Institute of Legal and Management Studies

The Supreme Court reiterated that the alleged invalidity of sanction cannot be a ground to discharge an accused in a criminal case under the Prevention of Corruption Act, 1988 (PC Act).

A bench of Justice M.M. Sundresh and Justice Satish Chandra Sharma allowed appeals filed by the Karnataka Lokayukta Police, setting aside a Karnataka High Court order that discharged the accused on the ground of lack of sanction.The High Court also quashed the money laundering case as well which was based on the corruption case.

Sanction Issue Cannot Be Examined At Pre-Trial Stage

The Supreme Court held that the approach of the High Court was “obviously contrary to law,” pointing to Section 19(3)(a) of the PC Act.

The bench cited precedents including State v. T. Venkatesh Murthy (2004), State of Madhya Pradesh v. Virender Kumar Tripathi (2009), and State of Bihar v. Rajmangal Ram (2014), which barred High Courts from interfering midcourse trial on the ground of invalidity of sanction.

As per Section 19(3)(a), a trial court's order cannot be interfered with on the ground of invalidity of sanction unless it is shown that a failure of justice has resulted due to it. The above-cited precedents explained that failure of justice can be established only after the conclusion of the trial and hence, the High Courts were dissuaded from quashing proceedings at pre-trial stage on the ground of invalidity of sanction.

In Virender Kumar Tripathi, it was held that interdicting a criminal proceeding mid-course on ground of invalidity of the sanction order will not be appropriate unless the court can also reach the conclusion that failure of justice had been occasioned by any such error, omission or irregularity in the sanction. It was further held that failure of justice can be established not at the stage of framing of charge but only after the trial has commenced and evidence is led.

In Virender Kumar Tripathi it was held :

"The said provision makes it clear that no finding, sentence or order passed by a Special Judge shall be reversed or altered by a court of appeal on the ground of absence of /or any error, omission or irregularity in sanction required under sub-section (1) of Section 19 unless in the opinion of the Court a failure of justice has in fact been occasioned thereby. The stage when this failure is to be established yet to be reached since the case is at the stage of framing of charge whether or not failure has in fact been occasioned was to be determined once the trial commenced and evidence was lead. In this connection the decisions of this Court in State v. T. Venkatesh Murthy [2004(7) SCC 763] and in Prakash Singh Badal v. State of Punjab [2007(1) SCC 1] need to be noted."

In Rajmangal Ram, it was reiterated that the appropriate stage for reaching the conclusion regarding failure of justice is the trial.

Revival Of Money Laundering Proceedings

Since the predicate offense under the PC Act stands restored, the Supreme Court held that the quashment of the money laundering case under Sections 3 and 4 of the Prevention of Money Laundering Act, 2002, also falls.

The Court clarified, however, that all issues, including the sanction question, remain open for consideration at the trial stage. It also left undecided the larger question of whether PMLA proceedings can continue if the predicate offense under the PC Act is later quashed.

Considering the age of the respondents, the Court exempted them from personal appearance unless specifically directed by the trial court.

Related - Summons Under PMLA Can't Be Quashed Merely Because Accused Was Discharged In Predicate Offence : Supreme Court

Case : THE KARNATAKA LOKAYUKTHA POLICE v. LAKSHMAN RAO PESHVE

Citation : 2025 LiveLaw (SC) 941

Click here to read the order