PMLA Offence Is a Continuing One; Absence of Sanction Not a Ground for Discharge At Threshold: Orissa High Court

The Orissa High Court has dismissed a criminal revision petition filed by a former public servant and another accused seeking discharge from proceedings under the Prevention of Money Laundering Act (PMLA), holding that questions relating to sanction, existence of “proceeds of crime,” and applicability of the statute cannot ordinarily be decided at the stage of discharge when prima facie material exists. The bench of Justice Chittaranjan Dash explained that liability may arise so long as a person continues to possess, conceal, or use proceeds of crime, even if the predicate offence occurred earlier. Consequently, the plea that the statute could not apply due to the time period of alleged transactions was not accepted at the discharge stage. The case originated from a vigilance investigation alleging that a public servant, who had served in different capacities including Executive Engineer, accumulated assets disproportionate to known sources of income during the check period from 2000 to 2009. Searches conducted at multiple premises reportedly revealed substantial assets allegedly disproportionate to income, leading to prosecution under the Prevention of Corruption Act. Subsequently, the Enforcement Directorate initiated proceedings under the PMLA, treating the alleged disproportionate assets as “proceeds of crime” and filing a complaint before the Special Court. The accused sought discharge under Section 227 of the Code of Criminal Procedure, but the trial court rejected the application, prompting the revision petition before the High Court. The petitioners contended that the PMLA proceedings were unsustainable for several reasons that there was no material to show the existence of “proceeds of crime” as defined under the Act. The prosecution relied primarily on documents reflecting lawful income such as agriculture, rent, and bank interest. The PMLA amendments and provisions could not be applied retrospectively to transactions predating their enforcement. Sanction under Section 197 CrPC was mandatory before prosecuting a public servant, and absence of such sanction vitiated the proceedings. One of the accused was implicated solely due to marital relationship, without independent evidence. The Enforcement Directorate opposed the revision, arguing that the materials on record disclosed a prima facie case of money laundering. At the stage of discharge, courts cannot conduct a detailed examination of evidence or determine the legitimacy of assets. The issue of sanction could be considered at an appropriate stage and did not automatically invalidate proceedings at the threshold. The High Court held that protection under Section 197 CrPC is neither automatic nor absolute and depends on whether the alleged acts bear a reasonable nexus to official duties. The Court noted that the question of sanction is often a mixed question of law and fact and may be examined during trial depending on evidence. It observed that absence of sanction does not necessarily render proceedings void at the stage of discharge. Addressing the argument regarding retrospective application of the PMLA, the Court relied on Supreme Court precedents holding that money laundering is a continuing offence. The Court emphasised that the statutory definition of “proceeds of crime” is wide and includes transformed forms and equivalent value of property derived from criminal activity. It held that determining whether assets are legitimate or tainted involves evidentiary analysis and cannot be conclusively decided without trial unless the record clearly rules out any nexus with the scheduled offence. Reiterating settled principles governing discharge, the Court observed that at this stage the prosecution material must be assumed to be true. Courts only examine whether there is sufficient ground to proceed, not whether conviction is likely. A “mini-trial” or detailed evaluation of evidence is impermissible. The High Court held that the materials on record disclosed grounds for presuming involvement in the alleged offences. The issues raised by the petitioners required full adjudication at trial. The trial court had acted correctly in refusing discharge. Accordingly, the criminal revision petition was dismissed, allowing the PMLA proceedings to continue. Case Details Case Title: K. Badri Narayan Patro Versus Tapamoy Bhattacharjee Case No.: CRLREV No.527 of 2023 Date: 13.02.2026 Counsel For Petitioner: U.C. Patnaik, Advocate Counsel For Respondent: Gopal Agarwal, Sr. Advocate Click Here To Read Order Read More: DGFT Amends Handbook of Procedures 2023; Updates GIA Laboratory’s Legal Status in Dubai

PMLA Offence Is a Continuing One; Absence of Sanction Not a Ground for Discharge At Threshold: Orissa High Court

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PMLA Offence Is a Continuing One; Absence of Sanction Not a Ground for Discharge At Threshold: Orissa High Court

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