2025 (10) TMI 1275 - HC - Money Laundering

Petition to block PMLA prosecution dismissed; Section 218 sanction required for public servant not removed without approval

Ved Prakash Yadav Versus Directorate Of Enforcement, Through Assistant Deputy Director Rajasthan.

HC dismissed the petition challenging prosecution under the PMLA. The court held the alleged possession of large cash and a gold bar did not constitute an ... Money Laundering - petitioner is a public servant and without getting sanction from the Department, he has been prosecuted and cognizance has been taken against him under Section 3/4 of the PMLA Act - HELD THAT:- Section 218 of BNSS postulates the procedure for prosecution any person who is 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. In the instant case, the allegation against the petitioner is that when a search was made, it was found that a sum of Rs. 2,31,15,000/- in cash alongwith one gold bar amounting to Rs. 61,00,000/- were found in a bag kept in the almirah of the petitioner’s residence and the same was found to be in possession of the petitioner. In the considered opinion of this Court, the aforesaid alleged act does not fall within the purview of “an act performed in official discharge of duties” and under these circumstances, it was incumbent upon the respondent to get the previous sanction to prosecute the petitioner. This Court finds no merit and substance in this petition and the judgments relied by counsel for the petitioner are not applicable in the facts and circumstances of this case. Accordingly, the instant petition stands rejected. ISSUES PRESENTED AND CONSIDERED 1. Whether, in a prosecution under Sections 3/4 of the Prevention of Money Laundering Act, 2002, the Court may take cognizance of an offence allegedly committed by a person who is a public servant without the previous sanction required under Section 218 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). 2. Whether the alleged act (possession of large sums of cash and a gold bar found in the accused's residence/almirah) constitutes an offence 'committed ... while acting or purporting to act in the discharge of his official duty' so as to invoke the protection and procedural requirement of Section 218 BNSS. 3. Applicability of the authorities relied upon by the parties (both those urged in favour of requiring prior sanction and those relied on to contend no sanction is necessary) to the facts of the case. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Requirement of previous sanction under Section 218 BNSS before cognizance Legal framework: Section 218 BNSS precludes a Court from taking cognizance of offences allegedly committed by a Judge, Magistrate or a public servant not removable except with Government sanction, if the offence is alleged to have been committed while acting or purporting to act in the discharge of official duty; it provides exceptions and a timeline for deemed sanction. Precedent Treatment: The petitioner relied on higher-court authorities (including an Apex Court decision and high court decisions) to support the proposition that where sanction is statutorily required it must be obtained before prosecution proceeds; the respondent relied on precedent (Shambhoo Nath Misra) to argue sanction was not required in the facts. Interpretation and reasoning: The Court interpreted Section 218 as conditionally ousting cognizance where the alleged offence is tied to an act done in the discharge (or purported discharge) of official duty. The threshold question is whether the alleged misconduct is of the character of an act performed in official discharge of duties. If it is not, the bar in Section 218 does not apply and prior sanction is not required; conversely, if it is, prior sanction is required before cognizance can be taken. Ratio vs. Obiter: Ratio - Section 218 applies only where the alleged offence is connected with the discharge (or purported discharge) of official duty; absence of such connection means Section 218 does not operate to bar cognizance. The Court's statement that the respondent was 'incumbent' to obtain sanction in circumstances where the act falls within official duty is explanatory of the statutory effect and forms part of the operative reasoning. Conclusions: The Court framed the statutory test correctly: whether the alleged act falls within the ambit of 'acting in the discharge of official duty' is determinative of the need for previous sanction under Section 218 BNSS prior to taking cognizance. Issue 2 - Whether possession of large cash and a gold bar in the private almirah constitutes an act in discharge of official duty Legal framework: Application of Section 218's proviso depends on a factual/legal determination whether the alleged conduct was performed in the course of official functions; PMLA offences (Sections 3/4) concern possession/acquisition/transaction in proceeds of crime and are to be evaluated on whether they relate to official acts. Precedent Treatment: The Court considered but found inapplicable the authorities cited by the petitioner that were urged to invalidate cognizance taken without sanction; the respondent's reliance on earlier precedent was noted but not expressly adopted as determinative. Interpretation and reasoning: On the material before the Court, the alleged misconduct involved concealment/possession of Rs.2,31,15,000/- in cash and a gold bar worth Rs.61,00,000/- found in a bag in the petitioner's almirah and in his possession. The Court concluded that such alleged conduct did not constitute an act performed in the official discharge of duties. Thus, the statutory bar in Section 218 (which attaches only to offences committed while acting or purporting to act in official discharge) is not engaged. Ratio vs. Obiter: Ratio - possession of the described assets in the private residence/almirah, as pleaded, does not fall within the statutory phrase 'while acting or purporting to act in the discharge of his official duty' and therefore does not attract the procedural protection of Section 218. This determination is central to the Court's decision and constitutes the core ratio. Conclusions: The Court concluded that the alleged act falls outside the scope of official duty under Section 218 BNSS; therefore, prior sanction was not required for prosecution and the trial Court could take cognizance under PMLA provisions in respect of the facts alleged. Issue 3 - Treatment of authorities relied upon and final disposition Legal framework: Courts must assess precedents on their facts and congruence with statutory text; applicability depends on whether earlier decisions addressed the same statutory test and comparable factual matrices. Precedent Treatment: The Court noted the petitioner's reliance on several higher-court decisions asserting the need for prior sanction in comparable circumstances but held that those decisions were not applicable to the facts of the case. The respondent's reliance upon Shambhoo Nath Misra was recorded but the Court's ruling turned on the statutory text and the factual finding about the non-official character of the alleged act rather than wholesale adoption or overruling of particular precedents. Interpretation and reasoning: Having determined the alleged conduct was not in discharge of official duty, the Court found the precedents invoked by the petitioner inapplicable to the present facts and sustained the trial Court's cognizance under PMLA. The Court emphasized that several observations made were confined to deciding the validity of the lower Court's order and did not preclude the accused from raising defenses at trial. Ratio vs. Obiter: Ratio - precedents must be applied factually; where a prior decision's factual matrix differs materially, it is inapposite. Obiter - the Court's general remarks about the availability of defenses at trial and expectations from the trial court are ancillary to the core decision. Conclusions: The Court rejected the petition challenging cognizance. It held the alleged possession of cash and gold in the private almirah did not constitute an act in the discharge of official duty, rendering Section 218 BNSS inapplicable, and therefore found no ground to interfere with the trial Court's taking of cognizance under Sections 3/4 PMLA. The petitioner remains free to pursue all appropriate defenses at the trial stage, and the trial Court is directed to deal with such defenses strictly in accordance with law.