Section 197(1) of the Code of Criminal Procedure, which requires prior government sanction for prosecuting public servants, also applied to money laundering cases under the Prevention of Money Laundering Act, said the Supreme Court on Wednesday, reported Live Law.

A bench of Justice Abhay Oka and Justice Augustine George Masih upheld the Telangana High Court’s decision quashing a money laundering case against former Indian Administrative Service officers Bibhu Prasad Acharya and Adityanath Das.

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The bench held that prior permission was not taken to prosecute the two former officers.

The Enforcement Directorate has alleged that Acharya, in conspiracy with former Andhra Pradesh Chief Minister Jagan Mohan Reddy, unlawfully allotted 250 acres of land for a Special Economic Zone project to Indu Techzone Pvt Ltd, reported The Indian Express. Acharya has also been accused of indirect involvement in money laundering.

Das, then principal Secretary of the Irrigation and CAD Department of Telangana, allegedly conspired with Reddy to illegally allot an additional 10 lakh litres of water from the Kagna River to India Cement Ltd, the Enforcement Directorate has alleged.

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On January 21, 2019, the Telangana High Court allowed the quashing of the case, pointing at the lack of the prior sanction for prosecution.

The Enforcement Directorate moved the Supreme Court challenging the High Court order, stating that the allegations against the former officers involved abuse of official powers for private gain, negating the protection offered by Section 197 of the Code of Criminal Procedure

The agency also argued that under Section 71 of the Prevention of Money Laundering Act, its provisions take precedence over other laws, including the Code of Criminal Procedure.

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The court refused the central agency’s argument, ruling that both respondents being civil servants, met the first condition of Section 197(1) of the Code of Criminal Procedure. It also held that the alleged acts were related to the discharge of their official duties, thus satisfying the second condition for the section’s applicability.

The court noted that Section 65 of the Prevention of Money Laundering Act makes Code of Criminal Procedure provisions applicable to all Prevention of Money Laundering Act proceedings, as long as they do not conflict with the Act. It further stated that the phrase “all other proceedings” includes complaints under Section 44(1)(b) of the Prevention of Money Laundering Act.

“We have carefully perused the provisions of the PMLA,” the Supreme Court said. “We do not find that there is any provision therein which is inconsistent with the provisions of Section 197(1) of CrPC.”

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It added: “When a particular provision of CrPC applies to proceedings under the PMLA by virtue of Section 65 of the PMLA, Section 71 (1) [of PMLA] cannot override the provision of CrPC which applies to the PMLA.”

Section 71 of the Prevention of Money Laundering Act states that this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law.