Cases ReportedSupreme Court Cases

In Part 4 of 2022 SCC Volume 3, read some very pertinent Supreme Court decisions, involving aspects regarding reservation, accountability of social media platforms, service law and more.


Constitution of India — Arts. 14, 15, 16 and 226 — Writ of mandamus in matters of reservation — Scope and limit: Order of High Court directing State Government to increase the percentage of reservation for a particular category, that is, to provide for 3% reservation/quota for sportspersons, instead of 1% provided by State Government, held, beyond its jurisdiction and a grave error. Court cannot issue a mandamus: (i) to provide for reservation or reservation for any particular community even on basis of any quantifiable data brought to its notice, or (ii) to collect quantifiable data to justify their action of not providing reservation. [State of Punjab v. Anshika Goyal, (2022) 3 SCC 633]

Constitution of India — Arts. 19(1)(a) & (2) and Arts. 194 & 105 — Accountability of Social media platforms, for posts made on such platforms by third parties: Extent of accountability of Social media platforms for posts made by third parties to House Committee of State Legislature, determined. [Facebook v. Delhi Legislative Assembly, (2022) 3 SCC 529]

Criminal Law — Public Accountability, Vigilance and Prevention of Corruption — Constitutional Authorities/Functionaries/High Public Offices — Security of Prime Minister of India: Directions issued for  judicial inquiry into breach and lapses as the convoy of PM was stuck on a flyover for around 20 minutes. Records relating to PM’s visit seized and secured. Directions also issued for constitution of Enquiry Committee, terms of reference and stay of ongoing proceedings by Central and State Governments. [Lawyers Voice v. State of Punjab, (2022) 3 SCC 521]

Criminal Procedure Code, 1973 — S. 389: Suspension of sentence by Supreme Court on ground of plea of juvenility taken before Supreme Court for the first time, when warranted, explained. [Sagar Behara v. State of W.B., (2022) 3 SCC 526]

Criminal Procedure Code, 1973 — S. 439 — Bail: Grant of bail without considering relevant aspects and recording reasons is not justified. Law summarised regarding principles for grant of bail and considerations to be balanced therefore. [Manoj Kumar Khokhar v. State of Rajasthan, (2022) 3 SCC 501]

Criminal Procedure Code, 1973 — S. 482 — Failure to exercise quashment power — When not proper: In this case of alleged misappropriation of monies of complainant and others, main allegations are against other co-accused, in the facts and circumstances of the case, it was held that to continue criminal proceedings against both appellant-accused herein would be abuse of process of law and court and unnecessary harassment to appellants. Hence, High Court ought to have exercised its powers and discretion under S. 482 CrPC and ought to have quashed criminal proceedings against appellants. Hence, criminal proceedings under Ss. 406, 420, 467, 468, 471 and 120-B IPC including charge-sheet, quashed and set aside insofar as appellants herein are concerned. [Rekha Jain v. State of U.P., (2022) 3 SCC 497]

Service Law — Pension — Computation/Calculation of pension: In this case, respondent retired after one month of rejoining from leave for about two years without allowances. Cl. 2(2) as modified vide Circular GO (P) No. 230/2012/Fin. dt. 19-4-2012 envisaged that for computing 10 months’ emoluments for purpose of average emoluments in respect of employee who retired from service on or after 1-1-2006 and who during part 10 months drew pay in pre-revised scale, their pay in pre-revised scale was to be enhanced notionally to initial pay drawn in revised scale. For calculating average emoluments as per Kerala Services Rules, if during period of ten months, employee was absent from duty, on leave with or without allowances which qualified for pension, or having been suspended was reinstated in service without forfeiture of service, his emoluments for ascertaining average were to be taken, at what they would have been, had he not been absent from duty or suspended provided that benefit of pay in any officiating post would be admissible only if it was certified that he would have continued to hold that officiating post but for leave or suspension. Thus, part of 10 months not equivalent to past 10 months. Hence, impugned judgment finding fixation of pension @ Rs 19,334 in revised scale justified considering last drawn pay of Rs 46,400 by respondent, calls for no interference. [State of Kerala v. Anie Lukose, (2022) 3 SCC 629]

Case BriefsHigh Courts

Rajasthan High Court: Pushpendra Singh Bhati, J., refused to interfere with the impugned order due to lack of any legal infirmity.

The facts of the case are such that an F.I.R., was lodged against the revisionist-petitioner for the offences under Sections 13 (1) (e) / 13 (2) of the Prevention of Corruption Act, 1988 (hereinafter referred to as ‘Act of 1988’) after two months of the recovery of an amount of Rs 50,000/- which was alleged to be bribe money. The said F.I.R. was lodged after a delay of about 2 months from the date of recovery of the said amount from the revisionist petitioner. Thus, the charge sheet was filed against the petitioner under the aforementioned provisions of the Act of 1988. The instant criminal revision petition under Section 397 read with Section 401 CrPC was preferred seeking quashing of the impugned order.

Counsel for the petitioner submitted that without looking into the facts and circumstances of the case, passed the impugned order, whereby it proceeded with framing of charges against the revisionist-petitioner, despite the factum of delay of two months in registration of the FIR.

Counsel for respondent submitted that after taking into due consideration all the facts and circumstances of the present case and after considering the evidence placed on record before it, has rightly passed the impugned order. 

The Court relied on judgment Union of India v. Prafulla Kumar Samal, (1979) 3 SCC 4 wherein it was observed that

Strong suspicion against the accused, if the matter remains in the region of suspicion, cannot take the place of proof of his guilt at the conclusion of the trial. But at the initial stage if there is a strong suspicion which leads the Court to think that there is ground for presuming that the accused has committed an offence then it is not open to the Court to say that there is no sufficient ground for proceeding against the accused.

The Court further relied on judgment State of Haryana v. Bhajan Lal, 1992 Supp (1) SCC 335 and observed that if a strong suspicion exists in the mind of the court at the stage concerned, then the same is sufficient for the court to proceed with the framing of the charge against the accused person(s). And if a prayer for discharge has been made before a revisional court, then the same may only be allowed if the court finds that the materials on record are wholly insufficient for the purpose of trial.

The Court held “this Court does not find any legal infirmity in the impugned order passed by the learned court below so as to warrant any interference, at this stage.”

[Sudhir Bordiya v. State, 2022 SCC OnLine Raj 765, decided on 20-04-2022]


Appearances:

For Petitioner(s): Mr. C.S. Kotwani

For Respondent(s): Mr. S.S. Rajpurohit


Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The 3-Judge Bench comprising of Dr. Dhananjaya Y Chandrachud*, Surya Kant and Vikram Nath, JJ., affirmed the impugned order of the Telecom Disputes Settlement and Appellate Tribunal whereby the Tribunal had dismissed appellant’s claim for refund of Rs 1454.94 crores Entry Fee paid by it for 2G licences. The Bench stated,

“…as a beneficiary and confederate of fraud, the appellant could not be lent the assistance of this Court for obtaining the refund of the Entry Fee.”

The instant appeals were filed under Section 18 of the Telecom Regulatory Authority of India Act 1997 against the judgments of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). The appellant claimed a refund of Rs 1454.94 crores Entry Fee paid by it for 2G licences for twenty-one service areas.

Noticeably, the Supreme Court by its judgment in Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1 (CPIL), had quashed 2G licences granted by the Union of India, including to the appellant. The Court had declared that the policy of the Union government for allocation of 2G spectrum on a ―First Come First Serve‖ basis was illegal.

Decision of TDSAT

As a consequence, the appellant approached the TDSAT to claim refund of its Entry Fee on the principles of civil, contractual and constitutional law which was dismissed by the TDSAT holding that the quashing of the appellant’s licences by the Supreme Court in its judgment in CPIL could not be equated with the Unified Access Service Licences (UASL) agreements becoming void within the meaning of Section 65 of the Indian Contract Act 1872.

The appellant then instituted another petition before the TDSAT7 raising the issue of a refund of the Entry Fee, on the ground that it had been exonerated by the Special Judge, CBI for charges under Section 120-B and 420 of the Indian Penal Code 1860 in a case relating to the grant of UASLs. However, it met with the same fate as the TDSAT dismissed the second petition noting that the appellant had made a second attempt for claiming the same relief which had been sought earlier in the First Telecom Petition.

Contention of the Appellant

It was against the impugned judgment of the TDSAT that the appellant had approached the Supreme Court contending that the fraud in the First Come First Serve policy for 2G spectrum allotment existed at the doorstep of the Union government alone and that the appellant was free from taint or wrong doing.

The CPIL Judgment

In CPIL, the Supreme Court had held that that the First Come First Serve policy was writ large with arbitrariness, and was intended to favour certain specific entities at a grave detriment to the public exchequer as the then Minister of Communications and Information Technology wanted to favour some companies and that as a matter of fact the entire process was stage-managed to favour those who had access to the nitty-gritties of the policy in advance. The Bench had observed,

“Undoubtedly, the authors of the ―First Come First Serve policy were the official actors comprised within the Union government. But equally, the decision did not exculpate the private business entities who obtained UASLs and became the beneficiaries of their decision.

Noticing that the appellant was amongst the four licensees who were directed to pay a cost of Rs 50 lakhs each because they too had been benefited by the wholly arbitrary and unconstitutional exercise undertaken by Department of Telecommunication (DoT) for grant of UASL and allocation of spectrum of 2G band, the Bench opined that the appellant was also complicit in the illegal exercise of obtaining favours by the indulgence of those in power. Thus, the the appellant was held to be in pari delicto along with the Union government.

Whether the Entry Fee was Refundable?

Clause 619 of the UASL Guidelines issued by the DoT required each applicant seeking a UASL for a given service area to deposit a non-refundable entry fee. Accordingly, the appellant paid paid the amount of Rs 1454.94 crores as entry fee and it was only upon the payment of Entry Fee the appellant became eligible to be issued UASLs in the twenty-one service areas. Additionally, Clause 18.121 of the UASL agreement acknowledged the payment of a onetime non-refundable entry fee prior to the signing of the agreement.

Thus, the Bench noted that the Entry Fee was a onetime non-refundable fee payable by an applicant for participating in the process of obtaining the UASL and was distinguishable from the licence fee under Clause 10.122, which was relatable to the actual operation of the licence.

Doctrine of frustration and restitution

The appellant had relied on the provisions of Sections 56 and 65 of the Contract Act to claim benefits of restitution and frustration contending that when a licence is granted under the proviso to Section (4)(1) of the Telegraph Act, the licence is in the nature of a contract between the government and licensee, thus bringing it within the ambit of the Indian Contract Act.

The Bench referred to Graham Virgo’s, “The Principles of Law of Restitution”, to observed that all claims for restitution are subject to a defence of illegality. The genesis of which is in the legal maxim ex turpi causa non oritur actio (no action can arise from a bad cause). Further, that a court will not assist those who aim to perpetuate illegality.

Thus, relying on the principle that when the party claiming restitution is equally or more responsible for the illegality of a contract, they are considered in pari delicto, the Bench held that unless the party claiming restitution participated in the illegal act involuntarily or the rule of law offers them protection against the defendant, they would be held to be in pari delicto and therefore, their claim for restitution will fail. The Bench expressed,

If the party claiming restitution was equally or more responsible for the illegality (in comparison to the defendant), there shall be no cause for restitution.”

Verdict

Consequently, the Bench concluded that the appellant was in pari delicto with DoT and the then officials of the Union government. Hence, as a beneficiary and confederate of fraud, the appellant could not be lent the assistance of this Court for obtaining the refund of the Entry Fee. Accordingly, the appeal was dismissed.

[Loop Telecom & Trading Ltd. v. Union of India, 2022 SCC OnLine SC 260, decided on 03-03-2022]


*Judgment by: Justice Dhananjaya Y Chandrachud


Appearance by:

For the Appellant: A M Singhvi and Huzefa A Ahmadi, Senior Advocates

For the Union of India: Vikramjit Banerjee, Additional Solicitor General


Kamini Sharma, Editorial Assistant has put this report together 

Case BriefsHigh Courts

Gujarat High Court: Biren Vaishnav, J. allowed a petition which was filed challenging the order of termination passed by the respondent – authority, by which, the services as Assistant Motor Vehicle Inspector, Class-III of the petitioner has been terminated on the ground of lodging of an FIR under Sections 7, 8, 12, 13(1)(D) and 13(2) of the Prevention of Corruption Act.

Counsel for the petitioner submitted that even otherwise summary report has been filed in context of the FIR in question, the short ground on which the petitioner has assailed the order of termination that it was contrary to the law laid down in a decision rendered by the Division Bench of this Court dated 24-07-2020 rendered in Letters Patent Appeal No.1596 of 2019 in case of State of Gujarat v. Chetan Jayantilal Rajgor where the Court had explained the importance of full scale inquiry before any action could be taken by the authority against the accused.

The Court considered the decision relied on by the counsel of the petitioner and quashed the order of termination. The petition was allowed and the respondent-authority was directed to reinstate the petitioner without back-wages within ten weeks from the date of order. It was further clarified that respondent authorities will not be precluded from proceeding against the petitioner for the alleged misconduct.[Hiren Dahyabhai Rathod v. State of Gujarat, R/Special Civil Application No. 15471 of 2020, decided on 13-04-2022]


Mr Jit P Patel for the Petitioner(s) 1

Mr Krutik Parikh, AGP for the Respondent(s) 1


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: In an interesting case where the Division Bench of Sanjay Kishan Kaul* and M.M. Sundresh, JJ., was to answer whether pending criminal appeal, and with the sentence being suspended, could the DCRG be directed to be released on the construction of the applicable rules, the Bench resolved the issue against the employees and held there was not statutory mandate that DCRG should be released to the respondents pending consideration of the criminal appeal.

The moot question before the full Bench of the Kerala High Court was whether on conviction in a criminal case for violation of integrity norms in performance of official duties and an appeal pending before the High Court, is the employee still entitled to the release of his Death-cum-Retirement Gratuity (DCRG). The High Court, by the impugned judgment had ruled in favour of the employees and had held that the recovery under Rule 3 of Kerala Services Rules could only be against pension and not DCRG, and Rule 3A insofar as it permitted DCRG to be withheld was struck down.

The Rules in Question

The Rule 3 of Kerala Services Rules reads as:

“withholding or withdrawing a pension or any part of it, whether permanently or for a specified period, and the right of ordering the recovery from a pension of the whole or part of any pecuniary loss caused to government if in a departmental or judicial proceeding, the pensioner is found guilty of grave misconduct or negligence during the period of his service, including service rendered upon re-employment after retirement…”

Whereas, Rule 3A provides that:

“3-A. (a) Where any departmental or judicial proceedings is instituted under Rule 3 or where a departmental proceeding is continued under clause (a) of the proviso thereto, against an employee who has retired on attaining the age of compulsory retirement or otherwise he shall be paid during the period commencing from the date of his retirement to the date on which, upon conclusion of such proceeding final orders are passed, a provisional pension not exceeding the maximum pension which would have been admissible on the basis of his qualifying service up to the date of retirement, or if he was under suspension on the date of retirement up to the date immediately preceding the date on which he was placed under suspension, but no gratuity or death-cum-retirement gratuity shall be paid to him until the conclusion of such proceeding and the issue of final orders thereon.”

Noticeably, Rule 3 in the KSR deems continuation of service in the case of a delinquent servant even after superannuation if any departmental or judicial proceedings are initiated, for the limited purpose of their finalisation. In the event of an order of dismissal being passed, even after retirement, the Government servant would have to forfeit his pension and DCRG.

Impugned Judgment

The High Court read the Rule 3 of the KSR as empowering the Government to punish the delinquent employee by withholding, withdrawing or reducing, for a specified period or permanently, the pension payable or to order recovery for any  pecuniary loss, but again only from the pension. The Court opined that the same could not be done from the DCRG. While, Rule 3A of the KSR was opined to be only tailored towards the effective implementation of Rule 3 and could not have any separate or distinct consequences.

Noting that the Rule 3A has two parts, the Court observed that the first part dealt with certain conditions on the disbursal of pension in the cases of a continuing proceeding while the second part allowed DCRG or gratuity to be withheld until the conclusion of the proceedings. By the impugned judgment, the second part was held to have an unnecessary penalising effect on an employee while proceedings are pending and would have onerous consequences if the proceedings ended in exoneration since the provision did not contemplate any modality for re-compensation if the DCRG is paid after a long period of time.

Further, observing that Note 2 to Rule 3 provided that the word ‘pension’ did not include DCRG and, that that liabilities could be recovered from DCRG only after giving the employee a reasonable opportunity to explain, the Court held that the recovery under Rule 3 could only be against pension and not DCRG, and Rule 3A insofar as it permitted DCRG to be withheld was struck down.

Analysis and Interpretation by the Court

Noticeably, the State in its wisdom had preferred to await the outcome of criminal proceedings in the instant case and had not initiated any separate departmental proceedings. Rule 3 of the KSR provides that Government reserves to themselves the right to withhold or withdraw a pension or any part of it, whether permanently or for a specified period, and all its ramifications. Further, the word pension is clarified by Note 2, as it would not include DCRG. Thus, DCRG and pension have been dealt with as separate aspects.

However, on the further reading of Note 2, which provides that the liabilities fixed against an employee or a pensioner can be recovered from DCRG without the departmental/judicial proceedings but after giving an employee or pensioner concerned a reasonable opportunity to explain, the Bench opined,

“If any part of DCRG was not supposed to be available for recovery of amounts, there would be no reason of inclusion of this aspect of DCRG in Note 2 and a view to the contrary would make the latter part of Note 2 otiose.”

The Bench observed that Note 2 is further clarified by Ruling 3, which stipulates that Note 2 does not mean that the employee’s or pensioner’s consent should be obtained for recovering the liabilities from DCRG. What has been contemplated is only a communication of such liabilities to him so as to enable him to submit his explanation. Thus, this Ruling No.3 also deals with the DCRG. Therefore, the important aspect before the Bench was whether Rule 3A is to be construed in the context of Rule 3 or should be read independently of itself. The High Court had sought to take a view that Rule 3A is in a sense assisting Rule 3 and does not have any independent existence. The Bench stated,

“The High Court, in our view, has introduced a new legislation by undertaking the exercise of reading down. We do believe that there is absolutely no need to do so when the language of the rule is so clear conveying its intended meaning without any ambiguity.”

Holding that it was a very restrictive view to disburse DCRG on account of the proceedings against a pensioner coming to an end, even where a conviction had arisen, specially where the convicted person has availed of the remedy of appeal, the Bench reiterated that an appeal is a continuation of the proceedings in trial and would be, thus, a continuation of judicial proceedings.  Therefore, pendency of the appeal cannot disentitle the State from withholding the DCRG, considering that it is a hiatus period within which certain arrangements have to be made which would be dependent on the outcome of the appeal.

Conclusion

In the light of the above, the Bench concluded that Rule 3A could not be read in isolation nor the latter part of it struck down as done by the High Court. Rule 3, Note 2, Ruling 3, and Rule 3A have to be read in conjunction as they provide for the treatment of the DCRG in case of disciplinary or judicial proceedings pending at the stage of retirement.

Accordingly, the impugned judgment was set aside holding that it could not be opined that the DCRG would have to be released to the respondents pending consideration of the criminal appeal.

[Local Self Government Department v. K. Chandran, 2022 SCC OnLine SC 318, decided on 15-03-2022]

*Judgment by: Justice Sanjay Kishan Kaul


Kamini Sharma, Editorial Assistant has put this report together 

Case BriefsSupreme Court

Supreme Court: In a case where the Karnataka High Court had reversed the judgment of Karnataka Administrative Tribunal directing compulsory retirement of a Government Servant after being found guilty of bribery, the bench of Dr. DY Chandrachud* and Surya Kant, JJ has held that acquittal of a person in the course of the criminal trial does not impinge upon the authority of the disciplinary authority or the finding of misconduct in the disciplinary proceeding.

Factual Background

  • The respondent, working as a Village Accountant at Revathagao in Indi Taluka of Bijapur District in Karnataka, was charged for demanding a bribe for deleting the name of a person from Column No. 11 of the RTC with regard to land bearing Survey No. 54, situated at Shirdona Village.
  • A criminal complaint was registered with the Lokayukta police against the respondent for the commission of an offence punishable under Sections 7 and 13(1) (d) read with Section 13 (2) of the Prevention of Corruption Act 1988.
  • After the investigation, a charge sheet was submitted against the respondent by the Lokayukta police in Special Case No. 20 of 2011 in the Court of Special Judge at Bijapur, who gave the benefit of doubt to the respondent and acquitted him of all charges.
  • A disciplinary enquiry was initiated under Section 7(2) of the Karnataka Lokayukta Act 1984 and the Lokayukta held that the charge against the respondent was proved and recommended the penalty of compulsory retirement from service.
  • The disciplinary authority held that the misconduct was proved and imposed a penalty of compulsory retirement.
  • Aggrieved by the penalty, the respondent moved the Karnataka Administrative Tribunal. The Tribunal upheld the order of compulsory retirement.
  • The Karnataka High Court set aside the judgment of the Tribunal.

Disciplinary enquiry vis-à-vis Criminal Trial

The principles which govern a disciplinary enquiry are distinct from those which apply to a criminal trial. In a prosecution for an offence punishable under the criminal law, the burden lies on the prosecution to establish the ingredients of the offence beyond reasonable doubt. The accused is entitled to a presumption of innocence. The purpose of a disciplinary proceeding by an employer is to enquire into an allegation of misconduct by an employee which results in a violation of the service rules governing the relationship of employment. Unlike a criminal prosecution where the charge has to be established beyond reasonable doubt, in a disciplinary proceeding, a charge of misconduct has to be established on a preponderance of probabilities. The rules of evidence which apply to a criminal trial are distinct from those which govern a disciplinary enquiry. The acquittal of the accused in a criminal case does not debar the employer from proceeding in the exercise of disciplinary jurisdiction.

Scope of Judicial Review

In the exercise of judicial review, the Court does not act as an appellate forum over the findings of the disciplinary authority. The court does not re-appreciate the evidence on the basis of which the finding of misconduct has been arrived at in the course of a disciplinary enquiry. The Court in the exercise of judicial review must restrict its review to determine whether:

  • the rules of natural justice have been complied with;
  • the finding of misconduct is based on some evidence;
  • the statutory rules governing the conduct of the disciplinary enquiry have been observed; and
  • whether the findings of the disciplinary authority suffer from perversity; and (vi) the penalty is disproportionate to the proven misconduct.

Ruling

The Court observed that none of the above tests for attracting the interference of the High Court were attracted in the present case. The Karnataka Administrative Tribunal having exercised the power of judicial review found no reason to interfere with the award of punishment of compulsory retirement. The Division Bench of the High Court exceeded its jurisdiction under Article 226 and trenched upon a domain which falls within the disciplinary jurisdiction of the employer. The enquiry was conducted in accordance with the principles of natural justice. The findings of the inquiry officer and the disciplinary authority were held to be sustainable with reference to the evidence which was adduced during the enquiry. Hence, the acquittal of the respondent in the course of the criminal trial did not impinge upon the authority of the disciplinary authority or the finding of misconduct in the disciplinary proceeding.

[State of Karnataka v. Umesh, 2022 SCC OnLine SC 345, decided on 22.03.2022]


*Judgment by: Justice Dr. DY Chandrachud


Counsels

For appellant: Advocate V N Raghupathy

For Respondent: Advocate Ashwin V Kotemath

Case BriefsSupreme Court

Supreme Court: In an interesting case relating to corruption, the Division Bench of Ajay Rastogi and Abhay S. Oka*, JJ., acquitted a Commercial Tax Officer in spite of proved recovery of tainted currency notes from her. The Bench observed that though the recovery was proved in the absence of demand being conclusively proved conviction cannot be made under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act.

The prosecution case, in brief, was that the appellant, Commercial Tax Officer demanded a bribe of Rs.3,000 for issuing an assessment order of the Farmers’ Service Co-operative Society for the year 1996-97, where the complainant was acting as a supervisor. Though the complainant showed unwillingness to pay the amount, the demand was reiterated by the appellant for consecutive three days which was later scaled down to Rs. 2000. Consequently, a complaint was filed in the Anti-Corruption Bureau (ACB) and accordingly, a trap was laid.

The allegation of the prosecution was that when the complainant tendered the tainted currency notes of Rs.2,000 to the appellant, instead of taking the amount directly, she took out a diary from her table drawer and asked to keep the currency notes in the diary thereafter she locked the diary in the table drawer and kept the key in her handbag. After that, she called ACTO along with the record, signed on the last page of the ledger and cash book by putting the date as 26-02-2000.

Notably, when the trap party entered the office of the appellant, they found a wad of currency notes in the diary, numbers on which tallied with the serial numbers of currency notes described in pre-trap proceedings. The Special Court found that the demand of bribe and acceptance of bribe was proved by the prosecution and convicted the appellant under Sections 7 and 13 (1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988. The High Court of Telangana had affirmed the said finding.

The appellant had challenged the concurrent findings of the Special Court and High Court contending that the recovery had not been proved and the complainant had deliberately kept the currency notes in the diary lying on her table when she went to the washroom before leaving her office.

Observing that the proof of demand of bribe by a public servant and its acceptance by him is sine quo non for establishing the offence under Section 7 of the PC Act, the Bench opined that as a corollary, failure of the prosecution to prove the demand for illegal gratification would be fatal and mere recovery of the amount from the person accused of the offence under Section 7 or 13 of the Act would not entail his conviction thereunder.

The Bench noted following discrepancies in the evidences submitted by the prosecution:

  1. The society been served with a notice on 15-03-2002 that an exemption had been granted from payment of commercial tax and it was not liable to pay any tax for the year 1996-97 which made the issue of the final assessment order a mere procedural formality and demand of bribe on 23-03-2002 highly doubtful.
  2. The LW8, R.Hari Kishan, was to accompany the complainant at the time of offering the bribe. However, in spite of being instructed only complainant entered the chamber and LW8 waited outside. The prosecution offered no explanation why LW8 did not accompany the complainant inside the chamber of the appellant at the time of the trap.
  3. The complainant’s version was that on his own, he told the appellant that he had brought the amount; further he had himself admitted that his version regarding the demand on various dates was an improvement. There being no other evidence of the alleged demand, the appellant’s version was not reliable.
  4. On 22-03-2000, the appellant had served a memo on PW 4, ACTO pointing out the defaults committed by him in the discharge of his duties, which indicated high probability of him holding grudge against her.

Hence, the Bench concluded that the demand of illegal gratification by the appellant was not conclusively proved by the prosecution. Thus, the demand which is sine quo non for establishing the offence under Section 7 was not established.

Consequently, the appeal was allowed and the conviction of the appellant for the offences punishable under Sections 7 and 13(1)(d) read with Section 13(2) of the PC Act was set aside and the appellant was acquitted of the charges framed against her.

[K. Shanthamma v. State of Telangana, 2022 SCC OnLine SC 213, decided on 21-02-2022]


*Judgment by: Justice Abhay S. Oka


Appearance by:

For the Appellant: V. Mohana, Senior Advocate

For the Respondent: Bina Madhavan, Advocate


Kamini Sharma, Editorial Assistant has put this report together 

Case BriefsHigh Courts

Allahabad High Court: While expressing that medical and legal fields are more a service than a profession especially the stream of oncology which deals with life and death, Krishan Pahal, J., held that “Corruption is a termite in every system.”

High Court also observed that, the offence of Corruption is against the society and Court has to balance the fundamental rights of the accused to the legitimate concerns of the society at large vis-a-vis the investigating agency.

On the basis of a complaint by Anmol Sachan, PI/CBI/ACB/Lucknow against Dr Sunita Gupta and her husband Dr Rajeev Gupta, the present case was registered under Section 109 of the Penal Code, 1860 and Sections 13(2) read with 13(1)(e) of the P.C. Act, 1988.

What was alleged in the complaint?

It was alleged that Dr Sunita was in possession of disproportionate assets to her known sources of income to the tune of Rs 1,80,96,585.33 which she cannot satisfactorily account for. The husband of doctor Sunita also abetted the possession of assets disproportionate to known sources of income by Dr Sunita Gupta.

CBI team had found and seized the currency notes amounting to Rs 1.59 crore from official residence of Dr Sunita Gupta.

The applicant or any other person (Doctors/Hospital Owners) summoned/examined during the investigation could not produce any valid documentary evidence in support of their statement or explanation offered by applicant that the total amount of Rs 1.59 crore seized from the official residence of Dr Sunita Gupta on 12/07/2016 was actually earned by applicant by indulging in private practice, after office hours.

Analysis, Law and Decision

Bench stated that applicant’s counsel failed to accord any tenable explanation for the recovered amount and further argued that the applicant was not authorized to take private practice as he was employed in a government institution.

Supreme Court’s decision in Sushila Aggarwal v. State (NCT of Delhi), (2020) 5 SCC 1 was cited by this Court.

Medical practitioner administer an oath at the time of convocation as provided by the Indian Medical Association which is an extension of Hippocratic oath taken the world over. The oath is not merely a formality. It has to be observed and followed in letter and spirit. It is on these lines that the apex medical education regulator, National Medical Commission has suggested that the Hippocratic oath be replaced by ‘CHARAK SHAPATH’ during the convocation ceremony for graduates in medical services.

High Court expressed that,

Corruption is a termite in every system. Once it enters the system, it goes on increasing.

Elaborating further on corruption, the Bench added that it is the root cause of all the problems, such as poverty, unemployment, illiteracy, social unrest. The menace has to be put to account.

Lastly, the Court stated that it has to ensure that there is no unwarranted misuse or abuse of process to encroach upon the life and liberty of the applicant as enshrined under Article 21 of the Constitution of India. Also, the Court has to see that the Rule of Law is followed and the administration of justice is not hampered, the guilty are brought to book.

In view of the above anticipatory bail application was dismissed. [Dr Rajeev Gupta v. State of U.P., 2022 SCC OnLine All 155, decided on 25-2-2022]


Advocates before the Court:

Counsel for Applicant: – Purnendu Chakravarty

Counsel for Opposite Party:- Anurag Kumar Singh

Case BriefsSupreme Court

Supreme Court: In the case where the bench of Hemant Gupta and V. Ramasubramanian*, JJ upheld NCLAT’s order of winding up of Devas Multimedia Private Limited, the requirement of advertising the winding up petition was looked into and the Court observed that the failure to publish an advertisement would not lead to the automatic dismissal of the petition for winding up.

Analysis

The Court analysed Rule 5 of the  the Companies (Transfer of Pending Proceedings) Rules, 2016 which prescribes the procedure to be followed by the Tribunal, upon the filing of a petition for winding up.

What does Rule 5 state?

The step-by-step procedure prescribed in Rule 5 is as follows:-

(1) The petition should first be posted before the Tribunal for admission.

(2) The purpose of posting the petition for admission is threefold, namely,

(i)  fixing a date for hearing of the petition;

(ii) issuing appropriate directions as to the advertisement to be published; and

(iii) indicating the persons upon whom the copies of the petition are to be served.

(3)  On the date when the petition is posted for admission, the Tribunal may direct notice to be given   to   the company and also provide an opportunity of being heard before giving directions as to the advertisement of the petition.

What is the purpose of advertisement?

The Court noticed that the essence of Rule 5 is to provide an opportunity of being heard to the company sought to be wound up, even before directions as to the advertisement of the petition are given.

Two purposes:

  • it provides an opportunity to all the stakeholders such as (i)creditors; (ii)workers; (iii) suppliers; (iv) customers; and (v) the general public, either to support or oppose the proceedings for winding up.
  • it serves as a warning/notice or red alert to all those dealing with the company so that they know that there could be an element of risk in dealing with the company.

Explaining why an opportunity of being heard is contemplated in Rule 5, before ordering the advertisement of the petition, the Court said,

“After all, the winding up of a company is like the insolvency of an individual. The advertisement of the petition for winding up, not merely serves as an opportunity to support or oppose winding up, but also harms the reputation of the company and sends shock waves in the stock market, if it is a listed company or among the stakeholders who have dealings with the company.”

What happens in case of failure to publish an advertisement?

The Court went through a number of authorities where the Court took a view that advertisement is mandatory, not only in view of the prescription contained in the Rules, but also in view of the specific order passed by the Company Court at the time of admission, directing the publication of the advertisement in specified newspapers. The Court, however, observed that even in such cases the failure to publish an advertisement was not seen as something that would lead to the automatic dismissal of the petition for winding up.

“This is for the reason that the advertisement of a petition for winding up is perceived to be something that worked at cross purposes, sometimes beneficial to several stakeholders as it provides an opportunity of hearing to them and sometimes as a measure of harassment of the company. There are cases where the companies themselves have opposed the advertisement of the petition on the ground that the same would harm their reputation and cripple their commercial activities. There are also cases where the failure to advertise has led to some of the creditors not having any notice of the proceedings and thereby suffering prejudice.”

Was non-publishing of advertisement detrimental to the case at hand?

In the case at hand it was alleged that the petition for winding up of Devas was never advertised nor even ordered to be advertised, either upon the admission of the petition or anytime thereafter. It was therefore contended that the failure to comply with this requirement which is mandatory, vitiates the whole proceedings.

To know what the case was about, read this.

In the present case, there were no stakeholders who were prejudiced by the failure of NCLT to order the publication of advertisement of the petition.

Also, this was not a case where the company is sought to be wound up on the ground of inability to pay debts or on just and equitable ground. This was a case of fraud and all stakeholders were fully aware of the proceedings and they had even shown extreme urgency in enforcing an ICC Arbitration award and BIT awards, before the conclusion of the winding up proceedings.

Therefore, the Court rejected the argument that the failure of the Tribunal to order the publication of an advertisement rendered the entire proceedings unlawful.

[DEVAS Multimedia Pvt. Ltd.v. Antrix Corporation Ltd., 2022 SCC OnLine SC 46, decided on 17.01.2022]


*Judgment by: Justice V. Ramasybramanian


Counsels

For DEVAS: Senior Advocate Mukul Rohtagi,

For shareholder¬appellant: Senior Advocate Arvind P. Datar,

For Antrix: Additional Solicitor General N. Venkataraman

For UPI: Additional Solicitor General Balbir Singh

Case BriefsSupreme Court

Supreme Court: The bench of Hemant Gupta and V. Ramasubramanian, JJ has upheld NCLAT’s order of winding up of Devas Multimedia Private Limited and has observed that allowing Devas and its shareholders to reap the benefits of their fraudulent action, may send another wrong message that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the 133 investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores.

Antrix Corporation Limited, the commercial arm of the ISRO, entered into a Memorandum of Understanding with Forge Advisors, LLC, a Virginia Corporation to make both parties become “strong and vital partners in evaluating and implementing major new satellite applications across diverse sectors including agriculture, education, media and telecommunications”.

In furtherance of this Agreement, Forge Advisors made a presentation proposing an Indian joint venture, to launch what came to be known as “DEVAS” (Digitally Enhanced Video and Audio Services) for delivering multimedia and information services via satellite to mobile devices tailored to the needs of various market segments.

Hence, DEVAS was incorporated as a private company and Antrix immediately entered into an Agreement i.e. “Agreement for the lease of space segment capacity on ISRO/Antrix SBand spacecraft by DEVAS” with the said company on 28.01.2005.

Alleging that Devas offered services which were non­existent, through a device which was not available and that even the so­called intellectual property rights over the device were not available, Antrix asserted that the aforementioned agreement as a result of a fraudulent and criminal conspiracy between the persons in management of the affairs of the company and the officials of Antrix/Government of India, to award a lease of scarce and   valuable   S­band   spectrum,   without   obtaining   necessary approvals and without following applicable norms and procedures.

It was alleged that the company which was formed with an authorized share capital Rs. 1,00,000/¬  in December, 2004, managed to secure a contract for a stated consideration of an “up-front capacity reservation fee” in the region of US, $ 20 million per satellite, apart from annual license fee of around US $ 9 million per satellite.

Not just the investors and the share¬holders concerned in the formation and the management of its affairs but also some of the then officials of Antrix and the Government of India were guilty of fraud, corrupt practices and money laundering.

Noticeably, not just the winding up proceedings but criminal proceedings also came to be initiated by CBI when the criminal conspiracy, fraud and corrupt practices came to light.

The Supreme Court noticed that when two forums namely NCLT and NCLAT have recorded concurrent findings on facts, borne out by documents, none of which is challenged as fabricated or inadmissible, the orders did not warrant any interference.

It observed,

“If the seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas, every part of the plant that grew out of those seeds, such as the Agreement, the disputes, arbitral awards etc., are all infected with the poison of fraud. A product of fraud is in conflict with the public policy of any country including India. The basic notions of morality and justice are always in conflict with fraud and hence the motive behind the action brought by the victim of fraud can never stand as an impediment.”

[DEVAS Multimedia Pvt. Ltd.v. Antrix Corporation Ltd., 2022 SCC OnLine SC 46, decided on 17.01.2022]


*Judgment by: Justice V. Ramasybramanian


Counsels

For DEVAS: Senior Advocate Mukul Rohtagi,

For shareholder¬appellant: Senior Advocate Arvind P. Datar,

For Antrix: Additional Solicitor General N. Venkataraman

For UPI: Additional Solicitor General Balbir Singh

Case BriefsSupreme Court

Supreme Court: The Division Bench of L. Nageswara Rao and Aniruddha Bose*, JJ held that not  having approval of the Finance Minister at the time of issue of charge memorandum for carrying departmental enquiry would render the it defective, not capable of being validated retrospectively by post-facto approval.

Factual Background

The issue arose out of an inquiry made the appellant, a former Assistant Commissioner of Income Tax for major penalty under Rule 14 of the Central Civil Services (Classification, Control and Appeal) Rules, 1965 on the allegation that in the year 1998, he, in collusion with a Deputy Commissioner of Income Tax, had conducted a survey under Section 133A of the Income-Tax Act, 1961 in five proprietary group concerns of one Mukeshchandra Dahyabhai Gajiwala and his family and demanded a sum of rupees five lacs other than legal remuneration for settling the matter. It was further alleged in the articles of charge that he, along with the said Deputy Commissioner, had demanded a sum of rupees two lacs other than legal remuneration from the same individual and later on, the Deputy Commissioner Mr. K.K. Dhawan accepted the said amount.

Grievances of the Appellant

The findings of the enquiry officer were assailed by the appellant on the ground that the charge memorandum was not specifically approved by the Finance Minister. The appellant relied on the decision of the Central Administrative Tribunal (CAT), in B.V. Gopinath v. Union of India, which was later on upheld by the coordinate Bench of the Supreme Court, wherein the Tribunal had held that in absence of the approval of the charges by the competent authority, further proceedings in the disciplinary case could not be sustained.

However, the appellant’s request for quashing the charges was ultimately turned down on the ground that the petition for Special Leave to Appeal was pending before the Supreme Court in the case of B.V. Gopinath and the appellant could not rely on a verdict which was sub judice when the cause of action arose. Further, the respondent informed the appellant that the charge memorandum had received the approval of Disciplinary Authority and the proceedings could continue from the stage where it stood before the charge memorandum was formally approved.

Findings of the Court Below

On challenge, the CAT quashed the Office Memorandum, holding that the approval sought to be given on 08-01-2014 to a charge memorandum dated 18-11-2002 was impermissible as such approval could not have been granted ex-post facto. In the aforesaid backdrop, the matter reached to the Delhi High Court against the Tribunal’s verdict. Differentiating the appellant’s case from the B.V. Gopinath’s case, the High Court held that subsequent approval implied ratifying an action and there being no requirement in the concerned Rules for prior approval, ex-post facto approval could always be obtained.

Analysis and Findings

The respondents’ argument was accepted by the High Court mainly on two counts. First, there was no ex-post facto approval to the charge memorandum in Gopinath’s case. Second, approval implies ratifying an action and there being no requirement in the concerned Rules for prior approval, ex-post facto approval could always be obtained. The Bench opined that the absence of the expression “prior approval” in the aforesaid Rule would not have any impact on the instant case as the same Rule had been construed in the case of B.V. Gopinath to hold that charge-sheet/charge memorandum not having approval of the Disciplinary Authority would be non est in the eye of law. Hence, the respondent could not claim that approval includes ratifying an action, which obviously could be given ex-post facto.

Similarly, the fact that initiation of proceeding received approval of the Disciplinary Authority could not lighten the obligation on the part of the employer in complying with the requirement of sub-clause (3) of Rule 14 of CCS (CCA), 1965. Evidently, sub-clauses (2) and (3) of Rule 14 contemplates independent approval of the Disciplinary Authority at both stages – for initiation of enquiry and also for drawing up or to cause to be drawn up the charge memorandum. Therefore, even in the event the requirement of sub-clause (2) is complied with, not having the approval at the time of issue of charge memorandum under sub-clause (3) would render the charge memorandum fundamentally defective, not capable of being validated retrospectively. The Bench remarked,

“…the approval for initiating disciplinary proceeding and approval to a charge memorandum are two divisible acts, each one requiring independent application of mind on the part of the Disciplinary Authority. If there is any default in the process of application of mind independently at the time of issue of charge memorandum by the Disciplinary Authority, the same would not get cured by the fact that such approval was there at the initial stage.”

The Bench further added,

“It would not be possible to accept the submission of Ms Indira Jaising that the approval granted by the Finance Minister for initiation of departmental proceedings would also amount to approval of the charge memo.”

However, noticing that the allegations against the appellant were serious in nature and ought not to be scuttled on purely technical ground, the Bench opined that the department’s power to pursue the matter should be reserved and not foreclosed. Accordingly, the impugned judgment was set aside and the Tribunal’s judgment was restored subject to the modification that in the event the department wants to continue with the matter, and on producing the material the Disciplinary Authority is satisfied that a fresh charge memorandum ought to be issued, such charge memorandum shall be issued not beyond a period of two months, and thereafter the proceeding shall take its own course.

[Sunny Abraham v. Union of India, C.A. No. 7764 of 2021, decided on 17-12-2021]


*Judgment by: Justice Aniruddha Bose


Kamini Sharma, Editorial Assistant has put this report together 


Case BriefsHigh Courts

Jharkhand High Court: Shree Chandrashekhar, J. held that a charged employee has no unfettered right to ask for any document on which the department does not intend to place reliance.

The petitioner was an ex Block Co-operative Development Officer who was in-charge of Kuru LAMPS Project as Member Secretary. A departmental proceeding was initiated against him and he was placed under suspension later on.

The memorandum of charges was served upon him contained the following charges:

  1. The delinquent employee defalcated Rs. 12,58,048 in different development projects within Kuru Blocks.
  2. The delinquent employee defalcated Rs. 77,000 from the amount deposited in the recurring deposit scheme under Kuru LAMPS.

A supplementary charge-memo was also served upon the petitioner on an allegation that he defalcated Rs.11,22,125 and destroyed relevant records with a view to cause disappearance of the evidence. In the departmental proceeding, the petitioner asked for some records which were not provided to him and presumably for that reason he did not co-operate in the departmental proceeding. Accordingly, as punishment it was directed that the petitioner should not be entitled for any payment except subsistence allowance during the period of suspension and Rs. 24,57,173 was to be recovered from his post-retiral dues along with deduction of his 10% pension.

The petitioner had assailed the departmental action on the two grounds, namely; the departmental proceeding was conducted in complete breach of the rules of natural justice inasmuch as neither a show-cause notice was issued nor a copy of the inquiry report was furnished to him, and that the right of appeal under Jharkhand Pension Rules had been taken away because the punishment order was approved by the Secretary, Co-operative Department.

Rejecting the second contention, the Bench observed that Rule 43 of the Jharkhand Pension Rules discloses that the appellate authority under Rule 43 is the State Government and not the departmental secretary. Further, the Bench opined that the proceeding was not conducted against the petitioner in violation of the principles of natural justice as the materials on record clearly indicated that the petitioner was afforded opportunity to defend himself but on a specious plea that he was not provided some documents so as to prepare his defence he did not participate in the departmental proceeding.

Noticing that the petitioner had not shown that the documents sought by him were so important that in absence of the same he could not have effectively defended himself, the Bench stated that a charged employee has no unfettered right to ask for any document on which the department does not intend to place reliance–in many cases the procedure adopted by the department is that the charge officer is permitted to inspect the records.

Citing the decision in U.P. State Textile Corpn. Ltd. v. P.C. Chaturvedi, (2005) 8 SCC 211, wherein the Supreme Court had observed that in absence of showing how the alleged non-supply of documents caused prejudice to workman, the same cannot by itself vitiate the enquiry, the Bench stated that in a departmental proceeding in which the delinquent employee refused to co-operate, it was lawful for the departmental authority to proceed in the matter and take a final decision.

Consequently, in the view that the charges framed against the petitioner were very serious, the Bench held that the order of punishment was not outrageous or disproportionate to the charges framed and found proved against the petitioner. Further stating that the quantum of punishment is within the exclusive domain of the departmental authority and the writ Court would not interfere with the same, the Bench dismissed the instant petition. [Bivash Chandra Thakur v. State of Jharkhand, 2021 SCC OnLine Jhar 834, decided on 23-12-2021]


Kamini Sharma, Editorial Assistant has reported this brief.


Appearance by:

For the Petitioner: Abhay Kumar Mishra, Advocate

For the Respondents: Om Prakash Tiwari, GP-III

Case BriefsSupreme Court

Supreme Court: While dealing with a case of abetment and conspiracy for commission of criminal misconduct by public servant, the Division Bench of K.M. Joseph and S. Ravindra Bhat*, JJ., held that  Section 13 of Prevention of Corruption Act cannot be invoked against a non-public servant. Clarifying the standard of suspicion to make out a prima facie case for conspiracy, the Bench stated,

“The material to implicate someone as a conspirator acting in concert with a public servant, alleged to have committed misconduct, under the PCA, or amassed assets disproportionate to a public servant’s known sources of income, has to be on firm ground.”

The instant appeal was filed by CBI against the judgment of Madras High Court by which exercising jurisdiction under Section 397 and Section 401 of CrPC, the High Court had quashed the charge sheet against the respondent-Uttamchand Bohra framed under Sections 120B and Section 109 of Penal Code, 1860 and Section 13(2) r/w Section 13(1)(e) of the Prevention of Corruption Act, 1988.

Conspiracy and Abetment

The respondent was accused of abetting and/or conspiring with the principal accused (A-1), a senior official of the Central Government in the income tax department,, so as to permit him to accumulate assets disproportionate to his known sources of income. A-1 was alleged to have acquired the flat, through the company named M/s Raviteja Trading Co. Pvt. Ltd. Two other accused, who facilitated the acquisition, turned approver. The role attributed to the respondent was that he helped in the execution of the sale deed of the property, which was seized from his house. The respondent was also involved in another case wherein the CBI had seized Rs. 50 lakhs from his vehicle when he was transporting the bribe amount received by A-1 to a safe place.

Analysis and Findings

Noticing that Section 13 of PC Act deals with Criminal misconduct by a public servant, the Bench opined that since the respondent was not a public officer or public servant, he could not be charged with committing an offence under Section 13(1)(e) read with Section 13(2) of the PCA. Further, there was no allegation against the respondent that he received any monetary or other benefit, or that he held the property in his name for the benefit of A-1. The Bench observed,

“There is no evidence against the respondent linking him to the transaction relating to the execution of the sale deed, or alleging that he had an agreement with A-1 and others to commit an illegal act.”

Further, there was no allegation of a legal act being done in an illegal manner, therefore the alleged offence under Section 120-B IPC was also not made out from the charge-sheet. With regard to the allegation of offence u/s 109 of IPC, the Bench noticed that the prosecution had not suggested that the respondent abetted A-1 to acquire disproportionate assets in any manner.

Holding that CBI could not deny that the respondent’s name was included in the instant case, although the sale deed was seized during a search conducted in earlier case, and that the FIR in the instant case named only A-1 and A-2 as the accused, the Bench stated that when the sale deed had already been seized from respondent’s house before initiating of instant case the allegations against the respondent in earlier case could not be against him in the instant case, since the two cases were separate and the earlier case was irrelevant to the instant case. Noticeably,

“He did not directly or indirectly finance the transaction by which property was sold to M/s Raviteja Trading Co. Pvt. Ltd, which, according to the prosecution, was in fact by A-1. The respondent also is not alleged to have facilitated the flow of money to fund acquisition of the flat.”

In the light of the above, the Bench opined that the fact that sale deed was in the respondent’s possession could not satisfy the ingredient of any of the offences alleged against him. Furthermore, crucially, the money trail for the property bought under the sale deed did not show his involvement. Accordingly, the Bench held that there was no material to prima facie support an inference that the respondent was either a conspirator or had abetted the commission of the offences alleged against the accused A-1. Hence, the appeal was dismissed.

[CBI v. Uttamchand Bohra, 2021 SCC OnLine SC 1208, decided on 09-12-2021]


Kamini Sharma, Editorial Assistant has put this report together 


Appearance by:

For CBI: Vikramjit Banerjee, Additional Solicitor General

For the Respondent: R. Basant, Senior Counsel


*Judgment by: Justice S. Ravindra Bhat

Case BriefsSupreme Court

Supreme Court: The 3-Judge Bench of N.V. Ramana, CJ., Surya Kant* and Hima Kohli, JJ., held that the Bank is not the trustee of the money that a customer deposits in a bank and the same is not held by the former on trust for him. The money so deposited becomes a part of the banker’s funds who is under a contractual obligation to pay the sum deposited by a customer to him on demand with the agreed rate of interest. Such a relationship between the customer and the Bank is one of a creditor and a debtor.

Background

The prosecution case was that the Appellant-N. Raghavender, Branch Manager of Sri Rama Grameena Bank along with accused 2 abused their respective position in the Bank and conspired with accused 3-Treasurer of the Nishita Educational Academy and brother-in-law of Appellant, by allowing withdrawal of amounts up to Rs. 10,00,000 from the account of the Academy in spite of availability of requisite funds for such withdrawal.

The prosecution contested that the Appellant, in his capacity as a Branch Manager, issued three loose-leaf cheques and despite withdrawal of the said amount, the debit was deliberately not entered into the ledger book. The endorsement on the third cheque showed the payment in favour of the accused 3; however, the signature on the cheque did not tally with that of accused 3. The Appellant was further accused of prematurely closing two FDRs for a sum of Rs. 10,00,000 and 4,00,000 respectively, and stood in the name of one B. Satyajit Reddy. The case was referred to CBI for offences under Sections 409, 477(A), and 120B Penal Code, 1860 and Section 13(2) read with 13(1)(c) & (d) of the Prevention of Corruption Act, 1988.

The Courts below acquitted all the accused of offences under Section 120B IPC. Further accused 2 and accused 3 were acquitted of all the other charges, while the appellant was held guilty and was convicted and sentenced to five years imprisonment along with various fines.

Observation and Analysis

A. Fraudulent and unlawful withdrawal of Rs. 10 Lakhs from Account No. 282 in the year 1994

Noticeably, the record though clearly revealed that issuance of a loose cheque was a departure from the standard operating procedure followed at the Bank, but no evidence had been led that it was an ‘illegal practice’ as in certain contingencies the Bank could issue loose cheques also. Therefore, the Bench stated,

“Since no explicit prohibition on issuing of loose cheques has been proved, the mere fact that the Appellant issued those loose cheques, is not sufficient to conclude that he acted unlawfully or committed a ‘criminal misconduct’.”

The case of the Prosecution rested heavily on the premise that the three cheques in question were passed even though there weren’t adequate funds in account however, the Auditor and the accountant had testified about there being sufficient funds in account throughout which was corroborate the Current Account Ledger for account in question. Therefore, the Bench held that the Bank did not suffer any loss.

With respect to the charge of ‘deceit’, the depositions of the Auditor and Accountant unveiled that though the relevant entries were missing in the Current Account Ledger, they did find a mention in the Officer’s Cash Scroll and the Cashier Payment Register. Noticing the non-production of these relevant ledgers by the Bank, the Bench was of the view that,

“Since the direct and relevant evidence has been withheld, the benefit of doubt for such failure ought to be accorded to the Appellant.”

Similarly, in order to substantiate the charge under Section 477-A IPC, the primary contention of the Prosecution was that despite passing the three cheques, the Appellant did not make the relevant entries into the Current Account Ledger of the account in other to conceal the withdrawals as there were insufficient funds in the account of the Academy. Rejecting that argument, the Bench noted that the expression ‘intent to defraud’ as given under Section of 477-A, contains two elements, deceit and injury. So far as the second element was concerned, no financial injury was caused to the Bank.

B. Unauthorised premature encashment of the two FDRs belonging to B. Satyajit Reddy

The allegation of premature withdrawal was also accompanied by the averment that despite the premature withdrawal, the interests relating to the two FDRs continued to be deposited into savings account of one B. Satyajit Reddy. Notably, the interest amount was transferred from the joint account of the Appellant and his wife which according to the prosecution was to ‘deceive’ the FDR holder into believing that the FDRs were still alive.

Observing that misappropriation with this dishonest intention is one of the most important ingredients of proof of ‘criminal breach of trust’, the Bench opined that relationship between the customer and the Bank is one of a creditor and a debtor and not of a trustee. Further, relying on the following grounds the Bench stated that there was no fraudulent intention as  no financial loss was caused to B. Satyajit Reddy, since:

  • Satyajit Reddy had made no complaint alleging any loss to him;
  • His written requests dated 22.02.1995 and 24.2.1995 for premature encashment of his FDRs and to deposit the amount in the account of the Academy had gone unrebutted;
  • The payment of interest on those FDRs even after pre-mature closure was made by the Appellant from his personal account and no public fund had been divested for such payment;
  • Satyajit Reddy might or might not have got undue monetary gain but definitely he suffered no loss in any manner.

Findings and Conclusion

In the backdrop of above, the Bench opined that in the absence of any reliable evidence that could unfold a prior meeting of minds, the High Court erred in holding that Appellant and other accused orchestrated the transactions in question to extend an undue benefit to Accused 3. Having held so, the Bench added that the appellant acted brazenly contrary to the norms and internal instructions of the Bank.

“Although he was clever enough to not trespass into the prohibited area(s) of Sections 409, 420 and 477-A IPC, he ran the risk of causing financial loss to the Bank.”

Therefore, the Bench held that the actions of the appellant constituted gross departmental misconduct and were unbecoming of a senior Bank Officer and hence, his dismissal from service of the Bank was fully legitimised and the punishment so awarded, was proportionate to the proven misconduct. The Bench, though acquitted the appellant of all the charges, it stated that acquittal would not entitle him for reinstatement. [N. Raghavender v. State of A.P., 2021 SCC OnLine SC 1232, decided on 13-12-2021]


Kamini Sharma, Editorial Assistant has put this report together


Appearance by:

For the Appellant: Sidharth Luthra, Senior Counsel

For CBI: Jayant K. Sud, Additional Solicitor General


*Judgment by: Justice Surya Kant

Case Briefs

Supreme Court: The Division Bench of L. Nageswara Rao and S. Ravindra Bhat*, JJ., dismisses the appeal initiated by the accused contractors in Integrated Housing and Slum Development corruption case. The Bench observed,

“The constructions, according to the reports, were sub-standard – in respect of 100 such houses, so severe that the units were unusable. The main objective of providing housing to 1206 eligible and deserving families remains unfulfilled despite expenditure of substantial amounts.”

Factual Fulcrum

The criminal Public Interest Litigations were filed by the respondents seeking directions to the Union of India, the State of Maharashtra, the Maharashtra Housing and Urban Development Authority (MHADA) and state officials to initiate criminal proceedings against the responsible officers and office bearers of Municipal Council, Naldurg and the contractors concerned for misappropriation of government funds in implementation of the housing scheme in the municipality.

An Integrated Housing and Slum Development Programme (IHSDP) was initiated by the Union Government through the State Government, under the “Jawaharlal Nehru National Urban Renewal Mission” for providing basic services to the urban poor including affordable prices, improved housing, water supply, sanitation, wherein the Maharashtra Government had appointed MHADA as the nodal agency.

The petitioners-respondents alleged that the quality of work carried out by the appellants was very poor and the officials (i.e. MHADA, municipality, etc.) did not inspect or supervise the work, and did not submit the quarterly reports as required under the scheme. It was submitted that the municipality diverted funds meant for the said development project, for other works as the observation made by technical team showed that the municipal council made an excess payment of Rs. 2,43,79,017/- to the contractors as compared to the work done. The allegations were also made with regard to failure to complete the project, and various other omissions were highlighted.

Findings of the High Court

Observing the dereliction of duties on the part of the authorities and certain other irregularities, the High Court had directed the Divisional Commissioner to take actions to its logical end as expeditiously as possible. Pursuant to the direction of the High Court and the report of the technical team the Collector directed the Municipal Council to recover the excess amount paid to the contractors, and blacklist them from Government work, to initiate criminal prosecution against the person(s) who had committed the irregularities, and lastly allot the repairable houses.

Analysis and Conclusion

Noticing that the appellants were all involved as persons or authorized individuals, acting on behalf of entities that were awarded the contract of construction and completion of the housing units, pursuant to the scheme, and that the spot inspection report alleged that they had not performed their task, the made the following observations:

Effect of Delay in Giving Reasoning of the Judgment by the High Court

Rejecting the first grievance of the appellants that the reasoning for the impugned judgment was given and published long after its operative portion was pronounced, i.e. a year and over three months which had prejudiced their case, the Bench stated that though it is clear that the High Court’s order, against which an aggrieved litigant has a right to approach in appeal, under special leave jurisdiction should contain reasons without which it would be well-nigh impossible to exercise that right of seeking special leave, to that extent, the appellants’ grievance was held to be justified, however, the Bench denied to hold that the absence of reasons struck at the legitimacy of the impugned judgment. The Bench stated,

“…prejudice stood off-set with the interim orders of this court, which recognized the piquancy of the situation, and directed stay of further action against the appellants.”

However, the Bench deprecated the High Court’s conduct in not furnishing reasons, either at the time of pronouncement of the operative part of the judgment, or before the commencement of the next working day (of the court).

Motive of PIL

The appellant’s next challenge to the impugned judgment emphasized the need to keep out “busybodies” who “have no interest in matters of public interest” on the ground that the petitioners-respondents had personal motive as they were former Councillors of the municipality. Rejecting the contention of the appellants, the Bench expressed,

“The cause espoused by the said individuals was undoubtedly one of public interest, because it concerned housing for the economically disadvantaged sections of society, in such great numbers.”

The scheme was meant to benefit thousands of persons, and over a thousand housing units were to be constructed and allotted to the beneficiaries. Therefore, in view of the inquiries and the reports, the Bench held that the initiation of public interest proceedings was justified even if the public interest litigants’ motives were ambiguous, or not immediately bona fide, that could not have led to dismissal of the writ petition, before the High Court.

Right to be Heard

Lastly, rejecting the main arguments of the appellants that criminal proceedings had been initiated against them even though they were not heard in the public interest proceedings, and that being adverse to them the judgment was vitiated on account of their non-participation, the Bench opined that the High Court disposed of the PILs directing the Divisional Commissioner to take appropriate steps to its logical end as expeditiously as possible, making it evident that the High Court did not by itself direct initiation of investigation nor did it direct registration of an FIR, hence, the appellants were not required to be on party array. The Bench emphasised,

“Whilst the reasoning for the impugned judgment was undoubtedly published after a long and unexplained delay, the effect of its operative directions was not to per se prosecute.”

Moreover, the constructions were sub-standard – in respect of 100 such houses, so severe that the units were unusable and dilapidated which rendered the main objective of providing housing to 1206 eligible and deserving families unfulfilled despite expenditure of substantial amounts.

Hence, rejecting the argument of the appellants that they ought to have been heard even before action was initiated as unsound, since, according to the decision of the Constitutional Bench in Lalita Kumari v. Govt. of U.P., if there are allegations with respect to commission of cognizable offences, brought to the notice of the police authorities, ordinarily an FIR has to be lodged.

Verdict

Lastly, noticing that High Court did not comment on whether the allegations were true or whether the submissions on behalf of the petitioners justified their conduct or omission, and that the FIR was registered by the police following the imperative nature of the law declared in Lalita Kumari where it was held that a preliminary enquiry ordinarily is to be eschewed whenever cognizable offences are reported, the Bench dismissed the appeals.

[Shaikh Ansar Ahmad Md. Husain v. State of Maharashtra, 2021 SCC OnLine SC 867, decided on 05-10-2021]

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Kamini Sharma, Editorial Assistant has put this report together 

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Appearance by:

For the Appellants: Shyam Divan, Senior Advocate


*Judgment by: Justice S. Ravindra Bhat 

Know Thy Judge| Justice S. Ravindra Bhat

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of Dr. DY Chandrachud*, Vikram Nath and BV Nagarathna, JJ has held that a Preliminary Enquiry is not mandatory in all cases which involve allegations of corruption.

The Court said that in case the information received by the CBI, through a complaint or a “source information”, discloses the commission of a cognizable offence, it can directly register a Regular Case instead of conducting a Preliminary Enquiry, where the officer is satisfied that the information discloses the commission of a cognizable offence.

Holding that the institution of a Preliminary Enquiry in cases of corruption is not made mandatory before the registration of an FIR under the CrPC, Prevention of Corruption Act or even the CBI Manual, the Court said that issuing a direction to that affect will be “tantamount to stepping into the legislative domain.” 

However, it was made clear that holding the aforesaid will not take away from the value of conducting a Preliminary Enquiry in an appropriate case.

“The registration of a Regular Case can have disastrous consequences for the career of an officer, if the allegations ultimately turn out to be false. In a Preliminary Enquiry, the CBI is allowed access to documentary records and speak to persons just as they would in an investigation, which entails that information gathered can be used at the investigation stage as well. Hence, conducting a Preliminary Enquiry would not take away from the ultimate goal of prosecuting accused persons in a timely manner. However, we once again clarify that if the CBI chooses not to hold a Preliminary Enquiry, the accused cannot demand it as a matter of right.”

Important rulings

Lalita Kumari v. Government of Uttar Pradesh, (2014) 2 SCC 1

If the information received discloses the commission of a cognizable offence at the outset, no Preliminary Enquiry would be required. Further, the scope of a Preliminary Enquiry is not to check the veracity of the information received, but only to scrutinize whether it discloses the commission of a cognizable offence.

Union of India v. State of Maharashtra, (2020) 4 SCC 761

The Court reversed the decision of a two Judge Bench in Subhash Kashinath Mahajan v. State of Maharashtra, (2018) 6 SCC 454 [Read more] which had, inter alia, held that “a preliminary enquiry may be conducted by the DSP concerned to find out whether the allegations make out a case under the Scheduled Cases and Scheduled Tribes (Prevention of Atrocities) Act 1989 and that the allegations are not frivolous or motivated”.

The three Judge Bench held that such a direction was impermissible since neither the CrPC nor the Atrocities Act mandate a preliminary inquiry.

“In case a cognizable offence is made out, the FIR has to be outrightly registered, and no preliminary inquiry has to be made (…). The direction would mean that even if a complaint made out a cognizable offence, an FIR would not be registered until the preliminary inquiry is held. In case a preliminary inquiry concludes that allegations are false or motivated, FIR is not to be registered, in such a case how a final report has to be filed in the Court. Direction 79.4 cannot survive for the other reasons as it puts the members of the Scheduled Castes and Scheduled Tribes in a disadvantageous position in the matter of procedure vis-à-vis to the complaints lodged by members of upper caste, for latter no such preliminary investigation is necessary. In that view of the matter it should not be necessary to hold preliminary inquiry for registering an offence under the Atrocities Act, 1989.”

Read more…

Charansingh v. State of Maharashtra,  (2021) 5 SCC 469

An enquiry at pre-FIR stage is held to be permissible and not only permissible but desirable, more particularly in cases where the allegations are of misconduct of corrupt practice acquiring the assets/properties disproportionate to his known sources of income. After the enquiry/enquiry at pre-registration of FIR stage/preliminary enquiry, if, on the basis of the material collected during such enquiry, it is found that the complaint is vexatious and/or there is no substance at all in the complaint, the FIR shall not be lodged.

However, if the material discloses prima facie a commission of the offence alleged, the FIR will be lodged and the criminal proceedings will be put in motion and the further investigation will be carried out in terms of the Code of Criminal Procedure. Therefore, such a preliminary enquiry would be permissible only to ascertain whether cognizable offence is disclosed or not and only thereafter FIR would be registered. Therefore, such a preliminary enquiry would be in the interest of the alleged accused also against whom the complaint is made.

Read more…

[CBI v. Thommandru Hannah Vijayalakshmi, 2021 SCC OnLine SC 923, 08.10.2021]

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Counsels:

For CBI: Aishwarya Bhati, Additional Solicitor General

For respondents: Senior Advocates Siddharth Luthra and Siddharth Dave


*Judgment by: Justice Dr. DY Chandrachud

Know Thy Judge| Justice Dr. DY Chandrachud

Case BriefsHigh Courts

Chhattisgarh High Court: Sanjay K Agrawal, J. dismissed the petition being devoid of merits.

Facts

The facts of the case are such that the Chhattisgarh State Economic Crime Bureau and Anti Corruption Bureau registered an offence against the petitioner and other persons for offence under Section 13(1)(d) read with Section 13(2) of Prevention of Corruption Act i.e. PC Act and Sections 120B & 420 of the Penal Code, 1860 i.e. IPC and sought sanction from respondent 1 for prosecution against the petitioner herein and other persons under Section 19(1)(b) of the PC Act and Section 197 of Criminal Procedure Code i.e. CrPC. The petitioner herein calls in question legality, validity and correctness of the impugned order dated 15-5-2019 passed by respondent No.1 in exercise of power conferred under Section 19(1)(b) of the Prevention of Corruption Act, 1988 (for short, ‘the PC Act’) read with Section 197 of the Code of Criminal Procedure, 1973 (for short, ‘the CrPC’) granting sanction for prosecution against him for offence under Section 13(1)(d) read with Section 13(2) of the PC Act and Sections 120B & 420 of the IPC.

Issue

The sanction for prosecution ought to have been placed before the Sub- Committee of the Cabinet, as the Administrative Department has not accorded sanction for prosecution of the petitioner modified by subsequent circular. Since that procedure was not followed by respondent 1, the order granting sanction is illegal and liable to be set-aside

Counsel for the petitioners submitted that the order granting sanction is illegal, contrary to law and deserves to be set-aside because if there is difference of opinion between two Departments of the State i.e. parent Department, here Water Resources Department and the Law Department, then the procedure laid down in the circular and its clarification issued by the State Government is required to be followed. It was further submitted that sanction can only be obtained in coordination with the Minister of Council of Political Affairs or with its concurrence and no such procedure has been followed in the present case.

The Court perused section 19 of PC Act and stated that previous sanction for prosecution is required in respect of a public servant who is employed and is not removable from his office save by or with the sanction of the State Government. The Court observed that the communication of alleged disagreement with respect to grant of sanction qua the petitioner has been made by the Chief Engineer, Water Resources Department, Raipur to the Secretary, Government of Chhattisgarh, Water Resources Department dated after the order granting sanction for prosecution under Section 19 of the PC Act and Section 197 of the CrPC was passed, whereas the disagreement was required to be expressed and to be sent by the Administrative Department before the question of sanction is considered by Respondent 1 herein.

The Court relied on judgment Subramanian Swamy v. Manmohan Singh, (2012) 3 SCC 64 and observed despite memo and reminder received by the Administrative Department – respondent 2, no response was served to respondent 1 who is the competent authority to consider the issue of grant of sanction and therefore in absence of any disagreement, the competent authority to grant sanction being the Department of Law & Legislative Affairs has proceeded to consider the matter and issued order granting sanction for prosecution against the petitioner and others. It was further established that despite memo dated 22-3-2019 reiterated by reminder dated 25-4- 2019, the Administrative Department kept pin-drop silence over the matter.

The Court further relied on judgment State of Madhya Pradesh v. Virender Kumar Tripathi, (2009) 15 SCC 533 and observed that interdicting a criminal proceeding midcourse on ground of invalidity of the sanction order will not be appropriate unless failure of justice has occasioned by any such error, omission or irregularity in the sanction and such failure of justice can be established not at the stage of framing of charge but only after the trial has commenced and the evidence is led.

The Court held “ultimately, finding no opinion of the Administrative Department (respondent 2) either way, the Department of Law & Legislative Affairs being the authority competent to grant sanction has rightly considered the issue and granted sanction for prosecution against the petitioner”.

[KK Vashishta v. State of Chhattisgarh, 2021 SCC OnLine Chh 621, decided on 15-03-2021]


Arunima Bose, Editorial Assistant has reported this brief.


 Appearances:

For Petitioner: Mr. B.P. Sharma and Mr. M.L. Sakat

For Respondents / State: – Mr. Jitendra Pali and Mr. Ravi Kumar Bhagat

Case BriefsSupreme Court

Supreme Court of India: The Division Bench comprising of Dhananjaya Y. Chandrachud and M.R. Shah*, JJ., addressed the instant appeal challenging the validity of notice send to the appellant by Anti-corruption Bureau regarding pre-FIR open enquiry against him. The Bench stated,

“…(If) an enquiry is held and/or conducted after following the procedure as per Maharashtra State Anti-corruption & Prohibition Intelligence Bureau Manual, it cannot be said that the same is illegal and/or the police officer, Anti-corruption Bureau has no jurisdiction and/or authority and/or power at all to conduct such an enquiry at pre-registration of FIR stage.”

Background

The background of the instant case relates to various allegations made against the appellant and his brothers with regard to accumulating the assets disproportionate to his known sources of income. Noticeably, the appellant was a Member and President of Municipal Council, Katol, Nagpur. In connection with the said complaint, the Police Inspector, Anti-corruption Bureau, had issued a notice, calling upon the appellant to personally remain present before the investigating officer of the Anti-corruption Bureau to give his statement in an ‘open enquiry’ in respect of the property owned by him along with the information on the points stated in the said notice and further, asking him to provide documents relating to his property, assets, bank statements, income tax returns.

The grievance of the petitioner was that the Police Inspector, Anti-Corruption Bureau, had no power to issue the said notice. It was also submitted that there is no statutory provision which would compel any body to give statement to the police. It was also submitted that there was no FIR against the appellant. Per contra, the respondent authority submitted that the said ‘open enquiry’ was ordered to find out if an offence under Section 13(e) of the Prevention of Corruption Act was disclosed.

Whether such an enquiry at pre-FIR stage would be legal and to what extent such an enquiry is permissible?

In Lalita Kumari v. Government of Uttar Pradesh, (2014) 2 SCC 1, this Court had observed that it is mandatory to register an FIR on receipt of information disclosing a cognizable offence. However, this Court had also considered the situations/cases in which preliminary enquiry is permissible/desirable and certain illustrations were also  carved out in which the preliminary enquiry was held to be permissible/desirable before registering/lodging of an FIR. It was further observed that if the information received did not disclose a cognizable offence but indicates the necessity for an inquiry, a preliminary enquiry may be conducted to ascertain whether cognizable offence is disclosed or not. It had been clarified that the scope of preliminary inquiry is not to verify the veracity or otherwise of the information received but only to ascertain whether the information reveals any cognizable offence. Similarly, in P. Sirajuddin v. State of Madras, (1970) 1 SCC 595, this Court expressed the need for a preliminary enquiry before proceeding against public servants.

When a public servant, whatever be his status, is publicly charged with acts of dishonesty which amount to serious misdemeanour or misconduct of indulging into corrupt practice, it does incalculable harm not only to the officer in particular but to the department he belonged to in general. Thus, before lodging FIR against him, there must be some suitable preliminary enquiry into the allegations by a responsible officer to ascertain whether cognizable offence is disclosed or not.

Observing that a fool proof safeguard and procedure is provided under the Maharashtra State Anti-corruption & Prohibition Intelligence Bureau Manual of Instructions 1968, before lodging an FIR/complaint before the Court against the public servant, the Bench disregarded any doubt of irregularity regarding the issuance of impugned notice. Further, the Bench observed that the information sought on the aforesaid points was having a direct connection with the allegations made against the appellant, namely, accumulating assets disproportionate to his known sources of income. Clarifying that such an ‘open enquiry’, should be restricted to facilitate the appellant to clarify regarding his assets and known sources of income, the Bench said the same could not be said to be a fishing or roving enquiry.

Conclusion

Clarifying that the statement of the appellant and the information so received during the course of discrete enquiry should be only for the purpose to satisfy and find out whether an offence under Section 13(1)(e) of the PC Act, 1988 was disclosed. Such a statement cannot be said to be confessional in character, and would be restricted only to ascertain whether a cognizable offence is disclosed or not. The Bench held that such an enquiry would be to safeguard the interest of appellant which may avoid further harassment to him. Hence, the Bench refused to interfere with the impugned judgment and order passed by the High Court of Bombay and dismissed the appeal with the above observations.

[Charansingh v. State of Maharashtra, 2021 SCC OnLine SC 251, decided on 24-03-2021]


Kamini Sharma, Editorial Assistant has put this report together 

*Judgment by: Justice M.R. Shah

Appearance before the Court by:

For the Appellant: Sr. Adv. Subodh Dharmadhikari,

For the Respondent/s: Sr. Adv. Raja Thakare

Case BriefsSupreme Court

Supreme Court: The bench of MM Shantanagoudar* and Vineet Saran, JJ has held that Section 195(1)(b)(i) CrPC will not bar prosecution by the investigating agency for offence punishable under Section 193 IPC, which is committed during the stage of investigation. This is provided that the investigating agency has lodged complaint or registered the case under Section 193, IPC prior to commencement of proceedings and production of such evidence before the trial court. In such circumstance, the same would not be considered an offence committed in, or in relation to, any proceeding in any Court for the purpose of Section 195(1)(b)(i) CrPC.

Background and issues raised

A case was registered against the Appellant/Accused No. 1, who was working as Regional Manager (South) at Chennai with the Rashtriya Ispat Nigam Ltd, under Section 120B read with Sections 420, 467, 468 and 471 IPC; and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988 (PC Act).

In the present case, the Accused Nos. 2 and 3 had colluded with Appellant/Accused No. 1 to create a false sale deed, and gave false explanation of escrow arrangement amongst the three parties, to justify how the seized currency came to be in the Appellant’s possession. This was done to exonerate the Appellant/Accused No. 1 and recover the seized currency at the stage of investigation itself.

This gave rise to the question before the Court as to

  1. Whether Section 195(1)(b)(i), CrPC bars lodging of case by the investigating agency under Section 193, IPC, in respect of offence of giving false evidence which is committed at the stage of investigation, prior to production of such evidence before the Trial Court?
  2. Whether an offence under Section 193, IPC committed at the stage of investigation, prior to production of the false evidence before the Trial Court by a person who is not yet party to proceedings before the Trial Court, is an offence “in relation to” a proceeding in any court under Section 195(1)(b)(i), CrPC?
  3. Whether the words “stage of a judicial proceeding” under Explanation 2 to Section 193, IPC can be equated with “proceeding in any court” under Section 195(1)(b)(i), CrPC?

Analysis by the Court

Import of the Words “in relation to” in Section 195(1)(b) (i) CrPC

The construction of the words “in relation to” must be controlled by the overarching principle   applicable to Section 195(1)(b), CrPC i.e., even if the offence is committed prior to giving of the fabricated evidence in court, it must have a direct or reasonably close nexus with the court proceedings.

Section 195(1)(b)(i), CrPC may be attracted to the offence of fabricating false evidence prior to its production before the Court, provided that such evidence is led by a person who is party to the court proceedings, for the purpose of leading the Court to form a certain opinion based on such evidence. The bar against taking of cognizance under Section 195(1)(b)(i) may also apply where a person who is initially not a party to the court proceedings fabricates certain evidence, and

1) subsequently becomes a party and produces it before the Court; or;

2) falsely deposes as a witness before the Court on the strength of such evidence,

for the purpose of causing the Court to form an erroneous opinion on a point material to the result of the proceedings.

However, where a person fabricates false evidence for the purpose of misleading the investigating officer, this may not have any direct nexus with the subsequent court proceedings.

“There is an indirect nexus inasmuch as if the investigating agency does not suspect any wrongdoing, and the Court commits the case for trial, the evidence will be produced for the Court’s perusal and impact the judicial decision-making process. However, it may be equally possible that even if the fabricated evidence appears sufficiently convincing, the investigating agency may drop proceedings against the accused and divert its time and resources elsewhere. Therefore, the offence may never reach the stage of court proceedings. Further, if it subsequently comes to light that the evidence was falsely adduced, it will be the investigating agency which will suffer loss of face and be forced to conduct a fresh investigation.”

Hence, though the offence is one which affects the administration of justice, it is the investigating agency, and not the Court, which is the aggrieved party in such circumstance.

“Just like a private party who has been a victim of forgery committed outside the precincts of the Court, the investigative agency should not be left remediless against persons producing false evidence for the purpose of interfering with the investigation process. Moreover, the present case concerns offences alleged to have been committed under the PC Act. Public interest and the reputation of the State will suffer significant harm if corrupt public servants are facilitated by third parties in hiding their assets from scrutiny. Hence any interpretation which negates against the speedy and effective trial of such persons must be avoided.”

Whether “stage of a judicial proceeding” under Explanation 2 to Section 193 IPC is synonymous   with “ proceeding in any court” under Section 195(1)(b)(i) CrPC?

Section 195(1)(b) is meant to restrict the right to make complaint in respect of certain offences to public servants, or to the relevant Court, as they are considered to be the only party who is directly aggrieved or impacted by those offences. Furthermore, for the purpose of Section 195(1)(b)(i), CrPC, there must be an intention on part of the alleged offender to directly mislead the Court into forming a certain opinion by commission of offence under Section 193 IPC.

“Though a criminal investigation is certainly a stage of a judicial proceeding insofar as it may culminate in issue of process and trial against the accused, it would not be a proceeding in relation to a certain Court under Section 195(1)(b) (i), CrPC before the Court has even taken judicial notice of such investigation.”

Section 2(i) CrPC defines “judicial proceeding” as including any proceeding in the course of which evidence is or may be legally taken by oath. The investigation under the PC Act was admittedly a stage of a judicial proceeding by virtue of Explanation 2 to Section 193 IPC. However, neither was the fabricated evidence in the present case given on oath before the investigating officer, nor is the investigating authority under the PC Act deemed to be a “court” for the purpose of Section 195(1) (b), CrPC.

In the present case, it is not the Trial Court but the Investigating authority/agency which has been directly impacted due to fabrication of evidence by the Appellants/accused.

“The Appellants’ intention was not to mislead the Trial Court, at least not at the first instance. Rather, their goal was to ensure that the Appellant/Accused No. 1 was cleared of wrongdoing at the stage of investigation itself. It was after being charged under Section 193 IPC, that the Appellants/accused reiterated the fictitious escrow arrangement story before the Trial Court so as to prove their innocence. Hence it cannot be said that the offence under Sections 120B read with 193 IPC was committed by the Appellants “in relation to” a proceeding in a court under Section 195(1)(b)(i), CrPC.”

Thus, the investigation conducted by the agency under the PC Act cannot be equated with a proceeding in a court of law under Section 195(1) (b)(i) CrPC, though it is deemed to be a stage of a judicial proceeding under Section 193, IPC.

“Had this been a case wherein the Investigating agency had not developed any suspicion against Accused Nos. 2 and 3, and the Trial Court had subsequently discovered the subterfuge caused by them, we may have taken a different view.”

[Bhima Razu Prasad v. State, 2021 SCC OnLine SC 210, decided on 12.03.2021]


*Judgment by: Justice MM Shantanagoudar

Appearance before the Court by:

For Appellants: Senior counsel Basava Prabhu Patil, and counsels Amit Anand Tiwari and B. Karunakaran

For State: Additional Solicitor General Aishwarya Bhati

Case BriefsHigh Courts

Tripura High Court: Akil Kureshi, CJ., disposed of a writ petition which was filed challenging a departmental inquiry and suspension pending such departmental inquiry against the petitioner.

Petitioner was a Junior Engineer in the Government of Tripura. A complaint was made against him holding assets disproportionate to his known source of income before the Lokayukta who upon completion of the investigation submitted his report in which he had concluded that the petitioner had received salary of Rs 22,13,279/- for the period between 1998 to March, 2012 as against which he had created assets worth Rs 74,26,472/- which was referable to the same period of 1998 to March, 2012. Lokayukta was of the opinion that the petitioner held assets disproportionate to his known source of income. He recommended initiation of departmental proceedings as well as criminal case against the petitioner and to place him under suspension. On 25th March, 2015 the disciplinary authority had issued a departmental charge sheet to the petitioner which contained two charges. Charge Article I was that as held by the Lokayukta in his report, the petitioner had amassed wealth far in excess of his known source of income. Charge Article II was that by such actions the petitioner had committed offences punishable under the Prevention of Corruption Act, 1988. On 13th May 2015, the disciplinary authority appointed Inquiry Officer.

After hearing both the parties the Court decided that there were no reasons to quash the departmental inquiry. The Court observed that it was up to the Government to accept or to reject the recommendations of the Lokayukta. If the departmental inquiry or the criminal proceedings are not time barred, the State Government cannot be restrained from taking any action against the petitioner even if it is on the report of the Lokayukta. Once the material has come to the notice of the Government prima facie indicating that the petitioner has indulged in some corrupt practice, the Government is duty-bound to act on the same. It was, therefore, held that there was no merit in the petition; however, in any departmental or criminal proceeding which may be initiated against the petitioner he would have a full right to defend himself. Coming to the continued suspension, the Court held that firstly, the charges were extremely serious. Secondly, the petitioner was also facing a criminal case for offences punishable under the Prevention of Corruption Act and thirdly, the competent authority has been reviewing the suspension order from time to time.[Bikash Bhowmik v. State of Tripura, 2021 SCC OnLine Tri 100, decided on 18-02-2021]


Suchita Shukla, Editorial Assistant has put this story together.