Kaushlesh Kumar Sinha vs Cbi
2018 Latest Caselaw 3266 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

A.F.R.
 
Court No. - 1
 
Case :- APPLICATION U/S 482 No. - 37911 of 2018
 
Applicant :- Kaushlesh Kumar Sinha
 
Opposite Party :- Cbi
 
Counsel for Applicant :- Manish Tiwary,Ashutosh Srivastava
 
Counsel for Opposite Party :- Gyan Prakash
 
Hon'ble Ramesh Sinha,J.

Hon'ble Dinesh Kumar Singh-I,J.

(Delivered by Hon'ble Dinesh Kumar Singh-I, J.)

1. Learned counsel for the appellant has filed a supplementary affidavit today in Court, which is taken on record.

2. Heard Sri Manish Tiwary, learned counsel for the applicant, Sri Gyan Prakash, learned counsel for the C.B.I. and perused the record.

3. This application under section 482 Cr.P.C. has been filed for quashing the charge-sheet dated 29.12.2017 as well as order taking cognizance dated 01.09.2018 and the entire proceedings of Special Case No.9 of 2018 (C.B.I. vs. Shailesh J. Bhatt and others) arising out of RC No.219-2016 (E) 0007, under sections 120B r/w 420 IPC and 13(2) r/w 13(1) (d) of Prevention of Corruption Act , Police Station CBI/EO-1/New Delhi, pending in the Court of Special Judge, Anti Corruption Court, CBI, Ghaziabad.

4. It is revealed from the perusal of record that an F.I.R. was registered being RC 2192016 E0007 at PS CPI/EO-I, New Delhi on 28/04/2016 under sections 120-B read with 420, 467, 468 and 471 IPC along with Section 13 (2) read with 13 (1) (d) of PC Act, 1988 by Director Finance, Handicrafts and Handlooms Exports Corporation of India Ltd. (in short as HHEC) against the applicant /Kaushlesh Kumar Sinha and others in which, it was alleged that HHEC was doing business of importing bullion on behalf of local buyers either on consignment basis/letter of credit basis or spot basis and that during the course of its business it was dealing with one Suresh Gadecha, who was representing M/s. Aaryavart Impex Pvt. Ltd. and M/s. Satlon Investment Ltd. since 2002-03. In the year 2007 Mr. Gadecha introduced a company called M/s. Aaryavart Commodities Pvt. Ltd. (in short ACPL) which company entered into an agreement for import of bullion on consignment basis for sale or outright loan basis vide agreement dated 24th of April, 2007. On behalf of ACPL Shri Shailesh J Bhatt signed an agreement and gave a separate undertaking. The terms of the said agreement envisaged purchase of consignment on loan basis and delivery of bullion were to be made on loan basis only after payment of 105% to 110% of bullion so imported and price was to be paid on provisional sale. The ACPL gave an undertaking to the effect that it would keep HHEC indemnified for the loss in transaction carried out by HHEC on behalf of ACPL. Both ACPL and HHEC entered into agreement dated 24th of April 2007, 20th June 2007 and 14th of August 2013 etc relating to import of bullion as well as export of jewellery. The purchases of bullion by ACPL were made on the basis of provisional price of gold prevailing in international market on the date of taking delivery of gold and the price of dollar was also provisional and the final price of gold used to be fixed by the ACPL with foreign supplier on a later date and the said practice was also followed in fixation of price of dollar and final payment used to be made on the basis of final price of gold as well as dollar from time to time on the basis of final price fixed by ACPL through its Director and representatives. During the course of business transaction with HHEC, ACPL fixed the price of 200 Kg gold, that is, 100 Kg gold bar and 100 Kg gold guineas after depositing custom duty in the month of October 2008. ACPL, however lifted only 51 Kg of gold due to sudden fall in price of gold and saw delivery of the remaining gold on the basis of deferred payment backed by security in the form of jewellery and post dated cheques. Having regard to the fact that report at that point of time indicated further fall in the price of gold, the proposal of ACPL was accepted and delivery of gold was given to ACPL against the post dated cheques and on the basis of jewellery given by ACPL with valuation report. As HHEC permitted the lifting of the gold up to 90% of the value of jewellery provided by ACPL along with valuation report of Government approved valuer. The details of the post dated cheques have been mentioned in the complaint in tabular form. The ACPL handed over 14 boxes of jewellery along with valuation reports of Hera Lal Gordhandas Zaveri showing the valuation of jewellery handed over to HHEC to be Rs. 9.40 crores , details of which are mentioned in the complaint in tabular form. Out of the said, one jewellery box vide invoice no. 04/08 - 09 dated 12/11/2008 amounting to Rs. 44 lakhs had been received back by ACPL on 23/07/2012 and the balance invoice no. 05/08-09 to 11/08 - 09 comprising 13 boxes of jewelleries were kept in vault of G4S Cash Services (India) Private Ltd at Ahmedabad which were transferred to Delhi in October 2013. At that time also the jewelleries had been valued by the Government approved valuer. The officials of HHEC believed the representation made by the Director of ACPL and its representatives with regard to security and value of jewellery given by ACPL. The HHEC on 2/3 - 07 - 2015 came to know that jewellery given by ACPL was fake and that they had cheated and defrauded HHEC. On 24th of March 2009 it was pointed out by HHEC to ACPL that the payments had not been made and huge outstanding amount to the extent of 8.9 crores was pending against ACPL. Sri S J Bhatt, the authorised signatory of ACPL vide letter dated 06/04/2009 sought to safeguard the outstanding dues of Rs. 20.10 crore by showing that Rs. 6.73 crore was adjustable against provisional credit balance subject to reconciliation, Rs. 1.6 crores interest on FDR, Rs. 9.14 crores towards jewellery as per valuation by valuer and assured HHEC that it would clear the outstanding amount gradually. Thereafter HHEC and ACPL entered into various correspondence to clear the outstanding amount and ACPL and its directors and representatives assured from time to time that they would clear the outstanding amount. When the outstanding amount could not be cleared, it was decided by HHEC to auction the jewellery and recover the amount due from ACPL to HHEC. The jewellery boxes were valued on 27 - 28 September, 2013 by Government approved valuer to the tune of Rs. 17.36 crores. HHEC in the month of November 2014 decided to e-auction the jewellery and for this purpose they engaged the services of MSTC - a public sector undertaking of Government of India. Thereafter, Shri Kamal Narain Kapoor, a Government approved valuer valued the jewellery in the month of February - March 2015 and valued the jewellery to the extent of Rs. 8.24 crores only. Upon obtaining legal advice it was decided to get the jewellery valued from the Government approved valuer who was empanelled with the income tax authorities. Accordingly evaluation of the jewellery was carried out by the Government approved valuer Shri Pankaj Jain who in his report dated 2 - 3 July, 2015 valued 11 boxes of jewellery and found that out of 11 boxes two boxes contained a studded jewellery having value of Rs. 1.1 crore and in respect of rest of boxes it was valued nil. Therefore it was clear from the narration of the facts stated above that the ACPL and its directors and representatives who had always interacted with the officials of HHEC, had made false representation regarding value of jewellery and payment of outstanding amount and committed the offence of fraud and indulged in criminal activities and thereby caused huge loss to the public sector undertaking HHEC. The HHEC had entered into various transaction with ACPL only on the basis of representation regarding purity of gold and valuation made by ACPL and its representatives. The offence of cheating had been committed not only by ACPL, its directord & representatives but also by Government approved valuer who thrice give incorrect valuation report and were part of criminal conspiracy of cheating and defrauding the HHEC. The intention of cheating was there right from the beginning as the HHEC discovered that jewelleries were fake.

5. After investigation by CBI/OP, charge-sheet has been submitted against the applicant as well as many other accused. As regards the present accused applicant, investigation revealed that CMD, Kaushlesh Kumar Sinha in furtherance of criminal conspiracy approved the following proposed points:

(A) ECGC of India had informed that no shipment be made to M/s. Ekta Jewellery LLC, Dubai without realising earlier payments.

(B) It has further been mentioned that M/s. ACPL proposed to lift 49 KG gold bar and liability at which the gold was fixed M/s. ACPL would provide the pay order for Rs. 575 lakhs and 30 post dated cheques for 72 lacs (6 cheques of 4 lakh each commencing from 12/11/2008 & 24 cheques of Rs. 2 lakhs each commencing from 20/11/2008). In addition M/s. ACPL would be provided jewelleries worth Rs. 70 lakhs approx. as collateral security, pending export to M/s. Ekta Jewellery LLC, Dubai after permission from ECGC was received. Pending receipt of jewellery release up to the value of pay order would be made.

(C) It had also be noted that M/s. ACPL had prized gold guineas for 106.936 KGs out of which 25.000 KGs had been hedged in MCX. M/s. ACPL had requested for squaring up the hedge in MCX & sale of guineas in 29th November 2008 contract. The difference as per the purchase/sale in MCX and the price of metal converted at the forward cover rate would be paid through post dated daily cheques. The approximate liability would be Rs. 48.00 lakhs and M/s. ACPL would pay the same through 24 post- dated cheques commencing from 01/12/2008 .

The applicant also directed the Director to inform the party's reaction to the proposal after his proposed visit to Ahmadabad.

6. The investigation further revealed that the accused applicant with dishonest intention approved the proposal to release gold against PDCs duly secured by jewellery whereas being CMD he in pursuance of criminal conspiracy knew that there was no such clause in the agreement dated 24/04/2007. Since he was head of the organisation it must have been in his knowledge that he did not have any such power as per prevailing delegation of powers at that time. There was no Circular/guideline in this regard, therefore he, in criminal conspiracy with other co-accused persons, approved note with dishonest intention. Thus he misused his official position in favour of M/s. Aaryavart Commodities Pvt. Ltd.. Accordingly he along with other co-accused was found to have committed offences under sections 120 - B read with 420 IPC and sec. 13 (2) read with 13 (1) (d) of PC Act, 1988.

7. The contention of  the applicant is that the FIR was lodged on 28.04.2016 for an incident which is alleged to have taken place between 2007 to 2015 which has been lodged by the then Director Finance 'HHEC against 10 persons and certain unknown persons which does not include the name of the applicant. M/s. ACPL approached HHEC to import bullion  and an agreement was entered between HHEC and M/s. ACPL on 24.4.2007. M/s. ACPL was regularly purchasing bullion from HHEC through the agreement, as a measure of security, handed over 14 boxes of jewellery as collateral apart from the already existing collateral which was in the form of post dated cheques. The jewellery which was handed over by the company had a valuation which was assessed by a Government approved valuer and was to the tune of approximately Rs.9.4 crores. 14 boxes of jewellery that were handed over by M/s. ACPL were kept in a vault at Ahmadabad. According to FIR, M/s. ACPL in the year 2009 was ordered by HHEC to either pay the amount of the bullion so imported on its behalf, which amounted to Rs.8.9 crores else HHEC would have no option but to auction the jewellery that was so furnished by M/s. ACPL in the form of collateral. M/s. ACPL failed to repay the debt and hence the jewellery was transferred from Ahmadabad to Delhi and once again valued. Subsequent valuation report was at variance with valuation report which was submitted by M/s. ACPL in the beginning and it has been also alleged by the prosecution that the jewellery that was submitted by M/s. ACPL was not genuine jewellery and its value was negligible. It is further contended that the Investigating Officer made perfunctory investigation and submitted charge-sheet against as many as seven persons including the applicant who was the Ex.Chairman and Managing Director of HHEC. Further, it is contended that the proposal to release the gold against PDCs (post dated cheques) which was duly secured by jewellery, was approved  by the applicant on the recommendation of the then Director Finance, Nirmal Sinha. Further, it was contended that the fact that the report of the Government approved valuer was incorrect, could not be held against the applicant. The applicant was only required to approve the recommendations that were made to him by his Junior Officer and he was not required to minutely monitor each and every activity. The main allegation against the applicant is that as the CMD of HHEC, he had allowed M/s. ACPL to lift bullion against security of PDCs. The charge-sheet also speaks about an agreement dated 24.04.2017 which was entered between HHEC and M/s. ACPL, which was signed by the then Director, Finance on behalf of HHEC, which was not signed by the applicant, rather the same was only approved by the applicant. It is further contended that the clause 12 of the said agreement stipulated that if there was any dispute, the arbitration proceedings could be invoked with respect to the same. Further, it is contended that in the year 2008-09, there was a global recession due to which the entire International Market suffered a serious setback including the precious metal had suffered huge setback and as a consequence of which the orders that were placed by HHEC for import of bullion on behalf of M/s. ACPL could not be lifted by M/s. ACPL. Taking into consideration, the global slump and that M/s. ACPL was facing a financial crunch, the HHEC in order to safe- guard its own interest and to maintain liquidity of the company took certain strategic decisions to cover the risk of the company which was taken by the CMD. The economic policy of HHEC was tweaked only to ensure that the financial exposure of the company gets reduced and as such HHEC allowed M/s. ACPL to lift gold on the basis of post dated cheques which were in a sequence and could not be encashed on daily basis. The applicant apart from obtaining post dated cheques as collateral security also ordered M/s. ACPL to give some other kind of collateral security to protect the interest of the company and in the negotiations that transpired between the two entities, it was decided that M/s. ACPL which was in the business of jewellery, would offer jewellery as collateral security as against the post dated cheques  that were already issued as security. Hence, only after HHEC had doubly protected its interest by way of cheques and jewellery, it allowed M/s. ACPL to lift the bullion. This method was also not duly honoured by M/s. ACPL and when M/s. ACPL started defaulting, HHEC took severe measure  by withholding the payment that was made by M/s. ACPL and did not release any gold. HHEC took the money so deposited by M/s. ACPL only to adjust the outstanding dues. It is also contended that as there existed an arbitration clause in the agreement, the matter between two entities was referred to sole arbitrator which was still pending and the arbitrator was required to arrive at a settlement by 09.07.2018 , however the award could not be passed within the time framed and the Delhi High Court vide order dated 10.08.2018 has extended the time limit by eight months.

8. It was further contended that CMD of HHEC took a strategic decision in the interest of company and that he was well within his right to alter the agreement only to protect the interest of the company, of which he was the CMD. Further it was contended that the applicant comes from a good family bacKground who was appointed that CMD in 1997 and prior to that he was Director (Commercial), the National Textile Corp and he was also handed an additional charge of Managing Director of Central Cottage Industries Corp. The Applicant was CMD for 13 years and during this tenure he was granted an extension once in the year 2002 and thereafter in the year 2007 and finally in the year 2010 he superannuated. During his tenure in that capacity he turned the fortunes of the company from a loss-making company to a profit-making company. It was further contended that HHEC underwent quarterly assessment every year and all details were reported to the Board in quarterly report and the Board never raised any objections. The Board was well aware about the decisions taken by the applicant. After retirement the applicant is practising as a pro bono lawyer in Supreme Court of India. No financial gain has been shown to have been made by the applicant in the charge- sheet. Further it was contended that ACPL and HHEC were battling over the issue before the arbitrator as such it was premature to say that HHEC had suffered any financial loss. Further it was a contended that the applicant being a public servant, it was required by CBI to seek prosecution sanction under sections 19 of the Prevention of Corruption Act , 1988 as well as under Section 197 of Cr. P.C.. The reliance was placed by the applicant on State of Punjab vs Labh Singh, 2014 (16) SCC 8007, in which it has been held categorically that sanction for prosecution under sections 197 Cr. P.C. was very much required for prosecuting a retired public servant. Further it is contended that by means of amendment of 2018 in the Prevention of Corruption Act which came into force with effect from 26/07/2018, Section 19 of the Act provides that sanction has to be taken even in respect of retired Government officials, therefore the trial court could not have taken cognizance of the charge- sheet vide order dated 01/09/2018. It was also submitted that benefit of amendment in Section 19 of PC Act shall be given in favour of the applicant as the cognizance was taken after the amendment came into force. According to the doctrine of beneficial interpretation a law shall be interpreted retrospectively if it is in favour of the accused. In this regard reliance has been placed on T. Bari vs Henry Ah Hoe, 1983 (1) SCC 177, wherein full Bench of the Hon'ble Supreme Court has extensively dealt with the concept of doctrine of beneficial interpretation and that in certain situations the same would be applicable retrospectively. Further the concept of penal laws being applied retrospectively when they are in favour of the accused, has been extensively dealt with by GP Singh J. In his book of Interpretation of Statutes. Further it was contended that the registered office of HHEC was located in New Delhi and the agreement that was being referred to in the charge- sheet was executed at New Delhi. In fact in the agreement it is specifically stated that the jurisdiction for any dispute would vest in New Delhi. The fake jewellery was kept in custody at Ahemdabad and was subsequently transferred to New Delhi and therefore the State of U.P. was not referred anywhere, hence the present proceedings could not have been initiated in State of U.P.. Further it is argued that though the FIR alleged that there was forgery, however, the charge- sheet was submitted only under section 420 read with Section 120 B IPC along with Sections of Prevention of Corruption Act . The ingredients of cheating were lacking in the present case. The matter pertained to only breach of contract because during the course of contract, due to sudden slump in the international market, ACPL could not perform its part of contract, as such the present dispute was actually nothing more than a breach of contract and law was settled on this point that during subsistence of a valid contract, if either party fails to perform an act in accordance with the agreement, then it shall not come under the head of cheating, rather it shall be treated as a breach of contract for which Civil remedy would be available. The Hon'ble Apex Court has also held that for an offence of cheating, the intention to cheat must exist since the beginning which was not the case in the present matter. Lastly it was argued that the applicant retired in the month of May, 2010 while the fact that the jewellery turned out to be fake was discovered only in the year 2015- 16, that is, 5 to 6 years after his retirement. In this backdrop the charge- sheet needed to be quashed.

9. On the other hand the learned counsel for the CBI vehemently opposed the quashing of the charge- sheet stating that the charge- sheet was submitted in accordance with law after thorough investigation and on the basis of evidence the investigating agency has clearly found the role of the applicant in commission of this offence. It was further argued that there was no such clause in the agreement dated 24/04/2007 which authorised CMD Kaushlesh Kumar Sinha to approve the proposal to release gold against PDCs duly secured by jewellery whereas being head of the organisation it could not be concluded that he did not have knowledge of the same and that he did not have any such power as per prevailing delegation of powers at that time. Therefore he was fully complicit in commission of this offence. With regard to seeking prior sanction to prosecute under Section 197 Cr. P.C. it was argued that no such permission was required to be taken because the wrong committed by the applicant did not have nexus with performance of his official duty. It would never fall in his official duty to transgress the limits of his jurisdiction.

10. After having heard both the sides and having perused the entire record as well as the case laws relied upon by the learned counsel for the applicant we are of the view that the impugned order dated 01/09/2018, whereby cognizance has been taken against the applicant as well as other co-accused under the afore- mentioned sections, does not suffer from any wrong. As per the facts which have emerged it transpires that the applicant was CMD of HHEC, a public sector undertaking which had entered into an agreement with M/s. ACPL for purchasing bullion. As a measure of security the ACPL had handed over 14 boxes of jewellery as collateral, apart from already existing collateral which was in the form of post-dated cheques. The jewellery that was handed over by ACPL had evaluation report procured from the Government approved valuer which stood approx at Rs. 9.4 crores. In the year 2009 ACPL was ordered by HHEC to either pay the amount of the bullion imported on its behalf, which amounted to 8.9 crores, as HHEC would have no option but to auction the jewellery that was furnished by ACPL as collateral security. When the ACPL failed to pay the debt, jewellery had to be auctioned and at that time it was again got valued and it was found to be of much lesser value because of the jewellery being found fake. In view of these facts, it could not be said that the applicant, despite being CMD of HHEC would not know that the jewellery which was given as collateral security was improper. He cannot be allowed to take shield that its valuation had been done by a Government approved valuer and in this backdrop the possibility could not be ruled out of his involvement in the alleged offence. Further his contention that the decision of permitting purchase of bullion against the post dated cheques was approved by him only with a view to salvaging the company from out of economic slump and keep to it moving is also a matter which can be adjudicated to only after full trial after evidence has been adduced by the prosecution and defence side and the same has been cross-examined. At the preliminary stage of filing of charge- sheet it would be improper to nib the prosecution into bud.

11. Now we would like to consider as to whether the cognizance taken by the trial court is defective on account of non-obtaining of prosecution sanction under Section 19 of the Prevention of Corruption Act as well as Section 197 of the Criminal Procedure Code. In this regard the learned counsel for the applicant has relied upon Punjab vs Labh Singh (supra). In this appeal by special leave to appeal the judgment and order dated 17/01/2006 passed by the High Court of Punjab and Haryana in Sikandar Singh vs State of Punjab (Criminal Revision No. 1743 of 2005) was challenged whereby it set aside the order of the Special Judge, Patiala dated 07/06/2005 framing charges against one Sikandar Singh and the present respondent. FIR no. 57 was lodged on 13/08/1997 alleging that semi-government letter dated 04/03/1994 had stated that pursuant to certain raids conducted at the site for checking the earthwork done on Bhakra mainline, it was found that as regards four projects cross sections/estimates were not prepared before doing any work and that it appeared that the estimates were actually prepared by the Government servants concerned after completion of work thereby violating provisions of the PWD code and causing loss to the tune of Rs. 3, 69, 603/- to the exchequer. Pursuant to the said F.I.R. crime was registered and investigation undertaken by the vigilance bureau. When the request was made for grant of sanction to prosecute the Government servants in question, it was refused by the Dept on 13/09/2000. Yet another attempt was made in the year 2003 requesting sanction to prosecute but such request was again rejected by the Dept on 24/09/2003. Despite such refusal for issuance of sanction, challan under Section 173 of the Criminal Procedure Code was filed in court of Additional Sessions Judge/Special Judge, Patiala. The Challan so presented arrayed two public servants, namely Shri Sikandar Singh, SDO and Shri Labh Singh, Junior engineer in addition to 5 private individuals. Shri Sikandar Singh and Shri Labh Singh had retired on 13/12/1999 and 30/04/2000 respectively, that is, even before the request for issuance of sanction was rejected on the 1st occasion. The aspect regarding their retirement and refusal to grant sanction was dealt with in the challan in following terms: "in view of the refusal of granting sanction for prosecution by the Dept, it is impossible to present challan against the employees who are in service, but the employees who have retired, challan can be presented against them in court." The Special Judge framed charges on 07/06/2005 against both the accused for offences under sections 218/409/465/467/120 - B IPC and under Section 13 (1) (c) read with sections 13 (2) of PC Act, 1988. Out of 6 charges framed, one pertained to the offence under Section 13 (1) (c) read with sections 13 (2) of PC Act while other 5 related to offences under sections Penal Code, 1860. The public servants, namely, Sikandar Singh and Labh Singh challenged the aforesaid order dated 07/06/2005 by filing Criminal Revision No. 1743 of 2005 in the High Court of Punjab and Haryana and the High Court took the view that the department had refused sanction to prosecute public servants and yet challan was presented on the premise that no sanction was required after retirement of those public servants and allowed the petition setting aside the order dated 07/06/2005. The Hon'ble Apex Court recorded that in the present case the public servants in question had retired on 13/12/1999 and 30/04/2000 and that the sanction to prosecute them was rejected subsequent to their retirement, i.e. , firstly on 13/09/2010 & later on 24/9/2003. The public servants having retired from service, there was no occasion to consider grant of sanction under Section 19 of the PC Act. The law on the point was quite clear that sanction to prosecute the public servant for the offences under the PC Act was not required if the public servant had already retired on the date of the cognizance taken by court, in accordance with the law laid down in S.A. Venkataraman vs the State, AIR 1958 SC 107 & C.R. Bansi vs State of Maharastra, (1970) 3 SCC 537 and Kali Charan Mahapatra vs State of Orissa, (1998) 6 SCC 411 and by Constitution Bench in K Veeraswami vs Union of India, (1991) 3 SCC 655. Hence it was held that the High Court's order was justified in setting aside the order passed by the Special Judge insofar as charge under the Prevention of Corruption Act was concerned. However as regards the charges for the offences punishable under Penal Code, the High Court was absolutely right in setting aside the order of the Special Judge. Unlike Section 19 of the PC Act, the protection under Section 197 Cr. P.C. is available to the public servant concerned even after retirement. Therefore, if the matter was considered by the sanctioning authority and the sanction to prosecute was rejected firstly on 13/09/2000 and secondly on 24/09/2003, the court could not have taken cognizance insofar as the offences punishable under the Penal Code were concerned and that as laid down by the Apex Court in State of HP vs Nishant Sareen, (2010) 14 SCC 527, the recourse in such cases was either to challenge the order of the sanctioning authority or to approach it again if there was any fresh material.

12. We do agree with the above position of law that the prosecution sanction would be required in respect of prosecution under the Penal Code sections even after retirement of his public servant, but with a caveat that it would have to be seen as to whether the act of the public servant was covered within the discharge of his official duty. In this regard we would like to rely upon Surinder Jeet Singh Mand and another vs State of Punjab and another, (2016) 8 Supreme Court Cases 722. In this case accused Neeraj Kumar was allegedly arrested in a theft case by the appellant police officers on 24/06/1999 but formally/officially were shown to have been arrested on 28/06/1999. The prosecution was initiated against the appellant officers on the basis of F.I.R. registered at the instance of Neeraj Kumar's mother, in relation to alleged illegal detention of Neeraj Kumar for the period from 24/06/1999 to 28/06/1999. The appellants were denying arrest of Neeraj Kumar on 24/06/1999 and were admitting that he was formerly/officially arrested on 28/06/1999. Following the law laid down in P.P. Unnikrishnan, (2000) 8 SCC 131 it was held by the High Court that the alleged act of the appellants in the present case in detaining Neeraj Kumar for the period 24/06/1999 to 28/06/1999 before his admitted formal arrest, could not be said to have been constituted an offence of illegal detention by them while acting or purporting to act in discharge of their official duties, hence no sanction for their prosecution was required in the present case. Dismissing the appeal, the Hon'ble Supreme Court held that in a case of the present nature, the court was obliged to ascertain as to whether the alleged offence, attributed to the accused, had been committed by accused "while acting or purporting to act in the discharge of his official duty". In the facts and circumstances of the present case, the alleged action constituting the allegations levelled against the appellants, was based on the arrest and detention of Neeraj Kumar from 24/06/1999 to 28/06/1999 (before he was admitted to have been formally arrested on 28/06/1999). Considering the facts, it was apparent that the official arrest of Neeraj Kumar in terms of the provisions of Cr. P.C. would extend during the period from 28/06/1999 to 30/06/1999. The arrest pertaining to the above period could legitimately be considered as having been made "while acting or purporting to act in discharge of their official duties". But the factual position expressed by the appellant police officers was that Neeraj Kumar was not detained for the period from 24/06/1999 to 28/06/1999. The detention during the above period, if true, would certainly not emerge from the action of the accused while acting or purporting to act in the discharge of their official duties, more so, because it was not the case of the appellants that they had kept Neeraj Kumar in jail during the period from 24/06/1999 to 28/06/1999. If they had not detained him during the above period, it was not open to anyone to assume the position that the detention of Neeraj Kumar during the above period was while acting or purporting to act in the discharge of their official duties. Therefore, in peculiar facts and circumstances of this case, based on the legal position declared by the Supreme Court in P.P. Unnikrishnan, (2000) 8 SCC 131, it was opined that sanction for prosecution of the accused police officers in relation to the detention of Neeraj Kumar for the period from 24/06/1999 to 28/06/1999 would not be required before a court of competent jurisdiction takes cognizance with reference to the alleged arrest of Neeraj Kumar.

13. In Surinder Jeet Singh Mand's case (supra) it was a strongly argued from the side of the appellants that sanction under sections 197 of the Code was mandatory where the public servant concerned was alleged to have committed an offence "while acting or purporting to act in the discharge of his official duty". In order to demonstrate the ambit and scope of the term "while acting or purporting to act in the discharge of his official duty", reliance was placed by the learned counsel for the appellants on a large number of rulings.

14. Firstly , reliance was placed on Shri Ram Singh vs Emperor , AIR 1939 FC 43, in which it was held that sections 477-A (equivalent to Section 197 of Cr. P.C.) in express terms covers the case of an officer, who wilfully falsifies accounts which may be his duty to maintain. They have apparently put theft, embezzlement, or breach of trust on exactly the same footing as falsification of accounts, and have not considered the charge of falsifying the accounts separately from that of criminal breach of trust. This is ignoring the significance of the words "purporting to be done" which are now less important. They have thought that an act done or purporting to be done in the execution of his duty as a servant of the Crown cannot by any stretching of English-language be made to apply to an act which is clearly a dereliction of his duty as such. But if an act has purported to be done in execution of duty, it may be done so, only ostensibly are not really, and if done dishonestly may still be a dereliction of duty. The High Court Bench had taken the view that the Section is clearly meant to apply to an act by a public servant which could be done in good faith, but which possibly might also be done in bad faith. The Section cannot be meant to apply to cases where there could be no doubt that the act alleged must be in bad faith. So far as sub-section (1) is concerned, the question of good faith or bad faith cannot strictly arise, for the words used are not only "any act done in the execution of his duty" but also "any act purporting to be done in execution of his duty". When an act is not done in execution of his duty, it may very well be done in bad faith and even an act which can not at all be done in execution of duty if another is made to believe wrongly that it was being done in execution of duty. It is therefore not possible to restrict the applicability of the Section to only such cases where an act could possibly have been done both in good and bad faith. Of course, the question of good or bad faith cannot be gone into at the earliest stage at which objection may be taken. Making false entries in a register may well be an act purported to be done in execution of duty, which would be an offence, although it can never be done in good faith. It is sub-section (2) only which introduces the element of good faith, which relieves the court of its obligation to dismiss the proceedings. But that sub-section relates to cases even previously instituted and in which there may not be a defect of want of consent, and is therefore quite distinct and separate, and not merely ancillary to sub-section (1), as the learned Sessions Judge supposed. Having regard to the ordinary and natural meaning of the words "purporting to be done", it is difficult to say that it necessarily implies "purporting to be done in good faith", for a person who ostensibly acts in execution of his duty still purports so to act, although he may have a dishonest intention.

15. Next, reliance was placed by the appellants of above case on Moitra vs Sadhana Das, 2003 SCC Online Cal 309, in which it is mentioned that the High Court had stated that killing of a person by use of excessive force could never be performance of duty. It may be correct so far as it goes. But the question is whether that act was done in the performance of duty or in purported performance of duty. If it was done in performance of duty or purported performance of duty, Section 197 (1) of the Code cannot be bypassed by reasoning that killing a man could never be done in an official capacity and consequently Section 197 (1) of the Code could not be attracted. Such reasoning would be against the ratio of decisions of the Apex Court referred earlier. The other reason given by the High Court that if the High Court were to interfere on the ground of want of sanction, people would lose faith in the judicial process, cannot also be a ground to dispense with is statutory requirement or protection. Public trust in the institution can be maintained by Entertaining Causes coming within its jurisdiction, by performing the duties entrusted to it diligently, in accordance with law and established Procedure and without delay. Dispensing with of jurisdictional or statutory requirements which may ultimately affect the Adjudication itself, will itself result in public losing faith in the system. So, the reason in that behalf given by the High Court cannot be sufficient to enable it to get over the jurisdictional requirement of a sanction under sections 197 (1) of the Code of Criminal Procedure. Thus it was held, that the High Court was in error in holding sanction under sections 197 (1) was not needed in this case. It was held that such sanction was necessary and for want of sanction the prosecution must be quashed at this stage.

16. Next, reliance was placed by the appellants of that case upon R. Balakrishna Pillai vs State of Kerala, (1996) 1 SCC 478, wherein the question whether the offence alleged against the appellant could be said to have been committed by him while acting or purporting to act in the discharge of his official duty was considered and it was recorded that it was contended by the learned counsel for the State that the charge of conspiracy would not attract Section 197 of the Code for the simple reason that it was not part of the duty of a Minister while discharging his official duty to enter into a criminal conspiracy. In support of his contention, he placed a strong reliance on decision of the Apex Court in Hari Prasad vs State of Bihar, (1972) 3 SCC 89. He drew attention of the court to the observation in Para 74 of the judgment where the court, while considering the question whether the acts complained of were directly concerned with the official duty of the public servants concerned, observed that it was no duty of a public servant to enter into criminal conspiracy and hence want of sanction under sections 197 of the Code was no bar to the prosecution. The question whether the acts complained of had direct nexus or relation with the discharge of official duties by the public servant concerned would depend on the facts of each case. There can be no general proposition that whenever there is a charge of criminal conspiracy levelled against a public servant in or out of office the bar of Section 197 (1) of the Code would have no application. Such a view would render Section 197 (1) of the Code specious. Therefore, the question would have to be examined in the facts of each case which clearly indicated that the criminal conspiracy entered into by the three delinquent public servants had no relation whatsoever with their official duties and, therefore the bar of Section 197 (1) was not attracted. It must also be remembered that the said decision was rendered keeping in view Section 197 (1), as it then stood, but the Apex Court did not base its decision on that distinction. The attention of the Apex court was next invited to a three Judge decision in B. Saha vs M. S. Kocher, (1979) 4 SCC 177. The relevant observations relied upon were to be found in Paris 17 of the judgment. It was pointed out that the words ''any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty' employed in Section 197 (1) of the Code, were capable of both a narrow and a wide interpretation but their Lordships pointed out that if they were construed too narrowly, the Section would be rendered altogether sterile, for, ''it is no part of an official duty to commit an offence, and never can be'. At the same time, if they were to widely construed, they would take under their umbrella every act constituting an offence committed in the course of the same transaction in which the official duty is performed or is purported to be performed. The right approach, it was pointed out, was to see that the meaning of this expression lies between these two extremes. While on the one hand, it is not every offence committed by a public servant while engaged in the performance of his official duty, which is entitled to protection. Only an act constituting an offence, directly or reasonably connected with his official duty will require sanction for prosecution. To put it briefly, it was the quality of the act that was important, and if it fell within the scope of the afore- quoted words, the protection of section 197 would have to be extended to the public servant concerned. This decision, therefore, points out what approach the court should adopt while considering Section 197 (1) of the Code and its application to the facts of the case on hand. In view of that position of law, in this case, the appellant was charged with having entered into a criminal conspiracy with the co-accused while functioning as a Minister. The criminal conspiracy alleged was that he sold electricity to an industry in the State of Kerala without the consent of the Government of Kerala, which was an illegal act under the provisions of the Electricity Act, 1948 and the Kerala Electricity Board Rules framed thereunder. The allegation was that he in pursuance of the said alleged conspiracy abused official position and illegally sold certain units to the private industry in Bangalore which profited the private industry to the tune of Rs. 19, 58, 630. 40 or more and it was, therefore, obvious that the criminal conspiracy alleged against the appellant was that while functioning as the Minister of Electricity he without the consent of the Government of Kerala supplied certain units of electricity to a private industry in Karnataka. Obviously, he did this in discharge of his official duty as a Minister. The allegation was that it was an illegal act inasmuch as the consent of the Government of Kerala was not obtained before this arrangement was entered into and supply was effected. For that reason, it was said that he had committed an illegality and hence he was liable to be punished for criminal conspiracy under Section 120 - B IPC. It was, therefore, clear from the charge that the act alleged was directly and reasonably connected with his official duty as a Minister and would, therefore attract the protection of Section 197 (1) of the Act.

17. Next, reliance was placed on R.K. Pradhan vs State of Sikkim, (2001) 6 SCC 704, in which it was recorded that the legislative mandate engrafted in sub-section (1) of Section 197 debarring a court from taking cognizance of an offence except with the previous sanction of the Government concerned in a case where the acts complained of appear to have been committed by a public servant in discharge of his official duty or purporting to be in the discharge of his official duty and such public servant is not removable from office save by or with the sanction of the Government, touches the jurisdiction of the court itself. It is a prohibition imposed by the statute from taking cognizance. Different tests have been laid down in decided cases to ascertain the scope and meaning of the relevant words occurring in Section 197 of the Code, ''any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty'. The offence alleged to have been committed must have something to do, or must be related in some manner, with the discharge of official duty. No question of sanction can arise under Section 197, unless the act complained of is an offence. The only point for determination is whether it was committed in the discharge of official duty. There must be a reasonable connection between the act and the official duty. It does not matter even if the act exceeds what is strictly necessary for the discharge of the duty, as this question will arise only at a later stage when the trial proceeds on the merits. What a court has to find out is whether the act and the official duty are so interrelated that one can postulate reasonably that it was done by the accused in the performance of official duty, though, possibly in excess of needs and requirements of situation. Thus, from a prospective survey of aforesaid decisions, it would be clear that for claiming protection under Section 197 of the Code, it has to be shown by the accused that there is reasonable connection between the act complained of and the discharge of official duty. An official act can be performed in the discharge of official duty as well as in dereliction of it. For invoking protection under Section 197 of the Code, the acts of the accused complained of must be such that the same cannot be separated from the discharge of official duty, but if there was no reasonable connection between them and the performance of those duties, the official status furnishes only the occasion or opportunity for the acts, then no sanction would be required. If the case as put forward by the prosecution fails or the defence establishes that the act purported to be done was in discharge of duty, the proceedings would have to be dropped. It is well-settled that question of sanction under Section 197 of the Code can be raised at any time after the cognizance, maybe immediately after cognizance or framing of charge or even at the time of conclusion of trial and after conviction as well. But there may be certain cases where it may not be possible to decide the question effectively without giving opportunity to the defence to establish that what he did was in discharge of official duty. In order to come to the conclusion whether claim of the accused that the act that he did was on course of performance of his duty was a reasonable one and neither pretended nor fanciful, can be examined during the course of trial by giving opportunity to the defence to establish it. In such an eventuality, the question of sanction should be left open to be decided in the main judgment which may be delivered upon conclusion of the trial.

18. In the afore- mentioned case, from the side of opposite party no. 2 reliance was placed on the following observation recorded by the High Court in the impugned order in Surinderjit Singh's case that as far as question of sanction for prosecution of petitioners was concerned, the contentions raised by the learned counsel for the petitioners could possibly be applicable for the detention period since 28/06/1999 when Neeraj Kumar was shown to have been arrested in FIR no. 30 dated 03/03/1999. However, the petitioners were not entitled to protection of sections 197 of the Code for illegal detention and torture of Neeraj Kumar since 24/06/1999 till 28/06/1999 when his arrest was shown in FIR no. 30 dated 03/03/1999. The said period of illegal detention and torture had no nexus much less reasonable nexus with the discharge or purported discharge of the official duty of the petitioners. Consequently, the impugned order could not be said to be illegal because sanction for prosecution of the petitioners was not required for illegal detention and torture of Neeraj Kumar during the aforesaid period.

19. In order to support the conclusion drawn by the High Code in above mentioned case, the reliance was also placed by the learned counsel for the opposite party no.2 upon Om Prakash vs State of Jharkhand, (2012) 12 SCC 72, in which it was recorded that the true trust as to whether the public servant was acting or purporting to act in discharge of his duties would be whether the act complained of was directly connected with his official duties or it was done in discharge of his official duties or it was so integrally connected with or attached to his office as to be inseparable from it as was held in K. Satwant Singh vs State of Punjab, AIR 1960 SC 266. The protection given under Section 197 of the Code has certain limits and is available only when the alleged act done by the public servant was reasonably connected with the discharge of his official duty and was not merely a cloak for doing the objectionable act. If in doing his official duty, he acted in excess of his duty, but there is a reasonable connection between the act and the performance of the official duty, the excess will not be sufficient ground to deprive the public servant of the protection as was held in the State of Orissa vs Ganesh Chandra Jew, (2004) 8 SCC 40. If the above tests were applied to the facts of the present case, the police must get protection given under Section 197 of the Code because the acts complained of were so integrally connected with or attached to their office as to be inseparable from it. It was not possible for the court to come to a conclusion that the protection granted under Section 197 of the Code was used by police personnel in this case as a cloak for killing the deceased in cold blood.

20. Next, the reliance is placed upon P.P. Unnikrishnan v. Puttiyottil Alikutty, (2000) 8 SCC 131 by the learned counsel for the opposite party no.2 in above mentioned cases, in which it was recorded that the police officer dealing with law and order duty uses force against unruly persons, either in his own defence or in defence of others and exceeds such right, it may amount to an offence. But such offence might fall within the amplitude of Section 197 of the Code as well as Section 64 (3) of KP Act . But if a police officer assaults a prisoner inside lock-up he cannot claim such an act to be connected with the discharge of his authority or exercise of his duty unless he establishes that he did such acts in his defence or in defence of others or any property. Similarly, if a police officer wrongfully confines a person in the lock-up beyond the period of 24 hours without the sanction of a Magistrate or an order of a court it would be an offence for which he cannot claim any protection in the normal course, nor can he claim that such act was done in exercise of his official duty. A policeman keeping a person in the lock-up for more than 24 hours without authority is not merely abusing his authority but his act could be quite outside the contours of his duty or authority.

21. Keeping in view of the legal position emerging from the provisions of the Code and the position of law which has been cited above in respect of the applicability of Section 197 (1) of Cr. P.C. mandating seeking prosecution sanction prior to prosecuting a public servant for an act which is performed in execution of his official duty, the position clearly emerges that there can be no straight jacketed formula for assessing as to whether the act alleged to have been committed by a public servant was actually performed in exercise of performance of his official duty, however broadly speaking such an act must have reasonable nexus with the discharge or purported discharge of the official duty of such a public servant. It also transpires that to make an assessment as to whether the impugned act falls in the ambit of performance of official duty or not may require giving opportunity to defence to establish it and in such a situation/eventuality the question of sanction should be left to be decided in the main judgment which may be delivered after conclusion of the trial. It is also clear that a balance has to be struck while interpreting whether an act of a public servant falls in the ambit of performance of official duty or purported performance of official duty or not by neither making too narrow construction nor too wide construction of the same. Within these parameters of legal position we have to assess as to whether in the case on hand the Kaushlesh Kumar Sinha's act falls in the domain of discharge of his official or purported to be official duty or not so as to give him the umbrella of Section 197 (1). According to prosecution version the applicant as CMD of HHEC is alleged to have allowed M/s. ACPL to lift bullion against security of posted dated cheques, which was not part of the agreement entered into between the HHEC and ACPL. According to the applicant the said decision was taken by him because of global slump in international market which resulted in non-lifting of the imported bullion by ACPL, therefore he took this strategic decision to cover the risk of the company. He also took the defence that the jewellery which was kept as a collateral security was evaluated by Government approved valuer, therefore, he could not be held to be liable for any fraud and the value of jewellery which was found to be much less than what it was actually claimed to be earlier when the same was accepted as collateral security by HHEC. The plea that the act of the applicant was in discharge of his official duty requiring prior sanction for prosecution under Section 197 Cr. P.C. as well as Section 19 of the PC Act does not inspire confidence because the applicant admittedly superannuated in the year 2010 while the cognizance has been taken in this case by the trial court on 01/09/2018 and it is admitted position of law which has been cited above that if a public servant retires, then there is no requirement of seeking prior permission for prosecution under Section 19 of the PC Act, however the learned counsel for the applicant has placed reliance on amended Section 19 of the PC Act, which according to him came into force on 26/07/2018 and it is after the said date that the cognizance has been taken by the trial court in this case, therefore he has argued that this being a beneficial legislation in favour of the accused , it would be applicable retrospectively in terms of the law laid down by the Hon'ble Supreme Court in T. Barai vs Henry Ah Hoe, 1983 (supra). According to the amended provision, taking prosecution sanction is mandatory even if a public servant has retired from service. We are of the view that the offence under Section 13 of the PC Act is not the only offence which is alleged to have been committed by the applicant rather there is allegation of commission of offence punishable under Penal Code also, therefore merely because prosecution sanction was not taken under Section 19 of the PC Act would not justify quashing the proceedings in the present criminal case, although we are not inclined to consider at this stage as to whether the benefit of not obtaining sanction to prosecute the applicant even though the applicant had retired long back before taking cognizance by court for an offence under the provisions of PC Act in view of the amended provision. Moreover, we are of the view that if an offence is committed by a person justification lies in adopting a procedure which ensures that such a person is punished under law and should not be allowed to be given any technical benefit. Now, we have to see as to whether non-seeking of sanction to prosecute under Section 197 Cr. P.C. would adversely impact the criminal proceedings in the present case. In this regard, in the above conspectus of legal position, we are of the view that the act which has been done by the applicant in this case is covered under performance of official duty of the applicant or not can be determined only after both the sides have been permitted to adduce evidence and cross-examining witnesses of each other, in the light of law laid down in R.K. Pradhan's case (supra). It is a matter of evidence as to whether tweaking the policy of HHEC by the applicant allowing the lifting of bullion by ACPL against post-dated cheques and taking a plea that ensuring correct valuation of the jewellery which was kept as collateral security was none of his concern as the same was done by the Government approved valuer also needs to be evaluated in the light of evidence, therefore in our view there is no justification found to interfere in the present matter under inherent jurisdiction of this court.

22. This application under 482 Cr. P.C. deserves to be dismissed and is accordingly dismissed.

23. It is needless to say that the applicant is at liberty to raise his plea regarding his age in his bail application before the court below.

(Dinesh Kumar Singh-I, J.) (Ramesh Sinha, J.)

Order Date :- 22.10.2018AU/h