2019 (1) TMI 1859 - HC - Money Laundering

Money Laundering - criminal conspiracy with other accused - scheduled offences - requirement or non-requirement of any sanction to take cognizance for the offences against the officials as accused - whether the Act is a complete code covering all areas as contended and if not to what area with reference to Sections 4 5 Cr.P.C. the provisions of Cr.P.C. as general law either specially made applicable by the special provisions or from its silence so to apply unless shown deemed not applicable? - HELD THAT - Against transactions constituting money-laundering the provisions of the Act contemplate two sets of proceedings; (a) prosecution for the offence of money-laundering defined in Sec. 3 with the punishment provided in Sec. 4; and (b) attachment adjudication and confiscation in the sequential steps and subject to the conditions and procedures enumerated in Chapter III of the Act and out of the two now we are concerned with the first set of the proceedings for prosecution covered by the offence of money laundering as ascribed in Sections 3 r/w 2(p) of the Act in an expansive locus as comprehending direct or indirect attempt to indulge; assist be a party to or actually involved knowingly in any process or activity connected with the proceeds of the crime and projecting it as untainted property and on proof of guilt for punishment of the offenders of Money-Laundering as provided in Section 4 of the Act that would follow after a due cognizance of the offence with pre-trial enquiry if any and trial by the Special Court; which is conferred exclusive jurisdiction qua Section 44 Chapter VII of the Act. The prosecution trial and conviction for the offence of Money-laundering are thus the criminal sanction administered by the Legislation and effectuated by a deprivation of personal liberty as a disincentive to a malfeasant. Section 71 of the Act clearly speaks that the provisions of the Act shall have effect notwithstanding inconsistent therewith contained in any other law for the time being in force. It has the overriding effect to the provisions of the Act over any other law for the time being in force provided it is shown that other law is inconsistent with the provisions of the Act. It is to be seen therefrom whether the Act not covered any area and if so whether the Cr.P.C. provisions then applicable provided those are not inconsistent with the provisions of this Act leave about other any law-in force for the time being to consider any inconsistency from any provisions thereunder. From this now coming to the Section 46 of the Act at the cost of repetition it specifically speaks that Cr.P.C. provisions are applicable to the proceedings before the Special Court. From what Section 46 reproduced supra Section 46(1) from the very wording supra of save as otherwise provided in this Act the provisions of the code in entirety which includes provisions as to bails or bonds shall apply to the proceedings before the special Court and for the purpose of said provisions the special Court shall be deemed to a Court of Session. Thus Cr.P.C. is applicable to the proceedings before the special Court save as otherwise specifically provided in the Act if not inconsistent therewith in the Act or anything inconsistent therewith to prevail to the extent the Act provisions specifically provided as special law taking away of the application of the Cr.P.C. provisions. Thus the Act provisions are applicable in addition to and not in derogation to what is specially provided in the Act. The contention has no legs to stand in saying to prosecute the Chairman and Managing Director of APIIC sanction under Section 197 Cr.P.C. is not required or that he is though an IAS Officer not a public servant - In fact this Court in L.V. Subrahmanyam v. State of Telangana where he was arrayed as A11 and the petitioner herein was A1 it is categorically observed that they are public servants and sanction is required under Section 197 Cr.P.C. and under Section 19 of PC Act respectively for the IPC offences and PC Act offences and also discussed the role of the Chairman and Managing Director of APIIC as limited. It is crystal clear that for filing of a private complaint to take cognizance before the special court by the competent authority obtaining and filing of the orders granting sanction by the competent authority to prosecute the public servant is mandatory and more particularly for the special court to take cognizance which is lacking in the case on hand and for want of sanction the cognizance orders respectively of the learned Special Judge are no way sustainable and are liable to be set aside - On the scope of requirement of sanction under Section 197 Cr.P.C. and it s marked difference with Section 19 of PC Act this Court in LV Subrahmanyam supra dealt with in detail particularly at Paras 44 45 and negated as untenable the contention of the learned Special Public Prosecutor for CBI of validity or otherwise of sanction and requirement or not is a matter to be considered in trial by answering the scope of law in this regard from Paras 47 to 49 in saying once it is noticed about the sanction is required and it is brought to the notice of the Court of the prosecution no way sustains for want of sanction the continuation of the proceedings is nothing but abuse of process and to sub serve the ends of justice the inherent power or writ jurisdiction has to be invoked in saying ends of justice are more important and Court cannot shut its size when brought to the notice of the Court any abuse of process leading to injustice but for invoking the inherent power or writ jurisdiction which have no limitations but self imposed that too mainly to sub serve the ends of justice having its roots in necessity and its breadth thereby is coextensive with necessity. All the three criminal petitions are allowed by setting aside the respective cognizance orders of the learned Special Judge holding that sanction to prosecute the respective petitioners in the respective cases as public servants is mandatory and prerequisite to take cognizance and from its lacking the learned Special Judge should not have been taken cognizance and the cognizance orders thereby are unsustainable by directing further the learned Special Judge to return said complaints to the complainant/s if at all to submit with necessary sanction orders from the competent authority respectively.

Summary

Issues Involved:
1. Whether the sanction under Section 197 Cr.P.C. is required to prosecute public servants under the Prevention of Money Laundering Act (PMLA), 2002.
2. Whether the cognizance taken by the Special Court without such sanction is valid.
3. The role and alleged involvement of the petitioners in the offences under the PMLA.

Issue-wise Detailed Analysis:

1. Requirement of Sanction under Section 197 Cr.P.C.:
The court examined whether the sanction under Section 197 Cr.P.C. is required for prosecuting public servants under the PMLA. It was concluded that the PMLA is not a complete code and the provisions of the Cr.P.C. apply unless they are inconsistent with the PMLA. Specifically, Section 65 of the PMLA states that the provisions of the Cr.P.C. apply to arrest, search, seizure, attachment, confiscation, investigation, prosecution, and all other proceedings under the PMLA. The court emphasized that the requirement of sanction under Section 197 Cr.P.C. is not inconsistent with the PMLA. Therefore, sanction is mandatory to prosecute public servants under the PMLA when the alleged acts are in the discharge of their official duties.

2. Validity of Cognizance Taken Without Sanction:
The court held that cognizance taken by the Special Court without the requisite sanction under Section 197 Cr.P.C. is invalid. The court referred to several precedents, including the Constitution Bench judgment in A.R. Antulay v. Ramdas Srinivas Nayak, which clarified that if the law requires sanction for prosecution, it must be obtained before taking cognizance. The court noted that the PMLA does not explicitly exclude the requirement of sanction for public servants. Consequently, the cognizance taken by the Special Court without sanction was deemed unsustainable and was set aside.

3. Role and Alleged Involvement of Petitioners:
The petitioners, being public servants, were alleged to have abused their official positions to show undue favors to certain companies, resulting in wrongful loss to the government and generating proceeds of crime. The court examined the specific roles and allegations against each petitioner:
- BP Acharya (Petitioner in Crl.P. Nos. 3988 of 2016 and 11942 of 2018): Alleged to have conspired with other accused to allot land at undervalued rates and transfer land without proper verification, causing a loss to the state exchequer. The court noted that the transactions were related to the discharge of his official duties and required sanction for prosecution.
- Adityanath Das (Petitioner in W.P. No. 2253 of 2018): Alleged to have allotted additional water to India Cements without following due procedure, causing wrongful loss to the government. The court observed that the actions were in the discharge of his official duties and required sanction for prosecution.

The court directed the Special Judge to return the complaints to the complainant(s) to resubmit them with the necessary sanction orders from the competent authority. The court also suspended the operation of the order for four weeks to allow for any further legal steps.

Conclusion:
The court concluded that the sanction under Section 197 Cr.P.C. is mandatory to prosecute public servants under the PMLA for acts done in the discharge of their official duties. The cognizance taken by the Special Court without such sanction is invalid. The complaints were directed to be returned for resubmission with the requisite sanction orders.