Firstly, the IO can make further investigation on the issues on the basis of which the sanction for prosecution was refused, and send a fresh request for sanction on the basis of such fresh / further investigation, specifically pointing out how those issues were / are not relevant for refusal of sanction.
Secondly, sanction for prosecution can also be given by the higher authority, subject, of course, to the condition if there is any such higher authority available. Barring the Class-I or Group A officers, for other government servants, there may be generally be an authority higher than the sanctioning authority available (such as the Government itself).
Thirdly, generally, under the guidelines of the concerned Government, there may be a mechanism to resolve the issue of refusal of sanction between the sanctioning authority and the investigating authority. For example, in Central Government, the CVC (Central Vigilance Commission) may be approached by the CBI in cases of refusal of sanction for suitably advising the sanctioning authority (though it may not be legally binding on such authority, but then the authority may be questioned by his own superiors if it does not follow such advice).
Scope for challenging refusal of sanction in a court is generally very limited. I may point out that recently Allahabad high court has allowed challenge to refusal of sanction, though it is in a different type of case.
Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.