Karnataka High Court
Sri. Hemant Nimbalkar vs State Of Karnataka on 19 March, 2021
Equivalent citations: AIRONLINE 2021 KAR 223
Author: John Michael Cunha
Bench: John Michael Cunha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF MARCH 2021
BEFORE
THE HON'BLE MR. JUSTICE JOHN MICHAEL CUNHA
WRIT PETITION NO.14014 OF 2020 (GM-RES)
BETWEEN:
SRI. HEMANT NIMBALKAR
S/O MADHUKAR
AGED 49 YEARS,
R/AT NO.272, 13TH CROSS, 5TH MAIN,
RMV 2ND STAGE, DOLLARS COLONY,
BANGALORE-560094.
...PETITIONER
(BY SRI: ASHOK HARANAHALLI, SR. ADVOCATE A/W
SRI: SWAROOP ANAND R, ADVOCATE)
AND:
1. STATE OF KARNATAKA
REP BY ITS CHIEF SECRETARY
GOVERNMENT OF KARNATAKA,
VIDHANA SOUDHA,
AMBEDKAR VEEDHI,
BANGALORE-560009.
2. THE STATE
BY CENTRAL BUREAU OF INVESTIGATION
REP BY ITS SPECIAL PUBLIC PROSECUTOR
2
HIGH COURT BUILDING,
BANGALORE-560 001.
...RESPONDENTS
(BY SRI: V.M. SHEELVANT, SPP-I A/W
SRI: B.J. ROHITH, HCGP FOR R1;
SRI: P. PRASANNA KUMAR, SPL-PP FOR R2)
---
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
CONSTITUTION OF INDIA R/W SECTION 482 CRPC PRAYING TO
QUASH GOVERNMENT ORDER DATED 09.09.2020 ACCORDING
PROSECUTION SANCTION UNDER SECTION 197 CRPC AND 170
KARNATAKA POLICE ACT, 1963 ISSUED BY THE R-1 IN FIR RC-
14(A)/2019 FOR OFFENCES UNDER SECTION 120B R/W
SECTIONS 420, 406, 409 OF IPC AND SECTION 9 OF THE KPID
ACT AGAINST THE PETITIONER HEREIN PRODUCED AT
ANNEXURE 'AY'; QUASH SUPPLEMENTARY CHARGESHEET IN
SPL CC 1055/2019 NAMING THE PETITIONER AS AN ACCUSED,
ARRAYING HIM AS ACCUSED NO.25 FOR OFFENCES UNDER
SECTION 120B R/W 420, 406, 218 AND 409 IPC AND SECTION 9
OF KPID ACT PRODUCED AT ANNEXURE-'BB' AND QUASH ORDER
DT: 06.11.2020 TAKING COGNIZANCE OF SUPPLEMENTARY
CHARGESHEET IN SPL CC 1055/2019 NAMING THE PETITIONER
AS AN ACCUSED, ARRAYING HIM AS ACCUSED NO.25 FOR
OFFENCES UNDER SECTION 120B R/W 420, 406, 218 AND 409
IPC AND SECTION 9 OF KPID ACT PRODUCED AT ANNEXURE
'BC'; QUASH GOVERNMENT ORDER DT: 07.01.2020 ACCORDING
SANCTION UNDER SECTION 17(A)(b) OF THE PREVENTION OF
CORRUPTION ACT, 1988 AGAINST THE PETITIONER HEREIN
PRODUCED AT ANNEXURE 'AU' AND CONSEQUENTLY QUASH
FIR BEARING DT: 01/02/2020 REGISTERED BY THE R-2
AGAINST THE PETITIONER HEREIN PENDING ON THE FILE CBI
SPL COURT (CCH 4) PRODUCED AT ANNEXURE 'AV' FOR
OFFENCES U/S 7, 7(A), 8, 10, 11 AND 12 OF THE PC ACT, 1988
(AS AMENDED IN 2018) AND FOR OFFENCES U/S 13(2) R/W
13(1)(d) PC ACT, 1988 ARRAYING THE PETITIONER HEREIN IN
THE SAID FIR AS ACCUSED NO.5 AND ETC.
3
THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 05.03.2021 AND COMING ON FOR
PRONOUNCMENT OF ORDER, THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
This petition is filed under Article 226 of Constitution of India r/w section 482 Cr.P.C. seeking the following reliefs:-
(1) Issue a writ of certiorari or any other appropriate writ, quashing Government Order dated 09.09.2020 bearing No. DPAR 89 SPS 2019 according prosecution sanction under Section 197 CrPC and 170 Karnataka Police Act, 1963 issued by the 1st Respondent in FIR RC-14(A)/2019 for offences under Section 120B r/w Sections 420, 406, 409 of IPC and Section 9 of the KPID Act, 2004 against the Petitioner herein produced at Annexure 'AY';
(2) Issue a writ of certiorari or any other appropriate writ, quashing supplementary chargesheet in SPL CC 1055/2019 naming the Petitioner as an accused, arraying him as accused No.25 for offences under section 120B r/w 420, 406, 218 and 409 IPC and Section 9 of KPID Act produced at Annexure'BB';
(3) Issue a writ of certiorari or any other appropriate writ, quashing order of CBI SPL Court (CCH4) in SPL CC 1055/2019 dt: 06.11.2020 taking cognizance of supplementary chargesheet in SPL CC 1055/2019 naming the Petitioner as an accused, arraying him as accused No.25 for offences under Section 120B r/w 420, 406, 218 and 409 IPC and section 9 of KPID produced at Annexure 'BC';
(4) Issue a writ of certiorari or any other appropriate writ, quashing Government Order bearing No. DPAR 89 SPS 2019 dt: 07.01.2020 according sanction under section 4 17(A)(b) of the Prevention of Corruption Act, 1988 against the Petitioner herein produced at Annexure 'AU';
(5) Issue a writ of certiorari or any other appropriate writ, quashing FIR bearing No.RC0372020A0005 dt:
01/02/2020 registered by the 2nd Respondent against the Petitioner herein pending on the file of CBI SPL Court (CCH 4) produced at Annexure 'AV' for offences u/s 7, 7(A), 8, 10, 11 and 12 of the PC Act, 1988 (as amended in 2018) and for offences u/s 13(2) r/w 13(1)(d) PC Act, 1988 arraying the Petitioner herein in the said FIR as Accused No.5.
(6) Grant such other relief as are just in the circumstances of the case.
2. The facts leading to the writ petition are as follows:-
(i) The respondent No.2 - CBI filed a FIR in RC0372020A0005/2020 against 11 accused persons on
01.02.2020 under section 120B IPC, sections 7, 7(A), 8, 10, 11 & 12, 13(2) r/w. 13(1)(d) of Prevention of Corruption Act, 1988 (as amended in 2018). The petitioner herein was shown as accused No.5 therein. The allegations leveled against the petitioner / accused No.5 was that he being the IGP, CID had forwarded the enquiry report of Sri. E.B.Sridhara (A-4) to the State DG & IGP on 18.01.2019 asserting that the enquiry did not find any wrongdoings on the part of the IMA group of entities to 5 invoke the provisions of Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004 (hereinafter referred to a "KPID Act") against them; he categorically maintained that the deposits collected by the IMA group of entities were exempted under Section 2(2)(ii) of the KPID Act; he did not mention about the deposits collected by the IMA Proprietorship owned by Shri Mohammed Mansoor Khan (A-6) in his report.
(ii) This report was not accepted by the RBI, which in turn addressed another letter dated 02.04.2019 to the DG & IGP stating that the RBI sought comprehensive enquiry by State CID on the unauthorized deposits collected by the IMA group entities. But the petitioner (A-5) did not oblige to the request made by the RBI and asserted that there was no requirement to re-look into the issue of IMA and again sent his earlier report to the DG & IGP on 25.05.2019.
(iii) According to the respondent, the reluctance on the part of the Public Servants, namely Shri M. Ramesh (A-1), the then Inspector of Police/SHO, Commercial Street Police Station, 6 Bengaluru; Sri Ajay Hilori (A-2), the then Deputy Commissioner of Police, Bengaluru East; Shri Gowrishankar (A-3), the then Sub-Inspector of Police, Commercial Street Police Station, Bengaluru; E.B. Sridhara (A-4), Deputy Superintendent of Police, Criminal Investigation Department (CID), Economic Offences Division (EOD), Bengaluru; and Shri Hemant Nimbalkar (A-5), the then Inspector General of Police, Criminal Investigation Department (CID), Bengaluru to take action against Shri Mohammed Mansoor Khan (A-6), Proprietor, I-Monetary Advisory and other IMA Group entities and its Directors was due to the fact that they had received illegal gratification as a motive or reward for forbearing to do official act of taking action against the IMA and obtained valuable things without consideration from IMA MD & CEO Shri Mohammed Mansoor Khan (A-6), Managing Director and CEO of IMA group of entities and its Directors.
(iv) It was further alleged that the above public servants conspired with accused No.6 and Directors of IMA Group of entities and conducted improper enquiry on IMA group of entities at various stages and submitted faulty enquiry reports to the 7 Government / concerned Authorities, recommending no action against the IMA group of entities and its Directors by misusing their official positions and thereby committed the above mentioned offences.
(v) During the pendency of investigation into the above FIR, a charge sheet was laid before the XXI City Civil and Sessions Judge and Principal Special Judge for CBI Cases (CCH-
4), Bengaluru in RC.No.14(A)/2019-BLR on 15.10.2020. In the said charge sheet, the petitioner herein was shown as accused No.25. The allegations leveled against the petitioner was that when he worked as Inspector General of Police, CID, EOD, during the period from 09.02.2018 to 10.07.2019 and as Head of CID-EOD he supervised the enquiry conducted by Shri.E.B.Sridhara (A.24) and during the course of enquiry, he had met Shri.Mohammed Mansoor Khan (A.1) and also Sri.Nizamuddin (A.2), one of the Directors of IMA at his office. The petitioner (A.25) vide his letter dated 18.01.2019 forwarded the CID-EOD enquiry report on IMA to DG & IGP with his assertions that the enquiry did not disclose any wrongdoings on 8 the part of IMA and its entities to take action against them under the provisions of KPIDFE Act, 2004; the petitioner (A.25) had categorically reiterated the enquiry findings in his comments that the deposits / investments collected by IMA and its group entities were exempted under section 2(2)(ii) of KPIDFE Act, 2004; he had also mentioned that no complaints were registered against IMA in any police station in order to take action against the IMA under the KPIDFE Act, 2004; he had also forwarded enquiry report of Sri.E.B.Sridhar (A.24) to the Deputy Commissioner, Bangalore Urban District and same was in turn forwarded to Sri.L.C.Nagaraj (A.23) who was conducting enquiry as competent authority under KPIDFE Act, 2004, instead of conducting independent and fair enquiry, adopted the same line of enquiry conducted by the CID, EOD and submitted his report on 08.03.2019 to the Government recommending for closure of enquiry against IMA, as such, during the period from 2016 to 2019, IMA and its group of entities were further facilitated to continue with their activities of collecting unauthorized deposits from the public by making impracticable or commercially non- viable promises to the depositors while accepting deposits from 9 them, which involved inherent risk of defrauding the depositors in violation of section 9 of KPIDFE Act, 2004.
(vi) The further allegations were that the accused / public servants colluded with Shri Mohammed Mansoor Khan (A.1) of IMA and refused to register any case despite receiving complaints against IMA and conducted improper enquiry and submitted enquiry report to the Government / Revenue Department / higher authorities of Police Department, to protect the interest of IMA by accepting illegal gratification / undue advantage from IMA.
(vii) It was further alleged that the investigation revealed that petitioner (A.25) was determined to help Sri.Mohammed Mansoor Khan (A.1) by influencing the Principal Secretary (Revenue) for accepting and approving the enquiry report submitted by accused No.23. The material evidence revealed the details of undue advantages received by accused Nos.24, 25 from accused No.1 in the form of costly gifts and monetary benefits.
10
3. The petitioner has challenged the initiation of criminal proceedings against him in FIR No.RC0372020A0005/2020 as well as the submission of additional / supplementary charge sheet in R.C.No.14(A)/2019- BLR, later numbered as Spl.CC.No.1055/2019 and pending on the file of learned XXI Addl. City Civil & Sessions Judge and Principal Special Judge for CBI Cases, Bengaluru (CCH.4) by raising the following contentions:-
(i) Petitioner has been selectively named an accused.
His superior and sub-ordinate officers are not arrayed as accused. The Deputy Commissioner, Bangalore city / the competent authority who failed to take action under the KPID Act has not been prosecuted and therefore, the prosecution of the petitioner is malafide, vindictive and ulteriorly motivated.
(ii) Petitioner was not the competent person to initiate action under the KPID Act, moreso, when no complaint was lodged before the Police alleging violation of the provisions of KPID Act.
11
(iii) That the FIR in Crime No.73/2019 was initially registered on 09.06.2019 by the Commercial Street Police Station on a complaint given by one Sri.Mohd. Khalid Ahamed against IMA and others for the offences under sections 406, 420 IPC for cheating him of his investment in IMA. The said FIR and the related FIRs were transferred to CBI vide Order No.E-HD.08. PCR.2019 dated 19.08.2019 and corrigendum No.E-HD.08.PCR. 2019 dated 27.08.2019 passed by the Government and FIR No.73/2019 came to be re-registered by the CBI as RC.No.14(A)/2019 dated 30.08.2019 against I-Monetary Advisory and 30 others under section 120B read with sections 406, 409 and 420 IPC. The petitioner was not shown as accused therein nor was there any whisper of allegation against the petitioner. It is only in the additional charge sheet filed on 15.10.2020 he has been arrayed as an accused. The additional charge sheet submitted by the respondent amounts to fresh investigation or re-investigation which is not permissible under law and hence additional charge sheet against the petitioner at Annexure-'BB' is illegal and bad in law and liable to be quashed. 12
(iv) The enquiry against the petitioner commenced only on 08.11.2019 pursuant to the seizure effected by the respondent. As on that date, no FIR having been registered against the petitioner and the petitioner having not been named as accused in RC.No.14(A)/2019, the preliminary enquiry conducted by the second respondent and the consequent seizure was bad in law.
(v) That the FIR in RC.No.5(A)/2020 was filed much after the alleged seizure on 01.02.2020 and the said delay is contrary to the principle of law laid down by the Hon'ble Supreme Court in LALITHA KUMARI vs. GOVERNMENT OF UTTAR PRADESH, 2014(2) SCC 1, wherein it is held that while ensuring and protecting the rights of the accused and the complainant, a preliminary enquiry should be made time bound and in any case it should not exceed fifteen days generally and in exceptional cases, by giving adequate reasons, six weeks' time is provided.
(vi) That the enquiry conducted by Sri.E.B.Sridhar, Enquiry Officer, was directly supervised and endorsed by the then Superintendent of Police, Financial Intelligence Unit of CID and 13 not by the petitioner. The letter sent by the petitioner was the draft letter got prepared by the SP-FIU CID and approved by the chain of command and the petitioner was only a signatory to the letter and not its author. The report submitted by the petitioner was the result of the enquiry conducted by various sub-ordinates and it was based on the opinion of the Legal Advisor and therefore, the allegations made against the petitioner in the additional charge sheet depicting the petitioner as Head of CID Wing, supervising and endorsing the enquiry conducted by Sri.E.B.Sridhar is patently incorrect. The said allegations are contrary to the records and are intended to create intentional bias against the petitioner.
(vii) That the Principal Secretary, Revenue Department, was entrusted with suo moto investigation under KPID Act against IMA Group by SLCC (Annexure-'N') and the Principal Secretary was the competent authority under section 3 KPID Act to investigate into the alleged irregularities in IMA group entities and he was competent to initiate action under the KPID Act without waiting for any report from the police based on the input 14 of the RBI. The Police Department was not the competent authority or deemed authority under section 5 of the KPID Act. Therefore, there is no basis for the prosecution of the petitioner for the alleged illegalities committed by the IMA under the provisions of KPID Act.
(viii) The registration of the FIR in RC.5(A)/2020 constitutes two FIRs which is impermissible under law. The allegations made in FIR RC.5(A)/2020 and the allegations leveled against the petitioner in the additional charge sheet in RC.14(A)/2019 are one and the same and therefore, continuation of the prosecution of the petitioner also cannot be sustained.
(ix) The sanction obtained by the respondent for prosecution of the petitioner under section 197 Cr.P.C. and section 170 Karnataka Police Act, 1963 are bad in law as the sanction order does not state that the said order has been approved by the Hon'ble Chief Minister who is the competent authority to issue the sanction. The sanction accorded for prosecution of the petitioner is not in conformity with the settled 15 principles of law. The sanction at Annexure-'AY' has been issued without application of mind and without considering the relevant material. Except the letter of the Investigating Officer, no other material was produced before the Sanctioning Authority to arrive at an objective decision to accord sanction, as such, sanction for prosecution of the petitioner suffers from patent illegality and is liable to be set aside on that score. Further the Sanctioning Authority being privy to both the requests and accord of sanction, failed to note that the material allegations in RC.5(A)/2020 and the additional charge sheet in RC.14(A)/2019 were one and the same and that the entire investigation itself having commenced in violation of section 17A of the PC Act, ought not to have granted sanction for prosecution of the petitioner.
(x) The allegations leveled against the petitioner do not constitute the ingredients of any of the offences alleged in the FIR or in the additional charge sheet and therefore, continuation of prosecution against the petitioner is illegal and a stark abuse of process of court.
16
4. Refuting the above submissions, the second respondent - CBI has filed detailed statement of objections, denying the allegations made in the petition and it is contended that the supplementary charge sheet has been filed by the second respondent / CBI in view of the further investigation undertaken. The previous charge sheets were filed for cheating the depositors and during the course of investigation, a larger conspiracy involving the petitioner came into light and in pursuance thereof, further investigation was conducted and a supplementary charge sheet was filed arraying the petitioner as accused No.25. It is further submitted that the FIR in RC.14(A)/2019 and the impugned FIR in RC.5(A)/2020 have been properly registered in accordance with law. The FIR in RC.5(A)/2020 was registered for the offences under the provisions of PC Act, 1988 (as amended in 2018) and since the XXI Additional City Civil and Sessions Judge and Principal Special Judge for CBI Cases (CCH-4), Bengaluru, was the notified court, the FIR had to be submitted to the notified court i.e., CCH.21, as such, there is no illegality in the registration of the FIR in 17 RC.5(A)/2020. Along with the written statement, the respondent No.2 has also produced the order sheets in W.P.No.56649/2018 and connected matters and has emphasized that the investigation into the alleged offences committed by the IMA entities were monitored by the Division Bench of this Court and prima facie material having been collected in proof of the accusations leveled against the petitioner, there is no reason to quash the proceedings as sought for by the petitioner.
5. Sri.Ashok Haranahalli, learned Senior Counsel appearing for petitioner, Sri.P.Prasanna Kumar, learned Spl.PP for respondent No.2 and Sri.V.M.Sheelvant, learned SPP for respondent No.1 have addressed elaborate arguments in line with the contentions urged in the petition and the statement of objections by raising the following points for consideration namely, (1) Whether the registration of FIR in RC.5(A)/2020 amounts to second FIR?
(2) Whether the additional / supplementary charge sheet dated 15.10.2020 is bad in law as the 18 same is the result of reinvestigation and not the further investigation as envisaged under section 173(8) of Cr.P.C.?
(3) Whether the investigation and consequent submission of additional / supplementary charge sheet is vitiated due to violation of protection under section 17A of the Prevention of Corruption Act, 1988 (as amended in 2018)?
(4) Whether the sanction for prosecution of the petitioner under section 197 Cr.P.C. and section 170 Karnataka Police Act, 1963 is proper and valid?
(5) Whether the uncontroverted allegations made in the FIR RC.5(A)/2020 and the material produced along with the additional / supplementary charge sheet in RC.14(A)/2019 prima facie disclose the ingredients of the offences alleged against the petitioner under section 120B read with sections 19 420, 406, 218, 409 IPC and section 9 of the KPID Act?
Reg. Point Nos.(1) and (2):
6. The respondents do not dispute the fact that based on the notification dated 19.08.2019 and corrigendum issued on 27.08.2019 by the Karnataka State Government and subsequent notification dated 30.08.2019 issued by DoPT, New Delhi, a case in RC.No.14(A)/2019 was registered against 30 accused persons on 30.08.2019 under section 120B read with sections 406, 409, 420 IPC. Initially investigation was conducted by the SIT and according to the respondent, the CBI took over investigation from SIT on 30.08.2019 and after collecting sufficient evidence, filed charge sheet No.04/2019 against 30 accused persons on 07.09.2019 (Annexure-'AQ').
7. In the statement of objections, a specific contention has been taken by respondent No.2 that subsequently further investigation was conducted therein. The averments made in the written statement in this regard read as under:-20
"Subsequently, the case was under further investigation to investigate into the larger conspiracy and role of regulators. Accordingly, CBI filed its first supplementary charge sheet against two other accused on 05.10.2019 and further investigation continued. After completing the investigation against the concerned Police Officers and the then Competent Authority, a detailed CBI report seeking sanction for prosecuting the then Competent authority and five police officers, including the petitioner/accused, has been sent to Government of Karnataka on 18.12.2019. The sanction to prosecute the accused police officers including the petitioner/accused under section 197 Cr.P.C. and Section 170 of Karnataka Police Act, 1963 was received by CBI only in September 2020. After receipt of sanction for prosecution, charge sheet along with the relied upon documents and statement of witnesses and copies of the accused were filed before the Hon'ble 21st Additional City Civil and Principal Special Judge for CBI Cases Court (CCH-4) on 15.10.2020."
8. These averments clearly indicate that the petitioner came to be implicated in the alleged offences pursuant to the investigation conducted subsequent to 07.09.2019. Undeniably, the additional / supplementary charge sheet was filed on 15.10.2020 whereas in respect of the very same transaction, a separate FIR came to be registered against the petitioner in RC.No.5(A)/2020 on 01.02.2020 and the investigation therein was kept in progress even after the submission of the additional 21 / supplementary charge sheet in RC.No.14(A)/2019 which is impermissible under law as it amounts to investigation based on second FIR in respect of the same transaction.
9. Though in the statement of objections, respondent No.2 sought to justify the registration of the second FIR, contending that, during the further investigation, it revealed the commission of the offences under the provisions of the Prevention of Corruption Act, but since the CCH.4 which was seized with the charge sheet arising out of R.C.No.14(A)/2019- BLR had no jurisdiction to try the offences under the provisions of the PC Act, pursuant to the orders of the Division Bench of this Court, which was monitoring the investigation into the alleged offences, a separate FIR was registered, yet, during the course of hearing, Sri.P.Prasanna Kumar, learned Spl. Public Prosecutor has made a submission before the Court that the charges against the petitioner would be pursued only in R.C.No.14(A)/2019 and the evidence collected in RC.No.5(A)/2020 shall be placed as additional material in R.C.No.14(A)/2019. His submission is placed on record. In view 22 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- 23 'AU') as well as sanction for prosecution of the petitioner under section 197 of Cr.P.C., and also under section 170 of Karnataka Police Act, 1963 vide Government Order No.DPAR.89.SPS.2019, Bengaluru dated 09.09.2020 (Annexure-'AY') have been produced. The sanction or permission to prosecute appears to have been issued pursuant to Government Order No.HD.08.PCR.2019 dated 19.08.2019 and based on the Letter No.RC.14(A)/2019/CBI/ACB/BLR/2019/63 dated 18.12.2019 from Superintendent of Police, CBI and Chief Investigating Officer, MDIT, Bengaluru (Annexure-'AY'). A reading of this order manifests that the application or requisition seeking permission to prosecute the petitioner was filed by the Superintendent of Police, CBI, Bengaluru only on 18.12.2019. Pursuant to this request, a Government Order No.DPAR.89.SPS.2019 dated 09.09.2020 has been passed and the same reads as under:-
Government Order No. DPAR 89 SPS 2019 Bengaluru, Dated: 09TH September 2020 In the circumstances explained in the preamble, Government of Karnataka hereby accords sanction to prosecute Sri. Hemant M. Nimbalkar, IPS (KN 1998), the 24 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 25 Order No.HD.08.PCR.2019 dated 19.08.2019 and Letter No.MDIT-IMA/CBI/BLR/2019/64 dated 18.12.2019 of Superintendent of Police and Chief Investigating Officer, MDIT/CBI, Bengaluru, (Annexure-'AU') indicating that even the application / requisition seeking permission to conduct enquiry under section 17A(b) of the PC Act was made only on 18.12.2019. Interestingly, in the preamble of the said order, it is stated thus:-
"Central Bureau of Investigation after carrying out the investigation in the case of M/s. I-Monetary Advisory Private Limited & its group entities and has submitted its report vide letter read at reference (2) above.
..
Investigation of CBI disclosed that there was a concerted effort on the part of the various Police Officials to protect the interests of Sri Mohammed Mansoor Khan M.D. and CEO of IMA and of M/s IMA instead of protecting the interest of investors and depositors and accordingly, they submitted improper enquiry reports and recommended no action against IMA and as a quid-pro-quo, received bribes / valuable things from IMA.26
Investigation of CBI also discloses that the evidence collected so far has prima facie disclosed that these public servants allegedly committed the offences under section 7 and 11 of Prevention of Corruption Act, 1988 (as amended in 2018) in discharge of their official functions or duties as public servants."
12. Considering these aspects, Government Order bearing No.DPAR.89.SPS.2019 dated 07.01.2020 was passed by the Government of Karnataka, which reads thus:-
Government Order No.DPAR 89 SPS 2019, Bengaluru dated: 07.01.2020 In exercise of powers conferred under section 17(A)
(b) of Prevention of Corruption (Amendment) Act, 2018, after being satisfied that prima facie the offences appear to have been committed by Sri. Hemant M. Nimbalkar IPS (KN-1998), Additional Commissioner (Admin), Bengaluru City, Bengaluru and Sri. Ajay Hilori, IPS (KN-2008) Commandant, Karnataka State Reserve Police, 1st Bn., Bengaluru, sanction of the government is hereby accorded to Central Bureau of Investigation, Bengaluru to conduct any enquiry or investigation into the allegations against above said official.27
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. --
28
6. One Magic Trackpad-2
7. Two Licenses of Office Home & Student 2016
8. One empty box bearing I Phone and leather case
9. One I Phone In the search list, it is stated that item Nos.1 to 8 were found kept in the carry-bag of I-Monetary Advisory and found in wardrobe in bedroom in first floor. Item Nos.1 to 7 were found in unopened condition. Item No.9 was found in the wardrobe in bedroom on first floor in unopened condition. Other than the material said to have been collected during the search, no other material is forthcoming in the entire charge sheet or additional charge sheet filed by respondent No.2 to show that the petitioner has received any illegal gratification, either monetary or in kind, from accused No.6 or any of its Directors or entities. Though in the course of arguments it was submitted that necessary evidence was collected to show that the amount for purchase of the items recovered from the house of the petitioner were paid from the account maintained by IMA, no such material has been brought to my notice. Even if it is assumed that the said evidence was collected, having regard to the fact that the 29 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 30 alleged to have been committed, in connection with the affairs of a State, of that Government;
(c) in the case of any other person, of the authority competent to remove him from his office, at the time when the offence was alleged to have been committed:
Provided that no such approval shall be necessary for cases involving arrest of a person on the spot on the charge of accepting or attempting to accept any undue advantage for himself or for any other person:
Provided further that the concerned authority shall convey its decision under this section within a period of three months, which may, for reasons to be recorded in writing by such authority, be extended by a further period of one month."
15. The scope and amplitude of section 17A of PC Act is succinctly expounded by the Gujarat High Court in BHAYABHAI GIGABHAI SUTREJA vs. STATE OF GUJARAT, 2020 SCC OnLine Guj. 2266, which read as under:-
"14. As per the plain reading of Section 17(A) latest amended, the preliminary inquiry or investigation is sine-qua-none, further without previous approval, the Investigating Officer cannot proceed with the matter. Learned Senior Advocate Shree Panchal for the applicant has placed reliance upon the judgment passed by 31 the High Court of Rajasthan at Jodhpur in S.B. Criminal Misc. (Pet) No. 159/2018 in case of Kailash Chandra Agrwal Vs. State of Rajasthan, wherein FIR was lodged on the basis of private complaint and no approval of the competent Government was taken before initiating the inquiry and registering the formal FIR. Manifestly, the newly inserted provision prohibits conducting of enquiry/inquiry or investigation into any offence under this Act alleged to have been committed by a public servant where the act alleged is relatable to any recommendation made or decision taken by such a public servant in discharge of official functions or duties. Manifestly, the questioned decisions in furtherance whereof, the land subject matter of dispute was sold to and transferred in the name of the applicants Kailash Chandra Agarwal and Nand Bihari, were issued by the respective public servants concerned i.e. the Land Record Inspector Chhotaram, the Patwari Ramratan and the Tehsildar Tejmal Choudhary in discharge of their official duties. Therefore, before initiating any inquiry against the public servants under the provisions of the P.C. Act, prior approval of the Government was a sine-qua-non and the FIR could not have been registered without such approval. As the public servants cannot be prosecuted in this 32 mater, registration of the FIR by the Anti Corruption Bureau against the private individuals i.e. the applicants Kailash Chandra Agarwal and Nand Bihari is also totally illegal and amounts to a gross abuse of process of law."
16. I am in respectful agreement with the view taken by the Gujarat High Court in the above decision. In view of the clear prohibition contained in section 17A of the PC Act, neither preliminary enquiry nor any investigation could have been commenced against the petitioner especially when the offences leveled against him related to the decision taken by him in his capacity as public servant in the discharge of his official function. As a result, the material collected during the search and the material collected in the course of investigation, either before registration of the FIR or subsequent thereto cannot be taken into consideration, either for making out charges against the petitioner or to proceed against him for the offences alleged in the charge sheet. Since the sanction for prosecution of the petitioner under section 197 Cr.P.C. and section 170 of Karnataka Police Act has been issued based on the illegal 33 material collected by the Investigating Agency, even the sanction relied on by the respondent for prosecution of the petitioner cannot be sustained. As a result, the FIR registered against the petitioner as well as the consequent submission of the additional / supplementary charge sheet being violative of the provisions of section 17A of PC Act and the sanction accorded for prosecution of the petitioner being illegal and invalid, no prosecution of the petitioner could be permitted to continue.
Reg. Point No.(5):
17. Now coming to the merits, before adverting to the contentions urged by the learned counsel for petitioner in this regard, it should be noted that the petitioner has sought to quash the proceeding initiated against him which are at the initial stage of investigation and / or trial. Law is now well settled that the inherent powers under section 482 of Cr.P.C. can be exercised to give effect to an order under the Code to prevent abuse of process of the court or to otherwise secure the ends of justice and cannot be used to stifle a legitimate prosecution. Though the petitioner has also invoked Article 226 and 227 of 34 the Constitution of India, the reliefs claimed in the petition in substance falls within the ambit of section 482 Cr.P.C.
18. In RISHIPAL SINGH v. STATE OF UTTAR PRADESH AND ANOTHER, (2014) 7 SCC 215, it is held by the Hon'ble Apex Court as under:-
"What emerges from the above judgments is that when a prosecution at the initial stage is asked to be quashed, the tests to be applied by the Court is as to whether the uncontroverted allegations as made in the complaint prima facie establish the case. The Courts have to see whether the continuation of the complaint amounts to abuse of process of law and whether continuation of the criminal proceeding results in miscarriage of justice or when the Court comes to a conclusion that quashing these proceedings would otherwise serve the ends of justice, then the Court can exercise the power under Section 482 Cr.P.C. While exercising the power under the provision, the Courts have to only look at the uncontroverted allegation in the complaint whether prima facie discloses an offence or not, but it should not convert itself to that of a trial 35 Court and dwell into the disputed questions of fact."
19. In MADHAVRAO JIWAJIRAO SCINDIA & Others vs. SAMBHAJIRAO CHANDROJIRAO ANGRE & Others reported in 1988 Cri.L.J. 853, it is held that:
"The legal position is well settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue."
20. Tested on the touchstone of the above principles, the allegations made in the FIR in RC.No.5(A)/2020 and the material produced in R.C.No.14(A)/2019, in my view, do not prima facie disclose the ingredients of any of the offences alleged against the petitioner warranting his prosecution for the above offences. On considering the records placed before this court and the 36 allegations leveled against the petitioner therein, it is seen the case of the prosecution is that the alleged offences were committed by the petitioner during his tenure as IGP between 09.02.2018 to 10.07.2019. But the records produced along with the additional charge sheet indicate that by the time the petitioner took charge of the office, Crime No.73/2019 was investigated by Commercial Street Police and a closure report was filed therein. This is evident from the letter written by the DG & IGP, Karnataka to the DGP-CID & EO, Bangalore dated 16.05.2019 (Annexure-'AH'), wherein by enclosing the report of the Commercial Street Police Station, it was reported that on enquiry into the affairs of the IMA, no illegalities were discovered by the police. This letter indicates that the petitioner had no involvement whatsoever either in the registration of the case or in the enquiry conducted by the Commercial Street Police Station. Further, the letter written by the Additional Commissioner of Police at Annexure-'L' discloses that the decision was taken to close the case without the intervention of the petitioner. More importantly, the proceedings of the State Level Co-ordination Committee (hereinafter referred to as 37 "SLCC"), which are produced by the petitioner at Annexure-'M' the genuineness of which is not disputed, indicate that the issue was discussed in the Committee and the Committee had come to the conclusion that, as per the preliminary enquiry report, the IMA entity had not committed any offence and so far no complaints were filed in Shivajinagar Police Station. A reading of the said proceedings indicate that even the officials of RBI participated in the discussion and it is observed that in the presence of the GM, RBI, the Members agreed to close the case. It is also noted that in the 17th SLCC meeting held by the Committee (Annexure-'N') the "RBI suggested that this case may also be referred to PS, Revenue for suo motto investigation and action under the relevant provisions of the Karnataka PID Act, 2004." These proceedings appear to have taken place in the year 2017 whereas according to the prosecution, the report of the Enquiry Officer was forwarded by the petitioner to his higher superiors only on 18.01.2019. In this context, it is also pertinent to note that on October 17, 2017, the General Manager of the Reserve Bank of India had addressed a letter to Dr.Ramana Reddy E V, IAS Principal Secretary, Department of 38 Revenue (Annexure-P'). Para 3 of the said letter reads as under:-
"3. The gist of the case is detailed in Annex. Taking into account the various aspects of the case, you are required to kindly issue requisite instructions for a detailed examination of the matter so that necessary action may be initiated by the Competent Authority under the relevant provisions of the Karnataka PID Act 2004."
This letter indicates that the Competent Authority had contemplated action against IMA and its group entities under the provisions of the KPID Act, 2004 as back as in 2017. The petitioner was no way involved either in the enquiry or in decision taken by SLCC. Further by letter dated 18.06.2018 (Annexure-'S'), the Deputy Commissioner of Bangalore District had written a letter to the DG & IGP informing him of the decision taken by the SLCC to take action under the provisions of the KPID Act. All these documents clearly disclose that the alleged activities of IMA had come to the notice of RBI as well as the competent authority appointed under the KPID Act much before the petitioner assumed charge as the IGP-CID. Under the said circumstances, the act of the petitioner forwarding the 39 report of the Inquiry Officer-accused No.4 cannot be construed as an act committed in furtherance of criminal conspiracy as sought to be made out by respondent No.2. If the above act of the petitioner could be treated as culpable, by the same yardstick, the RBI officials and the authorities under the KPID Act who participated in the SLCC meeting would also render themselves liable for prosecution for the above offences.
21. In this context, it is also significant to note that the file maintained in the CID Office (Annexure-'U') regarding the action taken against IMA, reveals that the ADGP-CID had made an endorsement directing IGP, EO and IGP-EI in turn had made an endorsement directing SP-FIU to take appropriate action. The petitioner herein is seen to have approved the said notings on 18.08.2018. In the said note-sheet, at item No.14, it was stated that Sri.E.B.Sridhara, Dy.SP. EOD - CID had submitted a progress report dated 21.08.2018. It was put up for approval and the petitioner routinely had given approval on 23.08.2018. The noting at item No.84 indicates that the final report was 40 forwarded to the LA for his opinion on 01.01.2019. Page No.16 of the note-sheet contains the opinion of the Legal Advisor. Based on the said legal opinion, once again the file appears to have been put up before the petitioner along with SP's comments, wherein it is stated as under:-
SP's comments in Annexure-14 is also of the opinion that there are no grounds to invoke Section 9 of KPID Act. Enquiry report submitted by EO may be approved.
Sd/-
07.01.19
87) DIGP) Submitted the Enquiry Report of the EO along with L.A's opinion that there is no ground for invoking Section 9 of KPID Act.
For kind approval.
Sd/-
07.01.19
88) IGP) Kindly refer page 31, 46 & 64.
A) Enquiry officer has submitted his findings vide Annexure-11 (page 107) r/w para 85 (LA opinion) I agree with the findings of the enquiry that the business or the transactions carried out by the instant group and the allied companies does not fall under the perview of KPID Act 2004 because;
I. The said establishments are not the financial establishments as defined vide Section 2(4) of the Act. II. The said companies do not receive 'Deposits' as defined vide Section 2(2) of the Act.
III. The business and the transactions are governed by Limited Liability Partnership Act 2005 and the LLP's are duly registered with ROC Karnataka and concerned Sub-Registrar.
41IV. The exceptions to Deposits vide Section 2(2)(ii) of the KPID Act exempts any contribution to partnership from the term 'Deposits' defined vide Section 2(2).
In the light of the above findings, initiation of Section 3(or Section 9) of KPID Act against the instant company is beyond the purview of the Statute.
In future, if any dispute arises between the members of the LLP, stated supra, they are free to avail legal remedies available to them as agreed vide LLP agreement.
The EO report is submitted for approval.
B) In the event of approval, permission is sought to send the enquiry report to the office of Deputy Commissioner, Bangalore District as instructed vide page 31 under the intimation to Chief Office.
For approval Sd/-
9.1.2019
89) DGP CID)
Discussed. It does not attract any provision of KPID Para 88 is approved.
Sd/-
These notings clearly indicate that the decision to close the enquiry was taken collectively by the police officers and the notings extracted above clearly indicate that it was an institutional decision taken by the concerned police officials right 42 from SP to DG based on the legal opinion obtained from the Legal Advisor. In the said circumstances, even if it is assumed that the decision taken by the petitioner is erroneous, yet, solely on that ground, criminality cannot be imputed to the petitioner when the material on record clearly indicate that the petitioner has approved the notings made by his subordinates based on the findings of the Enquiry Report and the opinion of the Legal Advisor. Though it is alleged in the charge sheet that the above omissions and commissions were carried out by the petitioner in connivance with the other Government servants including the Enquiry Officer, but no material is brought to my notice to show that at any point of time, the petitioner herein was found exerting his influence over any of his sub-ordinates or that he was instrumental in obtaining enquiry report and the legal opinion from the Legal Advisor. The allegations made in this regard are bald and are not supported by any material. Even otherwise, under the provisions of the KPID Act, neither the petitioner nor the police officers have any role to play in regulating the activities of the financial establishments. 43
22. Under section 5 of the KPID Act, 2004, the Competent Authority is appointed by the Government, by notification not below the rank of an Assistant Commissioner, for the purpose of this Act. The duties and powers of the Competent Authority are delineated in section 6 of the KPID Act. As per section 6(1) of KPID Act, "On receipt of order of appointment, the Competent Authority is required to take such necessary action as is necessary or expedient for taking physical possession of all the monies and assets of the concerned financial establishment expeditiously and the Competent Authority shall have all the powers which are necessary for the aforesaid purpose." For the purpose of carrying out purpose of this Act, the Competent Authority may require assistance of any police authority or any other authority or person and on such requisition it shall be the duty of the police authority or such other authority or person to extend necessary assistance to the Competent Authority.
23. The facts discussed above clearly point out that the Government and the authorities constituted under the Act were 44 aware of the alleged misdeeds of IMA and its entities in 2017 much before the petitioner assumed the office of IGP. As per the provisions of the Act, the State Government and the Competent Authority constituted under the KPID Act were duty-bound to act by themselves rather than depending upon the enquiry report by the police. The entrustment of enquiry to the police does not relieve the State Government and the authorities constituted under the Act of their duty to provide protection to depositors in financial establishment. Under the said circumstance, even if there was any act of commission or omission by police officers in preparing the enquiry report or error in the final opinion in the matter, the same cannot furnish a ground to proceed against the petitioner for the criminal offence of conspiracy or abetment to commit the offences by the financial establishment. Under the said circumstances, the allegations made against the petitioner and the material produced in support thereof, even if accepted at its face value as true, in my view, they do not constitute the ingredients of offences either under section 120B r/w Sections 420, 406, 409 of IPC or Section 9 of the KPID Act, 2004. In the absence of any evidence to show entrustment of any of the 45 properties to the petitioner, there is no basis to proceed against the petitioner for the offences under section 409 IPC.
24. Under section 9 of the KPID Act, only the promoter, director, partner, manager or any other person or an employee responsible for the management or conducting of the business or affairs of such financial establishment, would be liable for the fraud or default committed in repayment of the deposits. The petitioner herein is sought to be prosecuted on the allegation that he forwarded the enquiry report prepared by accused No.4 (Sri.E.B.Sridhara) and reiterated his opinion that the IMA and its entities did not fall within the ambit of the provisions of KPID Act. These allegations, even if they are accepted as true, do not constitute the ingredients of section 420 or 406 IPC or under the provisions of the PC Act insofar as petitioner is concerned. Moreover, the very enquiry initiated against the petitioner being without authority of law and in violation of the protection granted to the petitioner under section 17A of the PC Act and the 46 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 47 charge sheet is quashed insofar as petitioner herein is concerned.
(iv) The additional / supplementary charge sheet in Spl.CC.No.1055/2019 (Annexure-'BB') is quashed insofar as petitioner herein is concerned.
(v) The FIR bearing No.RC0372020A005 dated 01.02.2020 registered by the second respondent against the petitioner herein, pending on the file of CBI.Spl. Court (CCH.4) (Anneuxre-'AV') is quashed.
In view of disposal of the main matter, I.A.No.1/2021 does not survive for consideration and the same is also disposed of.
Sd/-
JUDGE BSS