2025 (4) TMI 317 - HC - Money Laundering

Special Judge's cognizance order quashed as ED failed to obtain mandatory prosecution sanction under Section 197 CrPC for public servant in PMLA case

Anil Tuteja Versus Directorate Of Enforcement Through Assistant Director, E.D., Raipur Zonal Office, Raipur, District- Raipur, C.G. (Details Wrongly Mentioned As assistant Director Pmla, Directorate Of Enforcement, Raipur, Zonal Office, Raipur, C.G. 039 In Certified Copy Of Impgned Order Annexure A/1)

Chhattisgarh HC set aside Special Judge's cognizance order dated 05/10/2024 against petitioner under PMLA for money laundering charges. Court held ... Money Laundering - challenge to cognizance taken by the Special Judge (PMLA), Raipur, against the petitioner under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002 - offence is committed by a public servant or not - petitioner’s alleged act reasonably connect with the discharge of official duty or not. Whether the offence is committed by a public servant? - HELD THAT:- The term public servant has been defined in Section 2 (28) of the Bharitya Nyay Sanhita, and it is an admitted fact that the petitioner was working as Joint Secretary of the Department of Commerce and Industry in the State of Chhattisgarh and he is in the service of Central Government, therefore, he is public servant as defined under Section 2 (28) of the BNS. Whether petitioner’s alleged act reasonably connect with the discharge of official duty? - HELD THAT:- A bare perusal of Section 197 Cr.P.C. shows that the essential conditions must be satisfied for the appreciation of Section 197 Cr.P.C. i.e.; (1) Offence mention therein must be committed by a public servant.; (2) The protection is available only when the alleged act done by the public servant is reasonably connected with the discharge of his official duty - there must be connection between official duty with the alleged offence. Section 197 Cr.P.C. restrict its scope of operation to only those acts or actions which are done by a public servant in discharge of official duty. Since Respondent/ ED has alleged that the Petitioner, who was the Joint Secretary of the Department of Commerce and Industry at the time of commission of the alleged offences. The alleged offence is alleged to have been committed while acting or purporting to act in the discharge of his duties as Joint Secretary of the Department of Commerce and Industry. Therefore, there is official nexus in doing the said act. The ED knows very well that in this case prosecution sanction is mandatory to prosecute the petitioner. It is crystal clear that on the date of taking cognizance there was no prosecution sanction obtained by the ED and without posecution sanction learned Special Judge PMLA, Raipur has taken cognizance on 05.10.2024 against the petitioner which is illegal and bad in law and it deserves to be set aside. The order dated 05/10/2024 passed by the learned Special Judge (PMLA) Raipur whereby the cognizance has been taken in Prosecution Complaint dated 19/06/2024 sine qua to the petitioner is set aside. However, the respondent/ ED is granted liberty to take recourse to the concerned Trial Court for taking cognizance afresh against the petitioner. And, the learned Trial Court is directed to examine the sanction order produced by the respondent/ED before taking cognizance. Conclusion - The petitioner is a public servant whose alleged acts are connected with his official duties, necessitating prior sanction for prosecution. The cognizance taken without such sanction is set aside, with liberty granted to the ED to seek fresh cognizance upon obtaining the required sanction. The instant criminal revision stands allowed. The judgment addresses a criminal revision petition filed under Section 438 read with Section 422 BNSS, 2023, challenging the cognizance taken by the Special Judge (PMLA), Raipur, against the petitioner under Section 3 read with Section 4 of the Prevention of Money Laundering Act, 2002 (PMLA). The core issues revolve around the requirement of obtaining prior sanction for prosecuting a public servant under Section 197(1) of the Criminal Procedure Code (CrPC) and its applicability to proceedings under the PMLA.Issues Presented and Considered:The primary issues considered by the court are: Whether the petitioner, a public servant, committed the alleged offence of money laundering. Whether the alleged acts of the petitioner are reasonably connected with the discharge of his official duties, requiring prior sanction under Section 197(1) CrPC for prosecution.Issue-wise Detailed Analysis:Relevant Legal Framework and Precedents:Section 197(1) CrPC requires prior sanction for prosecuting a public servant for offences committed while acting or purporting to act in the discharge of official duties. The court examines the applicability of this provision to proceedings under the PMLA, particularly in light of Section 65 PMLA, which incorporates the provisions of the CrPC unless inconsistent with the PMLA. The Supreme Court's decision in Enforcement Directorate v. Bibhu Prasad Acharya is pivotal, establishing that Section 197(1) CrPC applies to PMLA proceedings.Court's Interpretation and Reasoning:The court interprets Section 197 CrPC as requiring a connection between the alleged offence and the discharge of official duties for the protection to apply. It reasons that the alleged acts must be reasonably connected with the petitioner's official duties as a public servant. The court finds that the petitioner, as Joint Secretary of the Department of Commerce and Industry, is a public servant under Section 2(28) of the Bharitya Nyay Sanhita (BNSS), 2023.Key Evidence and Findings:The court considers the allegations against the petitioner, including his alleged role in a liquor scam and misuse of his position. It notes that the Enforcement Directorate (ED) filed a prosecution complaint without obtaining prior sanction under Section 197(1) CrPC, despite the petitioner's status as a public servant.Application of Law to Facts:The court applies the legal framework to the facts, concluding that the alleged acts are connected with the discharge of the petitioner's official duties. Therefore, the requirement for prior sanction under Section 197(1) CrPC is applicable. The court finds that the Special Judge erred in taking cognizance without the necessary sanction.Treatment of Competing Arguments:The petitioner's counsel argues that the absence of prior sanction renders the cognizance illegal, relying on Supreme Court precedents. The respondent's counsel contends that prior sanction was not required at the time of cognizance, citing a previous High Court decision. However, the court finds the Supreme Court's decision in Bibhu Prasad Acharya controlling, affirming the necessity of prior sanction.Conclusions:The court concludes that the absence of prior sanction under Section 197(1) CrPC renders the cognizance taken by the Special Judge (PMLA) illegal and sets it aside. It grants liberty to the ED to seek cognizance afresh upon obtaining the necessary sanction.Significant Holdings:The court holds that: The provisions of Section 197(1) CrPC apply to proceedings under the PMLA by virtue of Section 65 PMLA. The Special Judge's cognizance of the offence without prior sanction is illegal and must be set aside. The ED is granted liberty to pursue fresh cognizance after obtaining the requisite sanction.Verbatim Quotes of Crucial Legal Reasoning:'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... Therefore, we hold that the provisions of Section 197(1) of CrPC are applicable to a complaint under Section 44(1)(b) of the PMLA.'Core Principles Established:The judgment reinforces the principle that prior sanction under Section 197(1) CrPC is a prerequisite for prosecuting public servants for offences connected with their official duties under the PMLA.Final Determinations on Each Issue:The court determines that the petitioner is a public servant whose alleged acts are connected with his official duties, necessitating prior sanction for prosecution. The cognizance taken without such sanction is set aside, with liberty granted to the ED to seek fresh cognizance upon obtaining the required sanction.