Kerala High Court Says No Sanction Needed in SNDP Microfinance Case

On 6 November 2026, the Kerala High Court ruled that prior prosecution sanction under the Prevention of Corruption Act, 1988, was not required to proceed against the accused in the alleged ₹15.85-crore SNDP microfinance case. Justice A. Badharudeen passed the interim order while hearing petitions seeking a Special Investigation Team (SIT) probe into alleged loan misappropriation.

Case and court directions

The loans were disbursed to SNDP Yogam under a microfinance scheme by the Kerala State Backward Classes Development Corporation. The accused include SNDP Yogam general secretary Vellappally Natesan and former managing directors of the Corporation. The Vigilance and Anti-Corruption Bureau (VACB) registered a case in 2016 over alleged loan irregularities.

The State’s position was that SNDP Yogam was not a nodal agency of the Backward Classes Development Department and did not fall within the Act’s definition of a public servant. The VACB had argued that the accused were public servants and required sanction. The Court directed the VACB to file a chargesheet within two weeks. The allegations remain to be tested at trial, and the Court expressed no view on their merits. The case is listed for further consideration on 17 November 2026.

Important Facts for Exams

• Section 19 cognisance sanction: Section 19 bars a court from taking cognisance of specified offences against a public servant without competent-authority sanction; it does not itself bar investigation.
• Section 17A prior approval: Section 17A separately requires prior approval from government or competent authority for inquiry or investigation into alleged offences linked to official decisions, except on-the-spot trap arrests.
• Statutory public-servant scope: The Act’s public-servant definition covers people in the service or pay of statutory corporations and government-owned, controlled or aided bodies, not merely conventional government employees.
• Who grants sanction: For sanction under section 19, the competent authority is generally the government or authority empowered to remove the public servant, with different rules for Union, State and other personnel.