TaxTMI 
TaxTMI 
2026 (2) TMI 1025
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....ed as Executive Engineer, had accumulated assets to the tune of Rs. 1,09,81,686/-. Pursuant thereto, an investigation was initiated and searches were conducted at his residential house located at Akarapuri Colony, Old Town, Bhubaneswar, his office, official quarters at Berhampur, and other places on the strength of search warrant issued by the learned Special C.J.M.-cum-Vigilance, Bhubaneswar in Misc. Case No. 08 of 2009. During the course of the search, assets worth Rs. 97,14,683/- were found to be disproportionate to the known sources of income of the Petitioner. Accordingly, a prima facie case of misconduct was found against the petitioner involving commission of an offence under Section 13(2) read with Section 13(1)(e) of the Prevention of Corruption Act, 1988, and a charge-sheet was submitted on 19.09.2012. Subsequently, a separate and independent inquiry was conducted under the Prevention of Money Laundering Act, 2002 and a complaint was filed under Section 5(1) of the said Act. The Petitioners, thereafter, filed an application before the learned Addl. Sessions Judge-cum-Special Judge, C.B.I.-I, Bhubaneswar under Section 227 Cr.P.C., praying for their discharge from the case.....
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.... take possession of a residential house at Bhubaneswar, though the transactions were lawful and, in some instances, subsequent to the check period. It was further submitted that Petitioner No.1, during his entire service career, neither misused his official position nor violated any governmental guideline and had obtained due permission from the competent authority before acquiring properties in his name. Petitioner No.2 has been implicated merely by virtue of her marital relationship with Petitioner No.1, without any independent material against her. Learned counsel also pointed out that Petitioner No.1 derives income from ancestral landed property inherited from his father, Late K. Dolagobinda Patro, who owned approximately 121 acres of land prior to 1960, besides income from house rent and other business activities, and that the Petitioners have been regular income-tax assessees since 1985. On these premises, discharge was sought. 4. Mr. G. Agarwal, learned Senior Advocate appearing for the Assistant Director, Enforcement Directorate, on the other hand, opposed the submissions advanced on behalf of the Petitioners and supported the impugned order. He took this Court throug....
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....n, therefore, being devoid of merit, is liable to be dismissed. 5. Having heard learned counsel for the parties at length and upon perusal of the materials available on record, the point that arise for determination in this Revision is whether the impugned order rejecting the application preferred by the petitioners for their discharge from the offence alleged is legally sustainable. 6. The Hon'ble Apex Court in the case of Directorate of Enforcement vs. Bibhu Prasad Acharya, Etc. reported in (2025) 97 OCR (SC) 189, authoritatively examined the scope and object of Section 197(1) Cr.P.C. and held as follows: "6. The object of Section 197(1) must be considered here. The object is to protect the public servants from prosecutions. It ensures that the public servants are not prosecuted for anything they do in the discharge of their duties. This provision is for the protection of honest and sincere officers. However, the protection is not unqualified. They can be prosecuted with a previous sanction from the appropriate government. 7. The expression "to have been committed by him while acting or purporting to act in the discharge of his official duty" has been judi....
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....his aspect makes it clear that the concept of Section 197 does not get immediately attracted on institution of the complaint case." 8. In the decision of this Court in the case of Prakash Singh Badal and Another (supra), in paragraph 38, this Court held thus: "38. The question relating to the need of sanction under Section 197 of the Code is not necessarily to be considered as soon as the complaint is lodged and, on the allegations, contained therein. This question may arise at any stage of the proceeding. The question whether sanction is necessary or not may have to be determined from stage to stage." In the present case, after completing the investigation, the appellant has filed exhaustive complaints under Section 44(1)(b) of the PMLA. Cognizance has been taken based on the complaints. Therefore, the issue of the absence of sanction will arise at this stage." 7. Upon a cumulative reading of the above, it becomes abundantly clear that protection under Section 197 Cr.P.C. is neither automatic nor absolute. The decisive test is the "quality of the act" and its reasonable nexus with official duty. The Supreme Court has categorically clarified that the r....
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....nuing nature, and the act of money laundering does not conclude with a single instance but extends so long as the proceeds of crime are concealed, used, or projected as untainted property. The legislative intent behind the PMLA is to combat the menace of money laundering, which by its very nature involves transactions spanning over time. 22. The concept of a continuing offence under PMLA has been well-settled by judicial precedents. An offence is deemed continuing when the illicit act or its consequences persist over time, thereby extending the liability of the offender. Section 3 of the PMLA defines the offence of money laundering to include direct or indirect attempts to indulge in, knowingly assist, or knowingly be a party to, or actually be involved in any process or activity connected with the proceeds of crime. Such involvement, if prolonged. constitutes a continuing offence. 23. Even though the issue of retrospective application of the PMLA is pending adjudication before this Court, the reliance by the respondent on the observation of this Court in Vijay Madanlal Chaudhary (Supra) cannot be said to be misplaced. This Court, in its judgment in this case made....
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....ection 3, as amended until 2013 and were in force till 31-7-2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of clause (ii) in the Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all." xxx "30. The PMLA was enacted with the primary objective of preventing money laundering and confiscating the proceeds of crime, thereby ensuring that such illicit funds do not undermine the financial system. Money laundering has far-reaching consequences, not only in terms of individual acts of corruption but also in causing significant loss to the public exchequer. The laundering of proceeds of crime results in a significant loss to the economy, disrupts lawful financial transactions, and erodes public trust in the system. The alleged offences in the present case have a direct bearing on the economy, as illicit financial transactions deprive the state of legitimate revenue, distort market integrity, and contribute to economic instability. Such acts, when committed by persons in positions of power, erode public confidence in governan....
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....arth the full extent of the offence, to evaluate the evidence produced by the appellant, to analyze the complete chain of final transactions, and find out the veracity of the severe allegations and the amount of proceeds of crime. The legal framework under the PMLA serves as a crucial mechanism to ensure that individuals involved in laundering proceeds of crime are brought to justice and that economic offences do not go unpunished. 36. In light of the above discussion, it is evident that the appellant has failed to establish any legally sustainable ground warranting interference by this Court at a pre-trial stage. The submissions made in support of the appeal are neither legally untenable nor in the best interest of justice. The offence alleged against the appellant is clearly a continuing offence under the PMLA, and the quantum of proceeds of crime involved far exceeds the statutory threshold and requires proper investigation and judicial scrutiny. The findings of the Courts below are well-reasoned and do not call for interference." 11. The emphasis of the Hon'ble Supreme Court is clear and unequivocal: the offence under Section 3 of the PMLA is independent and distinc....
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....forcement Case Information Report (ECIR), which serves as an internal document analogous to a preliminary record of investigation. While the ECIR may have its genesis in the FIR of the predicate offence, the two are distinct in scope and purpose the FIR records the crime; the ECIR traces its financial consequence. It is well recognised that the proceeds of crime may not always manifest as direct monetary gains. They may assume the form of immovable properties, valuable securities, or other assets derived from or linked to criminal activity. The identification of such proceeds is essentially a matter of evidence and investigation, to be assessed on a case-to-case basis. As observed by the Hon'ble Supreme Court, the definition being inclusive, it covers both the tangible and intangible gains of the underlying criminal activity, and the "value of such property" where the actual property is no longer available. The determination of what constitutes proceeds of crime cannot be made in isolation or at the threshold unless the materials on record clearly demonstrate the absence of any link between the property and the scheduled offence. Where transactions involve large-s....
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....21, para 9.1, 9.2 and 13. He has submitted that probative value of evidence cannot be waived by the Court and once, the material has been collected, it should be presumed that the offence has been committed and the Court cannot become trial Court while exercising the power under Section 227 CrPC. Paragraph 9.1, 9.2 and 11 of the said judgment are quoted below:- "9.1 In the case of P. Vijayan (supra), this Court had an occasion to consider Section 227 of the Cr.P.C. and held that Melvin Saldanha & Anr. Vs. State of U.P. & Anr. required to be considered at the time of framing of the charge and/or considering the discharge application has been considered elaborately in the said decision. It is observed and held that at the stage of Section 227, the Judge has merely to sift the evidence in order to find out whether or not there is sufficient ground for proceeding against the accused. It is observed that in other words, the sufficiency of grounds would take within its fold the nature of the evidence recorded by the police or the documents produced before the Court which ex facie disclose that there are suspicious circumstances against the accused so as to frame a charge against....
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....at this stage."" 11. Having considered the reasoning given by the High Court and the grounds which are weighed with the High Court while discharging the accused, we are of the opinion that the High Court has exceeded in its jurisdiction in exercise of the revisional jurisdiction and has acted beyond the scope of Section 227/239 Cr.P.C. While discharging the accused, the High Court has gone into the merits of the case and has considered whether on the basis of the material on record, the accused is likely to be convicted or not. For the aforesaid, the High Court has considered in detail the transcript of the conversation. 15. The consistent judicial thread running through these authorities is that at the stage of discharge the Court must assume the prosecution material to be true. It must examine whether a prima facie case exists and cannot conduct a mini-trial. It cannot weigh evidence for conviction, and it cannot undertake detailed probative evaluation. The test is of "grave suspicion," not proof beyond reasonable doubt. In the present case, the charge-sheet reflects material alleging disproportionate assets and their alleged projection/possession within the meaning o....