New Delhi: After a Supreme Court order opened the door, former Union minister P. Chidambaram and former Delhi chief minister Arvind Kejriwal have both moved the Delhi High Court to quash trial court orders taking cognisance of Enforcement Directorate (ED) prosecution complaints or chargesheets against them.
In its order three weeks ago, the top court had all but mandated that investigative agencies must seek sanction from the competent authority prior to filing chargesheets against public servants in money laundering cases.
While the high court is yet to rule on either of the pleas, legal experts ThePrint spoke to were on the same page—the top court’s ruling applies retrospectively. Therefore, they argue that court orders taking cognisance of charges framed against public servants in Prevention of Money Laundering Act (PMLA) cases, even if they predate the 6 November Supreme Court judgment, ought to be challenged.
A two-judge bench of Supreme Court Justices Abhay S. Oka and Augustine George Masih on 6 November ruled that Section 197 (1) of CrPC, which mandates seeking prior sanction from government to take cognisance of an offence against public servants, would also apply to PMLA.
Section 197 (1) of CrPC, and its BNSS equivalent Section 218, states: “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 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, no court shall take cognisance of such offence except with the previous sanction.”
A similar provision (Section 17A) exists in the Prevention of Corruption Act, which was incorporated by way of an amendment in 2018.
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What SC judgment said
In its order, the Supreme Court upheld a Telangana HC decision setting aside a trial court order taking cognisance of the complaint against two former IAS officers, Bibhu Prasad Acharya and Adityanath Das, along with YSRCP chief and former Andhra Pradesh CM Jagan Mohan Reddy. Those appearing for the former IAS officers argued that the alleged offence took place during discharge of duty. The high court accepted their argument that no prior sanctions had been sought from the state government to prosecute Acharya and Das.
The Supreme Court judges based their observations on sections 65 and 71 of the PMLA.
Section 65 outlines the framework of applicability of CrPC provisions in PMLA cases, while section 71 states that PMLA provisions would have an “overriding effect” over any other statute in case of any inconsistencies.
The judges further noted that since section 65 facilitates application of CrPC provisions in PMLA cases, with the exception of inconsistent provisions, Section 71 (1) cannot override CrPC provisions.
“Once we hold that in view of Section 65 of the PMLA, Section 197(1) will apply to the provisions of the PMLA, Section 71 cannot be invoked to say that the provision of Section 197(1) of CrPC will not apply to the PMLA. A provision of CrPC, made applicable to the PMLA by Section 65, will not be overridden by Section 71,” read the apex court order.
It added, “If Section 71 is held applicable to such provisions of the CrPC, which apply to the PMLA by virtue of Section 65, such interpretation will render Section 65 otiose [idle]. No law can be interpreted in a manner which will render any of its provisions redundant.”
Chidambaram, Kejriwal & Amanutallah cases
Appearing for Chidambaram in the Delhi HC Wednesday, Senior Advocate N. Hariharan argued that the trial court took cognisance of ED’s chargesheet without sanction despite the claim that the alleged offence was committed when the Congress leader held public office.
Rouse Avenue court on 24 March 2021 took cognisance of ED’s chargesheet, filed in June 2020, against eight accused in the INX Media case including Chidambaram and his son Karti Chidambaram, both Congress MPs, and their chartered accountant S. Bhaskararaman.
The ED case stemmed from a case filed by CBI in May 2017 against INX Media, INX News, Karti Chidambaram, Chess Management Services, and Advantage Strategic Consulting under IPC Section 120-B, read with Section 420, and relevant sections of Prevention of Corruption Act.
In Kejriwal’s case, Solicitor General Tushar Mehta appearing for the ED told Delhi HC virtually on 21 November that sanction to prosecute the AAP national convener would be made available on record by way of an affidavit.
Kejriwal’s counsel argued that sanction to prosecute him was granted in the graft case being probed by CBI, not the PMLA case being probed by ED.
A week before Kejriwal moved the high court, a trial court in Delhi had refused to take cognisance of ED’s chargesheet against AAP MLA Amanatullah Khan in the money laundering probe linked to alleged irregularities during his tenure as chairperson of Delhi Waqf Board.
The counsel for ED argued that since cognisance of the main chargesheet was taken, the court cannot go back on the sanction and hence the accused must be summoned. But Special Judge Jitendra Singh asserted that accepting the view of the special public prosecutor would make provision of the sanction “nugatory and otiose” [useless and idle] in violation of the SC judgment.
SC order made it ‘amply clear’
At least two lawyers who have in the past argued PMLA cases told ThePrint that, with its judgment, the Supreme Court virtually brought PMLA provisions at par with provisions of the CrPC and Prevention of Corruption Act that deal with cases against public servants.
Senior Advocate Vikas Pahwa said while the apex court did not introduce any new concept to PMLA provisions or maintainability of CrPC provisions in PMLA cases, it simply “clarified” that sanction was mandatory, according to Section 197 of CrPC.
“The Supreme Court has recently clarified that prior sanction for prosecution under Section 197 of the Code of Criminal Procedure (CrPC) is mandatory, even in cases under the Prevention of Money Laundering Act (PMLA). Since the provisions of the CrPC apply to proceedings under the PMLA unless inconsistent with the special act, this ruling ensures that no prosecution can proceed without prior sanction,” Pahwa told ThePrint.
According to Senior Advocate Vikram Chaudhary, the Supreme Court made it “amply clear” the need for ED to seek sanction to prosecute a public servant, serving or former, in PMLA cases.
“In Bibhu Prasad Acharya’s case decided on 6/11/2024, the Supreme Court made it amply clear that Section 197(1) CrPC is applicable to a Prosecution Complaint under PMLA. Object of Section 197(1) CrPC i.e. the requirement of sanction for prosecution qua a public servant who commits an offence in discharge or colour of discharge of his duty cannot be excluded to the offences under PMLA,” Chaudhary told ThePrint.
Pahwa underlined that the apex court did not specify if the judgment would be in effect “henceforth”, which could have made it clear that the judgment could not serve as a basis to challenge lower court orders predating it.
“This decision will have a retrospective effect, impacting all pending cases in PMLA where cognisance was taken without obtaining the requisite sanction under Section 197 of the CrPC,” he added.
Chaudhary held similar views, adding that the scope of the judgment would be applicable on sanction orders passed by trial court before 6 November.
“Insofar as the declaration of law by a court is concerned, by a long line of decisions it is well settled that the same will have a retrospective effect, if not, otherwise stated to be so specifically. Function of the court is not to pronounce a law but to maintain and expound the old one. The judgments only discover the correct law and therefore, the same would always apply retrospectively,” Chaudhary said.
Adding, “Therefore, the judgment rendered in Bibhu Prasad Acharya’s case will be applicable across the spectrum to all PMLA cases where requirement of sanction under Section 197(1) gets triggered irrespective whether the case is instituted prior to the said judgment rendered by the Supreme Court.”
(Edited by Amrtansh Arora)
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