Sanction and PMLA

In Bhibu Prasad Acharya [Crl. Appeal Nos. 3414-16 of 2024, decided on 06.11.2024], the Supreme Court held that the provisions of Section 197 of the Criminal Procedure Code 1973 [Cr.P.C.], and by extension of Section 218 of the Bharatiya Nagarik Suraksha Sanhita 2023 [BNSS] apply to the Prevention of Money Laundering Act 2002 [PMLA]. 

The basis for this view was Sections 65 and 71 of PMLA — the first applies Cr.P.C. provisions to PMLA proceedings so long as they are not inconsistent, and the latter rules that in case of any inconsistency, the PMLA overrides. Nothing within the PMLA excluded application of sanction provisions, and so necessary effect had to be given to Section 197. It made sense as well, according to the Court, considering the object of Section 197 which was to ensure that public servants are afforded a measure of protection against legal proceedings of a vexatious character [Paras 6, 17-18]. In the facts of Bhibu Prasad Acharya, the Court held that prior sanction was required, and absence of such sanction rendered proceedings unsustainable.

Since then, there has been quite a buzz around this decision and its purported harm to the PMLA regime's enforcement as obtaining sanction is now made mandatory. News reports also suggest that the government may be mooting a challenge to a position which renders sanction mandatory.

Only, obtaining sanction is not made mandatory by Bhibu Prasad Acharya.

The decision holds that the clause regarding need for prior sanction applies with equal force to PMLA as it does to other laws. It does not, by any stretch, hold that obtaining sanction itself is necessary for all PMLA cases, because Section 197 Cr.P.C. and Section 218 BNSS do not say so. These provisions are not like other clauses which by their very text make the need for sanction mandatory in all cases, such as Section 19 of the Prevention of Corruption Act 1988.

What Section 197 Cr.P.C. / 218 BNSS do is pose a question — was the alleged offence committed by the public servant while acting in the discharge or purporting to act in the discharge of official duty. If yes, it needs prior sanction. But if not, there is no need for sanction. Each case turns on its own facts. 

The case-by-case determination involved in Section 197 naturally meant that in cases where sanction was not taken, aggrieved persons challenged the move, and required courts to consider the scope of the clause. It has led to a large, complicated, and often inconsistent body of law on what acts are within the scope of an official's public duty, when sanction can be challenged, what happens if governments sit pretty and do not pass sanction orders, and how deep the scrutiny while granting sanction should be. But at no point has that body of law held that sanction under Section 197 is a must.

All that Bhibu Prasad Acharya does, and it does so absolutely correctly, is to give natural effect to the text of the PMLA which does not contain any clause ousting the issue of sanction. Its result is not to render the need for sanction mandatory, but to open up a new avenue for litigation in these cases. The ball will be in the agency's court. Where it does not seek sanction, quite often public servants will challenge the move, as they do in other kinds of cases.  

Call for Submissions: National Law School of India Review [Volume 37(1)]

[This is call for submissions issued on behalf of the National Law School of India Review] 

National Law School of India Review

National Law School of India University, Bengaluru           ISSN No: 0974-4894

Call for Submissions – Volume 37(1)

Submissions for Volume 37(1) of the NLSIR Journal

The National Law School of India Review (NLSIR) is the flagship student-edited law review published by the National Law School of India University (NLSIU), Bengaluru. It is a bi-annual, peer-reviewed journal with the unique distinction of being cited multiple times by the Supreme Court of India, most recently in Union of India v M/s Mohit Minerals. NLSIR has also been cited by courts abroad, such as the High Court of South Africa.

NLSIR is a generalist law review that aims to:

1. Publish scholarship of the highest caliber in Indian law.

2. Publish comparative studies that yield unique insights for the development of Indian law.

3. Promote legal scholarship with respect to India and the broader Global South.

4. Promote deliberation on issues within the legal profession, the government, academia, industry, and civil society.

5. Promote quality legal writing by law students and early-career legal academics.

The NLSIR Editorial Board is happy to invite original, unpublished manuscripts for consideration for the upcoming Volume 37(1) of the Journal. The deadline for submissions is 2nd February 2025. We will not be able to accept any open submissions for Volume 37(1) after this date.

Submission Guidelines

As a general rule, all submissions should conform to NLSIR’s mandate and aims and must have some relevance to Indian law. Submissions may be made under any one of the following categories:

1. Long Article (5,000 to 10,000 words): Submissions under this category are expected to engage with a topic and existing literature comprehensively, and offer an innovative reassessment. Purely theoretical pieces, e.g., pieces on jurisprudence or legal philosophy are also welcome.

2. Essay (3,000 to 5,000 words): Submissions under this category, while similar to Long Articles, are expected to be more concise and targeted in issue identification and argumentation.

3. Legislative/Case Comment (2,500 to 5,000 words): Submissions under this category are expected to critique a contemporarily relevant judicial pronouncement or legislative measure.

4. Book Review (2,000 to 3,000 words): Submissions under this category are expected to engage with a recent book that is concerned with one or more legal issues. 

Please note that word limits are exclusive of footnotes. In compelling circumstances, the NLSIR Editorial Board may be flexible with respect to the word count depending on the quality of the submission. Please refer to our submission guidelines for more information.

Submission Process

All submissions must be made via the NLSIR Digital Commons Repository, by creating an account here. For further instructions and clarifications for submissions on the Platform, please refer to this guide. We do not accept submissions over email. We endeavour to revert to authors with the first round of editorial review within 4 weeks of submission.

Additional guidelines:

1. Please ensure that your submission is made as a Microsoft Word document (.docx).

2. The manuscript should be anonymised and should not contain any personal identifiers (e.g., author name, institutional affiliation, personal acknowledgements, etc.).

3. Manuscripts should be accompanied by a cover letter.

4. Manuscripts should be accompanied by an abstract of around 150 words.

For any queries and concerns, please contact us at mail.nlsir@gmail.com or visit our website.

National Law School of India Review

ONLINE

Submissions for NLSIR Online

NLSIR Online was launched as a companion blog to the NLSIR journal in 2018. The goal of NLSIR Online is to provide a platform for concise and timely academic commentary on contemporarily relevant issues in Indian law. NLSIR Online mirrors the mandate of the journal. We welcome submissions on all areas of the law, including case comments, interdisciplinary analyses, comparative studies, etc.

NLSIR Online Submission Guidelines:

1. Submissions should be between 1,500 and 3,000 words approximately. However, we are flexible with the word count depending on the quality of the submission.

2. The manuscript must be submitted via this Google Form. Current students at NLSIU, Bengaluru must submit their manuscripts via this separate form.

3. Manuscripts must be submitted in a .docx (Microsoft Word) format.

4. Manuscripts must not contain any personal metadata or identifiers (e.g., author details, institutional affiliation, acknowledgements, etc.).

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7. All references must be hyperlinked.

For additional details, please refer to the detailed NLSIR Online Submission Guidelines.

All manuscripts submitted to NLSIR Online undergo a round of review by the NLSIR Editorial Board. We are committed to reverting to authors with a decision on publication within two to three weeks. We invite submissions for the blog on a rolling basis, and do not have fixed submission deadlines for it.

For any queries and concerns with respect to NLSIR Online, please contact us at nlsirevonline@gmail.com or visit our website.

Guest Post: Reflections on the High Court's Judgment in Fahad Shah's Case

(This is a guest post by Rajyavardhan Singh)

A recent post on this blog by the editor argued that the Supreme Court in Union Territory of J&K v. Peerzada Shah Fahad had erred in declaring the J&K and Ladakh High Court’s judgement (“Fahad Shah”) per incuriam merely for referencing the "clear and present danger" test from Schenck v. United States (“Schenck”) in the context of bail under Unlawful Activities Prevention Act, 1967 (“UAPA”). It argued that the High Court in Fahad Shah did not misuse Schenck to assess free speech so as to render it per incuriam, but instead adapted it to set a threshold for justifying arrests and detention under UAPA. Further, it criticised the Supreme Court’s dismissal as potentially hindering other courts from considering valid reasoning.

Reading the analysis led me down a fascinating rabbit hole, exploring a rather distinct yet related question: Whether the invocation of the "clear and present danger" doctrine was normatively sound in this context?

Upon careful perusal, I submit that the High Court's reasoning suffers from two interconnected flaws that extend beyond the mere citation of foreign precedent. First, it commits a false equivalence by conflating a doctrine specifically designed for post-facto speech restrictions with the preventive nature of the UAPA, thereby misaligning the temporal and causal requirements. Second, and more problematically, it attempts a flawed transposition of American free speech doctrine into an Indian anti-terror statute, disregarding not only the Supreme Court’s deliberate rejection of such transplants but also the carefully calibrated evolution of domestic anti-terrorism jurisprudence.

1. False Equivalence

The High Court's invocation of the "clear and present danger" test in interpreting Section 43D(5) of the UAPA marks a significant departure from the legislative intent of the statute. While Sekhri contends that the court merely borrowed evocative prose from Schenck to express a proximity requirement for arrests, this interpretation understates the conceptual confusion such borrowing creates. Although he is right in observing that the High Court was "crafting an idea to address a problem using remnants of old concepts from different contexts," the Court's seemingly harmless transplantation nonetheless obscures a fundamental category error.

For what must be understood is that the "clear and present danger" test, even when repurposed, carries with it specific analytical assumptions about causation and imminence that are fundamentally at odds with the preventive nature of the UAPA framework. As evidenced in paragraph 31 and 32 of the High Court's judgement:

"31. The legislative intent behind s. 43D (5) and its proviso was to ensure that those who were a “clear and present danger” to the society, whose relationship with the offence is proximate and direct, do not get bail during the pendency of the trial lest they take to their nefarious ways again, once released. It was not to keep incarcerated the unwary transgressor who found himself at the wrong place at the wrong time.”

32. "We hold, that the investigating agency, investigating a case under the UAPA, has the unbridled authority to arrest or not to arrest under the provisions of the UAPA. However, upon arrest, the investigating agency would have to justify the arrest on the anvil of 'clear and present danger' of the accused to the society at large, if enlarged on bail. The existence of prima facie evidence against the accused is to no avail if there is no justification for the arrest based on the doctrine of clear and present danger to the society." [Emphasis mine]

This borrowed standard implicitly requires a degree of temporal and causal proximity that the UAPA deliberately eschews. When the High Court states that authorities must "justify the arrest on the anvil of 'clear and present danger' of the accused to society at large" it imposes a reactive paradigm on a preventive statute. This, I submit, is not merely a semantic sleight-of-hand—but much rather represents a substantive reconfiguration of the UAPA's operational logic. The specific importation of Schenck's framework introduces evidentiary and temporal requirements that could effectively nullify the UAPA's preventive capacity, particularly in cases involving long-term planning or preparatory acts.

This is precisely why the UAPA deliberately moves away from such immediate temporal requirements, allowing intervention based on reasonable grounds even when threats aren't imminent.

2. Flawed Transposition

The High Court's use of Schenck's language to express established principles about justified arrests overlooks the dangers of decontextualised legal borrowing. While Sekhri quite rightly notes that "there is no complete ban on citing a case that may have been disagreed with or frowned upon in the past" so as to render it per incuriam, nevertheless I argue that the manner of citation matters. Otherwise, it risks oversimplifying the nuanced jurisprudential reasons why Indian courts have rejected the "clear and present danger" test in cases like Babulal Parate v. State of Maharashtra, State of Madras v, V.G. Row and more recently in Arup Bhuyan v. State of Assam.

Importantly, the High Court's judgement does more than merely reference Schenck; it attempts to transpose a specific legal test designed for post-facto speech restrictions into the realm of anti-terror legislation. This, in turn, creates two fundamental problems. First, it muddles the distinct jurisprudential frameworks governing speech restrictions and terrorism. Second, it disregards the Supreme Court's careful development of native doctrine around preventive detention, which has evolved to balance security imperatives with constitutional rights in India's specific context (As Shastri J. emphasised in V.G. Row, India's constitutional scheme demands "different techniques and approaches" that account for our unique security challenges).

The flawed transposition becomes even more apparent when we trace how the borrowed test would operate in practice. Under Schenck, the "clear and present danger" framework was designed to evaluate whether speech had sufficient proximity to harm to justify restriction. This required courts to analyse: (1) the immediacy of potential harm, (2) the direct causal link between speech and danger, and (3) the substantive likelihood of the feared outcome.

When the High Court attempts to transpose this framework to UAPA arrests, it reveals both the appeal and limitations of such doctrinal borrowing:

First, while the "clear and present danger" test might seem useful for cases like Mr. Shah's, where a significant temporal gap exists between alleged acts and arrest. It creates an impossible ‘temporal paradox’—requiring authorities to show a "present" danger for actions specifically aimed at preventing dangers from becoming "present." This framework might work when questioning decade-old publications but becomes incoherent when applied to UAPA cases more broadly. While the High Court's instinct to question the necessity of arrest for historical acts is sound, importing Schenck's test unnecessarily complicates what could be a straightforward proportionality analysis.

Second, even in cases involving journalistic activities, the causal chain analysis from Schenck proves problematic. The High Court's attempt to require a direct link between past publications and present security threats, while protective of press freedom, fails to account for how written content might contribute to security risks over time through gradual radicalization or by providing operational intelligence to hostile actors. The "clear and present danger" framework's insistence on direct causation could blind courts to these more subtle, long-term security concerns while offering little additional protection against arbitrary detention that existing proportionality standards don't already provide.

Thus, while the High Court's judgement admirably attempts to protect against arbitrary detention for dated allegations, its choice of doctrinal tool creates more problems than it solves. Rather than importing foreign standards without fully contextualising them—especially from reactive contexts to preventive ones—a more effective approach would involve creating guidelines specifically tailored to address temporal remoteness under UAPA. Such guidelines could consider factors like the ongoing relevance of old publications, shifts in context since their release, and the proportionality of current detention. This approach would better serve the Court’s objectives while preserving doctrinal coherence.

To Conclude

Section 43D(5) of the UAPA, while imposing strict conditions for bail, does not override the fundamental requirement that arrests must be necessary and proportionate. In Fahad Shah, the High Court could very well have examined whether the significant temporal gap between the alleged journalistic activities and the arrest met these essential standards (given the decade-long gap between Mr. Shah’s alleged acts and his arrest) without resorting to the analytically incompatible 'clear and present danger' test.

In Union of India v. K.A. Najeeb, the Supreme Court has already established that statutory restrictions like Section 43D(5) cannot displace constitutional safeguards enshrined under Part III in evaluating preventive detention:

18. “It is thus clear to us that the presence of statutory restrictions like Section 43­D (5) of UAPA per­ se does not oust the ability of Constitutional Courts to grant bail on grounds of violation of Part III of the Constitution. Indeed, both the restrictions under a Statue as well as the powers exercisable under Constitutional Jurisdiction can be well harmonised. Whereas at commencement of proceedings, Courts are expected to appreciate the legislative policy against grant of bail but the rigours of such provisions will melt down where there is no likelihood of trial being completed within a reasonable time and the period of incarceration already undergone has exceeded a substantial part of the prescribed sentence. Such an approach would safeguard against the possibility of provisions like Section 43­D (5) of UAPA being used as the sole metric for denial of bail or for wholesale breach of constitutional right to speedy trial.”

This approach would have allowed the court to conclude that an inordinate delay between the alleged acts and the arrest, without compelling justification, suggests either a diminished need for preventive detention or an abuse of process—both warranting bail. Such reasoning would not only have led to the same conclusion but also promoted a more principled development of bail jurisprudence under special legislations like the UAPA, ensuring doctrinal consistency.

Fairness and Bail

In July 2022, the Supreme Court delivered what proved to be the the last significant milestone on the law of bail — its judgment in Satender Kumar Antil v. CBI [(2022) 10 SCC 51]. At the time, I had noted that the judgment was quite a mixed bag. On some issues, such as arresting persons and denying bail after completing the investigation, it unequivocally expressed a preference for personal liberty. On others, such as actually laying down clearer guidelines for exercising bail discretion, it did not do much. And it left the subject with a plea to Parliament — forlorn, as it turned out — to think of coming up with a dedicated law on the matter of bail as is prevalent in some other countries (the UK example was cited).

Two years hence, the situation has only gotten worse. It may seem paradoxical to be writing this at a time when the Supreme Court and High Courts are invoking Article 21 to grant bail in cases where trials have been delayed and accused persons have spent years behind bars. That, however, is precisely the point: My wrongful confinement does not magically become concerning after two years, eleven months, and nine days. It was either always concerning, or it is never concerning but simply uncomfortable. 

Once we begin to see this, it is clear that granting bail is not some liberty affirming, constitutionally driven, judicial choice in such instances that we ought to be celebrating. It is a morally (and politically) convenient, and legally hollow, choice, which is perpetuating a jurisprudence of apology driven by the personal beliefs of judges with the text of the law merely a proxy, and not a choice for liberty inspired by a set of rules and political ideals that represent shared beliefs.

But this is really the tip of the proverbial iceberg. The consternation, or celebration, around the outcomes in bail cases takes all the attention and successfully masks the real scandal of procedural unfairness in the bail adjudication setting. What are the hallmarks of fairness, in a processual setting? There is no textbook definition, but it is easy to agree on some basics: (i) fair notice, in that I should know the case I have to answer (ii) an opportunity to be heard to give said answer, and (iii) a guarantee that my case will be dealt with by the same yardsticks as every other case. If even one is absent from the procedural setting, I would argue that such a setting cannot, under any stretch, constitute a fair setting especially when what is at stake is personal liberty.

And yet, we continue to adjudicate bail cases in a manner that almost prides itself in not confirming to the most basic notions of fairness. A person being arrested will almost never be furnished a copy of the First Information Report, or detailed grounds of arrest, or even a copy of the application seeking custody at the time of the hearing. Even when a bail application is somehow filed in spite of not having access to any of these documents, prosecutors and police personnel will either not file any response and rely exclusively on the secret contents of their dossiers and diaries, or object to sharing copies of any responses being filed with the accused. 

With such woeful anchoring on the aspect of notice, being granted with an opportunity of being heard is a mirage for most persons being detained. Almost always the first hearing is a washout since the lawyer has no idea of the case, and getting a hold of the documents will take a few days. At this point, the degree of protection that the law offers to your personal liberty becomes directly proportional to the money that you are willing to pay to lawyers who can secure that liberty. It is settled transformation which, sadly, leaves the vast majority behind. 

Which then brings us to the worst placed facet of the lot - adjudication itself on issues of bail and remand. There are, again, two parts to this. Firstly, there is the content of decision-making, which takes us back to the outcome. In not having guidelines on how courts ought to exercise their discretion on bail and custody, the result is that courts are free to conduct almost any kind of reasoning so long as it fits the remarkably featherlight and self-justificatory standard of exercising judicial discretion 'judiciously'. Secondly, there is the process of decision-making — how many hearings, what all has to be seen / looked at, who all have to be heard, what all must be recorded in the order, etc? 

Somehow, there is even greater flux on this aspect. A bail application may be decided now, or may be listed four months later, and may not be heard on that day citing some administrative difficulty and then be taken up two weeks later. Or a judge may simply conduct a remand hearing at his house in the morning after counsel having ten minutes notice. A court may agree to look at the documents filed by an accused, or may not, or may look at material filed by the prosecution without showing anything to the accused. A victim may be heard, or may not unless the statute prescribes otherwise, or may only be allowed to file written objections. A judge may pass a two paragraph order, or a two page order, but may not share it with the accused until after a few days due to logistical difficulties. Where the judge grants bail there may be conditions, or may not, or the same kind of cases may have different conditions, or different accused in the same case may have different conditions without any explanation. Literally, anything goes.

When we think about the need for a bail law, the conversation naturally glides towards the debates on the matter of outcomes since that is what grabs most public attention. The real need for having such a law is arguably elsewhere, in making the process of bail adjudication fairer for all parties involved. It would be a huge step in stemming the growth of this jurisprudence of apology, and reinforcing a rules-based ordering of personal liberty, victim's rights, and investigative prerogatives of the state. 

Considering that undertrial prisoner population today stands at a jaw-dropping national average of more than 75% of total prison population, there is no other legal reform requiring more attention. It needs work, yes, and it will not brook an easy solution such as simply releasing first-time offenders early. Whichever parliament, or Court for that matter, commits itself to the task, ensures that India's criminal justice system takes a step back from the abyss into which it has been staring for some time now.