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by sayum
22 December 2025 9:35 AM
“Sanctioning Authority Acted as Mere Rubber Stamp; Had No Competence to Sanction IPC Offences” – Allahabad High Court, Lucknow Bench, delivered a sharp rebuke to the Central Bureau of Investigation (CBI), setting aside the prosecution of six Axis Bank officials in a ₹22 crore fraud case involving SHIATS University. In Sri Sushant Gupta and 5 Others v. Central Bureau of Investigation, the Court held that the sanction order issued for prosecution was void due to total non-application of mind and lack of legal competence. The Court declared: “The sanctioning authority has acted as a mere rubber stamp.”
Justice Subhash Vidyarthi, allowing the application under Section 482 CrPC, quashed both the sanction order dated 02.02.2023 and the trial court’s order dated 28.07.2023 rejecting discharge, concluding that “prosecution cannot be sustained on a sanction order that is legally incompetent and procedurally infirm.”
The CBI registered a case against several individuals, including employees of SHIATS and Axis Bank, alleging fraudulent transactions amounting to ₹22.39 crores. The FIR named Kamal Ahsan, a suspended Axis Bank employee, and Rajesh Kumar, an accountant at SHIATS. The applicants, working in managerial roles at Axis Bank, were added as accused based on statements and documents collected during the investigation.
On 8 March 2022, the trial court took cognizance under various sections of the IPC (Sections 120-B, 409, 418, 419, 420, 467, 468, 471, 477-A) and Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. However, the High Court later quashed this order, finding that no valid sanction under Section 19 of the PC Act or Section 197 CrPC had been obtained.
To cure this defect, the CBI submitted a fresh sanction order dated 2 February 2023, issued by the President and Head Corporate Affairs, Axis Bank, Mumbai, purportedly sanctioning prosecution for both PC Act and IPC offences. This sanction became the focal point of judicial scrutiny.
The applicants argued that Axis Bank, being a private entity, could only sanction under the PC Act and not for IPC offences, and that the sanction order reflected a mechanical approval devoid of legal analysis. The trial court nevertheless held the sanction to be valid, citing its length and detailed content.
Justice Vidyarthi emphatically disagreed: “The sanction of prosecution ‘for the said offences and for any other offence(s)’ for which no sanction was obtained indicates a total non-application of mind to the facts of the case and the law applicable.”
The Court noted that no request was made to the bank for IPC sanction, nor did the officer have statutory authority to grant such sanction. The sweeping language authorizing prosecution under “any other law” was described as legally untenable and excessively broad.
“This Court finds that the sanctioning authority has merely reproduced the contents of the charge sheet without due deliberation. This is not an independent application of mind; it is a bureaucratic endorsement without substance.”
“Axis Bank Had No Authority to Sanction IPC Prosecution” – Court on Competency
Reinforcing the limits of legal competence, the Court clarified that Axis Bank officials do not qualify under Section 197 CrPC, which protects public servants removable only by government authority. Citing A. Sreenivasa Reddy v. Rakesh Sharma, the Court held:
“The applicant herein is deemed to be a public servant under the PC Act, but the same cannot be extended to IPC offences. Protection under Section 197 CrPC is not available since the conditions in-built in the provision are not fulfilled.”
Thus, the only permissible sanction, if any, could be under Section 19 of the PC Act, which does not extend to offences under the IPC.
Court Slams Procedural Lapses by CBI
In addition to the substance of the sanction, the Court condemned the procedural violations committed by the CBI in its counter affidavit, which was filed only after a Supreme Court remand.
“Rules of the Court are meant to be obeyed by one and all, but when a specialized prosecution agency is a litigant, it is expected that the agency will certainly obey the Rules. The violation… by the CBI cannot be appreciated.”
Despite this, the Court opted not to delay proceedings by directing re-filing, stating:
“Procedure is the handmaiden of justice. In the present case, issuing a direction to file a fresh affidavit would result in undue delay.”
Analysis of Precedents: Valid Sanction Must Reflect Independent Mind
The judgment draws extensively on precedents to highlight that sanction must not be a ritualistic or clerical exercise, but a reasoned administrative act. Referring to C.S. Krishnamurthy v. State of Karnataka, the Court reiterated: “Sanction order should speak for itself. If it fails to show independent scrutiny and analysis, it is void.”
In Mahesh G. Jain, the Supreme Court had emphasized: “An order of sanction should not be construed in a pedantic manner, but it must reflect satisfaction that relevant facts would constitute the offence.”
The Court further distinguished between defective but curable sanctions and those tainted by total non-application of mind, citing State of Karnataka v. Ameerjan: “An order of sanction suffering from the vice of total non-application of mind is a nullity.”
Justice Vidyarthi concluded that the entire prosecution suffered from a fatal jurisdictional defect, stating:
“An order of sanction, after proper application of mind to relevant facts and circumstances, is a prerequisite for prosecution. This safeguard cannot be dealt with in a casual and mechanical manner.”
Accordingly, the Court allowed the application under Section 482 CrPC, and:
Quashed the sanction order dated 02.02.2023
Quashed the order dated 28.07.2023 rejecting the applicants’ discharge
Allowed the discharge application filed by the applicants
This judgment sends a clear signal to prosecuting agencies and sanctioning authorities: legal compliance is not a formality. A sanction for prosecution must be legally competent, procedurally correct, and demonstrably thoughtful. The Allahabad High Court has reaffirmed that liberty of individuals cannot be subjected to bureaucratic carelessness or institutional overreach.
As the Court put it with unmistakable clarity: “The law does not permit sanction to be granted by mechanical reproduction of police narratives. Sanction is a constitutional safeguard, not a rubber stamp.”
Date of Decision: 27 May 2025
