Justice Abhay S. Oka
vii) Citation: [2024] 11 S.C.R. 510; 2024 INSC 843
viii) Legal Provisions Involved: Section 197 of CrPC; Sections 3, 4, 44(1)(b), 65, and 71 of the PMLA
ix) Judgments Overruled by the Case (if any): None explicitly overruled.
x) Case Related to: Criminal Law, Money Laundering, Procedural Law.

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The appellant initiated complaints under Section 44(1)(b) of the PMLA against the respondents for offenses punishable under Section 4 of the Act. The respondents, as civil servants, were alleged to have committed acts amounting to money laundering during their official duties. The High Court quashed the Special Court’s cognizance orders due to the absence of prior sanction under Section 197(1) CrPC, emphasizing its mandatory nature for prosecuting public servants for acts in the course of their duties. The Directorate of Enforcement (appellant) appealed this decision.

D) FACTS OF THE CASE

1. Complaints Filed: The Enforcement Directorate filed complaints alleging that the respondents engaged in acts of money laundering in connection with abuse of public office.
2. Roles of Respondents:
   • Bibhu Prasad Acharya: Allegedly colluded to allot land improperly for a Special Economic Zone (SEZ).
   • Adityanath Das: Allegedly extended unlawful benefits to a private company by allotting additional water resources.
3. High Court Ruling: The High Court ruled that prior sanction under Section 197(1) CrPC was required for prosecuting the respondents since their actions were purportedly in discharge of their official duties.
4. Appeal to Supreme Court: The appellant contested the ruling, claiming inconsistency between PMLA’s provisions and CrPC, rendering Section 197 inapplicable.

E) LEGAL ISSUES RAISED

i) Does Section 197(1) of CrPC apply to proceedings initiated under Section 44(1)(b) of the PMLA?
ii) Can Section 71 of the PMLA override the application of Section 197 CrPC?

F) PETITIONER/APPELLANT’S ARGUMENTS

1. Applicability of Section 71 of PMLA: The appellant argued that Section 71 of the PMLA gives the Act overriding authority, thereby excluding the requirement of prior sanction under Section 197 CrPC.
2. Non-Public Servant Status: It was contended that the respondents, while acting in their corporate roles, were not public servants protected under Section 197.
3. Distinct Objectives: The appellant emphasized the distinct aims of PMLA, focusing on combating money laundering, and claimed that prior sanction under CrPC would frustrate its objectives.

G) RESPONDENT’S ARGUMENTS

1. Sanction Requirement: The respondents argued that their alleged acts were closely connected to their official duties, necessitating prior sanction under Section 197 CrPC.
2. Government Control: Citing corporate governance documents, they contended that they remained public servants, subject to state government oversight and removal.
3. Judicial Interpretation: They relied on precedent, asserting that acts performed in discharge of official duties cannot be prosecuted without prior approval.

H) JUDGMENT

a. RATIO DECIDENDI

1. Conditions for Section 197 Applicability: The Court outlined two conditions:
   • Accused must be a public servant removable by government sanction.
   • Offense must relate to acts in the discharge of official duties.
2. Extension to PMLA: The Court held that Section 65 of PMLA makes CrPC provisions applicable to PMLA unless inconsistent with its provisions. Section 197 was found consistent.
3. Limited Overriding Effect: Section 71 of PMLA does not override provisions of CrPC made applicable via Section 65, ensuring harmonious construction.

b. OBITER DICTA

The Court noted that Section 197 safeguards against vexatious litigation, ensuring public servants can discharge duties without fear, provided actions are genuine and not ultra vires.

c. GUIDELINES

1. Sanction for Cognizance: Public servants accused under PMLA require prior sanction when acts are linked to official duties.
2. Procedural Compliance: The applicability of CrPC provisions to PMLA is subject to the consistency test under Section 65.

I) CONCLUSION & COMMENTS

The judgment reinforces the protective scope of Section 197 CrPC, harmonizing its application with PMLA. By restricting Section 71’s overriding effect, the Court preserves statutory balance, ensuring neither Act’s purpose is defeated.

J) REFERENCES

a. Important Cases Referred

• Prakash Singh Badal v. State of Punjab [(2007) 1 SCC 1]
• Centre for Public Interest Litigation v. Union of India [(2005) 8 SCC 202]
• P.K. Pradhan v. State of Sikkim [(2001) 6 SCC 704]

b. Important Statutes Referred

• Prevention of Money Laundering Act, 2002: Sections 3, 4, 44(1)(b), 65, 71.
• Code of Criminal Procedure, 1973: Section 197.