Telangana High Court
K.Nagabhushanam vs The State Of A.P., Through on 26 April, 2024
HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
*****
Criminal Appeal No.280 OF 2011
Between:
M.Chennaiah ... Appellant
And
The State of A.P,
rep. by Inspector of Police, ACB,
Hyderabad Range. ..Respondent/Complainant
Criminal Appeal No.291 OF 2011
Between:
K.Nagabhushanam ... Appellant
And
The State of A.P,
rep. by Inspector of Police, ACB,
Hyderabad Range. ..Respondent/Complainant
DATE OF JUDGMENT PRONOUNCED :26.04.2024
Submitted for approval.
THE HON'BLE SRI JUSTICE K.SURENDER
1 Whether Reporters of Local
newspapers may be allowed to see the Yes/No
Judgments?
2 Whether the copies of judgment may
be marked to Law Reporters/Journals Yes/No
3 Whether Their Ladyship/Lordship
Wish to see their fair copy of the Yes/No
Judgment?
__________________
K.SURENDER, J
2
* THE HON'BLE SRI JUSTICE K. SURENDER
+ CRL.A. No.280 of 2011
% Dated 26.04.2024
# M.Chennaiah ... Appellant
And
$ The State of A.P,
rep. by Inspector of Police, ACB,
Hyderabad Range. Respondent/Complainant
+ CRL.A. No.291 of 2011
% Dated 26.04.2024
# K.Nagabhushanam ... Appellant
And
$ The State of A.P,
rep. by Inspector of Police, ACB,
Hyderabad Range. Respondent/Complainant
! Counsel for the Appellants: Sri C.Sharan Reddy
^ Counsel for the Respondent: Sri Sridhar Chikyala
Spl.Public Prosecutor
>HEAD NOTE:
? Cases referred
1 1996(2) ALD (Crl.) 483 (S.C)
3
THE HONOURABLE SRI JUSTICE K.SURENDER
CRIMINAL APPEAL Nos. 280 and 291 OF 2011
COMMON JUDGMENT:
1. Criminal Appeal No.280 of 2011 is preferred by A1 and
Criminal Appeal No.291 of 2011 is preferred by A2. A1, A2
along with A4 were convicted for the offence under Section
13(1)(c) r/w 13(2) of Prevention of Corruption Act, 1988 and
sentenced to undergo rigorous imprisonment for a period of
three years each and they were also sentenced to undergo
rigorous imprisonment for a period of six months each under
Section 120-B IPC vide judgment in C.C.No.1 of 2008 dated
11.03.2011 passed by the I Additional Special Judge for SPE &
ACB Cases, City Civil Court, Hyderabad. Since both the
appeals arise out of the same judgment, both the appeals are
heard together and disposed off by way of this Common
Judgment.
2. Briefly, the case of the prosecution is that A1 worked as
Deputy Chief Executive Officer, A2 worked as Accounts Officer
and A3 worked as Superintendent at Zilla Parishad, Nalgonda,
A4 worked as Branch Manager, FEDCON Branch, Nalgonda,
A5 worked as Business Manager, M/s.Nagarjuana District Co-
op Marketing Society, Nalgonda, A6 worked as Business
Manager, M/s.Neelgiri Super Bazar, Nalgonda and A7 worked
as Chief Executive Officer, Zilla Parishad, Nalgonda. All the
seven accused colluded for defrauding and misappropriating
the government funds by purchasing stationery and other
articles at exorbitant rates. The amount of Rs.19,35,477/- was
spent. However, the investigation found that the value of the
goods purchased resulted in loss to the Government to the
tune of Rs.11,30,566/-. Accordingly, charges were framed
against A1 to A7 for the offences under Section 13(1)(c) r/w
13(2) of the PC Act against all the accused. Charge was also
framed under Section 120-B IPC.
3. The allegation is that the stationery and other articles
were purchased at exorbitant rates from FEDCON without
calling for quotations of any other persons. The Government
Order Ex.P2 in which GORT No.87, MA dated 01.02.1999
directing all the heads of the departments and subordinate
offices and public undertakings under the control of Municipal
Administration and Urban Development Department to
procure stationery items from FEDCON (National Cooperative
Consumers Federation) was followed. The prices of the
materials to be supplied by FEDCON are at competitive prices
with other agencies, material could be purchased.
Accordingly, A2 circulated file through A1 for purchasing
stationery and registers for the use of Mandals in the Zilla
Parishads from the Zilla Parishad funds. P.W.1, who was the
Joint Collector and In-charge as Chief Executive Officer, Zilla
Parishad, Nalgonda decided to purchase the stationery from
FEDCON, after A1 negotiated for the prices and later was
reduced by 5% by FEDCON. Accordingly payment was made
by PW.1 by order dated 25.01.2000 under Ex.P7. The
stationery purchased was distributed to various Mandals
under acknowledgment.
4. After the stationery and other items were distributed,
there was an article which was published in Telugu News
Daily regarding purchase of stationery and other material from
FEDCON at higher rates than the existing market rate. P.W.1
then caused enquiry and found that there was difference of
prices collected by FEDCON over and above the market price.
Meanwhile, FEDCON offered a special discount and returned
Rs.4.00 lakhs through challan dated 12.05.2000. Having
conducted enquiry, P.W.1 filed a report against A1 and A2 for
misleading P.W.1 and causing loss to the Government to a
tune of Rs.3,86,000/-. Thereafter, ACB had taken up
investigation on the basis of information provided to them.
Crime was registered and having investigated the case, ACB
found that loss of Rs.11,30,566/- occurred on account of the
purchase of material from FEDCON.
5. Charges were framed by the Special Judge and P.Ws.1 to
12 were examined. Note file, purchase orders, stock registers,
sanctions etc were all filed under Exs.P1 to P44. Learned
Special Judge found that A1, A2 and A4 of FEDCON were
complicit of the offences and convicted them as stated supra.
A3, A5 to A7 were found not guilty and accordingly acquitted.
6. Pending the present criminal appeal, A4 died and his
Criminal Appeal No.356 of 2011 was disposed off as abated.
7. Learned counsel appearing for the appellants would
submit that according to Ex.P40, the officials of Zilla Parishad
and other officers of Panchayat Raj department were directed
to purchase the office stationery etc., from FEDCON. The said
Memo was dated 20.03.1992. In fact, Ex.P2 G.O dated
01.02.1999 directed that the stationery requirements should
be purchased from FEDCON without following any tender
process. It was P.W.1 who had asked A1 to negotiate and after
negotiations when the price was reduced by 5%, P.W.1 made
payments to FEDCON.
8. Learned counsel further argued that on the basis of
article which was published in Telugu Daily Newspaper, when
enquiry was conducted, P.W.1 came to the conclusion that
there was an excess payment of Rs.3,86,000/- and
accordingly, FEDCON represented by A4, had returned
Rs.4.00 lakhs. However, the investigation by the ACB
disclosed that excess payment of Rs.11,30,566/- was arrived
at without giving any details as to how the said amount was
arrived at. No evidence was collected by the ACB to
substantiate the rates at which purchases were made by
P.W.1 and similar goods that were sold in the market. Unless
it is specifically shown that the goods purchased by the
department were at a higher price by comparing with the very
same goods that were available in the open market, the alleged
excess payment cannot be considered. Further, there is no
evidence that any kick backs were given by the FEDCON to A1
and A2.
9. Learned counsel for the appellants relied on the
judgment of Hon'ble Supreme Court in the case of C.Chenga
Reddy and others v. State of Andhra Pradesh 1. The Hon'ble
Supreme Court held that irregularities give rise to a strong
suspicion regarding the bonafides of officials of the
department, but such suspicion cannot be substitute of proof.
Courts cannot draw inferences by placing burden on the
accused which course is impermissible. Unless the
1996(2) ALD (Crl.) 483 (S.C)
prosecution profess its case beyond reasonable doubt,
conviction cannot be recorded.
10. On the other hand, learned Special Public Prosecutor
would submit that the collusion in between the FEDCON and
the appellants is apparent. The costs of the stationery and
other material were inflated and purchased from FEDCON.
The Investigating Officer had examined P.Ws.6, 9 and 10 and
compared the prices of the material that was purchased.
Accordingly, the Investigating Officer concluded that excess
payment of Rs.11,30,566/- was made. In the said
circumstances, when the prosecution had produced all the
evidence in support of its case and proved its case, the appeals
filed by A1 and A2 have to be dismissed.
11. Admitted facts in the case are:
i) Direction to Government departments for purchasing
stationery and other material from FEDCON is evident from
Exs.P2 and P40.
ii) A2 put up the requirement of purchase to A1 and A1
in turn put up the file with P.W.1.
iii) P.W.1 asked A1 to negotiate the prices and after
negotiation when the prices were reduced by 5%, P.W.1
authorized purchase and paid amount.
iv) Funds were never entrusted by department to A1 and
A2 but to P.W.1.
v) The specific details of purchase made by the
department are no where mentioned.
vi) The details of prices were taken from P.Ws.6, 9 and
10, who are retail sellers and not from manufacturers.
12. For the sake of convenience, Section 13(1)(c) of PC Act is
extracted hereunder:
"13. Criminal misconduct by a public servant - (1) A
public servant is said to commit the offence of criminal
misconduct,
(c) if he dishonestly or fraudulently misappropriates or
otherwise converts for his own use any property entrusted to
him or under his control as a public servant or allows any
other person so to do."
13. An offence under Section 13(1)(c ) of the Act would be
made out when there is a fraudulent misappropriation of
property entrusted. Admittedly, the funds were entrusted to
P.W.1 and not to A1 and A2.
14. P.W.1 admitted in his cross-examination as follows:
"It is true the AO1 was being a Deputy CEO has no
authority to take policy decision, he only implements the
decision taken by CEO. As per the note file vide Ex.P1, the
Dy.CEO i.e., AO1 followed whatever the decision taken by me.
It is true I have not mentioned in my enquiry report with
whom I got the details about the market rate. Witness adds. I
made local enquiries but I have not recorded any statements. I
did not obtained any quotations during my local enquiry. I do
not remember the name of the persons with whom I made local
enquiry.
It is true I being CEO of ZP was at liberty to reject any note
or part of any note when it was not to my satisfaction. It is true
I have carefully gone through the note file and after satisfying
myself that all the guidelines of the government followed I
passed the order as OK."
15. The Investigating Officer/P.W.12 admitted in his cross-
examination as follows:
"It is true AO1 being Dy.CEO of ZP, he had no authority to
take decision and he has to implement only the decision taken
by CEO i.e, P.W1. It is true as per Ex.P1 file AO1 has simply
followed the decisions taken by P.W.1 and there was no
deviation on part of AO1."
"It is true the price lists I secured from the traders are the
basis for arrival of monetary loss suffered by the ZP."
"It is true in ZP, P.W.1 alone being CEO was having
dominion over the funds of the ZP. It is true there are no cash
transactions in the purchases made pertains to this case all the
payments were made through cheques only signed by P.W.1. I
did not collected any evidence to show the FEDCON and other
suppliers have paid any amount to any of the accused officer."
16. The prosecution witnesses admission, nothing was
entrusted to A1 and A2. When there is no entrustment, the
question of misappropriation does not arise. No evidence was
collected either to show that any amount was received by the
appellants after payment by P.W1. The decision to purchase
the goods was taken by P.W.1 and amounts were also paid by
P.W.1.
17. The prosecution has not verified the prices at which
FEDCON had purchased from the manufacturers and items
sold to the department. The details of the manufacturers,
specifications of the stationery purchased were never tallied
during investigation. The assistance of P.Ws.6, 9 and 10, who
are retail sellers was taken to state that the stationery was
purchased at exorbitant rates. Even the details taken from
P.W.6 under Ex.P25, price list, does not contain the
specifications of any stationery product. Ex.P31 price list given
by PW.9 also does not contain any details of the
manufacturers or specifications of any product. P.W.10 was
treated as hostile to the prosecution case.
18. Any product would be sold in the market which will be
available at cheaper rates and also basing on the quality of the
materials, prices would differ. Unless the Investigating Officer
had taken steps to collect the exact and specific details of the
products, which were purchased and available in the open
market, the question of assuming that the products were
purchased at higher rates on the basis of Exs.P25 and P31,
which are typed copies provided by P.Ws.6 and 9 will not prove
the allegation against A1 and A2.
19. The case is one of circumstantial evidence. The
prosecution has failed to prove the circumstances of collecting
higher amounts by FEDCON for the very same products,
which are available at cheaper rates. The basis for the
prosecution is exorbitant rates by FEDCON, which is not
proved by any reliable evidence. Accordingly, the appellants
succeed.
20. In the result, the judgment of trial Court in C.C.No.1 of
2008 dated 11.03.2011 passed by the I Additional Special
Judge for SPE & ACB Cases, City Civil Court, Hyderabad, is
hereby set aside. Since the appellants A1 and A2 are on bail,
their bail bonds shall stand discharged.
21. Both the Criminal Appeals are allowed.
__________________
K.SURENDER, J
Date: 26.04.2024
Note: LR copy to be marked.
kvs
