Karnataka High Court
Sri. Hemant Nimbalkar vs State Of Karnataka on 19 March, 2021
Author: John Michael Cunha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF MARCH 2021
BEFORE
THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA
WRIT PETITION NO.14014 OF 2020 (GM-RES)
BETWEEN:
SRI. HEMANT NIMBALKAR
S/O MADHUKAR
AGED 49 YEARS,
R/AT NO.272, 13TH CROSS, 5TH MAIN,
RMV 2ND STAGE, DOLLARS COLONY,
BANGALORE-560094.
...PETITIONER
(BY SRI: ASHOK HARANAHALLI, SR. ADVOCATE A/W
SRI: SWAROOP ANAND R, ADVOCATE)
AND:
1. STATE OF KARNATAKA
REP BY ITS CHIEF SECRETARY
GOVERNMENT OF KARNATAKA,
VIDHANA SOUDHA,
AMBEDKAR VEEDHI,
BANGALORE-560009.
2. THE STATE
BY CENTRAL BUREAU OF INVESTIGATION
REP BY ITS SPECIAL PUBLIC PROSECUTOR
2
HIGH COURT BUILDING,
BANGALORE-560 001.
...RESPONDENTS
(BY SRI: V.M. SHEELVANT, SPP-I A/W
SRI: B.J. ROHITH, HCGP FOR R1;
SRI: P. PRASANNA KUMAR, SPL-PP FOR R2)
---
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
CONSTITUTION OF INDIA R/W SECTION 482 CRPC PRAYING TO
QUASH GOVERNMENT ORDER DATED 09.09.2020 ACCORDING
PROSECUTION SANCTION UNDER SECTION 197 CRPC AND 170
KARNATAKA POLICE ACT, 1963 ISSUED BY THE R-1 IN FIR RC-
14(A)/2019 FOR OFFENCES UNDER SECTION 120B R/W
SECTIONS 420, 406, 409 OF IPC AND SECTION 9 OF THE KPID
ACT AGAINST THE PETITIONER HEREIN PRODUCED AT
ANNEXURE 'AY'; QUASH SUPPLEMENTARY CHARGESHEET IN
SPL CC 1055/2019 NAMING THE PETITIONER AS AN ACCUSED,
ARRAYING HIM AS ACCUSED NO.25 FOR OFFENCES UNDER
SECTION 120B R/W 420, 406, 218 AND 409 IPC AND SECTION 9
OF KPID ACT PRODUCED AT ANNEXURE-'BB' AND QUASH ORDER
DT: 06.11.2020 TAKING COGNIZANCE OF SUPPLEMENTARY
CHARGESHEET IN SPL CC 1055/2019 NAMING THE PETITIONER
AS AN ACCUSED, ARRAYING HIM AS ACCUSED NO.25 FOR
OFFENCES UNDER SECTION 120B R/W 420, 406, 218 AND 409
IPC AND SECTION 9 OF KPID ACT PRODUCED AT ANNEXURE
'BC'; QUASH GOVERNMENT ORDER DT: 07.01.2020 ACCORDING
SANCTION UNDER SECTION 17(A)(b) OF THE PREVENTION OF
CORRUPTION ACT, 1988 AGAINST THE PETITIONER HEREIN
PRODUCED AT ANNEXURE 'AU' AND CONSEQUENTLY QUASH
FIR BEARING DT: 01/02/2020 REGISTERED BY THE R-2
AGAINST THE PETITIONER HEREIN PENDING ON THE FILE CBI
SPL COURT (CCH 4) PRODUCED AT ANNEXURE 'AV' FOR
OFFENCES U/S 7, 7(A), 8, 10, 11 AND 12 OF THE PC ACT, 1988
(AS AMENDED IN 2018) AND FOR OFFENCES U/S 13(2) R/W
13(1)(d) PC ACT, 1988 ARRAYING THE PETITIONER HEREIN IN
THE SAID FIR AS ACCUSED NO.5 AND ETC.
3
THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 05.03.2021 AND COMING ON FOR
PRONOUNCMENT OF ORDER, THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
This petition is filed under Article 226 of Constitution of
India r/w section 482 Cr.P.C. seeking the following reliefs:-
(1) Issue a writ of certiorari or any other appropriate writ,
quashing Government Order dated 09.09.2020
bearing No. DPAR 89 SPS 2019 according prosecution
sanction under Section 197 CrPC and 170 Karnataka
Police Act, 1963 issued by the 1st Respondent in FIR
RC-14(A)/2019 for offences under Section 120B r/w
Sections 420, 406, 409 of IPC and Section 9 of the
KPID Act, 2004 against the Petitioner herein produced
at Annexure 'AY';
(2) Issue a writ of certiorari or any other appropriate writ,
quashing supplementary chargesheet in SPL CC
1055/2019 naming the Petitioner as an accused,
arraying him as accused No.25 for offences under
section 120B r/w 420, 406, 218 and 409 IPC and
Section 9 of KPID Act produced at Annexure'BB';
(3) Issue a writ of certiorari or any other appropriate writ,
quashing order of CBI SPL Court (CCH4) in SPL CC
1055/2019 dt: 06.11.2020 taking cognizance of
supplementary chargesheet in SPL CC 1055/2019
naming the Petitioner as an accused, arraying him as
accused No.25 for offences under Section 120B r/w
420, 406, 218 and 409 IPC and section 9 of KPID
produced at Annexure 'BC';
(4) Issue a writ of certiorari or any other appropriate writ,
quashing Government Order bearing No. DPAR 89 SPS
2019 dt: 07.01.2020 according sanction under section
17(A)(b) of the Prevention of Corruption Act, 1988
against the Petitioner herein produced at Annexure
'AU';
(5) Issue a writ of certiorari or any other appropriate writ,
quashing FIR bearing No.RC0372020A0005 dt:
01/02/2020 registered by the 2nd Respondent against
the Petitioner herein pending on the file of CBI SPL
Court (CCH 4) produced at Annexure 'AV' for offences
u/s 7, 7(A), 8, 10, 11 and 12 of the PC Act, 1988 (as
amended in 2018) and for offences u/s 13(2) r/w
13(1)(d) PC Act, 1988 arraying the Petitioner herein in
the said FIR as Accused No.5.
(6) Grant such other relief as are just in the
circumstances of the case.
2. The facts leading to the writ petition are as follows:-
(i) The respondent No.2 - CBI filed a FIR in
RC0372020A0005/2020 against 11 accused persons on
01.02.2020 under section 120B IPC, sections 7, 7(A), 8, 10, 11
& 12, 13(2) r/w. 13(1)(d) of Prevention of Corruption Act, 1988
(as amended in 2018). The petitioner herein was shown as
accused No.5 therein. The allegations leveled against the
petitioner / accused No.5 was that he being the IGP, CID had
forwarded the enquiry report of Sri. E.B.Sridhara (A-4) to the
State DG & IGP on 18.01.2019 asserting that the enquiry did not
find any wrongdoings on the part of the IMA group of entities to
invoke the provisions of Karnataka Protection of Interest of
Depositors in Financial Establishment Act, 2004 (hereinafter
referred to a "KPID Act") against them; he categorically
maintained that the deposits collected by the IMA group of
entities were exempted under Section 2(2)(ii) of the KPID Act;
he did not mention about the deposits collected by the IMA
Proprietorship owned by Shri Mohammed Mansoor Khan (A-6) in
his report.
(ii) This report was not accepted by the RBI, which in
turn addressed another letter dated 02.04.2019 to the DG & IGP
stating that the RBI sought comprehensive enquiry by State CID
on the unauthorized deposits collected by the IMA group entities.
But the petitioner (A-5) did not oblige to the request made by
the RBI and asserted that there was no requirement to re-look
into the issue of IMA and again sent his earlier report to the DG
& IGP on 25.05.2019.
(iii) According to the respondent, the reluctance on the
part of the Public Servants, namely Shri M. Ramesh (A-1), the
then Inspector of Police/SHO, Commercial Street Police Station,
Bengaluru; Sri Ajay Hilori (A-2), the then Deputy Commissioner
of Police, Bengaluru East; Shri Gowrishankar (A-3), the then
Sub-Inspector of Police, Commercial Street Police Station,
Bengaluru; E.B. Sridhara (A-4), Deputy Superintendent of Police,
Criminal Investigation Department (CID), Economic Offences
Division (EOD), Bengaluru; and Shri Hemant Nimbalkar (A-5),
the then Inspector General of Police, Criminal Investigation
Department (CID), Bengaluru to take action against Shri
Mohammed Mansoor Khan (A-6), Proprietor, I-Monetary
Advisory and other IMA Group entities and its Directors was due
to the fact that they had received illegal gratification as a motive
or reward for forbearing to do official act of taking action against
the IMA and obtained valuable things without consideration from
IMA MD & CEO Shri Mohammed Mansoor Khan (A-6), Managing
Director and CEO of IMA group of entities and its Directors.
(iv) It was further alleged that the above public servants
conspired with accused No.6 and Directors of IMA Group of
entities and conducted improper enquiry on IMA group of entities
at various stages and submitted faulty enquiry reports to the
Government / concerned Authorities, recommending no action
against the IMA group of entities and its Directors by misusing
their official positions and thereby committed the above
mentioned offences.
(v) During the pendency of investigation into the above
FIR, a charge sheet was laid before the XXI City Civil and
Sessions Judge and Principal Special Judge for CBI Cases (CCH-
4), Bengaluru in RC.No.14(A)/2019-BLR on 15.10.2020. In the
said charge sheet, the petitioner herein was shown as accused
No.25. The allegations leveled against the petitioner was that
when he worked as Inspector General of Police, CID, EOD,
during the period from 09.02.2018 to 10.07.2019 and as Head of
CID-EOD he supervised the enquiry conducted by
Shri.E.B.Sridhara (A.24) and during the course of enquiry, he
had met Shri.Mohammed Mansoor Khan (A.1) and also
Sri.Nizamuddin (A.2), one of the Directors of IMA at his office.
The petitioner (A.25) vide his letter dated 18.01.2019 forwarded
the CID-EOD enquiry report on IMA to DG & IGP with his
assertions that the enquiry did not disclose any wrongdoings on
the part of IMA and its entities to take action against them under
the provisions of KPIDFE Act, 2004; the petitioner (A.25) had
categorically reiterated the enquiry findings in his comments that
the deposits / investments collected by IMA and its group
entities were exempted under section 2(2)(ii) of KPIDFE Act,
2004; he had also mentioned that no complaints were registered
against IMA in any police station in order to take action against
the IMA under the KPIDFE Act, 2004; he had also forwarded
enquiry report of Sri.E.B.Sridhar (A.24) to the Deputy
Commissioner, Bangalore Urban District and same was in turn
forwarded to Sri.L.C.Nagaraj (A.23) who was conducting enquiry
as competent authority under KPIDFE Act, 2004, instead of
conducting independent and fair enquiry, adopted the same line
of enquiry conducted by the CID, EOD and submitted his report
on 08.03.2019 to the Government recommending for closure of
enquiry against IMA, as such, during the period from 2016 to
2019, IMA and its group of entities were further facilitated to
continue with their activities of collecting unauthorized deposits
from the public by making impracticable or commercially non-
viable promises to the depositors while accepting deposits from
them, which involved inherent risk of defrauding the depositors
in violation of section 9 of KPIDFE Act, 2004.
(vi) The further allegations were that the accused /
public servants colluded with Shri Mohammed Mansoor Khan
(A.1) of IMA and refused to register any case despite receiving
complaints against IMA and conducted improper enquiry and
submitted enquiry report to the Government / Revenue
Department / higher authorities of Police Department, to protect
the interest of IMA by accepting illegal gratification / undue
advantage from IMA.
(vii) It was further alleged that the investigation revealed
that petitioner (A.25) was determined to help Sri.Mohammed
Mansoor Khan (A.1) by influencing the Principal Secretary
(Revenue) for accepting and approving the enquiry report
submitted by accused No.23. The material evidence revealed
the details of undue advantages received by accused Nos.24, 25
from accused No.1 in the form of costly gifts and monetary
benefits.
3. The petitioner has challenged the initiation of
criminal proceedings against him in FIR
No.RC0372020A0005/2020 as well as the submission of
additional / supplementary charge sheet in R.C.No.14(A)/2019-
BLR, later numbered as Spl.CC.No.1055/2019 and pending on
the file of learned XXI Addl. City Civil & Sessions Judge and
Principal Special Judge for CBI Cases, Bengaluru (CCH.4) by
raising the following contentions:-
(i) Petitioner has been selectively named an accused.
His superior and sub-ordinate officers are not arrayed as
accused. The Deputy Commissioner, Bangalore city / the
competent authority who failed to take action under the KPID
Act has not been prosecuted and therefore, the prosecution of
the petitioner is malafide, vindictive and ulteriorly motivated.
(ii) Petitioner was not the competent person to initiate
action under the KPID Act, moreso, when no complaint was
lodged before the Police alleging violation of the provisions of
KPID Act.
(iii) That the FIR in Crime No.73/2019 was initially
registered on 09.06.2019 by the Commercial Street Police
Station on a complaint given by one Sri.Mohd. Khalid Ahamed
against IMA and others for the offences under sections 406, 420
IPC for cheating him of his investment in IMA. The said FIR and
the related FIRs were transferred to CBI vide Order No.E-HD.08.
PCR.2019 dated 19.08.2019 and corrigendum No.E-HD.08.PCR.
2019 dated 27.08.2019 passed by the Government and FIR
No.73/2019 came to be re-registered by the CBI as
RC.No.14(A)/2019 dated 30.08.2019 against I-Monetary
Advisory and 30 others under section 120B read with sections
406, 409 and 420 IPC. The petitioner was not shown as accused
therein nor was there any whisper of allegation against the
petitioner. It is only in the additional charge sheet filed on
15.10.2020 he has been arrayed as an accused. The additional
charge sheet submitted by the respondent amounts to fresh
investigation or re-investigation which is not permissible under
law and hence additional charge sheet against the petitioner at
Annexure-'BB' is illegal and bad in law and liable to be quashed.
(iv) The enquiry against the petitioner commenced only
on 08.11.2019 pursuant to the seizure effected by the
respondent. As on that date, no FIR having been registered
against the petitioner and the petitioner having not been named
as accused in RC.No.14(A)/2019, the preliminary enquiry
conducted by the second respondent and the consequent seizure
was bad in law.
(v) That the FIR in RC.No.5(A)/2020 was filed much
after the alleged seizure on 01.02.2020 and the said delay is
contrary to the principle of law laid down by the Hon'ble
Supreme Court in LALITHA KUMARI vs. GOVERNMENT OF UTTAR
PRADESH, 2014(2) SCC 1, wherein it is held that while ensuring
and protecting the rights of the accused and the complainant, a
preliminary enquiry should be made time bound and in any case
it should not exceed fifteen days generally and in exceptional
cases, by giving adequate reasons, six weeks' time is provided.
(vi) That the enquiry conducted by Sri.E.B.Sridhar, Enquiry
Officer, was directly supervised and endorsed by the then
Superintendent of Police, Financial Intelligence Unit of CID and
not by the petitioner. The letter sent by the petitioner was the
draft letter got prepared by the SP-FIU CID and approved by the
chain of command and the petitioner was only a signatory to the
letter and not its author. The report submitted by the petitioner
was the result of the enquiry conducted by various sub-ordinates
and it was based on the opinion of the Legal Advisor and
therefore, the allegations made against the petitioner in the
additional charge sheet depicting the petitioner as Head of CID
Wing, supervising and endorsing the enquiry conducted by
Sri.E.B.Sridhar is patently incorrect. The said allegations are
contrary to the records and are intended to create intentional
bias against the petitioner.
(vii) That the Principal Secretary, Revenue Department,
was entrusted with suo moto investigation under KPID Act
against IMA Group by SLCC (Annexure-'N') and the Principal
Secretary was the competent authority under section 3 KPID Act
to investigate into the alleged irregularities in IMA group entities
and he was competent to initiate action under the KPID Act
without waiting for any report from the police based on the input
of the RBI. The Police Department was not the competent
authority or deemed authority under section 5 of the KPID Act.
Therefore, there is no basis for the prosecution of the petitioner
for the alleged illegalities committed by the IMA under the
provisions of KPID Act.
(viii) The registration of the FIR in RC.5(A)/2020
constitutes two FIRs which is impermissible under law. The
allegations made in FIR RC.5(A)/2020 and the allegations
leveled against the petitioner in the additional charge sheet in
RC.14(A)/2019 are one and the same and therefore,
continuation of the prosecution of the petitioner also cannot be
sustained.
(ix) The sanction obtained by the respondent for
prosecution of the petitioner under section 197 Cr.P.C. and
section 170 Karnataka Police Act, 1963 are bad in law as the
sanction order does not state that the said order has been
approved by the Hon'ble Chief Minister who is the competent
authority to issue the sanction. The sanction accorded for
prosecution of the petitioner is not in conformity with the settled
principles of law. The sanction at Annexure-'AY' has been issued
without application of mind and without considering the relevant
material. Except the letter of the Investigating Officer, no other
material was produced before the Sanctioning Authority to arrive
at an objective decision to accord sanction, as such, sanction for
prosecution of the petitioner suffers from patent illegality and is
liable to be set aside on that score. Further the Sanctioning
Authority being privy to both the requests and accord of
sanction, failed to note that the material allegations in
RC.5(A)/2020 and the additional charge sheet in RC.14(A)/2019
were one and the same and that the entire investigation itself
having commenced in violation of section 17A of the PC Act,
ought not to have granted sanction for prosecution of the
petitioner.
(x) The allegations leveled against the petitioner do not
constitute the ingredients of any of the offences alleged in the
FIR or in the additional charge sheet and therefore, continuation
of prosecution against the petitioner is illegal and a stark abuse
of process of court.
4. Refuting the above submissions, the second
respondent - CBI has filed detailed statement of objections,
denying the allegations made in the petition and it is contended
that the supplementary charge sheet has been filed by the
second respondent / CBI in view of the further investigation
undertaken. The previous charge sheets were filed for cheating
the depositors and during the course of investigation, a larger
conspiracy involving the petitioner came into light and in
pursuance thereof, further investigation was conducted and a
supplementary charge sheet was filed arraying the petitioner as
accused No.25. It is further submitted that the FIR in
RC.14(A)/2019 and the impugned FIR in RC.5(A)/2020 have
been properly registered in accordance with law. The FIR in
RC.5(A)/2020 was registered for the offences under the
provisions of PC Act, 1988 (as amended in 2018) and since the
XXI Additional City Civil and Sessions Judge and Principal Special
Judge for CBI Cases (CCH-4), Bengaluru, was the notified court,
the FIR had to be submitted to the notified court i.e., CCH.21, as
such, there is no illegality in the registration of the FIR in
RC.5(A)/2020. Along with the written statement, the respondent
No.2 has also produced the order sheets in W.P.No.56649/2018
and connected matters and has emphasized that the
investigation into the alleged offences committed by the IMA
entities were monitored by the Division Bench of this Court and
prima facie material having been collected in proof of the
accusations leveled against the petitioner, there is no reason to
quash the proceedings as sought for by the petitioner.
5. Sri.Ashok Haranahalli, learned Senior Counsel
appearing for petitioner, Sri.P.Prasanna Kumar, learned Spl.PP
for respondent No.2 and Sri.V.M.Sheelvant, learned SPP for
respondent No.1 have addressed elaborate arguments in line
with the contentions urged in the petition and the statement of
objections by raising the following points for consideration
namely,
(1) Whether the registration of FIR in
RC.5(A)/2020 amounts to second FIR?
(2) Whether the additional / supplementary
charge sheet dated 15.10.2020 is bad in law as the
same is the result of reinvestigation and not the
further investigation as envisaged under section
173(8) of Cr.P.C.?
(3) Whether the investigation and
consequent submission of additional / supplementary
charge sheet is vitiated due to violation of protection
under section 17A of the Prevention of Corruption
Act, 1988 (as amended in 2018)?
(4) Whether the sanction for prosecution of
the petitioner under section 197 Cr.P.C. and section
170 Karnataka Police Act, 1963 is proper and valid?
(5) Whether the uncontroverted allegations
made in the FIR RC.5(A)/2020 and the material
produced along with the additional / supplementary
charge sheet in RC.14(A)/2019 prima facie disclose
the ingredients of the offences alleged against the
petitioner under section 120B read with sections
420, 406, 218, 409 IPC and section 9 of the KPID
Act?
Reg. Point Nos.(1) and (2):
6. The respondents do not dispute the fact that based
on the notification dated 19.08.2019 and corrigendum issued on
27.08.2019 by the Karnataka State Government and subsequent
notification dated 30.08.2019 issued by DoPT, New Delhi, a case
in RC.No.14(A)/2019 was registered against 30 accused persons
on 30.08.2019 under section 120B read with sections 406, 409,
420 IPC. Initially investigation was conducted by the SIT and
according to the respondent, the CBI took over investigation
from SIT on 30.08.2019 and after collecting sufficient evidence,
filed charge sheet No.04/2019 against 30 accused persons on
07.09.2019 (Annexure-'AQ').
7. In the statement of objections, a specific contention
has been taken by respondent No.2 that subsequently further
investigation was conducted therein. The averments made in
the written statement in this regard read as under:-
"Subsequently, the case was under further
investigation to investigate into the larger
conspiracy and role of regulators. Accordingly,
CBI filed its first supplementary charge sheet
against two other accused on 05.10.2019 and
further investigation continued. After completing
the investigation against the concerned Police
Officers and the then Competent Authority, a
detailed CBI report seeking sanction for
prosecuting the then Competent authority and
five police officers, including the
petitioner/accused, has been sent to
Government of Karnataka on 18.12.2019. The
sanction to prosecute the accused police officers
including the petitioner/accused under section
197 Cr.P.C. and Section 170 of Karnataka Police
Act, 1963 was received by CBI only in
September 2020. After receipt of sanction for
prosecution, charge sheet along with the relied
upon documents and statement of witnesses
and copies of the accused were filed before the
Hon'ble 21st Additional City Civil and Principal
Special Judge for CBI Cases Court (CCH-4) on
15.10.2020."
8. These averments clearly indicate that the petitioner
came to be implicated in the alleged offences pursuant to the
investigation conducted subsequent to 07.09.2019. Undeniably,
the additional / supplementary charge sheet was filed on
15.10.2020 whereas in respect of the very same transaction, a
separate FIR came to be registered against the petitioner in
RC.No.5(A)/2020 on 01.02.2020 and the investigation therein
was kept in progress even after the submission of the additional
/ supplementary charge sheet in RC.No.14(A)/2019 which is
impermissible under law as it amounts to investigation based on
second FIR in respect of the same transaction.
9. Though in the statement of objections, respondent
No.2 sought to justify the registration of the second FIR,
contending that, during the further investigation, it revealed the
commission of the offences under the provisions of the
Prevention of Corruption Act, but since the CCH.4 which was
seized with the charge sheet arising out of R.C.No.14(A)/2019-
BLR had no jurisdiction to try the offences under the provisions
of the PC Act, pursuant to the orders of the Division Bench of
this Court, which was monitoring the investigation into the
alleged offences, a separate FIR was registered, yet, during the
course of hearing, Sri.P.Prasanna Kumar, learned Spl. Public
Prosecutor has made a submission before the Court that the
charges against the petitioner would be pursued only in
R.C.No.14(A)/2019 and the evidence collected in
RC.No.5(A)/2020 shall be placed as additional material in
R.C.No.14(A)/2019. His submission is placed on record. In view
of this submission, the legal contentions urged on behalf of the
petitioner questioning the illegality in the registration of the
second FIR in RC.No.5(A)/2020 and the consequent investigation
undertaken thereon needs to be upheld. Consequently, FIR
bearing No.RC.No.5(A)/2020 has to be held as illegal and liable
to be quashed. Though prayer has been made by learned Spl.
Public Prosecutor to permit the Investigating Agency to produce
the evidence collected in RC.No.5(A)/2020 as additional material
in RC.No.14(A)/2019, but having regard to the fact that the said
material or evidence having been collected through illegal
investigation, as I would presently discuss, prayer made by
learned Spl. Public Prosecutor to produce the said evidence in
RC.No.14(A)/2019 is rejected.
Reg. Points (3) and (4):
10. It is not in dispute that along with the supplementary
/ additional charge sheet, sanction of permission to conduct
enquiry or investigation obtained by the respondent under
section 17A(b) of PC Act vide Government Order
No.DPAR.89.SPS.2019, Bengaluru dated 07.01.2020 (Annexure-
'AU') as well as sanction for prosecution of the petitioner under
section 197 of Cr.P.C., and also under section 170 of Karnataka
Police Act, 1963 vide Government Order No.DPAR.89.SPS.2019,
Bengaluru dated 09.09.2020 (Annexure-'AY') have been
produced. The sanction or permission to prosecute appears to
have been issued pursuant to Government Order
No.HD.08.PCR.2019 dated 19.08.2019 and based on the Letter
No.RC.14(A)/2019/CBI/ACB/BLR/2019/63 dated 18.12.2019
from Superintendent of Police, CBI and Chief Investigating
Officer, MDIT, Bengaluru (Annexure-'AY'). A reading of this
order manifests that the application or requisition seeking
permission to prosecute the petitioner was filed by the
Superintendent of Police, CBI, Bengaluru only on 18.12.2019.
Pursuant to this request, a Government Order
No.DPAR.89.SPS.2019 dated 09.09.2020 has been passed and
the same reads as under:-
Government Order No. DPAR 89 SPS 2019
Bengaluru, Dated: 09TH September 2020
In the circumstances explained in the preamble,
Government of Karnataka hereby accords sanction to
prosecute Sri. Hemant M. Nimbalkar, IPS (KN 1998), the
then IGP, CID Bengaluru and Shri Ajay Hilori, IPS (KN
2008), the then Deputy Commissioner of Police (East)
Bengaluru under section 197 of Criminal Procedure Code
and also under section 170 of Karnataka Police Act 1963
in Crime No. RC14(A)/2019/CBI/ACB/BLR for the offences
punishable under section 120-B read with 420, 406, 409
IPC and under section 9 of Karnataka Protection of
Interest of Depositors in Financial Establishment (KPIDFE)
Act 2004.
As per Rule 19 of Karnataka Government
(Transaction of Business) Rules, 1977 the under signed is
competent to sign and issue of orders in the name of
Governor of Karnataka.
By order and in the name of the
Governor of Karnataka
Sd/-
(Nagappa.S. Pareet)
Under Secretary to Government,
Department of Personnel and
Administrative Reforms (Services-4)
11. As against this order, if the proceedings of the
Government dated 07.01.2020 are perused, under the said
Government Order bearing No.DPAR.89.SPS.2019 dated
07.01.2020, sanction was accorded to conduct investigation
under section 17A(b) of the P.C. (Amendment) Act, 2018. Even
in this proceedings, a reference has been made to Government
Order No.HD.08.PCR.2019 dated 19.08.2019 and Letter
No.MDIT-IMA/CBI/BLR/2019/64 dated 18.12.2019 of
Superintendent of Police and Chief Investigating Officer,
MDIT/CBI, Bengaluru, (Annexure-'AU') indicating that even the
application / requisition seeking permission to conduct enquiry
under section 17A(b) of the PC Act was made only on
18.12.2019. Interestingly, in the preamble of the said order, it
is stated thus:-
"Central Bureau of Investigation after
carrying out the investigation in the case of
M/s. I-Monetary Advisory Private Limited & its
group entities and has submitted its report vide
letter read at reference (2) above.
..
Investigation of CBI disclosed that there
was a concerted effort on the part of the
various Police Officials to protect the interests
of Sri Mohammed Mansoor Khan M.D. and CEO
of IMA and of M/s IMA instead of protecting the
interest of investors and depositors and
accordingly, they submitted improper enquiry
reports and recommended no action against
IMA and as a quid-pro-quo, received bribes /
valuable things from IMA.
Investigation of CBI also discloses that
the evidence collected so far has prima facie
disclosed that these public servants allegedly
committed the offences under section 7 and 11
of Prevention of Corruption Act, 1988 (as
amended in 2018) in discharge of their official
functions or duties as public servants."
12. Considering these aspects, Government Order
bearing No.DPAR.89.SPS.2019 dated 07.01.2020 was passed by
the Government of Karnataka, which reads thus:-
Government Order No.DPAR 89 SPS 2019,
Bengaluru dated: 07.01.2020
In exercise of powers conferred under section 17(A)
(b) of Prevention of Corruption (Amendment) Act, 2018,
after being satisfied that prima facie the offences appear
to have been committed by Sri. Hemant M. Nimbalkar IPS
(KN-1998), Additional Commissioner (Admin), Bengaluru
City, Bengaluru and Sri. Ajay Hilori, IPS (KN-2008)
Commandant, Karnataka State Reserve Police, 1st Bn.,
Bengaluru, sanction of the government is hereby accorded
to Central Bureau of Investigation, Bengaluru to conduct
any enquiry or investigation into the allegations against
above said official.
By Order and in the name of the
Governor of Karnataka
Sd/- (7.1.2020)
(Robin Vanaraj.J)
Under Secretary to Government
DPAR (services-4)
13. From this order, it is evident that the permission to
conduct enquiry under section 17A(b) of the P.C. (Amendment)
Act was accorded only on 07.01.2020 whereas the investigation
had commenced much earlier thereto as evident from the fact
that a search was conducted in the house and office premises of
the petitioner on 08.11.2019. As on that day, no FIR was
registered against the petitioner nor was he arrayed as accused
in RC.No.14(A)/2019. The search list produced by the petitioner
at Annexure-'AS' indicates that, during the search conducted by
the respondent No.2 on 08.11.2019, following articles were
seized from the house of the accused namely,
1. One Magic Mouse-2 of Apple make
2. One USB-C 87W Power adapter
3. One USB-C to lightening cable(1m)
4. One USB-C to USB adapter
5. --
6. One Magic Trackpad-2
7. Two Licenses of Office Home & Student 2016
8. One empty box bearing I Phone and leather case
9. One I Phone
In the search list, it is stated that item Nos.1 to 8 were
found kept in the carry-bag of I-Monetary Advisory and found in
wardrobe in bedroom in first floor. Item Nos.1 to 7 were found
in unopened condition. Item No.9 was found in the wardrobe in
bedroom on first floor in unopened condition. Other than the
material said to have been collected during the search, no other
material is forthcoming in the entire charge sheet or additional
charge sheet filed by respondent No.2 to show that the
petitioner has received any illegal gratification, either monetary
or in kind, from accused No.6 or any of its Directors or entities.
Though in the course of arguments it was submitted that
necessary evidence was collected to show that the amount for
purchase of the items recovered from the house of the petitioner
were paid from the account maintained by IMA, no such material
has been brought to my notice. Even if it is assumed that the
said evidence was collected, having regard to the fact that the
said evidence was collected prior to the sanction of authorization
for investigation under section 17A(b) of PC (Amendment) Act,
same cannot be treated as a prima facie material to proceed
against the petitioner for the offences under the Act.
14. Section 17A of the PC Act prohibits any enquiry or
investigation into offences committed by a public servant
relatable to any recommendation made or decision taken by
such public servant in discharge of his official functions or duties.
The Section reads as under:-
"17A.Enquiry or Inquiry or investigation of
offences relatable to recommendations
made or decision taken by public servant in
discharge of official functions or duties.--
No police officer shall conduct any enquiry or
inquiry or investigation into any offence alleged
to have been committed by a public servant
under this Act, where the alleged offence is
relatable to any recommendation made or
decision taken by such public servant in
discharge of his official functions or duties,
without the previous approval--
(a) in the case of a person who is or was
employed, at the time when the offence was
alleged to have been committed, in connection
with the affairs of the Union, of that
Government;
(b) in the case of a person who is or was
employed, at the time when the offence was
alleged to have been committed, in connection
with the affairs of a State, of that Government;
(c) in the case of any other person, of the
authority competent to remove him from his
office, at the time when the offence was alleged
to have been committed:
Provided that no such approval shall be
necessary for cases involving arrest of a person
on the spot on the charge of accepting or
attempting to accept any undue advantage for
himself or for any other person:
Provided further that the concerned
authority shall convey its decision under this
section within a period of three months, which
may, for reasons to be recorded in writing by
such authority, be extended by a further period
of one month."
15. The scope and amplitude of section 17A of PC Act is
succinctly expounded by the Gujarat High Court in BHAYABHAI
GIGABHAI SUTREJA vs. STATE OF GUJARAT, 2020 SCC OnLine
Guj. 2266, which read as under:-
"14. As per the plain reading of Section
17(A) latest amended, the preliminary inquiry or
investigation is sine-qua-none, further without
previous approval, the Investigating Officer
cannot proceed with the matter. Learned Senior
Advocate Shree Panchal for the applicant has
placed reliance upon the judgment passed by
the High Court of Rajasthan at Jodhpur in S.B.
Criminal Misc. (Pet) No. 159/2018 in case of
Kailash Chandra Agrwal Vs. State of Rajasthan,
wherein FIR was lodged on the basis of private
complaint and no approval of the competent
Government was taken before initiating the
inquiry and registering the formal FIR.
Manifestly, the newly inserted provision
prohibits conducting of enquiry/inquiry or
investigation into any offence under this Act
alleged to have been committed by a public
servant where the act alleged is relatable to any
recommendation made or decision taken by
such a public servant in discharge of official
functions or duties. Manifestly, the questioned
decisions in furtherance whereof, the land
subject matter of dispute was sold to and
transferred in the name of the applicants Kailash
Chandra Agarwal and Nand Bihari, were issued
by the respective public servants concerned i.e.
the Land Record Inspector Chhotaram, the
Patwari Ramratan and the Tehsildar Tejmal
Choudhary in discharge of their official duties.
Therefore, before initiating any inquiry against
the public servants under the provisions of
the P.C. Act, prior approval of the Government
was a sine-qua-non and the FIR could not have
been registered without such approval. As the
public servants cannot be prosecuted in this
mater, registration of the FIR by the Anti
Corruption Bureau against the private
individuals i.e. the applicants Kailash Chandra
Agarwal and Nand Bihari is also totally illegal
and amounts to a gross abuse of process of
law."
16. I am in respectful agreement with the view taken by
the Gujarat High Court in the above decision. In view of the
clear prohibition contained in section 17A of the PC Act, neither
preliminary enquiry nor any investigation could have been
commenced against the petitioner especially when the offences
leveled against him related to the decision taken by him in his
capacity as public servant in the discharge of his official function.
As a result, the material collected during the search and the
material collected in the course of investigation, either before
registration of the FIR or subsequent thereto cannot be taken
into consideration, either for making out charges against the
petitioner or to proceed against him for the offences alleged in
the charge sheet. Since the sanction for prosecution of the
petitioner under section 197 Cr.P.C. and section 170 of
Karnataka Police Act has been issued based on the illegal
material collected by the Investigating Agency, even the sanction
relied on by the respondent for prosecution of the petitioner
cannot be sustained. As a result, the FIR registered against the
petitioner as well as the consequent submission of the additional
/ supplementary charge sheet being violative of the provisions of
section 17A of PC Act and the sanction accorded for prosecution
of the petitioner being illegal and invalid, no prosecution of the
petitioner could be permitted to continue.
Reg. Point No.(5):
17. Now coming to the merits, before adverting to the
contentions urged by the learned counsel for petitioner in this
regard, it should be noted that the petitioner has sought to
quash the proceeding initiated against him which are at the
initial stage of investigation and / or trial. Law is now well
settled that the inherent powers under section 482 of Cr.P.C. can
be exercised to give effect to an order under the Code to prevent
abuse of process of the court or to otherwise secure the ends of
justice and cannot be used to stifle a legitimate prosecution.
Though the petitioner has also invoked Article 226 and 227 of
the Constitution of India, the reliefs claimed in the petition in
substance falls within the ambit of section 482 Cr.P.C.
18. In RISHIPAL SINGH v. STATE OF UTTAR PRADESH
AND ANOTHER, (2014) 7 SCC 215, it is held by the Hon'ble Apex
Court as under:-
"What emerges from the above
judgments is that when a prosecution at the
initial stage is asked to be quashed, the tests to
be applied by the Court is as to whether the
uncontroverted allegations as made in the
complaint prima facie establish the case. The
Courts have to see whether the continuation of
the complaint amounts to abuse of process of
law and whether continuation of the criminal
proceeding results in miscarriage of justice or
when the Court comes to a conclusion that
quashing these proceedings would otherwise
serve the ends of justice, then the Court can
exercise the power under Section 482 Cr.P.C.
While exercising the power under the provision,
the Courts have to only look at the
uncontroverted allegation in the complaint
whether prima facie discloses an offence or not,
but it should not convert itself to that of a trial
Court and dwell into the disputed questions of
fact."
19. In MADHAVRAO JIWAJIRAO SCINDIA & Others
vs. SAMBHAJIRAO CHANDROJIRAO ANGRE & Others
reported in 1988 Cri.L.J. 853, it is held that:
"The legal position is well settled that when a
prosecution at the initial stage is asked to be
quashed, the test to be applied by the court is
as to whether the uncontroverted allegations as
made prima facie establish the offence. It is
also for the court to take into consideration any
special features which appear in a particular
case to consider whether it is expedient and in
the interest of justice to permit a prosecution to
continue."
20. Tested on the touchstone of the above principles, the
allegations made in the FIR in RC.No.5(A)/2020 and the material
produced in R.C.No.14(A)/2019, in my view, do not prima facie
disclose the ingredients of any of the offences alleged against
the petitioner warranting his prosecution for the above offences.
On considering the records placed before this court and the
allegations leveled against the petitioner therein, it is seen the
case of the prosecution is that the alleged offences were
committed by the petitioner during his tenure as IGP between
09.02.2018 to 10.07.2019. But the records produced along with
the additional charge sheet indicate that by the time the
petitioner took charge of the office, Crime No.73/2019 was
investigated by Commercial Street Police and a closure report
was filed therein. This is evident from the letter written by the
DG & IGP, Karnataka to the DGP-CID & EO, Bangalore dated
16.05.2019 (Annexure-'AH'), wherein by enclosing the report of
the Commercial Street Police Station, it was reported that on
enquiry into the affairs of the IMA, no illegalities were discovered
by the police. This letter indicates that the petitioner had no
involvement whatsoever either in the registration of the case or
in the enquiry conducted by the Commercial Street Police
Station. Further, the letter written by the Additional
Commissioner of Police at Annexure-'L' discloses that the
decision was taken to close the case without the intervention of
the petitioner. More importantly, the proceedings of the State
Level Co-ordination Committee (hereinafter referred to as
"SLCC"), which are produced by the petitioner at Annexure-'M'
the genuineness of which is not disputed, indicate that the issue
was discussed in the Committee and the Committee had come to
the conclusion that, as per the preliminary enquiry report, the
IMA entity had not committed any offence and so far no
complaints were filed in Shivajinagar Police Station. A reading of
the said proceedings indicate that even the officials of RBI
participated in the discussion and it is observed that in the
presence of the GM, RBI, the Members agreed to close the case.
It is also noted that in the 17th SLCC meeting held by the
Committee (Annexure-'N') the "RBI suggested that this case
may also be referred to PS, Revenue for suo motto investigation
and action under the relevant provisions of the Karnataka PID
Act, 2004." These proceedings appear to have taken place in
the year 2017 whereas according to the prosecution, the report
of the Enquiry Officer was forwarded by the petitioner to his
higher superiors only on 18.01.2019. In this context, it is also
pertinent to note that on October 17, 2017, the General
Manager of the Reserve Bank of India had addressed a letter to
Dr.Ramana Reddy E V, IAS Principal Secretary, Department of
Revenue (Annexure-P'). Para 3 of the said letter reads as
under:-
"3. The gist of the case is detailed in Annex.
Taking into account the various aspects of the
case, you are required to kindly issue requisite
instructions for a detailed examination of the
matter so that necessary action may be
initiated by the Competent Authority under the
relevant provisions of the Karnataka PID Act
2004."
This letter indicates that the Competent Authority had
contemplated action against IMA and its group entities under the
provisions of the KPID Act, 2004 as back as in 2017. The
petitioner was no way involved either in the enquiry or in
decision taken by SLCC. Further by letter dated 18.06.2018
(Annexure-'S'), the Deputy Commissioner of Bangalore District
had written a letter to the DG & IGP informing him of the
decision taken by the SLCC to take action under the provisions of
the KPID Act. All these documents clearly disclose that the
alleged activities of IMA had come to the notice of RBI as well as
the competent authority appointed under the KPID Act much
before the petitioner assumed charge as the IGP-CID. Under the
said circumstances, the act of the petitioner forwarding the
report of the Inquiry Officer-accused No.4 cannot be construed
as an act committed in furtherance of criminal conspiracy as
sought to be made out by respondent No.2. If the above act of
the petitioner could be treated as culpable, by the same
yardstick, the RBI officials and the authorities under the KPID
Act who participated in the SLCC meeting would also render
themselves liable for prosecution for the above offences.
21. In this context, it is also significant to note that the
file maintained in the CID Office (Annexure-'U') regarding the
action taken against IMA, reveals that the ADGP-CID had made
an endorsement directing IGP, EO and IGP-EI in turn had made
an endorsement directing SP-FIU to take appropriate action.
The petitioner herein is seen to have approved the said notings
on 18.08.2018. In the said note-sheet, at item No.14, it was
stated that Sri.E.B.Sridhara, Dy.SP. EOD - CID had submitted a
progress report dated 21.08.2018. It was put up for approval
and the petitioner routinely had given approval on 23.08.2018.
The noting at item No.84 indicates that the final report was
forwarded to the LA for his opinion on 01.01.2019. Page No.16
of the note-sheet contains the opinion of the Legal Advisor.
Based on the said legal opinion, once again the file appears to
have been put up before the petitioner along with SP's
comments, wherein it is stated as under:-
SP's comments in Annexure-14 is also of the opinion that
there are no grounds to invoke Section 9 of KPID Act.
Enquiry report submitted by EO may be approved.
Sd/-
07.01.19
87) DIGP) Submitted the Enquiry Report of the EO along
with L.A's opinion that there is no ground for invoking
Section 9 of KPID Act.
For kind approval.
Sd/-
07.01.19
88) IGP) Kindly refer page 31, 46 & 64.
A) Enquiry officer has submitted his findings vide
Annexure-11 (page 107) r/w para 85 (LA opinion) I agree
with the findings of the enquiry that the business or the
transactions carried out by the instant group and the
allied companies does not fall under the perview of KPID
Act 2004 because;
I. The said establishments are not the financial
establishments as defined vide Section 2(4) of the Act.
II. The said companies do not receive 'Deposits' as
defined vide Section 2(2) of the Act.
III. The business and the transactions are governed by
Limited Liability Partnership Act 2005 and the LLP's
are duly registered with ROC Karnataka and
concerned Sub-Registrar.
IV. The exceptions to Deposits vide Section 2(2)(ii) of
the KPID Act exempts any contribution to
partnership from the term 'Deposits' defined vide
Section 2(2).
In the light of the above findings, initiation of Section
3(or Section 9) of KPID Act against the instant company
is beyond the purview of the Statute.
In future, if any dispute arises between the
members of the LLP, stated supra, they are free to avail
legal remedies available to them as agreed vide LLP
agreement.
The EO report is submitted for approval.
B) In the event of approval, permission is sought to send
the enquiry report to the office of Deputy Commissioner,
Bangalore District as instructed vide page 31 under the
intimation to Chief Office.
For approval
Sd/-
9.1.2019
89) DGP CID)
Discussed. It does not attract any provision of KPID
Para 88 is approved.
Sd/-
These notings clearly indicate that the decision to close the
enquiry was taken collectively by the police officers and the
notings extracted above clearly indicate that it was an
institutional decision taken by the concerned police officials right
from SP to DG based on the legal opinion obtained from the
Legal Advisor. In the said circumstances, even if it is assumed
that the decision taken by the petitioner is erroneous, yet, solely
on that ground, criminality cannot be imputed to the petitioner
when the material on record clearly indicate that the petitioner
has approved the notings made by his subordinates based on the
findings of the Enquiry Report and the opinion of the Legal
Advisor. Though it is alleged in the charge sheet that the above
omissions and commissions were carried out by the petitioner in
connivance with the other Government servants including the
Enquiry Officer, but no material is brought to my notice to show
that at any point of time, the petitioner herein was found
exerting his influence over any of his sub-ordinates or that he
was instrumental in obtaining enquiry report and the legal
opinion from the Legal Advisor. The allegations made in this
regard are bald and are not supported by any material. Even
otherwise, under the provisions of the KPID Act, neither the
petitioner nor the police officers have any role to play in
regulating the activities of the financial establishments.
22. Under section 5 of the KPID Act, 2004, the
Competent Authority is appointed by the Government, by
notification not below the rank of an Assistant Commissioner, for
the purpose of this Act. The duties and powers of the Competent
Authority are delineated in section 6 of the KPID Act. As per
section 6(1) of KPID Act, "On receipt of order of appointment,
the Competent Authority is required to take such necessary
action as is necessary or expedient for taking physical possession
of all the monies and assets of the concerned financial
establishment expeditiously and the Competent Authority shall
have all the powers which are necessary for the aforesaid
purpose." For the purpose of carrying out purpose of this Act,
the Competent Authority may require assistance of any police
authority or any other authority or person and on such
requisition it shall be the duty of the police authority or such
other authority or person to extend necessary assistance to the
Competent Authority.
23. The facts discussed above clearly point out that the
Government and the authorities constituted under the Act were
aware of the alleged misdeeds of IMA and its entities in 2017
much before the petitioner assumed the office of IGP. As per the
provisions of the Act, the State Government and the Competent
Authority constituted under the KPID Act were duty-bound to act
by themselves rather than depending upon the enquiry report by
the police. The entrustment of enquiry to the police does not
relieve the State Government and the authorities constituted
under the Act of their duty to provide protection to depositors in
financial establishment. Under the said circumstance, even if
there was any act of commission or omission by police officers in
preparing the enquiry report or error in the final opinion in the
matter, the same cannot furnish a ground to proceed against the
petitioner for the criminal offence of conspiracy or abetment to
commit the offences by the financial establishment. Under the
said circumstances, the allegations made against the petitioner
and the material produced in support thereof, even if accepted at
its face value as true, in my view, they do not constitute the
ingredients of offences either under section 120B r/w Sections
420, 406, 409 of IPC or Section 9 of the KPID Act, 2004. In the
absence of any evidence to show entrustment of any of the
properties to the petitioner, there is no basis to proceed against
the petitioner for the offences under section 409 IPC.
24. Under section 9 of the KPID Act, only the promoter,
director, partner, manager or any other person or an employee
responsible for the management or conducting of the business or
affairs of such financial establishment, would be liable for the
fraud or default committed in repayment of the deposits. The
petitioner herein is sought to be prosecuted on the allegation that
he forwarded the enquiry report prepared by accused No.4
(Sri.E.B.Sridhara) and reiterated his opinion that the IMA and its
entities did not fall within the ambit of the provisions of KPID Act.
These allegations, even if they are accepted as true, do not
constitute the ingredients of section 420 or 406 IPC or under the
provisions of the PC Act insofar as petitioner is concerned.
Moreover, the very enquiry initiated against the petitioner being
without authority of law and in violation of the protection granted
to the petitioner under section 17A of the PC Act and the
sanction accorded for prosecution of the petitioner itself being
illegal and invalid, it would an abuse of process of court to
continue the investigation or prosecution of the petitioner based
on the additional / supplementary charge sheet submitted by
respondent No.2. For the above reasons, the petitioner is
entitled for the reliefs claimed in the petition.
Accordingly, the petition is allowed.
(i) The impugned Government Order dated 09.09.2020
(Annexure-AY') issued by respondent No.1 in RC.No.14(A)/2019
according sanction for prosecution of the petitioner herein under
section 197 Cr.P.C. and section 170 of Karnataka Police Act,
1963 is quashed.
(ii) The impugned Government Order dated 07.01.2020
(Annexure-'AU') according sanction under section 17(A)(b) of the
Prevention of Corruption Act, 1988 against the petitioner herein
is quashed.
(iii) The impugned order dated 06.11.2020 in
Spl.CC.No.1055/2019 passed by the CBI Spl. Court (CCH.4)
(Annexure-'BC') taking cognizance of additional / supplementary
charge sheet is quashed insofar as petitioner herein is
concerned.
(iv) The additional / supplementary charge sheet in
Spl.CC.No.1055/2019 (Annexure-'BB') is quashed insofar as
petitioner herein is concerned.
(v) The FIR bearing No.RC0372020A005 dated
01.02.2020 registered by the second respondent against the
petitioner herein, pending on the file of CBI.Spl. Court (CCH.4)
(Anneuxre-'AV') is quashed.
In view of disposal of the main matter, I.A.No.1/2021 does
not survive for consideration and the same is also disposed of.
Sd/-
JUDGE
BSS
