IMPORTANT POINTS
(1) Provisions of Section 197(1) of Cr.P.C. are applicable to complaint under Section 44(1)(b) of PMLA.
(2) There is no embargo on considering plea of absence of sanction, after cognizance is taken by Special Court of offences punishable under Section 4 of PMLA.

JUDGMENT :

ABHAY S. OKA, J.

FACTUAL ASPECT

1. The appellant has filed complaints against the respondents and others under Section 44(1)(b) of the Prevention of Money Laundering Act, 2002 (for short, ‘the PMLA’). The complaint is for an offence under Section 3 of the PMLA, which is punishable under Section 4. Both private respondents are accused in the complaints. They are Bibhu Prasad Acharya (described hereafter as the first respondent) and Adityanath Das (described hereafter as the second respondent). The Special Court took cognizance of the complaints and issued summons to the respondents and other accused persons. Both of them filed writ petitions before the High Court challenging the cognizance taken by the Trial Court and inter alia prayed for quashing the complaints on the ground that both of them were public servants and, therefore, it was necessary to obtain prior sanction under sub-section (1) of Section 197 of the Code of Criminal Procedure, 1973 (for short, ‘the CrPC’). By the impugned judgment, the High Court upheld the respondents' contentions and quashed the orders of taking cognizance passed by the Special Court on the complaints only as against the said respondents.

SUBMISSIONS

2. Shri S.V. Raju, learned Additional Solicitor General for India, appeared for the appellant-Enforcement Directorate. He submitted that in view of Section 71 of the PMLA, the provisions thereof have an overriding effect over the provisions of the other statutes, including the CrPC. He submitted that considering the object of the PMLA, the requirement of obtaining a sanction under Section 197(1) of CrPC will be inconsistent with the provisions of the PMLA.

3. He pointed out from the assertions made in the complaints that at the relevant time, the first respondent was the Vice Chairman and Managing Director of Andhra Pradesh Industrial Infrastructure Corporation Ltd. (for short, ‘the Corporation’). His submission is that he was not a public servant within the meaning of Section 197(1) of CrPC, as it cannot be said that while holding the said position, he was not removable from the office save by or with the sanction of the Government. He relied upon the decisions of this Court in the case of S.S. Dhanoa v. Municipal Corporation Delhi and Others, (1981) 3 SCC 431 and Mohd. Hadi Raja v. State of Bihar and Another, (1998) 5 SCC 91. He submitted that the first respondent was not employed in connection with the affairs of the State Government at the time of the commission of the offence. He submitted that officers of such Corporations are not public servants within the meaning of Section 197(1). He also relied upon a decision of this Court in the case of Prakash Singh Badal and Another v. State of Punjab and others, (2007) 1 SCC 1. He submitted that the issue of the requirement of sanction will have to be decided at the time of the trial. He submitted that the respondents’ act of money laundering cannot be considered to have been done in the discharge of their official duties.

4. Mrs Kiran Suri, learned senior counsel appearing for the respondents accused, invited our attention to the Memorandum and Articles of the Association (for short, “the Memorandum”) of the said Corporation and, in particular, Clauses 70 and 71 (b) thereof and submitted that power to appoint a Director of the Corporation and power to remove him vested in the State Government. Therefore, the first respondent continued to be a public servant as contemplated by Section 197(1) of CrPC. She submitted that the plea of absence of sanction can be raised at any stage of the proceedings, and it is not necessary to wait till the final hearing of the complaint.

CONSIDERATION OF SUBMISSIONS

5. Section 197 (1) of CrPC (which corresponds to Section 218 of Bhartiya Nagrik Suraksha Sanhita, 2023) reads thus:

“197. Prosecution of Judges and public servants.—(1) When any person who is or was a Judge or Magistrate or a public servant not removable from his office save by or with the sanction of the