Kerala High Court
K.K.Manoj vs State on 16 June, 2014
`CR'
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE P.D.RAJAN
MONDAY, THE 16TH DAY OF JUNE 2014/26TH JYAISHTA, 1936
Crl.MC.No. 3535 of 2010 ( )
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AGAINST THE ORDER/JUDGMENT IN CC 6/2008 OF SPECIAL JUDGE-II FOR CBI CASES
AT ERNAKULAM
PETITIONER/ACCUSED:
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K.K.MANOJ,
202, SHERIEF APARTMENTS, SERPENTINE STREET,
RICHMAND TOWN, BANGALURU-25.
BY ADV. SRI.S.RAJEEV
RESPONDENT/STATE:
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STATE, REPRESENTED BY CENTRAL BUREAU OF
INVESTIGATION (C.B.I./S.P.E./A.C.B, KERALA
R.C.05/A/2007 & REP.BY STANDING COUNSEL, CBI.
BY ADV. SRI.P.CHANDRASEKHARA PILLAI, SC, C.B.I.
BY ADV. SRI.M.V.S.NAMBOOTHIRY,SC, C.B.I.
THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 16-06-2014,
THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
Crl.MC.No. 3535 of 2010 ( )
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APPENDIX
PETITIONER'S ANNEXURES :
1 COPY OF THE SEARCH LIST SIGNED BY THE CONCERNED OFFICER OF CBI.
2 COPY OF THE FINAL REPORT SUBMITTED BY THE RESPONDENT.
RESPONDENT'S ANNEXURES :
NIL
// True Copy //
P.A. To Judge
DSV/23/06
`CR'
P.D.RAJAN, J.
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Crl.M.C.No. 3535 of 2010
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Dated this the 16th day of June, 2014
O R D E R
This petition is filed under Section 482 of the Code of Criminal Procedure (hereinafter referred to as 'the Code'), to quash Annexure A2 in FIR No.RC 05/A/2007 of the CBI/SPE/ACB, KERALA filed for offences punishable under Sections 120 B, 420, 468 and 471 of the Indian Penal Code (hereinafter referred to as 'IPC') and under Sections 7, 12 & 13 (2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 (hereinafter referred to as 'the PC Act'), by invoking inherent jurisdiction. The above case was registered by the CBI in the year 2007 and after investigation, a final report was filed before court which is now pending trial in the Court of Special Judge for CBI cases at Ernakulam. Petitioner is the third accused in the above case. First accused is the Senior Crl.M.C.No. 3535 of 2010 2 Branch Manager of National Small Industries Corporation Ltd. (hereinafter referred to as `NSIC') at Kochi and the second accused is the Proprietor of a firm namely Origin Herbs Research (hereinafter referred to as 'OHR'), Venjaramood which is a Small Scale Industrial unit. Petitioner contended that he is a Government Employee and prosecution against him is possible only after getting valid sanction. If trial is proceeded without valid sanction, it amounts to a mere abuse of the process of the Court.
2. The allegation against accused in Annexure A2 was that during the period from 04.07.1996 to 17.09.2007, the 1st accused was Senior Branch Manager of NSIC, Kerala, earlier office at Thrissur and later at Cochin. The second accused is the proprietor of OHR, which is an SSI unit, engaged in production and supply of Ayurvedic Medicines exclusively for veterinary purpose and also engaged in the business of sale/stock and distribution of drugs and medicines since 1992. The third accused was working as the Deputy Manager of NSIC, Cochin from 1998 to 2006 and Crl.M.C.No. 3535 of 2010 3 thereafter he resigned from the service in the year 2006 and joined at Industrial Development Bank of India (hereinafter referred to as `IDBI'). On 06.02.2001, A1 to A4 pursuant to their conspiracy, forwarded the application of A2 in the prescribed form and recommended for material assistance without credit worthiness report and financial appraisal note, and swindled huge amount from NSIC thereby, committed the alleged offence by forging the documents, hence the case.
3. The learned counsel for the petitioner contended that there is only a negligence of duty or a dereliction of duty, for that an internal disciplinary action is sufficient. The petitioner was a public servant at the time of committing the alleged offences and a sanction under Section 197 (1) of the Code is necessary for prosecuting him. The first accused was also a Senior Branch Manager and prosecution obtained sanction under Section 19 of the PC Act and under Section 197(1) of the Code. The petitioner relies on decisions in State of Madhya Pradesh v. Sheetla Sahai and others Crl.M.C.No. 3535 of 2010 4 [(2009) 8 SCC 617] and People's Council For Civil Rights v. State of Kerala [2009 (1) KLT 831].
4. The learned standing counsel for the CBI contended that the petitioner while acting as the Deputy Manager, participated in the alleged conspiracy and there is conscious elements of participation which was detected by the Investigating Agency. After this, petitioner resigned his job from NSIC and joined in IDBI. Now, the petitioner is not a Government servant saved by or with the sanction of the Government commit any offence while discharging his official duties. Therefore, he is not entitled to get the protection under Section 197(1) of the Code also. Respondent relies on decisions in Prakash Singh Badal and another v. State of Punjab and others [(2007) 1 SCC (Cri) 193], State of H.P. v. M.P.Gupta [2003(10) SCALE 522] and Dr.Subramanian Swamy v. Dr. Manmohan Singh and Another [AIR 2012 SC 1185].
5. The valid law regarding sanction is mentioned under Section 19 of the PC Act and under Section 197 of the Code. Crl.M.C.No. 3535 of 2010 5 Section 19 of the PC Act reads as follows:
"19. Previous sanction necessary for prosecution.--(1) No court shall take cognizance of an offence punishable under sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction 1 [save as otherwise provided in the Lokpal and Lokayuktas Act, 2013]--
(a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, of that Government;
(b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, of the Government;
(c) in the case of any other person, of the authority competent to remove him form his office. (2) Where for any reason whatsoever any doubt arises as to whether the previous sanction as required under sub-section (1) should be given by the Central Government or the State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed."
Crl.M.C.No. 3535 of 2010 6
6. Section 197(1) of the Code reads as follows:
197. Prosecution of Judges and public servants.--(1)When any person who is or was a Judge or Magistrate or a public servant not removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty, no Court shall take cognizance of such offence except with the previous sanction save as otherwise provided in the Lokpal and Lokayuktas Act, 2013--
(a) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of the Union, of the Central Government;
(b) in the case of a person who is employed or, as the case may be, was at the time of commission of the alleged offence employed, in connection with the affairs of a State, of the State Government:
1[Provided that where the alleged offence was committed by a person referred to in clause (b) during the period while a Proclamation issued under clause (1) of Article 356 of the Constitution was in force in a State, clause (b) will apply as if for the expression "State Government" occurring therein, the expression "Central Government" were substituted.] 2[Explanation.--For the removal of doubts it is Crl.M.C.No. 3535 of 2010 7 hereby declared that no sanction shall be required in case of a public servant accused of any offence alleged to have been committed under section 166A, section 166B, section 354, section 354A, section 354B, section 354C, section 354D, section 370, section 375, section 376, section 376A, section 376C, section 376D or section 509 of the Indian Penal Code (45 of 1860).] (2) No Court shall take cognizance of any offence alleged to have been committed by any member of the Armed Forces of the Union while acting or purporting to act in the discharge of his official duty, except with the previous sanction of the Central Government.
(3) The State Government may, by notification, direct that the provisions of sub-section (2) shall apply to such class or category of the members of the Forces charged with the maintenance of public order as may be specified therein, wherever they may be serving, and thereupon the provisions of that sub-section will apply as if for the expression "Central Government"
occurring therein, the expression "State Government"
were substituted.
3[(3A) Notwithstanding anything contained in sub-section (3), no Court shall take cognizance of any offence, alleged to have been committed by any member of the Forces charged with the maintenance of public order in a State while acting or purporting to act in the discharge of his official duty during the Crl.M.C.No. 3535 of 2010 8 period while a Proclamation issued under clause (1) of article 356 of the Constitution was in force therein, except with the previous sanction of the Central Government.] 3[(3B) Notwithstanding anything to the contrary contained in this Code or any other law, it is hereby declared that any sanction accorded by the State Government or any cognizance taken by a Court upon such sanction, during the period commencing on the 20th day of August, 1991 and ending with the date immediately preceding the date on which the Code of Criminal Procedure (Amendment) Act, 1991, receives the assent of the President, with respect to an offence alleged to have been committed during the period while a Proclamation issued under clause (1) of article 356 of the Constitution was in force in the State, shall be invalid and it shall be competent for the Central Government in such matter to accord sanction and for the Court to take cognizance thereon.] (4) The Central Government or the State Government, as the case may be, may determine the person by whom, the manner in which, and the offence or offences for which, the prosecution of such Judge, Magistrate or public servant is to be conducted, and may specify the Court before which the trial is to be held."
Crl.M.C.No. 3535 of 2010 9
7. The policy underlying Section 19 of the PC Act is that there should not be unnecessary harassment of public servants. The object of the section is to save the public servants from the harassment of frivolous and unsustainable allegation. Before applying Section 19 of the PC Act, two conditions must be satisfied, that the offence must be committed by a public servant and the person is employed with the affairs of Central Government or State Government and is not removable from his office save by or with the sanction of the Central or State Government or is a public servant who is removable from his office by any other competent authority. If any one of the conditions is not found the Court need not wait for sanction for taking cognizance of the offence. While considering Section 19 of the PC Act, 1988, a protection is given to a person who is employed in connection with the affairs of the Union Government or State Government and is not removed from his office save by or with the sanction of the Central Crl.M.C.No. 3535 of 2010 10 Government or State Government. This position has been explained by the Apex Court in S.A.Venkataraman v. The State [AIR 1958 SC 107] while discussing Section 6 of the old Act (1947 Act) held as follows:
"(16) In our opinion, in giving effect to the ordinary meaning of the words used in S. 6 of the Act, the conclusion is inevitable that at the time a Court is asked to take cognizance not only the offence must have been committed by a public servant but the person accused is still a public servant removable from his office by a competent authority before the provisions of S. 6 can apply. In the present appeals, admittedly, the appellants had ceased to be public servants at the time the Court took cognizance of the offences alleged to have been committed by them as public servants. Accordingly the provisions of S. 6 of the Act did not apply and the prosecution against them was not vitiated by the lack of a previous sanction by a competent authority."
8. Therefore, the protection under Section 19 of the PC Act is given only to those public servants who are in service. The petitioner had ceased to be a public servant at the time when the court took cognizance of the alleged offences. Crl.M.C.No. 3535 of 2010 11 Therefore, the benefit of Section 19 of the PC Act is not extended to the petitioner. This view was followed by the Apex Court in a subsequent decision in C.R.Bansi v. The State of Maharashtra [1970 (3) SCC 537]. In Prakash Singh Badal and another v. State of Punjab and others [(2007) 1 SCC (Cri) 193] paragraph 15 reads as follows:
"15. It is their stand that where the public servant has ceased to be a public servant in one capacity by ceasing to hold office which is alleged to have been misused, the fortuitous circumstances of the accused being in another capacity holding an entirely different public office is irrelevant. It is categorically held in R.S. Nayak case in para 13 that "on analysis of the policy of the whole section the authority competent to remove the public servant from the office alleged to have misused is alone the competent sanctioning authority"."
9. The protection under Section 19 (1) of the PC Act is Crl.M.C.No. 3535 of 2010 12 extended to those officers who are public servants in service. After retirement from the service, the benefit is not extended to him. It appears that the relevant date with reference to a valid sanction is sine qua non for taking cognizance committed by a public servant ie., the date on which the court take cognizance of the offence.
10. In this context, the next contention is that the petitioner is entitled to get protection of Section 197 (1) of the Code. The scope of Section 197 (1) of the Code is to protect the responsible public servants against vexatious criminal proceedings while they are acting or purporting to act as public servants. The benefit is not extended to all the public servants under Section 197 (1) of the Code. Therefore, a public servant is or was not removable from his office save by or with the sanction of the Government is accused of any offence alleged to have been committed by him while acting or purporting to act in discharge of his official duty alone protected. In such cases, the court shall take cognizance of such offence only with the previous Crl.M.C.No. 3535 of 2010 13 sanction of the Government. No materials have placed before this Court to show that the petitioner is a Government servant protected under Section 197 (1) of the Code. "The official duty" expressed under Section 197 (1) of the Code implies that an act or action must have been done by the public servant in the course of his service and that it should have been in discharge of his official duty. The protection under Section 197 (1) of the Code is also extended to those public servants after retirement from service also. But that benefit is not extended under Section 19 of the PC Act. A Division Bench of this Court in People's Council For Civil Rights v. State of Kerala [2009 (1) KLT 831] explains as follows:
"The purpose of S.197 (1) is to avoid vexatious litigation against public servant for the acts done in the discharge of their duties. Sanction is a condition precedent in taking cognizance of an offence committed by a public servant while discharging official duties. Sanction is necessary before taking cognizance of an offence under S.197(1) only if the following ingredients are satisfied: (i) A public servant is accused of an Crl.M.C.No. 3535 of 2010 14 offence (ii) that public servant is not removable from his office except by or with the sanction of the Government,
(iii) the alleged offence committed by him should be in the discharge of his official duties or purporting to act in discharge of his official duties. There is clear difference between the workings of S.19 of the Prevention of Corruption Act (for short, PC Act) and S.197 of the Cr.P.C."
11. In State of Madhya Pradesh v. Sheetla Sahai and others [(2009) 8 SCC 617] paragraphs 55 reads as follows:
"55. This leaves us with the question as to whether an order of sanction was required to be obtained. There exists a distinction between a sanction for prosecution under Section 19 of the Act and Section 197 of the Code of Criminal Procedure. Whereas in terms of Section 19, it would not be necessary to obtain sanction in respect of those who had ceased to be a public servant, Section 197 of the Code of Criminal Procedure requires sanction both for those who were or are public servants."
paragraphs 59 and 60 reads as follows:
Crl.M.C.No. 3535 of 2010 15
"59. For the purpose of attracting the provisions of Section 197 of the Code of Criminal Procedure, it is not necessary that they must act in their official capacity but even where public servants purport to act in their official capacity, the same would attract the provisions of Section 197 of the Code of Criminal Procedure. It was so held by this Court in Sankaran Moitra v. Sadhna Das12. The question came up for consideration before this Court in Matajog Dobey v. H.C.Bhari13 wherein it was held:(AIR pp. 48-49, para 17) "17. Slightly differing tests have been laid down in the decided cases to ascertain the scope and the meaning of the relevant words occurring in Section 197 of the Code; `any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty'. But the difference is only to language and not in substance.
The offence alleged to have been committed must have something to do, or must be related in some manner, with the discharge of official duty. No question of sanction can arise under Section 197, unless the act complained of is an offence; the only point to determine is whether it was committed in the discharge of official duty. There must be a reasonable connection between the act and the official duty. It does not matter even if the act exceeds what is strictly necessary for the discharge of the duty, as this question will arise only a Crl.M.C.No. 3535 of 2010 16 later stage when the trial proceeds on the merits.
What we must find out is whether the act and the official duty are so interrelated that one can postulate reasonably that it was done by the accused in the performance of the official duty, though possible in excess of the needs and requirements of the situation. In Hori Ram Singh v. Crown14 Sulaiman, J. observes:
`The section cannot be confined to only such acts as are done by a public servant directly in pursuance of his public office, though in excess of the duty or under a mistaken belief as to the existence of such duty. Nor is it necessary to go to the length of saying that the act constituting the offence should be so inseparably connected with the official duty as to form part and parcel of the same transaction.' The interpretation that found favour with Varadachariar, J. in the same case is stated by him in these terms at p.56:
`There must be something in the nature of the act complained of that attaches it to the official character of the person doing it.' In affirming this view, the Judicial Committee of the Privy Council observed in Gill case15:(IA pp.59-60) `A public servant can only be said to act or to purport to act in the discharge of his official duty, if his act is such as to lie within the scope of his official duty..... The test may well be whether the public Crl.M.C.No. 3535 of 2010 17 servant, if challenged, can reasonably claim that, what he does, he does in virtue of his office.' Hori Ram case14 is referred to with approval in the later case of Lieutenant Hector Thomas Huntley v. King Emperor16 but the test laid down that it must be established that the act complained of was an `official' act appears to us unduly to narrow down the scope of the protection afforded by Section 197 of the Criminal Procedure Code as defined and understood in the earlier case. The decision in Albert West Meads v.R.17 does not carry us any further; it adopts the reasoning in Gill case15."
60. The said principle has been reiterated by this Court in B.Saha v.M.S.Kochar18 in the following terms:
(SCC pp.184-85, paras 17-18) "17. The words `any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty' employed in Section 197(1) of the Code, are capable of a narrow as well as a wide interpretation. If these words are construed too narrowly, the section will be rendered altogether sterile, for, `it is no part of an official duty to commit an offence, and never can be'. In the wider sense, these words will take under their umbrella every act constituting an offence, committed in the course of the same transaction in which the official duty is performed or purports to be performed. The right approach to the Crl.M.C.No. 3535 of 2010 18 import of these words lies between these two extremes.
While on the one hand, it is not every offence committed by a public servant while engaged in the performance of his official duty, which is entitled to the protection of Section 197(1), an act constituting an offence, directly and reasonably connected with his official duty will require sanction for prosecution under the said provision. As pointed out by Ramaswami, J. in Baijnath v. State of M.P.19: (AIR p.227, para 16) `16..... It is the quality of the act that is important, and if it falls within the scope and range of his official duties the protection contemplated by section 197 of the Criminal Procedure Code will be attracted'.
18. In sum, the sine qua non for the applicability of this section is that the offence charged, be it one of commission or omission, must be one which has been committed by the public servant either in his official capacity or under colour of the office held by him." (emphasis in original )"
12. NSIC is a Government of India enterprise set up with the objective to aid and promote the SSI units in the country. It provides market support, credit support, technology support and other services to small scale Crl.M.C.No. 3535 of 2010 19 enterprises. It also provides financial assistance to the small scale units including raw-material assistance scheme, bill financing scheme, working capital and export development assistance. During the period from 4.7.1996 to 17.9.2007, A1 was working as the Senior Branch Manager, at NSIC, Kerala, having its main office earlier at Thrissur and later on at Cochin. A2 is the proprietor of OHR, Venjaramood, Thiruvananthapuram, which is an SSI unit engaged in production and supply of ayurvedic medicines exclusively for veterinary consumption since 1998. A2 is also the Proprietor of M/s Kaivalyam Pharmaceutical Distributors engaged in the business of sale/stock/distribution of drugs & medicines since 1992. A3 was working as the Deputy Manager, in NSIC, Cochin during the period 1998-2006 and he is resigned from the service of NSIC in 2006 to join IDBI, Bangalore as Manager. A4 was working as the Marketing Manager of OHR during 1998-2002 and presently working as Senior Executive, Administration, with M/s US Technology International Private Limited at Techno Park, Trivandrum, Crl.M.C.No. 3535 of 2010 20 who was a close ally of A2 and marketing office of OHR was running from his residence.
13. The allegation in the instant case pertains to the disbursement of loan by A1 by way of bill discounting in favour of A2 during May, 2001 for an amount of `23 lakhs and sanctioning & disbursement of raw material assistance for an amount of `15 lakhs in December, 2001. The firm OHR was registered with NSIC, Cochin from 1999 onwards and permanent enlistment certificate dt.15.10.99 was issued by A1 on 15.10.1999. In this circumstance, however, without any credit worthiness report and financial assistance, the petitioner and other accused recommended the amount. On receipt of the same, Regional Office had again sent a communication dated 16.4.2001 asking Credit Worthiness Report, value of the collateral security offered by the unit and financial appraisal note. However, A1, without collecting the credit worthiness certificate from Kerala Financial Corporation, Trivandrum, accepted a letter of credit worthiness dt.23.4.2001, alleged to have been issued Crl.M.C.No. 3535 of 2010 21 by District Manager, KFC in favour of OHR, recommending to extend the bill discounting facilities. Actually, no letter of credit worthiness had been issued by KFC in favour of OHR to NSIC for the reason that during the relevant period A2 was having a liability with KFC for about `19.4 lakhs. Thus, in furtherance to the conspiracy, A1 had knowingly and dishonestly accepted the above said false and forged letter of credit worthiness from A2. It is alleged by the CBI that A1 to A4 participated in the conspiracy and made huge financial liability and loss to the unit, KSIC which makes out a prima facie case. The prosecution has obtained sanction against the 1st accused under Section 19 of the PC Act and Section 197 of the Code.
14. The petitioner and other accused facing prosecution under the Prevention of Corruption Act cannot claim any immunity on the ground of want of sanction under Section 19, when he ceased to be a public servant on the date when the Court took cognizance of the alleged offences. It is equally a fallacious argument that for Crl.M.C.No. 3535 of 2010 22 launching prosecution for offences under Section 120 B, 420, 468 and 471 IPC, sanction under Section 197 of the Code is a condition precedent. It is not part of the duty of the public servant while discharging his official duty to enter into criminal conspiracy for indulging criminal misconduct. The contention that the Government sanction under Section 197 of the Code is not unsustainable. This view was explained by the Apex Court in Harihar Prasad, etc. v. State of Bihar [1972(3)SCC 89], State of Kerala v.
Padmanabhan Nair [1999 (5) SCC 690] and Amrik Singh v. The State of Pepsu [1955 (1) SCR 1302].
15. From the aforesaid discussion, it is crystal clear that the protection under Section 19(1) of the PC Act, will be available only to those public servants in service alone. This benefit is not extended to those public servants after retirement from their service. Therefore, the relevant date for a valid sanction is sine qua non for taking cognizance of offence committed by a public servant, the date on which the Court take cognizance of the offence alone. At the same Crl.M.C.No. 3535 of 2010 23 time, the protection given under Section 197(1) of the Code is extended to a person who is or was a public servant, who is not removable from his office save by or with the sanction of the Government, is accused of any offence alleged to have been committed by him while acting or purporting to act in discharge of his official duty and no Court shall take cognizance of such offence except with previous sanction of the Government. Therefore, I am of the opinion that this is not a fit case to invoke the inherent jurisdiction under Section 482 of the Code. The learned counsel for the petitioner contended that the liberty may be granted to take a defence of discharge in the trial court. I am not making any opinion on the above submission which is within the purview of the trial court.
Hence, I am of the view that this petition lacks merits and is liable to be dismissed and I dismiss the petition.
Sd/-
P.D.RAJAN (JUDGE).
DSV/17/06 Crl.M.C.No. 3535 of 2010 24