The Supreme Court today upheld the quashing of a money laundering case against former Indian Administrative Service (IAS) officer Bibhu Prasad Acharya on the ground that no sanction had been secured to prosecute him under Section 197 of the Code of Criminal Procedure (CrPC) [Directorate of Enforcement v. Bibhu Prasad Acharya].
Section 197 of the CrPC protects public servants from prosecution if they are accused of committing a crime while acting in discharge of their duties. It says that prior sanction must be obtained from the concerned government before a public servant can be prosecuted for any such act.
A Division Bench of Justices Abhay S Oka and Augustine George Masih today held that this provision would also apply to money laundering cases under the Prevention of Money Laundering Act, 2002 (PMLA).
"We have held that the provision of Section 197 CRPC providing sanction will apply to cases under PMLA," the Bench said while pronouncing the verdict in the case.
The case against Acharya was registered on the basis of statements he gave in 2012 and 2015 to the Enforcement Directorate (ED) during its probe in a disproportionate assets case concerning former Andhra Pradesh Chief Minister YS Jagan Mohan Reddy.
The ED's case against the suspended IAS officer concerned actions allegedly carried out by Acharya during his term as the Vice Chairman of the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) between 2005 and 2009.
The ED alleged that Acharya, in connivance with Jagan Mohan Reddy and others accused, abused his official position and showed undue favours to certain companies, including Aurobindo Pharma, the Hetero Group and Trident Life companies.
The alleged favours extended by him included the allotment of land at reduced prices. The ED claimed that this land was allotted at the rate of ₹7 lakhs per acre, while the actual price estimated by a price fixation committee was more than double.
The ED claimed that these transactions violated various legal norms and caused a wrongful loss of ₹21.5 crores to APIIC Limited. The ED, therefore, claimed that Acharya was involved in the creation of proceeds of crime worth ₹21.5 crores.
However, the ED was not granted sanction under Section 197 CrPC by the State to prosecute Acharya under the PMLA.
This lack of sanction eventually led the Telangana High Court to quash the money laundering case against the former bureaucrat in 2019.
"Sanction to prosecute the respective petitioners (including Acharya) in the respective cases as public servants is mandatory and pre- requisite to take cognizance and from its lacking the learned Special Judge should not have been taken cognizance and the cognizance orders thereby are unsustainable," the Telangana High Court held.
The ED challenged this verdict before the Supreme Court which dismissed the central agency's appeal today.