Cognizance and process under PMLA quashed against public servants, with liberty granted to Enforcement Directorate to seek fresh cognizance upon obtaining requisite sanction.
In a significant development, the Bombay High Court has set aside the cognizance order in a high-profile money laundering case involving Shri. Digambar Vasant Kamat and others, due to the absence of prior sanction under Section 197 of the Criminal Procedure Code (Cr.P.C.). The judgment, delivered by Justice Ashish S. Chavan on May 4, 2026, underscores the mandatory requirement of obtaining sanction before taking cognizance of offences under the Prevention of Money Laundering Act, 2000 (PMLA) when the accused are public servants.
The case, which has been under scrutiny since the registration of the FIR in July 2015, saw proceedings initiated by the Enforcement Directorate (ED) under the PMLA, leading to charges being framed against the accused in July 2021. However, the applicants challenged the cognizance order on the grounds that no prior sanction had been obtained under Section 197 of Cr.P.C., a provision that requires government approval before prosecuting public servants for actions taken in discharge of their official duties.
In the judgment, Justice Chavan emphasized the necessity of adhering to statutory provisions, highlighting that the absence of such sanction renders the cognizance order unsustainable. The court referred to the Supreme Court's ruling in Directorate of Enforcement v. Bibhu Prasad Acharya, reinforcing that Section 197 Cr.P.C. applies to PMLA cases, and cannot be overridden by the provisions of Section 71 of PMLA.
The court's decision not only quashes the cognizance order but also allows the Enforcement Directorate to approach the Special Court to seek cognizance afresh, contingent upon obtaining the requisite sanction. This liberty is subject to any legal and factual objections that may be raised by the applicants.
The ruling is expected to have a significant impact on similar cases, reinforcing the procedural safeguards in place for public servants and ensuring compliance with statutory requirements in the prosecution of money laundering offences.
Bottom line:-
Cognizance of offences under the Prevention of Money Laundering Act, 2000 (PMLA) cannot be taken by a court without obtaining prior sanction under Section 197 of the Criminal Procedure Code (Cr.P.C.) when the accused is a public servant.
Statutory provision(s): Prevention of Money Laundering Act, 2000 Sections 44(1)(b), 65, 71; Criminal Procedure Code, 1973 Section 197
