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.