Karnataka High Court
Shri Raj Kumar Ram vs The Central Bureau Of Investigation on 17 September, 2024
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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NC: 2024:KHC:39661
WP No. 15635 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF SEPTEMBER, 2024
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
WRIT PETITION NO. 15635 OF 2024 (GM-RES)
BETWEEN:
SHRI RAJ KUMAR RAM
S/O LATE GONAUR RAM
AGED ABOUT 49 YEARS
RESIDING AT FLAT NO.655, BLOCK 45
CPWD COMPLEX, SECTOR-1
HSR LAYOUT, BENGALURU - 560 102.
...PETITIONER
(BY SRI BASAVARAJU S., SR. ADVOCATE FOR
SRI KANISHK RAVINDRAN, ADVOCATE)
AND:
1. THE CENTRAL BUREAU OF INVESTIGATION
Digitally signed by REPRESENTED BY INVESTIGATING OFFICER,
NAGAVENI
Location: HIGH 6TH FLOOR, LODHI ROAD, PLOT NO.5-B,
COURT OF
KARNATAKA JAWAHARLAL NEHRU STADIUM MARG,
CGO COMPLEX, NEW DELHI, DELHI - 110 003.
REPRESENTED BY SPP.
2. THE UNDER SECRETARY
GOVERNMENT OF INDIA
DEPARTMENT OF REVENUE
MINISTRY OF FINANCE
269-B, NORTH BLOCK
NEW DELHI - 110 001
REPRESENTED BY UNDER SECRETARY.
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NC: 2024:KHC:39661
WP No. 15635 of 2024
...RESPONDENTS
(BY SRI PRASANNA KUMAR P., ADVOCATE FOR R-1;
SRI S.RAJASHEKAR, ADVOCATE FOR R-2)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA AND READ WITH SECTION 482
OF CR.P.C., I) QUASH THE FIR BEARING NO. RC2162022A0004
DT. 08/03/2022 REGISTERED AGAINST THE PETITIONER FOR
THE OFFENCES PUNISHABLE UNDER THE SECTION 120-B R/W
109 OF IPC AND THE OFFENCES PUNISHABLE UNDER THE
SECTION 13(2) R/W 13(1)(b) OF THE PREVENTION OF
CORRUPTION ACT PENDING ON THE FILE OF XXI ADDL. CITY
CIVIL AND SESSIONS JUDGE AND SPECIAL JUDGE,
BANGALORE (CCH-4) AS AGAINST THE PETITIONER HEREIN,
PRODUCED AT ANENXURE-A AND ETC.,
THIS PETITION, COMING ON FOR PRELIMINARY HEARING
IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS
UNDER:
CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA
ORAL ORDER
The petitioner/accused No.1 is before this Court calling in question registration of a crime in No. RC2162022A0004 registered for offences punishable under Section 13(2) read with 13(1)(b) of the Prevention of Corruption Act, 1988 ('the Act' for short) and Sections 109 and 120-B of the IPC and -3- NC: 2024:KHC:39661 WP No. 15635 of 2024 pending before the XXI Additional City Civil and Sessions Judge and Principal Special Judge for CBI cases at Bengaluru.
2. Heard Sri S. Basavaraju, learned senior counsel appearing for the petitioner, Sri P. Prasanna Kumar, learned counsel appearing for respondent No.1 and Sri H Shanti Bhushan, learned Deputy Solicitor General of India and Sri S. Rajashekar, learned counsel appearing for respondent No.2.
3. Facts, in brief, germane are as follows:-
The petitioner is an Officer in the Enforcement Directorate. An FIR comes to be registered in No. RC2162022A0004 by the 1st respondent/Central Bureau of Investigation ('CBI') against the petitioner and his wife for offences punishable under Sections 13(2) r/w 13(1)(b) of the Act and Sections 120B r/w 109 of the IPC on 08-03-2022. The allegation against the petitioner in the FIR is that, the 1st respondent had received a source information report when the petitioner was serving as Assistant Director at the Enforcement Directorate, Bengaluru Zonal Office and between 01-04-2016 -4- NC: 2024:KHC:39661 WP No. 15635 of 2024 and 31-03-2020, which according to the 1st respondent was the check period, had acquired both movable and immovable properties in the name of family members, which according to the CBI was disproportionate to his known sources of income to the tune of 28%. Based upon the said source information report, the Superintendent of CBI authorized the Inspector of Police to investigate the matter as obtaining under Section 17 of the Act in terms of his order dated 08-03-2022. The 1st respondent/CBI conducts investigation and files its final report before the concerned Court i.e., the Special Court for CBI cases. The 1st respondent then applies for grant of sanction to prosecute the petitioner; sanction is accorded by Union of India, the Competent Authority. It is then the Court registers Special C.C. No. 229 of 2024 and the proceedings have proceeded. The proceedings of the case before the concerned Court has driven the petitioner to this court in the subject petition.
4. The learned senior counsel Sri S. Basavaraju representing the petitioner would vehemently contend that proceedings before the concerned Court are a nullity in law, as -5- NC: 2024:KHC:39661 WP No. 15635 of 2024 the foundation itself is defective. The allegation against the petitioner, as could be gathered from the charge sheet, is that he had recommended closure of Foreign Exchange Management Act, 1999 ('FEMA' for short) proceedings against accused Nos.
4 and 5 in the same crime. Therefore, the recommendation became an offence under Sections 13(2) r/w 13(1)(b) of the Act. He would submit that there is no approval under Section 17A of the Act granted to register a crime and investigate into the mater. This would cut at the root of the matter and, therefore, vitiated all subsequent actions.
5. The learned counsel Sri P. Prasanna Kumar representing the 1st respondent/CBI would submit that at the stage of registration of the crime, the CBI was not aware of everything revolved round on the recommendation or closure of FEMA proceedings qua accused 4 and 5. It only came to its light when the charge was filed that due to recommendation, the allegation of disproportionate assets has sprung. He would submit that Section 17A would not become applicable in a case which concerns offence punishable under Section 13(2) r/w 13(1)(b) of the Act.
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6. The learned Deputy Solicitor General of India Sri Shanthi Bushan representing the 2nd respondent/Union of India which is the Competent Authority to grant approval or sanction would, on verification of records and instructions admit that, the file of the petitioner was never put up for any approval under Section 17A of the Act. Barring this, he would submit that the only file placed before the Competent Authority was seeking sanction under Section 19 of the Act and the authority has granted sanction under Section 19 of the Act. He would submit that his role is limited to what he has submitted.
7. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.
8. The afore-narrated facts are not in dispute. The service of the petitioner between 2016 and 2020 becomes the subject matter of allegation or the source report that is drawn. In terms of the source report, it is the allegation that the petitioner had acquired disproportionate assets through accused No.4 who is the Director of accused No.5 Company. It -7- NC: 2024:KHC:39661 WP No. 15635 of 2024 is alleged that accused No.4 was also a Director of a Company known as M/s K365, Deccan Web Assets Private Limited and was facing proceedings for violation of FEMA. The petitioner while in office, in the capacity of Assistant Director, had received illegal gratification from accused Nos. 4 and 5 and had recommended that pending case for FEMA violation is worthy of being closed. Based upon the said recommendation, the case against accused Nos.4 and 5 was closed, not by the petitioner but by a superior officer who was empowered to consider and take a decision for closure of the case under FEMA. It is based upon the said incident, long after the closure, a source report is said to have been drawn against the petitioner that he has amassed wealth disproportionate to his known source of income and everything has emanated from the closure of proceedings in favour of accused Nos. 4 and 5. The crime is registered based upon the said source report. The CBI investigates; the investigation leads to preparing final report against the petitioner. The final report is placed before the Competent Authority and the Competent Authority grants sanction. The order of sanction reads as follows:
"F No.C-14011/01/2023-Ad ED Government of India -8- NC: 2024:KHC:39661 WP No. 15635 of 2024 Ministry of Finance Department of Revenue (Ad. ED Section) 269-B, North Block, New Delhi 09-01-2024 Sanction Order No.01/2024 Whereas, on the basis of a source information regarding amassing of assets disproportionate to known source of income by Shri Raj Kumar Ram, the then Assistant Director, Directorate of Enforcement, Zonal Office, Bangalore, presently working as such in Kohima Zonal Office (sitting in Guwahati Zonal Office), a case No.RC 216 2022 A0004 dated 08-03-2022 U/s 109 IPC 120-B r/w 13(2) r/w 13(1)(b) of Prevention of Corruption Act, 1988 (as amended in 2018) was registered by CBI, AC, New Delhi against said Raj Kumar Ram and his wife Smt. Chandrama Kumari. After concluding investigation, CBI has sought permission of the Competent Authority to prosecute said Raj Kumar Ram for the offences punishable under Section for the substantive office u/s 120B of IPC r/w 13(2) R/W 13(1)(e) of PC Act 1988 corresponding to Section 13(2) r/w 13(1)(b) of PC Act, 1988 (as amended in 2018).
Whereas, the investigation conducted by CBI revealed that Shri Raj Kumar Ram while being posted and functioning as Enforcement Officer and later promoted to Assistant Director, Directorate of Enforcement, Zonal Office, Bengaluru in furtherance of abetment made by accused Smt. Chandrama Kumari D/o Shri Rajendra Ram, Shri Umesh Chandra S/o Shri Rajendra Ram, Shri Vinod Monoharan S/o Shri Manoharan and M/s Deccan Web Assets Private Limited (Now M/s Distributedlab Block Chain Services India Private Limited) through its Director Shri Vinod Manoharan, has acquired assets, movable and immovable, to the tune of Rs.85,05,431.13 during the check period from 01-04-2016 to 31-03-2020 in his name or jointly with his wife's name or in the names of his family members, which are disproportionate to his "known sources of income". Smt. Chandrama Kumari W/o Shri Raj Kumar Ram, Shri Umesh Chandra S/o Rajendra Ram, Shri Vinod Manoharan S/o Shri Manoharan and M/s Deccan Web Assets Private Ltd. (Now M/s Distributedlab Block Chain Services India Pvt. Ltd.) -9- NC: 2024:KHC:39661 WP No. 15635 of 2024 through its Director Shri Vinod Manoharan also abetted Shri Raj Kumar Ram to commit the said offence.
Whereas the aforesaid acts of omission and commission on the part of said Shri Raj Kumar Ram, the then Assistant Director, Directorate of Enforcement, Zonal Office, Bangalore constitute commission of offences punishable under Section for the substantive offence u/s 120B of IPC r/w 13(2) r/w 13(1)(e) of the PC Act, 1988 corresponding to Section 13(2) r/w 13(1)(b) of the PC Act, 1988 (as amended in 2018).
And whereas the President of India being the authority to remove the said Shri Raj Kumar Ram from office after fully and carefully examining the material, including the statement of Witnesses recorded by the Investigating Officer under the provisions of Section 161 CrPC and documents collected in relation to the aforesaid allegations and the circumstances of the case considering that the said Shri Raj Kumar Ram has committed the alleged offence and should be prosecuted in the Court of Law for the said offences.
Now, therefore, the President of India do hereby accord sanction under Section 19(1) of PC Act 1988 (Act 49 of 1988 and as amended in 2018) for the prosecution of the said Shri Raj Kumar Ram for the said offences and any other offence offences punishable under the provisions of law in respect of facts aforesaid and for taking cognizance of the said offence by the Court of Competent Jurisdiction."
It is an admitted fact, in the case at hand, that there is no approval under Section 17A of the Act granted to register the crime and investigate into the matter. The contention is that it was not necessary, as the offence is under Section 13(2) r/w 13(1)(b) of the Act. The submission of the learned counsel for the CBI is partially acceptable. In all cases of amassing wealth
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NC: 2024:KHC:39661 WP No. 15635 of 2024 disproportionate to the known source of income, the rigour of Section 17A need not be followed. But, when the allegation has sprung from a recommendation or a decision taken by any public servant, compliance with Section 17A is mandatory.
Section 17A of the Act reads as follows:
"17-A. Enquiry or Inquiry or investigation of offences relatable to recommendations made or decision taken by public servant in discharge of official functions or duties.--(1) 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
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NC: 2024:KHC:39661 WP No. 15635 of 2024 writing by such authority, be extended by a further period of one month."
(Emphasis supplied)
9. The purport of Section 17A of the Act need not detain this Court for long or delve deep into the matter. This Court in the case of SMT. SHREEROOPA V. THE STATE OF KARNATAKA,1 has held as follows:
".... .... ....
22. Clause (a) thereof provides that in case of public servant who is or was employed in connection with the affairs of the Union at the time when the offence alleged to have been committed, the previous approval of the Central Government shall be obtained. Clause (b) likewise provides that in case of a public servant who is or was an employee in connection with the affairs of the State at the time when the offence was alleged to have been committee, the approval of the State Government shall be obtained before proceeding. Clause (c) provides that in case of any other person who comes within the definition of public servant previous approval of the competent authority to remove him from office at the time when the offence alleged to have been committee should be obtained. The narrative hereinabove cannot but indicate that the object of the Section was to protect public servants from malicious, vexatious or baseless prosecution. However, if enquiry into the circumstances in which the alleged administrative or official act was done by the public servant or where malfeasance committed by the public servant which would involve an element of dishonesty or impropriety is to be proceeded against, the approval of the competent authority is required.
1W.P.No.8905 of 2022 c/w W.P.No.9183 of 2022 decided on 13th July, 2021
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23. In my considered view Section 17A and its purport must be observed with complete strictness bearing in mind public interest and protection available to such officers against whom offences are alleged, failing which many a time it would result in a malicious prosecution. Section 17A is clearly a filter that the prosecution must pass in order to discourage or avoid vexatious prosecution, though cannot be considered as a protective shield for the guilty, but a safeguard for the innocent.
24. The provision (supra) was also considered by the Apex Court in the case of YESHWANTH SINHA v. CENTRAL BUREAU OF INVESTIGATION2. The Apex Court though did not consider as to how the previous approval of the competent authority has to be taken, but considered the amendment and its importance in the following paragraphs:
"117. In terms of Section 17-A, no police officer is permitted to conduct any enquiry or inquiry or conduct investigation into any offence done by a public servant where the offence alleged is relatable to any recommendation made or decision taken by the public servant in discharge of his public functions without previous approval, inter alia, of the authority competent to remove the public servant from his office at the time when the offence was alleged to have been committed. In respect of the public servant, who is involved in this case, it is clause (c), which is applicable. Unless, therefore, there is previous approval, there could be neither inquiry or enquiry or investigation. It is in this context apposite to notice that the complaint, which has been filed by the petitioners in Writ Petition (Criminal) No. 298 of 2018, moved before the first respondent CBI, is done after Section 17-A was inserted. The complaint is dated 4.10.2018. Para 5 sets out the relief which is sought in the complaint which is to register an FIR under various provisions. Paras 6 and 7 of the complaint are relevant in the context of Section 17-A, which read as follows:2
(2020) 2 SCC 338
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NC: 2024:KHC:39661 WP No. 15635 of 2024 "6. We are also aware that recently, Section 17-A of the Act has been brought in by way of an amendment to introduce the requirement of prior permission of the Government for investigation or inquiry under the Prevention of Corruption Act.
7. We are also aware that this will place you in the peculiar situation, of having to ask the accused himself, for permission to investigate a case against him. We realise that your hands are tied in this matter, but we request you to at least take the first step, of seeking permission of the Government under Section 17-A of the Prevention of Corruption Act for investigating this offence and under which, "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".
(emphasis supplied)
118. Therefore, the petitioners have filed the complaint fully knowing that Section 17-A constituted a bar to any inquiry or enquiry or investigation unless there was previous approval. In fact, a request is made to at least take the first step of seeking permission under Section 17- A of the 2018 Act. Writ Petition (Criminal) No. 298 of 2018 was filed on 24.10.2018 and the complaint is based on non-registration of the FIR. There is no challenge to Section 17-A. Under the law, as it stood, both on the date of filing the petition and even as of today, Section 17-A continues to be on the statute book and it constitutes a bar to any inquiry or enquiry or investigation. The petitioners themselves, in the complaint, request to seek approval in terms of Section 17-A but when it comes to the relief sought in the writ petition, there was no relief claimed in this behalf.
119. Even proceeding on the basis that on petitioners' complaint, an FIR must be registered as it purports to disclose cognizable offences and the Court must so direct, will it not be a futile exercise having regard to Section 17-A. I am, therefore, of the view that though otherwise the petitioners in Writ Petition (Criminal) No.298 of 2018 may have made out a case, having regard to the law actually laid down in Lalita Kumari [Lalita kumari v. State of U.P., (2014) 2 SCC 1: (2014) 1 SCC (Cri)524], and
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NC: 2024:KHC:39661 WP No. 15635 of 2024 more importantly, Section 17-A of the Prevention of Corruption Act, in a review petition, the petitioners cannot succeed. However, it is my view that the judgment sought to be reviewed, would not stand in the way of the first respondent in Writ Petition (Criminal) No. 298 of 2018 from taking action on Ext. P-1, complaint in accordance with law and subject to first respondent obtaining previous approval under Section 17-A of the Prevention of Corruption Act."
The Apex Court has considered the importance of previous approval of the competent authority in the afore-extracted judgment.
25. Section 17A casts an obligation of application of mind on the part of the Competent Authority in three situations. The Section makes it clear that no officer shall conduct any enquiry or inquiry or investigation without previous approval. Therefore, the approving authority will have to look into the materials, apply its mind in all the three contingencies i.e., enquiry or inquiry or investigation. Though, enquiry and inquiry are often used interchangeably, there exists a difference between the two. Etymologically, the source of both enquiry and inquiry could be the same as 'en' is derived from French and 'in' is from Latin. Inquiry has a formal and official ring to it. Enquiry is informal and can be unofficial. Enquiry could even mean, to question; Inquiry is a formal investigation; investigation is a search. Therefore, the act casts an obligation of application of mind upon the authority to consider whether approval is sought for an enquiry, inquiry or an investigation. It becomes imperative for the authority to apply its mind to what is brought before it, as application of mind is the bedrock of any order that an authority passes, failing which, it would be contrary to the principles of natural justice, as non-application of mind is in itself violative of principles of natural justice.
26. Application of mind by an authority is demonstrable only in the order that the authority makes, for the order to demonstrate application of mind by the authority, it must contain the reasons, as recording of reasons in an order is the only way that one can construe such application of mind. Reasons are live links between
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NC: 2024:KHC:39661 WP No. 15635 of 2024 the mind of the decision-taker, to the controversy in question and the decision arrived at. Reason and application of mind are impregnable for an order to sustain the scrutiny of law, be it administrative or quasi judicial. Reasons in every circumstance need not be elaborate, but nevertheless should bear application of mind. The case at hand and the order impugned will have to be tested on the anvil of the mandate of the statute, the intent behind its enactment and the rule of application of mind."
10. The issue now would be, when the offence is under Section 13(2) and 13(1)(b) of the Act, whether approval was necessary. A coordinate Bench of this Court in the case of HEMANT NIMBALKAR V. STATE OF KARNATAKA3, while considering the very issue has held as follows:
".... .... ....
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 3 Writ Petition No.14014 of 2020 decided on 19th March, 2021
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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.
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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, petitioner/accused, has including been sent the 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,
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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-
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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
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NC: 2024:KHC:39661 WP No. 15635 of 2024 (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
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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:
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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 matter, 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.
... ... ...
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
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NC: 2024:KHC:39661 WP No. 15635 of 2024 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.
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NC: 2024:KHC:39661 WP No. 15635 of 2024
(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) (Annexure-'AV') is quashed."
(Emphasis supplied) The charge sheet so filed by the CBI comes to be quashed on the score that it did not precede an approval under Section 17A of the Act, inter alia.
11. Another coordinate Bench of this Court in K.KRISHNA MURTHY V. STATE OF KARNATAKA - 2019 SCC OnLine Kar 2904 has declined to interfere, as it found that the allegation was amassing wealth disproportionate to the known source of income, but not on any recommendation made. Therefore, the coordinate Bench rejected the plea of Section 17A. It becomes unnecessary to notice the said judgment for the reason that, the law is clear that in cases where the allegations are under Section 13(2) r/w 13(1)(b) of the Act and those allegations have emanated from a recommendation or a decision taken, compliance of Section 17A becomes mandatory. If it is only a plain and simple allegation of amassing wealth to the known source of income, rigour of Section 17A need not be complied. As observed
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NC: 2024:KHC:39661 WP No. 15635 of 2024 hereinabove, it is an admitted fact that the entire allegations have sprung from a recommendation made by the petitioner for closure of the case against accused Nos. 4 and 5 concerning violation of FEMA. If that be so and it being an admitted fact, I have no hesitation to hold that all the events that have happened on the aftermath of registration of crime would all become acts contrary to law. It is not that the petitioner would be absolved of the offences. In the event the Union of India would accord approval under Section 17A of the Act even today, it would be open to the CBI to restart proceedings from the stage of grant of approval under Section 17A of the Act, failing which, the mandate of the statute will be given a go-bye for the reason that, CBI has proceeded further on the approval obtained under Section 19 of the Act.
12. It is trite law that the rigour of the statute must and must at all times be followed, as violation of the statute would render the entire exercise, contrary to the statute, a nullity. In that light, with the liberty as noted hereinabove, I deem it appropriate to obliterate the subsequent proceedings. For all the aforesaid reasons, the following:
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NC: 2024:KHC:39661
WP No. 15635 of 2024
ORDER
(i) Writ Petition is allowed in part.
(ii) Final Report Form/Charge sheet in No. RC 216 2022 A0004 filed by the 1st respondent before XXI Additional City Civil & Sessions Judge and Principal Special Judge for CBI Cases, Bengaluru in Special C.C.No.229 of 2024 and all further proceedings taken up thereto stand quashed with the observation qua liberty.
Consequently, I.A.No.1 of 2024 also stands disposed.
Sd/-
(M.NAGAPRASANNA) JUDGE BKP List No.: 2 Sl No.: 1