Case Note & Summary
The Directorate of Enforcement (ED) filed criminal appeals against the judgment of the High Court of Andhra Pradesh which quashed the orders of cognizance taken by the Special Court under the Prevention of Money Laundering Act, 2002 (PMLA) against two respondents, Bibhu Prasad Acharya and Adityanath Das, on the ground that prior sanction under Section 197(1) of the Code of Criminal Procedure, 1973 (CrPC) was required as they were public servants. The ED had filed complaints under Section 44(1)(b) PMLA for offences under Section 3 punishable under Section 4 PMLA. The respondents were accused of money laundering. The first respondent was the Vice Chairman and Managing Director of Andhra Pradesh Industrial Infrastructure Corporation Ltd., and the second respondent was the Principal Secretary, I&CAD Department of the Government of Andhra Pradesh. The High Court upheld their contention and quashed the cognizance orders against them. The Supreme Court allowed the appeals. The Court examined the conditions for applicability of Section 197(1) CrPC: the accused must be a public servant not removable from office save by or with the sanction of the Government, and the offence must have been committed while acting or purporting to act in discharge of official duty. The Court found that the first respondent, being a Director and Managing Director appointed by the State Government and removable by it under the Memorandum of Association, satisfied the first condition. However, the Court held that the offence of money laundering under Section 3 PMLA cannot be considered as an act done in the discharge of official duty. The Court relied on the principle that the protection under Section 197 is available only when the act is reasonably connected with official duty, and money laundering is not such an act. The Court also noted the overriding effect of PMLA under Section 71. Therefore, no sanction was required. The Court set aside the High Court's judgment and restored the cognizance orders, directing the Special Court to proceed with the complaints.
Headnote
A) Criminal Procedure - Sanction for Prosecution - Section 197 CrPC - Prevention of Money Laundering Act, 2002 - The issue was whether prior sanction under Section 197(1) CrPC is required before taking cognizance of a complaint under PMLA against public servants. The Court held that the offence of money laundering under Section 3 PMLA cannot be considered as an act done in discharge of official duty, and therefore, no sanction is necessary. (Paras 5-14) B) Prevention of Money Laundering Act - Overriding Effect - Section 71 PMLA - The Court noted that Section 71 PMLA gives overriding effect to PMLA over other laws, including CrPC, and the requirement of sanction under Section 197 CrPC would be inconsistent with the object of PMLA. (Para 2) C) Public Servant - Corporation Director - Section 197 CrPC - The first respondent, Vice Chairman and Managing Director of a State Corporation, was held to be a public servant removable by the State Government under the Memorandum of Association, thus satisfying the first condition of Section 197(1). (Paras 9-10) D) Criminal Procedure - Stage for Raising Sanction Plea - Section 197 CrPC - The Court held that the question of sanction can be raised at any stage, but in this case, after filing of exhaustive complaints and taking cognizance, the issue was ripe for consideration. (Para 8)
Issue of Consideration
Whether prior sanction under Section 197(1) CrPC is necessary for taking cognizance of offences under PMLA against public servants, and whether the respondents were public servants within the meaning of that provision.
Final Decision
Appeals allowed. Impugned judgment of High Court set aside. Orders of cognizance passed by Special Court restored. Special Court to proceed with complaints in accordance with law.
Law Points
- Section 197 CrPC sanction not required for PMLA offences
- money laundering not an official duty
- overriding effect of PMLA Section 71
- public servant status of corporation director
- stage for raising sanction plea
