Himachal Pradesh High Court
Cr. Appeal No. 241/2 vs Central Bureau Of Investigation on 18 July, 2016
Author: Rajiv Sharma
Bench: Rajiv Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA.
Cr. Appeal No. 241/2011 with
Cr. Appeals No. 248 and 249/2011
Reserved on: July 14, 2016
.
Decided on: July 18, 2016
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1. Cr. Appeal No. 241/2011
Rajesh Gupta ...... Appellant
Versus
Central Bureau of Investigation ........Respondent
2. Cr. Appeal No. 248/2011
of
Vinay Singh Mehta ...... Appellant
Versus
Central Bureau of Investigation
rt ........Respondent
3. Cr. Appeal No. 249/2011
Diwan Chand ...... Appellant
Versus
Central Bureau of Investigation ........Respondent
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Coram:
Hon'ble Mr. Justice Rajiv Sharma, Judge
Whether approved for reporting? 1 yes.
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For the appellant(s) : Mr. Anoop Chitkara, Advocate, for
the appellant in Cr. Appeal No.
249/2011.
Mr. K.S. Banyal, Senior Advocate
with Mr. Bhupender Thakur,
Advocate, for the appellant in Cr.
Appeal No. 248/2011
Mr. N.K. Thakur, Senior Advocate
with Ms. Jamuna, Advocate, for the
Appellant in Cr. Appeal no.
241/2011.
1
Whether the reporters of the local papers may be allowed to see the judgment?
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2
For the respondent : Mr. Ashok Sharma, Assistant
Solicitor General of India, in all the
appeals.
___________________________________________________________________
.
Rajiv Sharma, Judge:
Since all the appeals arise from the same judgment and common questions of law and facts are involved, all the appeals were taken up together for hearing and are being disposed of by this common judgment.
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2. The present appeals have been instituted against Judgment dated 30.6.2011 rendered by the learned Sessions Judge rt (Special Judge), Shimla in Sessions Trial CC No. 3-S/7 of 2006, whereby appellants-accused (hereinafter referred to as 'accused' for convenience sake), who were charged with and tried for offences punishable under Sections 420, 409 and 120-B IPC and Section 13(2) of the Prevention of Corruption Act, 1988, have been convicted and sentenced to undergo rigorous imprisonment for a period of one year each and to pay a fine of Rs.5,000/- each under Sections 420, 120-B IPC and Section 13 (2) of the Prevention of Corruption Act, 1988, and, in default of payment of fine, to further undergo simple imprisonment for two months each. Substantive sentence of imprisonment were ordered to run concurrently.
3. Case of the prosecution, in a nutshell, is that Rajesh Gupta and V.S. Mehta were working as Divisional Manager and Administrative Officer in the United India Insurance Company Limited. Government of Himachal Pradesh had taken a group ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 3 personnel insurance policy (Ext. PW-31/U) from United India Insurance Company Limited for its 1,50,000 employees at the rate of Rs.2,00,000 per employee from 1.1.2005 to 31.12.2005. Total .
premium paid to the insurance company was Rs.1,36,50,000/-.
Government of Himachal Pradesh had not taken services of a broker/agent for arranging insurance cover. Notice inviting quotations was issued to the public/private sector insurance companies. Twelve insurance companies including four public of sector insurance companies had submitted quotations. Though the quotation of private sector company was found to be lowest but at rt the instance of NGO Federation, government had decided to allot the work to the public sector insurance companies. United India Insurance Company had negotiated with other three public sector insurance companies (National Insurance Company, New India Assurance Company and Oriental Insurance Company) and was nominated leader. Premium was to be shared in the ratio of 40:20:20:20 between the United India Insurance Company and three other insurance Companies. Accused Diwan Chand was working as an agent of United India Insurance Company. He had not dealt with the Government at any stage. Accused No.2 and 3 namely Rajesh Gupta and V.S. Mehta had paid 10% commission amounting to Rs.12,38,657/- on the premium of Rs.1,23,86,570/-
to Diwan chand. Cheque in the sum of Rs.10,50,935/- Ext. PW-4/F was prepared by PW-7 Sushil Bhardwaj. The cheque was submitted to Sh. T.B. Negi, Assistant Manager. Shri T.B. Negi had signed the ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 4 cheque. Since the amount of the cheque exceeded the authority of Sh. T.B. Negi, he made reference Ext. PW-7/A-1 dated 6.1.2005 to the Regional Office for second signatory of competent jurisdiction.
.
V.S. Mehta had taken the cheque as also the reference from Shri T.B. Negi. Later, V.S. Mehta had signed the cheque as second signatory and had handed over the same to Diwan Chand. Diwan Chand presented the cheque with Canara Bank Branch Shimla on 6.1.2005. Amount of Rs.10,50,935/
- was credited to account No. of 4688 of the accused Diwan Chand on 7.1.2005 after deducting Rs.1,87,722/- as tax deducted at source. Accused No.1, 2 and 3 rt had entered into a criminal conspiracy to cheat the Government of Himachal Pradesh and the United India Insurance Company of Rs.12,38,657/-. V.S. Mehta had obtained blank cheques of his account No. 4688 from Diwan Chand. Blank cheques were encashed. FIR was registered. Matter was investigated by PW-40.
Accused Rajesh Gupta had defrauded three other Insurance Companies of an amount of Rs.2,47,731/-. Admitted specimen signatures and handwritings of the accused were obtained by PW-
40. These were sent to PW-23, T. Joshi. Sanction was obtained.
Investigation was completed. Challan was put up in the Court after completing all the codal formalities.
4. Prosecution has examined as many as forty one witnesses to prove its case against accused. Accused were also examined under Section 313 CrPC. Their case was denial ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 5 simpliciter. Accused were convicted by the learned trial Court as noticed herein above. Hence, these appeals.
5. Mr. K.S. Banyal, Mr. N.K. Thakur, learned Senior .
Advocates and Mr. Anoop Chitkara, Advocate, have vehemently argued that the prosecution has failed to prove its case against the accused.
6. Mr. Ashok Sharma, Assistant Solicitor General of India has supported judgment dated 30.6.2011.
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7. I have heard the learned counsel for the parties and also gone through the record carefully.
8. rt Nalin Mahajan (PW-1) testified that he was posted as Research Officer, Finance Department, HP Secretariat, Shimla since 1997. He worked as Statistical Assistant from 1983 and from 1995 till 1997 as Technical Assistant in the same department. He was associated by the CBI in the investigation of the case. Group Personal Accident Insurance Scheme was floated by the Government of Himachal Pradesh initially in the year 1997. National insurance companies approached the government at that time for introducing the scheme. Scheme was applicable to all the government employees including daily wagers, contractual employees and employees of Boards and Corporations. Scheme was introduced in 1997 for one year. However, in the year 1998, the scheme could not be renewed.
It was discontinued and renewed in the year 2000 and it continued for that year and was discontinued in the year 2002. Thereafter, in the year 2004, negotiations with the Insurance Companies, ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 6 scheme was introduced in the year 2005. Quotations were called from all nationalized and private insurance compan ies by the Additional Chief Secretary (Finance) vide letter dated 8.9.2004 Ext.
.
PW-1/A. In response to the quotations Ext. PW-1/A, six insurance companies offered to float the scheme namely National Insurance Co. New Delhi, New India Assurance Company Limited, United India Insurance Company, Oriental Insurance Company, ICICI Lombard, General Insurance Company and Kangra Central Co-operative of Bank. The quotations offered by the companies are Ext. PW-1/B. The officials present in the meeting were Shri D.S. Thakur of New rt India Insurance Company, Shri Rajesh Gupta, Divisional Manager, United India Insurance Company, Shri Prem Nath Bodh, Oriental Insurance Company, Shri D.S. Kaith, Divisional Manager, New India Insurance Company, Shri Gupta, Area Manager, ICICI Insurance Company, Shri V.S. Mehta of United India Insurance Company.
Document showing their presence is Ext. PW-1/C. Rates quoted by the insurance companies were intimated to the President NGO Federation vide letter dated 5.10.2004 Ext. PW-1/D. President, NGO Federation intimated to the government that the federation would accept and adopt the scheme only from Public Sector companies and accordingly, the ICICI Lombard which quoted lowest premium rate was dropped from consideration for floating the scheme. Intimation sent by the Federation is Ext. PW-1/E. Government invited the Divisional Managers of United India Insurance Company, Oriental Insurance Company, New India ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 7 Assurance Company Limited and National Insurance Company for negotiations and to consider and reduce the quotations for the scheme. United India Insurance Company agreed to revise the .
premium from Rs.94 to 91 and communication to this extent was sent by the Divisional Manager, United India Insurance Company which is Ext. PW-1/F. Matter was finalised. It was placed before the Cabinet for consideration and approval. After due deliberation by the Cabinet, the approval was conveyed to the department through of noting of the file vide Ext.PW-1/G. Scheme was duly notified on 30.12.2004 vide Ext. PW-1/H. A sum of Rs.1,36,50,000/- was paid rt to United India Insurance Company by the Finance Department on 31.12.2004 through covering letter Ext. PW-1/K. It was sent by the Secretary (Finance). Receipt of the payment by United India Insurance Company was duly acknowledged vide receipt No. 64059 dated 3.1.2005 vide Ext. PW-1/L. He has categorically admitted that during the entire process of consideration for floating the scheme, the government employees of HP, Divisional Manager, United India Insurance Company with the Finance Department, other than Divisional Manager, at no point of time, any other officer or any other official was consulted by the government for taking up the aforesaid scheme. At no point of time, the Finance Department sought any advice from any other person or institute in considering and accepting the aforesaid scheme.
9. For entire deliberations meetings, negotiations on behalf of government, Secretary Finance, Additional Secretary ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 8 (Finance) on behalf of the companies their Divisional Managers or representatives i.e. Mr. Mehta and Mr. Gupta used to represent the Insurance Companies. CBI was duly informed by the Additional .
Chief Secretary that no services of agent named in Ext. PW-1/N were ever taken by the government and the government had directly dealt with the Divisional Manager of the Insurance Companies of four Public Sector Insurance Companies. In his cross-examination, he has admitted that policy floated by the United India Insurance of Company, New India Assurance Company, Oriental Insurance Company and National Insurance Company remained inforce from rt 15.10.1997 to 15.10.1998. He has also deposed in his cross-
examination that NGO Federation was not involved in the negotiations of Group Personal Accident Insurance Scheme.
10. Shri Kant Baldi (PW-2) deposed that he took over as Secretary (Finance) to the Government of Himachal Pradesh in the month of March-April, 2005. Premium of Rs.1,36,50,000/- was sent directly to the Divisional Manager, United India Insurance Company through covering letter Ext. PW-1/K vide Banker's Cheque No. BC/C 274469 dated 31.12.2004. He testified that as per record, he found that the Government had directly dealt with the Public Sector Insurance Companies without dealing with any middleman or agent.
11. Anil Sharma (PW-3) testified that he was posted as a director, Institutional Finance in the H.P. Secretariat during the year 2004. He testified that in response to Ext. PW -1/A, quotations were received from United India Insurance Company, Shimla and ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 9 other Insurance Companies. Rates quoted by ICICI Lombard were the lowest. In his cross-examination, he has admitted that the Council of Ministers approved the proposal to revive the Indexed .
Group Personal Accident Insurance for regular, ad hoc, contractual, part time and daily wage employees of the State government including the Boards and Corporations and Universities.
Thereafter, Notification was issued by the Finance Department vide Ext. PW-1/H which was signed by him at point 'A'. He has of specifically deposed that during the entire process of finalisation of policy, Finance Department had at no point of time, called for rt services of a middleman, broker or agent as per record shown to him in the Court.
12. Ashok Negi (PW-4) testified that he was posted in United India Insur ance Company, Timber House, Cart Road, Shimla as Assistant Divisional Manager. He was looking after the accounts department. At that time, Rajesh Gupta was posted as Divisional Manager and V.S. Mehta was posted as Assistant Divisional Manager (Marketing). Accused Diwan Chand was working as agent with the United India Insurance Company. He used to look after and maintain the accounts including collecting premium and payment to be made by the Company. Fax message dated 5.1.2005 was not sent by Rajesh Gupta, Divisional Manager. Volunteered that he was on tour. He was cross-examined by the learned Public Prosecutor. He could not explain that how Shri Rajesh Gupta could sign on 5.1.2005 when he stated that he was on tour on the relevant date.
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 10No money was requisitioned from Regional Office Chandigarh.
Volunteered that sufficient amount was available with the Company.
He admitted that Ext. PW -6/A dated 5.1.2015 was signed by Rajesh .
Gupta, Divisional Manager, Shimla. He admitted that Ext. PW -6/A pertained to requisitioning of Rs.27,00,000/- from the regional office Chandigarh. He admitted that as per Ext. PW -4/A and Ext.
PW-4/B, cheque signing power of Assistant Manager with Administrative Officer was Rs.4.00 Lakh. He also admitted that an of amount of Rs.10,50,935/- was paid to Diwan Chand vide cheque Ext. PW-4/F. He identified signatures of V.S. Mehta the then rt Assistant Manager at point Q -31 and signatures of T.B. Negi the then Assistant Manager. He identified their signatures as he was working with them. In his cross-examination, he deposed that 507 was the code of accused Diwan Chand. Letter dated 31.12.2004 through which premium was sent had the code of accused Diwan Chand.
13. Sanjay Sharma (PW-5A) deposed that he was working as a Assistant Manager in the Regional Office of United India Insurance Company, Chandigarh. He produced the requisitioned document i.e. fax message dated 5.1.2005 sent to Regional Office by the Divisional Office Shimla. Document i.e. fax message dated 5.1.200 forms the part of official record of the Regional Office vide Ext. PW-5/A.
14. N.K. Sidhu (PW-6) testified that he was posted as Assistant Manager in Accounts Branch of United India Insurance Company, Chandigarh. He handed over file Ext. D58, Ext. PW-6/A ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 11 to the police vide seizure memo E xt. PW-6/B. As per instructions Ext. PW-6/C-1, the Assistant Manager of United India Insurance Company was competent and authorised to sign cheques of Rs.2.00 .
Lakh with Administrative Officer jointly. Without the consent, approval and signatures of Administrative Officer, the Assistant Manager was not authorised to issue cheque even for amounts less than Rs.2.00 Lakh.
15. Sushil Bhardwaj (PW-7) deposed that he was of associated in the investigation by the CBI. He handed over the documents to the CBI. Administrative Officer, V.S. Mehta has rt received Ext. PW-4/F. Cheque was received by Mr. Mehta to be sent to the Regional Office, Chandigarh for signature of the competent officer having power to sign the same. Cheque Ext. PW-4/F was filled up by him in favour of Diwan Chand, agent of United India Insurance Company. At that time Shri T.B. Negi was Assistant Manager. He identified his signatures on Ext. PW -7/B. Cheque was signed by Shri Mehta, the Administrative Officer. In his cross-
examination, he has admitted that the cheque Ext. PW-4/F was prepared in routine after having been approved by Shri T.B. Negi.
16. Surinder Kumar (PW-8) deposed that he was posted as Supervisor Canara Bank Shimla Branch from August, 2004 to 16.7.2008. He joined the investigation with the CBI. Cheque Ext.
PW-4/F i.e. account payee cheque in favour of Diwan Chand for an amount of Rs.10,50,935/- was presented to him.
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 1217. Jagdish Narang (PW-9) deposed that he has handed over record to the CBI including two files i.e. rate approval file in respect of policy No. 111300-42-04-00046, the commission .
correspondence file in respect of the policy.
18. B.S. Negi (PW-10) was associated in the investigation of the case. In his cross-examination, he has admitted that the Additional Chief Secretary to the Government of Himachal Pradesh had called for quotations from all the Insurance Companies in of Himachal Pradesh. Thereafter, all the companies submitted quotations to the said company. In scrutiny the quotation submitted rt by United India Insurance Company was found the lowest one. In view of said fact, United India Insurance Company was made the leader. He admitted that they did not approach the NGO Federation at any point of time. Government had called for the quotations when NGO Federation asked the Government to implement this policy. He has deposed in his further cross-examination that had the payment of commission been not payable, they would not have allowed payment of commission to the agent. He also deposed that in every meeting in which he remained present, it was unanimously decided that the commission should be paid to the agent because the same was permissible.
19. SC Sharma (PW-11) deposed that he has never handed over any document to CBI. He was declared hostile and cross-
examined by the learned Public Prosecutor. In his cross-
examination, he has admitted that on 11.2.2005, Rajesh Gupta has ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 13 written a letter Ext. DA-11/1 to the Regional office for ratification of the rates of commission. He was one of the members of the committee which was constituted for the ratification of rates of .
commission. Committee was asked to reduce the commission from 15% o 10%. He has categorically admitted towards the end of his cross-examination that in case of brokerage, there has to be a written mandate from the insured to represent him with the insurer.
20. Arun Kumar Bhardwaj (PW-12) has handed over of documents enlisted in Ext. PW-12/A from A to H. Ext. PW -12/A was signed by him at point 'A'. Letter Ext. PW
-1/P was shown to him rt wherein in para 4, the Additional Chief Secretary conveyed that the State government is not involved in it in any manner and that the Government has directly dealt with the Divisional Managers of the Insurance Companies and Government of India undertaking and Public Sector Undertaking and Insurance Sector. He was not aware of office note dated 11.4.2005 in which the Divisional Managers of New India Assurance Company, Oriental Insurance Company and United India Insurance Company were present but the fact that United India Insurance Company officials told him tha t they have been allowed to pay 10% commission by their RO office was conveyed to him which he confirmed vide letter Ext. DA-12/1.
21. Sudhir Bhattacharya (PW-13) deposed that he remained posted as Manager, United India Insurance Company, Head Office, Chennai. CBI associated him in the investigation. He issued letter Ext. PW-13/A. He had issued quoting rate of premium ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 14 vide Ext. PW-13/B. In his cross-examination, he deposed that in case business of insurance is done through broker, in that case, there has to be a mandate of insured in writing appointing that .
person as broker to negotiate with the concerned company. If some business of the company is routed through an agent the agent is entitled for commission. In reference to Ext. PW-13/DA, he stated that the same was not signed by anybody thus, he could not say by whom said instructions were issued.
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22. V.S. Chopra (PW-14) deposed that he was posted as General Manager-cum-Director United India Insurance Company rt Limited in 2005. He was declared hostile and cross-examined by the learned Public Prosecutor. He has deposed in his statement Ext.
PW-14/A that the brokers are to be appointed by the insured party and insured party in such case issues mandate to route the business through that broker. He has stated that the government had directly approached the Insurance Companies for taking insurance. He stated that in view of letter of Government of Himachal Pradesh, there was no question of any broker involved in the business, thus, there was no question of payment of brokerage.
23. R.K. Sharma (PW-14A) testified that during the period when he was working as Regional Manager, United India Insurance Company, at Chandigarh, Shimla was Divisional Office of the Company. Rajesh Gupta was the Divisional Manager at Shimla. The then Divisional Manager, United India Insurance Company informed that the business of Group Personal Accident Insurance Policy of ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 15 the employees of the State of Himachal Pradesh was pursued through an agent. He had not revealed the name of the agent. No broker was appointed by the Government of Himachal Pradesh.
.
Subsequently, on their clarification, the Divisional Manager of Company disclosed that said business was being routed through Diwan Chand, agent of the Company. He did not know Diwan Chand. He was declared hostile and cross-examined by the learned Public Prosecutor. He deposed that during the tenure as Regional of Manager, he did not receive any document from the divisional Office to specify the role of an agent. Volunteered that such document was rt not required by the Regional Manager. He had also told the CBI officials that if the government directly approached them for group insurance, no commission was payable to any agent. However, brokerage could be paid in such cases if the Government had appointed any broker for the same. In his cross-examination by the learned defence Counsel, he admitted that it was in the knowledge of all the companies that business in this case was procured through an agent and commission was payable to the agent in this case. He also admitted that there was agency code in the policy.
24. Munshi Ram (PW-15A) deposed that he had money transaction with V.S. Mehta in connection with purchase of plot at Maliana. He requested V.S. Mehta to give him loan of Rs.1.00 Lakh for the purpose of plot and Mr. Mehta gave him Rs.1.00 Lakh. He withdrew the money and transferred the amount given by cheque to him by Mr. Mehta into his saving bank account.
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 1625. Rajeev Sood (PW-17) Chartered Accountant deposed that he had conducted audit some 10-12 years back. V.S. Mehta never came to him for rendering services of filling up income tax .
return in respect of Diwan Chand. V.S. Mehta never gave him cheque of Rs.15,000/- for rendering the services in favour of Diwan Chand. He was declared hostile and cross-examined by the learned Public Prosecutor.
26. Sangeeta Bali (PW-18) testified that she was associated of by the CBI in the investigation of the case. There was a Code of Conduct for agents. The IRDA Regulations 2000 lay down the Code rt of Conduct for agents. Agents are required under the Code of Conduct to regulate their working and for doing so they bring business from the market and give the proposal to the Insurance Company. She also admitted that Diwan Chand was paid a commission to the tune of Rs.10,50,935. On 31.12.2004, V.S. Mehta came alongwith cheque amounting to Rs.1,36,50,000/-. Upon the leter which was given to her by V.S. Mehta she was told that the agency code must be entered against Code No. 507 of Diwan Chand.
In her cross-examination she deposed that every rate quoted was inclusive of the commission unless specifically described.
27. S.K. Munjal (PW-24) deposed that he collected information from Divisional Manager, New India Assurance Company Limited, Shimla. After receipt of the documents, he examined them and communicated his opinion vide letter Ext. PW-
24/A. In his cross-examination, he deposed that he had not asked ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 17 for any documents even from United India Insurance Company to confirm the fact as to whether any effort has been made by the agent for procurement of the policy. Towards the end of his cross-
.
examination, he admitted that in his opinion, if government gives premium cheque, commission is not payable.
28. Virender Kumar (PW-26) in his examination-in-chief deposed that in order to get the commission, an agent has to approach a prospect, understand the requirement of prospect, of explain the policy conditions and exclusions and in case he agrees to take a policy get the proposal form filled and collect the payment rt of premium. He did not know whether said duties were performed by Diwan Chand. He further deposed that in case the mandate of the client was available then it was the brokerage which was to be paid and in the absence of the mandate, agency commission is payable if the business is procured through agent. He also admitted that the Exts. PW-13/A, PW-26/B, PW-15/DA and PW-13/B were the letters of correspondence in the case when the matter had not been finally decided as to what rate is to be quoted and the matter was in the pipeline during this period.
29. Jai Parkash (PW-27) deposed that he joined the Municipal Corporation, Shimla in the year 1982 as a Clerk. He became a cashier in the year 2004. His wife Kalpna was working as a Female Health Worker in the Department of Health. He knew V.S. Mehta. He was his friend. In the year 2003, he constructed duplex house in village Agwahi, Post Office Shoghi, District Shimla, HP. He ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 18 had constructed said house over 4 biswas of land. he had started the construction in 2003. He had withdrawn Rs.4,50,000/- and his wife had also withdrawn GPF advance. He also obtained loan from .
State Bank of Patiala. He was declared hostile and cross-examined by the learned Public Prosecutor. In his cross-examination, he has admitted that he had filled all the particulars of cheque Ext. PW-
27/B and withdrawn the amount of Rs.5,50,000/- from saving bank account of Diwan Chand at Canara Bank, The Mall, Shimla. He also of admitted that on the reverse of Ext. PW-27/B, his signatures were there as Q -28.
30. rt Laxmi Singh Machhan (PW-29) deposed that after receipt of letter the insurance agents were visiting him. At that time, he did not know anything about the scheme. Agents from private as well as public sector insurance companies visited him and made aware of the benefits of the scheme. Diwan Chand agent of United India Insurance Company came to him. He was declared hostile and cross-examined by the learned Public Prosecutor. He admitted that Ext. PW-1/E was issued by him. He admitted that there was no reference of the fact that the Federation or he being President of the Federation was visited by agents or private/public sector insurance companies. He admitted that he had not received any letter from the Divisional Manager or any other officer of the United India Insurance Company that agent Diwan Chand would apprise the Federation of the benefit of the policy. Volunteered that there was no ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 19 such practice. He proved the copy of letter mark DZ, which was written by him to Diwan Chand.
31. C.P.R. Verma(PW-32) deposed that he was working as .
Deputy General Manager. He accorded prosecution sanction vide Ext. PW-32/A.
32. T. Joshi (PW-33) gave opinion vide No. CX-148/2005 dated 5.7.2005 vide Ext. PW-33/Z-107
33. Mathew Verghese (PW-34) deposed that the CBI sent a of reference Ext. PW-34/A. He sent reply Ext. PW -34/B to the same.
34. Rahul Dev Goyal (PW-35) deposed that the CBI had rt taken into possession numerous documents from the house of accused person. The documents were taken into possession vide seizure memo Ext. PW -30/A.
35. Rajesh Kumar Khajuria (PW-36) deposed that various documents were recovered from the house of accused Diwan Chand.
36. Bhawani Chand Kapoor (PW-37) deposed that house of accused V.S. Mehta was searched. Search memo Ext. PW-37/A was prepared. He duly signed the same.
37. Abhi Ram (PW-38) deposed that the CBI has raided the office of the accused and recovered documents vide Ext. PW-38/A.
38. Ashok Kalra (PW-39) deposed that he had carried out search of the residential house of accused V.S. Mehta on 6.4.2005 in the presence of ID Sharma and Bhawani Chand Kapoor. He prepared search memo Ext. PW-37/A. ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 20
39. Anil Chandola (PW-40) is the Investigating Officer. He had seized the original cheques of account No. 4688 of Diwan Chand maintained at Canara Bank on 7.4.2005 It transpired .
during the investigation that account No. 4688 in the name of Diwan Chand was opened on 5.1.2005. Cheque of Rs.10,50,935/-
towards payment of commission to Diwan Chand in the GPA policy was issued on 6.1.2005 and this amount was credited in the account of Diwan Chand on 7.1.2005. Specimen signatures of the of accused were obtained.
40. It is clear from Ext. PW-1/A dated 8.9.2004 that the rt Research Officer has sent a communication to 12 insurance companies requesting them to quote premium per annum for two accidental insurance schemes latest by 16.9.2004 by 11.00 AM positively under sealed covers. Same were to be opened in the presence of the representatives of participant insurance companies at 3.00 PM on the same day in the Chamber of the Secretary (Finance) i.e. Room No. 101. Mr. Rajesh Gupta was present on behalf of the United India Insurance Company in the meeting held on 16.9.2004 at 3.00 PM as per Ext. PW-1/C. Research Officer PW-
1, has sent a communication to Shri Lakshmi Singh Machhan vide Ext. PW-1/D seeking clarification whether the NGO wanted policy from a PSU or a Company, which has quoted the lowest rates. Shri Lakshmi Singh Machhan sent a communication to the Additional Chief Secretary (Finance) vide Ext. PW-1/E that they would like to have policies from the United India Insurance Company, Oriental ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 21 Insurance Company, New India Assurance Company and National Insurance Company. The Divisional Manager of United India Insurance Company informed the Principal Secretary (Finance) on .
10.12.2004 that its revised rates would be Rs.91/ including service tax per employee. There is no reference of any brokerage/ commission. There is also no reference of brokerage/ commission in the Ext. PW-1/G, i.e., Memorandum for consideration of the Council of Ministers. The Indexed Group Personal Accident Insurance was of revived as per Notification dated 30.12.2004 (Ext. PW-1/H).
Principal Secretary (Finance) has sent a cheque of Rs.1,36,00,000/-
rt in favour of the United India Insurance Company payable at State Bank of Patiala being premium for the scheme which was made operative from 1.1.2005 to 31.12.2005 vide Ext. PW-1/K. United India Insurance Company was requested to furnish cover note and official stamped receipt for the same at the earliest. Cheque was received vide Ext. PW-1/L. Superintendent of Police, CBI SCB has sought clarification of the Principal Secretary (Finance) vide letter dated 10.5.2005 vide letter Ext. PW-1/N, whether the Government had appointed Diwan Chand, a private person, to broker the deal with the Government and United India Insurance Compan y, in the matter of issuing Group Personal Accident Policy No. 111300/42/04. In sequel to Ext. PW-1/N, Additional Secretary (Finance) sent a communication to the Superintendent of Police on 19.5.2005 (Ext. PW-1/P) informing him that the Government is unaware of any such commission since the company used to quote a ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 22 premium which is further subjected to negotiations with employees' leaders/ Unions and there might be an arrangement of the company concerned and State Government is not involved in it, in any .
manner, Government has directly dealt with the Divisional Managers of Insurance Companies i.e. Government of India Public Sector Undertakings in Insurance sector. Thus, the Government was unaware of any such commission. Government had made negotiations with the employees' leaders/ Unions. According to Ext.
of PW-4/E, a sum of Rs.10,50,935/- was debited. The Divisional Manager has sent a communication as per Ext. DA/2 for the rt ratification of the commission. Communication was sent to R.K. Sharma, Regional Manager, Regional Office, Chandigarh from the office at Shimla to seek approval of rates for policy. Rates were approved as per Ext. DA/5 dated 22.12.2004 at the rate of Rs.91/-
per head including Rs.10.2% service tax for Table II cover. There is no reference of any commission /brokerage in Ext. DA/5. Shri R.K. Sharma, vide Ext. DA/18 dated 3.5.2005 has sent a communication to Rajesh Gupta stating that since he had requested for getting the approval of HO for rate editing facility to disburse the commission @ 10 % and accordingly, they had written to HO. The approval for the same has not been received as yet, but he (Rajesh Gupta) had released the commission without waiting for the necessary approval from head office. Explanation was sought from Rajesh Gupta vide Ext. DA/18. Rajesh Gupta, justified payment of 10% commission by sending reply dated 14.7.2005 to the notice ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 23 dated 3.5.2005 that Rs.91/- was inclusive of 10% commission. Shri R.K. Sharma, Regional Manager has sent a communication to the accused Rajesh Gupta stating that right from the day one, he had .
been telling them that the subject business was likely to be routed through a broker and the rates suggested by him were also inclusive of brokerage. It was under that bonafide belief that they recommended to HO for rate editing at 10% commission/brokerage but now, it had surfaced that neither the business was booked of through a broker nor the agent Diwan Chand was in any way instrumental in the procurement of the premium and as such the rt payment of commission to Shri Diwan Chand was totally illegal and unjustified. The officers also expressed their surprise as to how the agency code had been changed in the subsequent policies issued to boards/ corporations at his own. Rajesh Gupta was advised to take immediate steps for recovery of the commission illegally paid to Shri Diwan Chand and other agents. A carbon copy was sent to V.S. Chopra, General Manager, Head Office, Chennai informing him that at the time of recommending for rate editing with 10% commission they were under the bonafide belief that the business had been routed through a broker/agent but now the new facts had emerged out and as per which payment of commission was illegal and therefore it was requested that their earlier recommendation of rate editing with 10% commission may be treated as cancelled. Mr. Rajesh Gupta has again tried to mislead the investigating agency on 30.5.2005 vide Ext. DA/28 by stating that the rate of Rs.91 per ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 24 employee was inclusive of 10% commission. It is also evident from the letter dated 20.3.1997 Ext. PW-5/A that limit of Assistant Manager to sign the cheque was less than Rs.4.00 Lakh. Ext.
.
DA12/2 is contrary to the records. Thus, no agent was involved in the negotiations with the State Government. Rajesh Gupta could not come to the conclusion that rates quoted by the United India Insurance Company would include 10% commission. Ext. PW -14/D is against the record. Copy of cheque amounting to of Rs.1,36,50,000/- is Ext. PW-13/B. Copy of cheque Ext. PW-15/A whereby a sum of Rs.1,00,000/- was paid from Canara Bank. Copy rt of the cheque whereby a sum of Rs.1,05,000/- was released is Ext.
PW-33 and a sum of Rs.50,000/- was released vide Ext. PW-33/C. Another cheque is Ext. PW-27/B of Rs. 5,50,000/-. Ext. PW-33/R is the copy of saving bank account of Canara Bank whereby a sum of Rs.10,50,935/- was deposited. On the basis of cheque Ext. PW-
33/S was drawn at Canara Bank. These cheques were sent for examination. These were found to be signed by the accused. Copy of the cheque book which was recovered from the possession of the accused, of Canara Bank is Ext. PW-33/Z-2 and Ext. PW17/D/A. Divisional Manager has sent a cheque No. 388313 dated 6.1.2005 for Rs.10,50,935/- for the signatures of the Regional Office official as the amount exceeded the cheque signing power of Divisional Manager. As per Ext. PW-7/A/1. The signature and handwritings of the accused have been examined/verified by T.Joshi (PW-27).
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 2541. State Government has mooted a proposal for floating Group Personal Accident Insurance Policy for its employees.
Quotations were called from all the nationalized and private sector .
insurance companies by the Additional Chief Secretary (Finance) vide letter dated 8.9.2004. Six insurance companies offered to float the policy/scheme. Lowest rates were quoted by the ICICI Lombard General Insurance Company, Chandigarh, but preference was given to United India Insurance Company. The United India of Insurance Company was made leader. Government purchased the Group Personal Accident Insurance Scheme No. 040046 (Ext. PW-
rt 33/U) from the United India Insurance Company. Total premium paid to the Insurance Companyw as Rs.1,36,50,000/-. Service tax was payable. After payment of service tax, Rs.1,23,86,570/- was left with the Insurance Company. Premium was to be shared in the ratio of 40:20:20:20 between United India Insurance Company and three other Insurance Companies. However, fact of the matter is that the accused Nos. 2 and 3 namely Rajesh Gupta and V.S. Mehta have paid 10% commission amounting to Rs.12,38,657/- on the total premium of Rs.1,23,86,570/- to the accused Diwan Chand vide Cheque Ext. PW-4/F. Accused presented the cheque to Canara Bank and a sum of Rs.10,50,935/- was credited to his account. PW-
1 Shri Nalin Mahajan deposed that six insurance companies offered to float the scheme i.e. United India Insurance Company, Oriental Insurance Company, ICICI Lombard General Insurance Company and Kangra Central Co-operative Bank. Quotations of these ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 26 companies were opened in the presence of the officers of these companies i.e. Shri D.S. Thakur of New India Insurance Company, Shri Rajesh Gupta, Divisional Manager, United India Insurance .
Company, Shri Prem Nath Bodh, Oriental Insurance Company, Shri D.S. Kaith, Divisional Manager, New India Insurance Company, Shri Gupta, Area Manager, ICICI Insurance Company, Shri V.S. Mehta of United India Insurance Company. Document showing the presen ce of these officers of the companies is Ext. PW-1/C. Thereafter, of Divisional Managers of United India Insurance Company, New India Assurance Company Limited, National Insurance Company and rt Oriental Insurance Company Limited, were called for negotiations.
The United India Insurance Company agreed to revise their premium from Rs.94 to Rs.91 and a communication to this effect was sent by Divisional Manager, United India Insurance Company vide Ext. PW-1/F. Thereafter, the matter was placed before the Cabinet. The Cabinet approved the same. Thereafter, scheme was duly notified on 30.12.2004. PW-1 Nalin Mahajan has specifically deposed in his examination-in-chief that during the entire process of the consideration for floating the Scheme, the government employees of Himachal Pradesh, Divisional Manager, United India Insurance Company, with Finance Department, other than the Divisional Manager, at no point of time, any other officer or any other official was consulted by the Government for taking the Scheme. At no point of time, the Finance Department sought any advice from any other person or institute in considering and ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 27 accepting the Scheme. It was intimated by the Additional Chief Secretary that no services of the agent named in Ext. PW-1/N were ever taken by the Government and the Government has directly .
dealt with the Divisional Managers of the Insurance Companies of four Public Sector Un dertakings. In his cross-examination, he has categorically denied that the NGO Federation was involved at the time of negotiations. Letter Ext. PW-1/P was written to the Superintendent of Police, CBI in response to letter Ext. PW-1/N, of whereby clarification was given that the Government had directly dealt with the Divisional Managers of the Insurance Companies.
rt PW-2 Shri Kant Baldi also deposed that all the documents were sent or received in the ordinary course of official work and the originals of these had been retained in the office. As per record, he found that the Government had directly dealt with PSU insurance companies without dealing with any agent or middleman. PW-3 Anil Sharma deposed in his cross-examination that during the entire process of finalisation of the policy, the Finance Department of HP at no point of time called for the services of middleman, broker or any agent as per the record shown to him. Though, PW-4 Ashok Negi has resiled from his previous statement that the fax message dated 5.1.2005 was not sent by Rajesh Gupta since he was on tour, however, in his cross-examination by the learned Public Prosecutor, he could not explain that how Shri Rajesh Gupta could sign the same on 5.1.2005, when he was on tour at that time.
He has admitted that a sum of Rs. 10,50,935/- was paid to Diwan ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 28 Chand vide Cheque Ext. PW-4/F. He identified the signatures of V.S. Mehta, the then Administrative Officer and at point Q -31, the signatures of TV Negi the then Assistant Manger. PW-6 N.K. Sidhu .
deposed that as per Notification Ext. PW-6/C-1, the Assistant Manager, United India Insurance Company was competent and authorised to sign cheques of Rs.2.00 lakh with Administrative Officer jointly. Without the consent approval and signatures of of Administrative Officer, the Assistant Manager was not authorised to issue cheque even for an amount less than Rs.2.00 Lakh. To his knowledge, no instructions had been issued by the Company rt enhancing the powers of Assistant Manager and Administrative Officer to sign and issue cheque or amount more than Rs.4.00 Lakh. PW-7 Sushil Bhardwaj deposed that the cheque was signed by Shri Mehta. It was sent to regional office at Chandigarh for signatures of the competent officer having power to sign the cheque Ext. PW-4/F. Cheque was filled in by him in favour of Diwan Chand, agent of United India Insurance Company. Cheque was signed by Administrative Officer, Shri Mehta. It was prepared in routine after having been approved by T.B. Negi. PW-8 Surinder Kumar deposed that Ext. PW-4/F issued in favour of Diwan Chand for a sum of Rs.10,50,935/- was presented to him. It was sent to the clerical staff for debiting the same to the account No. 252. BS Negi (PW-10) Senior Manager, Divisional officer, Oriental Insurance Company, Mandi has admitted in his cross-examination that the Additional Chief Secretary (Finance) to the Government of Himachal Pradesh ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 29 had called for quotations of all the insurance companies in the State. Thereafter, all the companies submitted that quotations.
Unite d India Insurance Company was made leader. They did not .
approach any NGO Federation. Government had called for quotations when NGO Federation asked the Government to implement the policy. He admitted that had the payment of commission been not payable they would not have allowed the payment of the commission to the agent. PW-11 SC Sharma has of admitted that in case of brokerage, there has to be a written mandate from the insured to represent him with the insurer. PW-13 rt Sudhir Bhattacharya also deposed that if some business of the Government is routed through an agent, agent is entitled to commission. PW-14 VS Chopra in his cross-examination has deposed that he has stated that the brokerage / commission is normally paid as per IRDA, Commission differs from case to case.
Letter Mark PW-14/P was shown to him by the Investigating Officer. He had stated that the said circular and its enclosures do not mention any thing about routing the business through any broker. He stated that the Government had directly approached the insurance company. RK Sharma, PW-14-A though declared hostile but in his cross-examination he admitted that he stated to the CBI that if the government directly approached them for any group insurance, no commission was payable to any agent. However, brokerage was payable if the government had appointed any broker for the same. He also deposed that the Division Office at Shimla was ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 30 directly negotiating with the Government. In his examination-in-
chief he has admitted that from the documents sent by DO, he came to the conclusion that agent's services were obtained merely that the .
agent code is reflected in the record. In his cross-examination, he has admitted that in the present case, except to furnish the details of the policy and to persuade the NGO Federation to purchase the policy there was no other work in writing done by the agent. He also admitted that in a government business the policy is taken by the of Government, premium is paid by the government and it is not recovered from the employees like Matri Shakti Insurance Policy. SK Munjal PW-24 rt communicated that a loss amounting to Rs.2,47,731/- had been construed as loss to the company. Said loss was confirmed by the Divisional Manager, New India Assurance Company Limited vide page one of Ext. PW-24/C. Towards the end of his cross-examination, he admitted that if government gives premium cheque the commission is not payable. Virender Kumar PW-26 has deposed in his cross-examination that in order to get commission, agent has to approach a prospect, understand the requirement of prospect, explain the policy conditions and exclusions and in case he agrees to take a policy get the proposal form filled and collect the payment of premium. He did not know whether these duties were performed by Diwan Chand. In his cross-
examination PW-26 Virender Kumar has reiterated that in case mandate of the client is available then it is brokerage which is payable and in the absence of the mandate, agency commission is ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 31 payable if the business is procured through the agent. In case the business has been procured through an agent, he is entitled to commission. PW-27 Jai Parkash has admitted in his cross-
.
examination by the learned Public Prosecutor that he filled in all the particulars of the cheque Ext. PW-27/B and withdrew the amount of Rs.5,50,000/- from saving bank account of Diwan Chand at Canara Bank. He also admitted that he has sold 1/3rd portion of plot owned by him at Shoghi and received a consideration amount of of Rs.5,50,000/- from V.S. Mehta.
42. Thus, the prosecution has conclusively proved that no rt commission was payable at the time of floating of Scheme. There is sufficient evidence on record that no agent was involved in the transaction. Negotiations had taken place between the functionaries and employees of various corporations. Reference of these proceedings is also mentioned alongwith the names of the official who attended the negotiations. There is no iota of evidence even remotely to suggest that Diwan Chand has, in any manner, acted as an agent of Uni ted India Insurance Company to get the policy floated. He could get commission if he was authorised and had procured business for United India Insurance Company. Rajesh Gupta and V.S. Mehta (accused) were aware throughout that Diwan Chand was not entitled to commission and despite that they have issued cheques in favour of the accused Diwan Chand. In fact, Diwan Chand has also paid a sum of Rs.5,50,000/- to V.S. Mehta for purchasing land. No suggestion has been put to Jai Parkash PW-
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 3227 where was the occasion for him to issue cheque in favour of V.S. Mehta to purchase land. Rajesh Gupta and V.S. Mehta were not authorised to sign the cheque. All the accused have conspired .
together to cause loss to the Corporations/insurance companies.
Their signatures on the documents have been duly proved by the report of Shri T. Joshi, PW-33. It has also come on the record that the agent was only entitled to any commission if he had been asked to get business. No letter has been placed on record whereby the of Corporation at any given time has asked Diwan Chand to procure business on behalf of the Company from the State Government.
rt Even T.B. Negi has admitted that since cheque exceeded the jurisdiction therefore same was sent to Regional Officer for doing the needful. Accused was having bank accounts with ICICI and HDFC Banks. However, new account was opened on 5.1.2005 where the cheque amounting to Rs.10,50,935/- was deposited. In fact, accused V.S. Mehta has also obtained cheque book from Diwan Chand. He had signed blank cheques. Premises of accused were searched. Cheque book issued in favour of Diwan Chand was recovered. It was recovered on 6.4.2005. Blank Cheque was recovered alongwith cheque book. Money drawn by Diwan Chand was meager. Amount withdrawn by V.S. Mehta from the account of Diwan Chand was substantial. Cheque book from which Ext. PW-
15/A was taken out was recovered from the house of V.S. Mehta.
Jai Parkash, PW-27 has not deposed about any liability to be discharged by way of Rs.5,50,000/-. Property has been purchased ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 33 by V.S. Mehta with the money paid to him by Diwan chand. Accused Rajesh Gupta has not sent fax message dated 5.1.2005. Rajesh Gupta and V.S. Mehta have, thus, paid Rs.10,50,935/- to Diwan .
Chand fraudulently. No question of payment of commission was involved in this case. Rajesh Gupta and V.S. Mehta have cheated the Insurance Company and the State Government of Rs.12,38,657/-.
43. Learned advocates appearing on behalf of the accused of have argued that the insurance companies have agreed to pay the commission on the basis of correspondences exchanged between the rt offices at Shimla and Chandigarh. However, fact of the matter is that since Diwan Chand neither had any mandate of the Government nor had performed any duties of an agent in the purchase of policy. Rather, the State Government had directly held negotiations with the Insurance Companies. Thus, these submissions made by the learned Advocates appearing on behalf of the accused merit rejection.
44. Learned advocates appearing on behalf of the accused have vehemently argued that in the present case, sanction to launch prosecution is not in accordance with law.
They have relied upon Karnataka High Court Judgment in case K T Uthappa vs State Of Karnataka decided on 1.3.2012. They also submit that this judgment has been upheld by the Hon'ble Apex Court. However, fact of the matter is that in the instance case, sanction to launch prosecution given by C.P.R. Verma (PW-
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 3432). He was competent authority to remove the accused as per General Insurance (Conduct, Discipline and Appeal) Rules, 1975.
This plea has been taken for the first time at the appellate stage.
.
According to Section 19 (1)(c), sanction is to be obtained from an authority competent to remove the person from his office.
45. Their lordships of the Hon'ble Apex Court in Central Bureau of Investigation vs. V.K. Sehgal and another reported of in (1999) 8 SCC 501 have held that where prosecution under Section 161 IPC and S. 5(2) of Prevention of Corruption Act ends in conviction, in such circumstances, reversal of conviction and rt sentence by appellate or revisional court merely on the ground of want of a valid sanction for prosecution was held impermissible.
More so when the pleas of want of valid sanction was raised for the first time before the appellate court. Their lordships have further held that effort to save the public servant from frivolous or vindictive or mala fide prosecution becomes meaningless if on trial he is in fact found guilty. Their lordships have held as under:
10. A court of appeal or revision is debarred from reversing a finding (or even an order of conviction and sentence) on account of any error or irregularity in the sanction for the prosecution, unless failure of justice had been occasioned on account of such error or irregularity. For determining whether want of valid sanction had in fact occasioned failure of justice the aforesaid sub-section (2) enjoins on the court a duty to consider whether the accused had raised any objection on that score at the trial stage. Even if he had raised any such objection at the early stage it is ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 35 hardly sufficient to conclude that there was failure of justice. It has to be determined on the facts of each case. But an accused who did not raise it at the trial stage cannot possibly sustain such a plea made for the first time in the appellate court. In Kalpnath Rai .
v. State through CBI, [1997] 8 SCC 732 this Court has observed in paragraph 29 thus :
"Sub-section (2) of Section 465 of the Code is not a carte blanche for rendering all trials vitiated on the ground of the irregularity of sanction if objection thereto was raised at the first instance itself. The sub- section only says of that `the court shall have regard to the fact' that objection has been raised at the earlier stage in the proceedings. It is only one of the considerations to be weighed but it does not rt mean that if objection was raised at the earlier stage, for that very reason the irregularity in the sanction would spoil the prosecution and transmute the proceedings into a void trial."
11. In a case where the accused failed to raise the question of valid sanction the trial would normally proceed to its logical end by making judicial scrutiny of the entire materials. If that case ends in conviction there is no question of failure of justice on the mere premise that no valid sanction was accorded for prosecuting the public servant, because the very purpose of providing such a filtering check is to safeguard public servants from frivolous or mala fide or vindictive prosecution on the allegation that they have committed offence in the discharge of their official duties. But once the judicial filtering process is over on completion of the trial the purpose of providing for the initial sanction would bog down to a surplusage. This could be the reason for providing a bridle upon the appellate and revisional forums as envisaged in Section 465 of the Code of Criminal Procedure.
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 3646. Their lordships of the Hon'ble Apex Court in State by Police Inspector v. T. Venkatesh Murthy reported in (2004)7 SCC 763 have reiterated that merely because there is any .
omission, error or irregularity in the matter of according sanction that does not affect the validity of the proceeding unless the court records the satisfaction that such error, omission or irregularity has resulted in failure of justice. The same logic also applies to of the appellate or revisional court. The requirement of sub- section (4) about raising the issue, at the earliest stage has not been also considered.. Their lordships have held as under:
rt
9. Sub-section (4) postulates that in determining under sub-section (3) whether the absence of, or any error, omission or irregularity in the sanction has occasioned or resulted in a failure of justice the Court shall have regard to the fact whether the objection could and should have been raised at any earlier stage in the proceedings.
14. In the instant case neither the Trial Court nor the High Court appear to have kept in view the requirements of sub-section (3) relating to question regarding "failure of justice". Merely because there is any omission, error or irregularity in the matter of according sanction that does not affect the validity of the proceeding unless the court records the satisfaction that such error, omission or irregularity has resulted in failure of justice. The same logic also applies to the appellate or revisional court. The requirement of sub- section (4) about raising the issue, at the earliest stage has not been also considered. Unfortunately the High Court by a practically non- reasoned order, confirmed the order passed by the learned trial judge. The orders are, therefore, indefensible. We set aside the said orders.
It would be appropriate to require the trial Court to record findings in terms of clause (b) of sub-section (3) and sub-section (4) of Section 19.
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 3747. Their lordships of the Hon'ble Apex Court in Ashok Tshering Bhutia v. State of Sikkim reported in (2011) 4 SCC 402 have held that . Section 19 (1) of the PC Act 1988 is a matter .
of procedure and does not go to the root of the jurisdiction and once the cognizance has been taken by the Court under Cr.P.C., it cannot be said that an invalid police report is the foundation of jurisdiction of the court to take cognizance. . Their lordships have of held as under:
19. It has further been submitted that an invalid sanction cannot be the foundation for the rt prosecution and thus, the entire investigation and trial stood vitiated as the investigation without proper authorisation and invalid sanction goes to the root of the jurisdiction of the court and so the conviction cannot stand.
20. The issues raised hereinabove are no more res integra. The matter of investigation by an officer not authorised by law has been considered by this Court time and again and it has consistently been held that a defect or irregularity in investigation however serious, has no direct bearing on the competence or procedure relating to cognizance or trial and, therefore, where the cognizance of the case has in fact been taken and the case has proceeded to termination, the invalidity of the precedent investigation does not vitiate the result, unless a miscarriage of justice has been caused thereby. The defect or irregularity in investigation has no bearing on the competence of the Court or procedure relating to cognizance or trial. (Vide H.N. Rishbud & Anr. v.
State of Delhi, AIR 1955 SC 196; Munnalal v.State of U.P., AIR 1964 SC 28, Khandu Sonu Dhobi & Anr. v. The State of Maharashtra, AIR 1972 SC 958; State of M.P. v. Bhooraji & Ors ., AIR 2001 SC 3372;State of M.P. v. Ramesh Chand Sharma, (2005) 12 SCC 628; and State of M.P. v. Virender Kumar Tripathi, (2009) 15 SCC 533).
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 3821. In Kalpnath Rai v. State (Through CBI), AIR 1998 SC 201, a case under the provisions of Section 20 of Terrorist and Disruptive Activities (Prevention) Act, 1987, this Court considered the issue as to whether an oral direction to an officer to conduct .
investigation could meet the requirement of law.
After considering the statutory provisions, the Court came to the conclusion that as oral approval was obtained from the competent officer concerned, it was sufficient to legalise the further action.
22. In State Inspector of Police, Vishakhapatnam v. Surya Sankaram Karri, (2006) 7 SCC 172, a two- Judge Bench of this Court had taken a contrary view of without taking note of the earlier two-Judge Bench judgment in Kalpnath Rai (supra) and held as under:
"When a statutory functionary passes an order, rt that too authorizing a person to carry out a public function like investigation into an offence, an order in writing was required to be passed. A statutory functionary must act in a manner laid down in the statute. Issuance of an oral direction is not contemplated under the Act. Such a concept is unknown in administrative law. The statutory functionaries are enjoyed with a duty to pass written orders.
However, the Court taking note of subsequent proceedings recorded its conclusions as under:
`It is true that only on the basis of illegal investigation a proceeding may not be quashed unless miscarriage of justice is shown, but in this case as we have noticed hereinbefore, the respondent had suffered miscarriage of justice as the investigation made by PW 41 was not fair'."
23. In the instant case, the officer has mentioned in the FIR itself that he had orally been directed by the Superintendent of Police to investigate the case. It is evident from the above that the judgments in Kalpnath Rai (supra) and Surya Sankaram Karri (supra) have been decided by two Judge Benches of this Court and in the latter judgment, the earlier judgment of this Court in Kalpnath Rai (supra) has not been taken note of. Technically speaking it can be held to be per incuriam. There is nothing on record to show that the officer's statement is not factually correct.
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 3924. We have no occasion to decide as which of the earlier judgments is binding. It is evident that there was a direction by the Superintendent of Police to the officer concerned to investigate the case. Thus, in the facts and circumstances of the case, the issue as to whether the .
oral order could meet the requirement of law remains merely a technical issue. Further, as there is nothing on record to show that the investigation had been conducted unfairly, we are not inclined to examine the issue further.
25. Same remained the position regarding sanction. In the absence of anything to show that any defect or irregularity therein caused a failure of justice, the plea is without substance. A failure of justice is relatable to error, omission or irregularity in the sanction. Therefore, a mere of error, omission or irregularity in sanction is not considered to be fatal unless it has resulted in a failure of justice or has been occasioned thereby. Section 19 (1) of the PC Act 1988 is a matter of procedure and does not go to the root of the jurisdiction and once the cognizance has rt been taken by the Court under Cr.P.C., it cannot be said that an invalid police report is the foundation of jurisdiction of the court to take cognizance. (Vide Kalpnath Rai (supra);State of Orissa v. Mrutunjaya Panda, AIR 1998 SC 715; State by Police Inspector v. Sri T. Venkatesh Murthy, (2004) 7 SCC 763;Shankerbhai Laljibhai Rot v. State of Gujarat, (2004) 13 SCC 487;Parkash Singh Badal & Anr. v. State of Punjab & Ors., AIR 2007 SC 1274; and M.C. Mehta v. Union of India & Ors. (Taj Corridor Scam), AIR 2007 SC 1087).
26. In State of Haryana & Ors. v. Ch. Bhajan Lal & Ors., AIR 1992 SC 604, this Court dealing with the same provisions held that a conjoint reading of the main provision, Section 5-A(1) (new Section 17) and the two provisos thereto, shows that the investigation by the designated police officer was the rule and the investigation by an officer of a lower rank was an exception. It has been ruled by the Court in several decisions that Section 6-A (new Section 23) of the Act was mandatory and not directory and the investigation conducted in violation thereof bears the stamp of illegality, but that illegality committed in the course of an investigation, does not affect the competence and the jurisdiction of the Court for trial and where the cognizance of the case has in fact been taken and the case has proceeded to termination, the validity of the proceedings is not vitiated unless a miscarriage of justice has been caused as a result of the illegality in the investigation.
::: Downloaded on - 15/04/2017 20:50:25 :::HCHP 4048. A plain reading of clause (c) of Sub-section (1) of Section 19 of the Prevention of Corruption Act, 1988, shows that the authority competent to accord sanction to launch prosecution is the .
authority which is competent to remove him from his office. In the case in hand, sanction to launch prosecution has been accorded by C.P.R. Verma, (PW-32), who was the competent authority to grant sanction to launch prosecution against the accused in this case.
49. In view of the discussion made herein above, the of prosecution has duly proved its case against the accused. Accused have been rightly convicted under Sections 420 and 120B IPC and rt Section 13 (2) of the Prevention of Corruption Act.
50. Accordingly, there is no merit in all the appeals and the same are dismissed. Pending applications, if any, are also disposed of. Bail bonds of all the accused are cancelled.
(Rajiv Sharma) Judge July 18, 2016 (vikrant) ::: Downloaded on - 15/04/2017 20:50:25 :::HCHP