S. 197 CrPC Applies To PMLA : Supreme Court Holds Prior Sanction Mandatory To Prosecute Public Servants For Money Laundering Offence

The Supreme Court held today that section 197(1) of CrPC, which provides that prior sanction from the government is required to prosecute public servants and judges for offences alleged while discharge of public duties, will apply to cases under the Prevention of Money Laundering Act.

A bench of Justice Abhay Oka and Justice Augustine George Masih dismissed an appeal by the Directorate of Enforcement challenging Telangana High Court's order that set aside cognizance orders against an IAS officer on the ground of lack of prior sanction.

“Appeal dismissed. We have held that provisions of Section 197(1) CrPC will apply to PMLA”, Justice Oka pronounced.

The allegations against respondent Bibhu Prasad Acharya involved misuse of official position in land allotments, undervaluation of assets, and unauthorized concessions that allegedly benefitted private companies linked to former Andhra Pradesh CM YS Jagan Mohan Reddy while causing significant financial loss to government. The ED alleged that Acharya conspired with prominent figures to facilitate these transactions.

Before the HC, Acharya contended that he acted within official capacity, arguing that prior government sanction under Section 197 of the CrPC was necessary for prosecution.

The ED argued that the PMLA, being a special statute with overriding provisions under Sections 65 and 71, does not require such sanction. The ED maintained that the allegations involve abuse of official powers for private gain, thus negating the protection offered by Section 197 CrPC. ED further argued that the proceedings under the PMLA do not necessitate sanction as the PMLA is a complete code providing procedure for everything.

The Telangana High Court on January 21, 2019 allowed the quashing petition, setting aside the cognizance orders issued by the Special Judge in proceedings under the PMLA. The HC held that lack of required prior sanction under Section 197 of the CrPC rendered the cognizance orders unsustainable.

Judgment to be uploaded.

Case no. – Crl.A. No. 4314-4316/2024

Case Title – Directorate of Enforcement Etc. v. Bibhu Prasad Acharya Etc. Etc.