Mr. Madhav Khurana, Senior Advocate with Mr. Debopriyo Moulik and Ms. Shaurya Singh, Advocates v. DIRECTORATE OF ENFORCEMENT

Judgment

1. Suraksha Sanhita, 2023 assails order dated 3rd April, 20241 passed by the Special Judge (PC Act) (CBI)-06, Rouse Avenue District Court, New Delhi in CT Case No. 12/ 2024.2 By the impugned order, the Special Court took cognizance of the offence of money laundering under Sections 3 and 4 of the Prevention of Money Laundering Act, 20023 and issued summons to the Petitioner in the said proceedings.

2. Briefly, the facts leading to the filing of the present petition are 1 “the impugned order” 2 titled Directorate of Enforcement v. Jagdish Kumar Arora & Ors. 3 “PMLA” CRL.M.C. 148/2025 Page 1 of 11 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/01/2025 at 12:37:58 summarised as follows:

2.1. On 6th July, 2022, the Central Bureau of Investigation,4 registered RC218202240010 under Sections 120B and 420 of the Indian Penal Code, 18605 read with Section 13(2) and 13(1)(d) of the Prevention of Corruption Act, 19886 against officials of Delhi Jal Board.7 This RC case pertains to alleged irregularities in the award of a tender floated by the DJB to NKG Infrastructure Limited. Among those implicated were officials of DJB, including the Petitioner (then serving as Chief Engineer), officials of NBCC, and representatives of NKG Infrastructure Limited.

2.2. Subsequently, on 28th September, 2022, ECIR/ DLZ0-1/45/2022 was registered by the Directorate of Enforcement8 under Sections 3 and 4 of Prevention of Money Laundering Act, 20029, in relation to the afore- mentioned scheduled offence registered by the CBI. ED alleges that the proceeds of crime arising from the irregularities in the tender process were laundered through various channels. On 31st January, 2024, the Petitioner was arrested in connection with the case and is presently in judicial custody.

2.3. After the completion of investigation, ED filed a prosecution complaint on 28th March, 2024, implicating the Petitioner and others for offences under PMLA. The complaint elaborates on the purported role of the Petitioner in facilitating the alleged laundering of proceeds of crime.

2.4. Pursuant to the prosecution complaint, Special Judge passed the impugned order on 3rd April, 2024, taking cognizance of the offence under 4 “CBI” 5 “IPC” 6 “the PC Act” 7 “DJB” 8 “ED” 9 “PMLA” CRL.M.C. 148/2025 Page 2 of 11 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/01/2025 at 12:37:58 Section 3 read with Section 4 of PMLA and issued summons to the accused persons, including the Petitioner. The said proceedings are pending before the Trial Court and are currently at the stage of consideration of charge.

2.5. In the afore-noted proceedings, the Petitioner had filed an application praying for dropping the proceedings, however, Petitioner understood that the request was misconceived and accordingly, withdrew the same on 21st December, 2024.

3. Mr. Madhav Khurana, Senior Counsel for Petitioner, urges that the impugned order is untenable in law as the same has been passed in absence of prior sanction of the Government, as mandated under Section 197(1) of the Code of Criminal Procedure, 197310 for prosecution of government officials. Relying on the Supreme Court decision in Directorate of Enforcement v. Bibhu Prasad Acharya11, he urges that at the time of passing of the impugned order, a sanction under Section 197(1) of Cr.P.C read with Section 65 of PMLA is a pre-condition for prosecuting a public servant. Mr. Khurana emphasizes that the Apex Court has categorically held that Section 197(1) Cr.P.C applies even to complaints made under Section 44 of PMLA. As such, the absence of sanction renders the Court incompetent to take cognizance of the alleged offences, thereby vitiating the impugned order and subsequent proceedings.

4. Although the present petition challenges the order of cognizance and the issuance of summons, Mr. Khurana, on instructions, submits that since the case is presently at the stage of framing of charges, the Petitioner is prepared to raise the issues urged herein before the Trial Court. However, he 10 “Cr.P.C” 11 2024 SCC OnLine SC 3181 CRL.M.C. 148/2025 Page 3 of 11 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/01/2025 at 12:37:58 expresses apprehension that the Trial Court, in light of the jurisdictional objections raised by ED, may refrain from addressing the question of sanction, given that cognizance has already been taken. To ensure the Petitioner has a meaningful opportunity to argue his case at the appropriate stage, Mr. Khurana seeks this Court’s direction for the Trial Court to specifically apply its mind to the question of sanction at the stage of charge. On this issue, Mr. Khurana places reliance on B. K. Parchure v. State and Another,12 wherein the Court emphasized that jurisdictional issues and questions concerning the validity of sanction can be examined even during the framing of charges.

5. On merits, Mr. Khurana argues that the sanction dated 7th June, 2024 issued by the sanctioning authority against Petitioner,13 is irrelevant to the PMLA case. He highlights that the said sanction pertains exclusively to offences under Section 120B read with Sections 420, 468, and 471 of IPC and Sections 13(2) and 13(1)(d) of the PC Act. At the time of issuance of the said sanction, the authority had not been presented with any material relating to the offences under Sections 3 and 4 of the PMLA. Therefore, Mr. Khurana argues, the sanction is limited in its scope and cannot be extended to the offences alleged under the PMLA. Any reliance placed on this sanction by ED is, therefore, legally untenable and procedurally irregular.

6. Additionally, Mr. Khurana contends that the expression “any other offences punishable under other provisions of law” in paragraph No. 12 of the sanction order must be interpreted narrowly to relate solely to the scheduled offences for which the sanction was granted. He submits that this 12 2022 SCC OnLine Del 2492; (2022) 292 DLT 249 13 intimated to CBI through covering letter dated 10th June, 2024 CRL.M.C. 148/2025 Page 4 of 11 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/01/2025 at 12:37:58 phrase cannot be construed to include offences under PMLA, as such an interpretation would contravene the settled principles governing the issuance and scope of sanction. He asserts that the phrase, in its context, authorizes only the Special Judge of the CBI Court to take cognizance of the scheduled offences and does not extend to offences under Sections 3 and 4 of the PMLA, for which an independent sanction would be required.

7. On the other hand, Mr. Zoheb Hossain, Special Counsel for ED, strongly opposes the instant petition. He argues that the sanction granted in relation to the scheduled offence encompasses facts that are intrinsically connected with the alleged acts of “discharge of official duty” forming the basis of PMLA prosecution. According to him, the competent authority, while granting sanction, not only authorized the prosecution for the specific offences under the IPC and the PC Act but also provided a broader sanction for “any other offences punishable under other provisions of law in respect of the acts aforesaid and for taking cognizance of the said offences by a court of competent jurisdiction”. He asserts that the phrase used in the sanction order is inclusive and extends to offences under the PMLA, particularly since the allegations pertain to proceeds of crime stemming directly from the acts that form the foundation of the scheduled offences.

8. Without prejudice to the above, Mr. Hossain argues that acts alleged against the Petitioner, namely generation and acquisition of proceeds of crime by accepting bribes in exchange for awarding tenders based on fake eligibility certificates and subsequent laundering by investment of those proceeds in various properties, cannot, by their very nature, be considered acts performed in the discharge of official duty. Thus, he argues, no prior sanction under Section 197(1) of Cr.P.C is required for the prosecution in CRL.M.C. 148/2025 Page 5 of 11 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/01/2025 at 12:37:58 the present case. Nevertheless, in light of the Supreme Court’s decision in Bibhu Prasad Acharya and as a matter of procedural prudence, Mr. Hossain informs the Court that the ED has, out of abundant caution, sought additional sanction from the competent authority for prosecuting the Petitioner under the PMLA. He clarifies that this step has been taken to preclude any procedural objections that might arise during the trial.

9. Mr. Hossain also asserts that the present case does not involve a complete absence of sanction but rather raises a question regarding the adequacy and validity of the sanction already granted. Mr. Hossain acknowledges that this issue of sufficiency of sanction is a matter that the Trial Court is competent to assess, even at the stage of framing charges. In support of this contention, he places reliance on the judgments of the Supreme Court in State of Telangana v. Managipet14 and Dinesh Kumar v. Chairman, Airport Authority of India and Another15.

10. Furthermore, Mr. Hossain submits that, should the Court deem it appropriate to remand the matter to the Trial Court, the Trial Court can independently assess whether sanction under Section 197(1) of Cr.P.C. is necessary in the present case and whether the sanction order relied upon by the ED is adequate. He reiterates that, in the ED’s view, the existing sanction is both valid and sufficient to sustain the prosecution under the PMLA. He, however, contends that even if the sanction is found to be deficient in any respect, such a defect would not warrant the discharge of the accused but would instead constitute a curable defect. He urges that the Trial Court, in such a scenario, should grant the ED an opportunity to obtain a