Now if the public servant holds two offices and he is accused of
having abused one and from which he is removed but continues to hold
the other which is neither alleged to have been used nor abused, is a
sanction of the authority competent to remove him from the office which is
neither alleged or shown to have been abused or misused necessary? The
submission is that if the harassment of the public servant by a frivolous
prosecution and criminal waste of his time in law courts keeping him away
from discharging public duty, are the objects underlying Section 6, the
same would be defeated if it is held that the sanction of the latter authority
is not necessary. The submission does not commend to us. We fail to see
how the competent authority entitled to remove the public servant from an
office which is neither alleged to have been used or abused would be able
to decide whether the prosecution is frivolous or tendentious. An illustration
was posed to the learned counsel that a Minister who is indisputably a
public servant greased his palms by abusing his office as Minister, and
then ceased to hold the office before the court was called upon to take
cognizance of the offence against him and therefore, sanction as
contemplated by Section 6 would not be necessary; but if after committing
the offence and before the date of taking of cognizance of the offence, he
was elected as a Municipal President in which capacity he was a public
servant under the relevant Municipal law, and was holding that office on
the date on which court proceeded to take cognizance of the offence
committed by him as a Minister, would a sanction be necessary and that
too of that authority competent to remove him from the office of the
Municipal President. The answer was in affirmative. But the very illustration
would show that such cannot be the law. Such an interpretation of Section
6 would render it as a shield to an unscrupulous public servant. Someone
interested in protecting may shift him from one office of public servant to
another and thereby defeat the process of law. One can legitimately
envisage a situation wherein a person may hold a dozen different offices,
each one clothing him with the status of a public servant under Section 21
IPC and even if he has abused only one office for which either there is a
valid sanction to prosecute him or he has ceased to hold that office by the
time court was called upon to take cognizance, yet on this assumption,
sanction of 11 different competent authorities each of which was entitled to
remove him from 11 different public offices would be necessary before the
court can take cognizance of the offence committed by such public
servant, while abusing one office which he may have ceased to hold. Such
an interpretation is contrary to all canons of construction and leads to an
absurd and product which of necessity must be avoided. Legislation must
at all costs be interpreted in such a way that it would not operate as a
rougue's charter. (See Davis & Sons Ltd. v. Atkins)
26. Therefore, upon a true construction of Section 6, it is implicit therein
that sanction of that competent authority alone would be necessary which
is competent to remove the public servant from the office which he is
alleged to have misused or abused for corrupt motive and for which a
prosecution is intended to be launched against him.
“ REPORTABLE”
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.1454 OF 2013
(Arising out of SLP (Crl.) No.61 of 2012)
Ajoy Acharya … Appellant
Versus
State Bureau of Inv. against Eco. Offence … Respondent
With
CRIMINAL APPEAL NO.1455 OF 2013
(Arising out of SLP (Crl.) No. 400 of 2012)
Dated:September 17, 2013.
Citation:2016 ALLSCR (CRI)648
1. Investigation into the affairs of the Madhya Pradesh Industrial
Development Corporation (renamed as Madhya Pradesh State Industrial
Development Corporation, hereinafter referred to as the ‘MPSIDC’) was ordered
with effect from 3.1.1996, by the State Government. Thereupon, a first
information report bearing no. 25 of 2004 was registered under Sections 409,
406, 467, 468 and 120B of the Indian Penal Code, 1860 (hereinafter referred to
as the ‘IPC’) and Section 13(1)(d) read with Section 13(2) of the Prevention of
Corruption Act, 1988 (hereinafter referred to as the ‘PC Act’). The allegations
levelled in the first information report generally were, that the functionaries of the
MPSIDC had permitted investment by way of inter corporate deposits
(hereinafter referred to as the ‘ICD’s’) through a resolution of the Board of
Directors (of the MPSIDC) dated 19.4.1995. By the instant resolution, the Board
(of the MPSIDC) authorized its Managing Director, to extend short term loans
(including ICD’s) out of the surplus funds with the MPSIDC, on suitable terms
and conditions. The gravamen of the accusation was, that the Board of
Directors’ resolution dated 19.4.1995 was passed in disregard of an earlier
decision taken in the Cabinet Review Meeting held on 28.1.1994, wherein a
decision was taken that the MPSIDC would not extend financial assistance to
industries. The petitioner herein had admittedly attended the said meeting held
on 28.1.1994. The accusation also included the insinuation, that after the
decision of the Cabinet Review Committee dated 28.1.1994, the Board of
Directors (of the MPSIDC) had passed an endorsing resolution dated 31.1.1994,
wherein it was resolved by the MPSIDC to stop financing industries, from out of
its surplus funds. The petitioner herein had even participated in the instant
proceedings held on 31.1.1994. Based on the aforesaid factual position, it was
sought to be suggested, that undeterred by the decision during the Cabinet
Review Meeting dated 28.1.1994, and the resolution of the Board dated
31.1.1994 (which had prohibited extension of financial assistance to industries),
the Board of Directors’ resolution dated 19.4.1995, authorized its Managing
Director to extend short term loans (including ICD’s) to industries, out of surplus
funds with the MPSIDC, on suitable terms and conditions. It was also alleged,
that the above controversial Board resolution dated 19.4.1995 was passed in
complete disregard to the mandate contained in Section 292 of the Companies
Act, 1965. After the aforesaid Board resolution dated 19.4.1995, it was alleged,
that the MPSIDC had extended ICD’s to a large number of companies, out of
which 42 companies had committed default in repayments. In the
abovementioned first information report, it was also alleged, that the
abovementioned transactions executed by the MPSIDC were illegal and in
violation of law.
2. The ICD’s referred to in the foregoing paragraph were executed during the
period between 1995 and 2004. It was alleged, that four senior functionaries of
the MPSIDC who were then members of the Board of Directors of the MPSIDC
had deliberately supported the resolution of the Board of Directors dated
19.4.1995, despite the fact that they were aware of the Cabinet Review Meeting
decision dated 28.1.1994, as well as, the earlier resolution of the Board of
Directors of the MPSIDC dated 31.1.1994. Without their participation and
support, it was alleged, that the controversial Board resolution dated 19.4.1995
could not have been passed.
3. It would also be relevant to mention, that allegations were also levelled
against 42 defaulting companies in the first information report dated 24.7.2004.
The said 42 companies had defaulted by not making repayments of the ICD’s
released to them, in terms of their contractual obligations. The said first
information report, however, did not make any reference to a large number of
other companies in whose favour the MPSIDC had likewise extended ICD’s,
simply because the companies had returned the loaned amount to the MPSIDC,
in consonance with their contractual obligations.
4. A brief description of the four senior functionaries of the MPSIDC, against
whom allegations were levelled, is being delineated below:
(I) Rajender Kumar Singh : He was the then State Minister in the
Commerce and Industries Department. He
was also the then Chairman of the
MPSIDC, having been appointed as such
on 7.4.1994.
(ii) Ajoy Acharya : He was a member of the IAS cadre,
belonging to the 1976 batch. While holding
the charge of the office of Industries
Commissioner, Government of Madhya
Pradesh, he was nominated as a Director
of the MPSIDC in 1993. He continued as
such till 1998. In June 1998, he was
transferred as Joint Secretary, Department
of Heavy Industries, Government of India,
whereupon, he ceased to be on the Board
of Directors of the MPSIDC.
(iii) J.M. Ramamurthy : He was also a member of the IAS cadre.
He was appointed as Special Director, on
the Board of the MPSIDC in 1993. He
retired from the IAS on 30.6.1998.
Thereupon, he ceased to be on the Board
of Directors of the MPSIDC.
(iv) Munadutt Pillai Rajan :He was also a member of the IAS cadre.
He was appointed as the Managing
Director of the MPSIDC. He retired from
the IAS on 7.5.2000. Thereupon, he
ceased to be the Managing Director of the
MPSIDC.
5. The first charge sheet was filed on 24.9.2007. The allegations against the
petitioner herein, Ajoy Acharya, were as follows:
“a) The petitioner was present at the Cabinet Review Meeting dated
28.01.1994 and Board Meeting dated 31.01.1994, where the
decision relating to discontinuance of project financing/providing
financial assistance was taken, and thus, the instant factual position
was within petitioner’s personal knowledge.”
b) The petitioner was present in the Board Meeting dated 19.04.1995 in
which the Board Resolution was passed to engage itself in
Investments by way of ICD, and also in other Board Meeting after
28.01.1994 where decision relating to equity participation was taken.
The petitioner did not object to the passing of these resolutions
despite of his having been aware of the contrary decision taken at
the Cabinet Review Meeting which was endorsed at the Board
Meeting dated 31.1.1994.
c) The petitioner did not act bonafidely as the Cabinet Review Meeting
had specifically stopped giving of any financial assistance to
industries out of the surplus funds available with the MPSIDC.
d) The Board Resolution dated 19.04.1995 empowering the Managing
Director to invest in ICD was in violation of Section 292 of the
Companies Act, and also, in violation of Memorandum of
Association and Articles of Association.
e) The petitioner facilitated the passing of the aforesaid allegedly illegal
Board Resolution, which became the foundation for all illegal ICD’s.
f) The petitioner facilitated the passing of the resolutions referred to
above, by attending the said Board Meetings, wherein he did not
object to the proposed resolutions in the Board Meetings.”
6. The first charge sheet dated 22.9.2007 was filed in Special Case no. 7 of
2007, and the Special Judge, Bhopal, took cognizance thereof. It is the
contention of the petitioner Ajoy Acharya, that upon his having perused the
charge sheet dated 22.9.2007 (and the documents enclosed therewith), he learnt
that no sanction was applied for or obtained, before initiation of the above
prosecution against him. Under the belief, that prior sanction was a pre-requisite
under Section 19 of the PC Act, as well as, under Section 197 of the Code of
Criminal Procedure, 1973 (hereinafter referred to as the ‘CrPC’), the petitioner
filed a petition under Section 239 of the CrPC (as well as, Section 19 of the PC
Act) seeking discharge on the ground, that prosecution had been initiated against
him without seeking sanction of the competent authority. The petition filed under
Section 239 of the CrPC was dismissed by the Special Judge, Bhopal, on
11.4.2008.
7. Dissatisfied with the aforesaid order dated 11.4.2008, the petitioner
preferred Criminal Revision Petition no. 1422 of 2008, in the High Court of
Madhya Pradesh (before its principal seat at Jabalpur, hereinafter referred to as
the ‘High Court’). The aforesaid Criminal Revision Petition was dismissed by a
Division Bench of the High Court on 29.8.2011. Aggrieved by the order passed
by the Special Judge, Bhopal (dated 11.4.2008), and the order passed by the
High Court (dated 29.8.2011), the petitioner preferred Petition for Special Leave
to Appeal (Criminal) no. 61 of 2012. This Court issued notice in the above matter
(as also in a connected matter i.e., Special Leave to Appeal (Criminal) no. 400 of
2012) on 6.1.2012. While issuing notice, an interim order came to be passed on
6.1.2012, staying proceedings before the Special Judge, Bhopal (in Special Case
no. 7 of 2007).
8. We have concluded hearing in the matter. Leave is granted.
9. We shall endeavour to first adjudicate the principal contention advanced at
the hands of the appellant, namely, that the initiation of prosecution against the
appellant was not sustainable in law, since sanction of the competent authority
was not obtained before cognizance in the matter was taken. The particulars of
the allegations levelled against the appellant in the charge sheet filed against him
(and others) are irrelevant for the determination of the present controversy. We
have already recorded hereinabove briefly, an outline of the controversy which
resulted in the filing of the charge sheet (dated 22.9.2007) involving the
appellant. Despite our above determination, it is imperative at the cost of
repetition to notice, that the pointed allegation in respect of the appellant’s
culpability is drawn from the resolution of the Board of Directors of the MPSIDC
dated 19.4.1995. For all intents and purposes, therefore, our determination on
the merits of the controversy, will be based on the culpability of the appellant on
account of his participation in the meeting of the Board of Directors, wherein the
resolution dated 19.4.1995 was passed, without his having objected to the same.
10. Having recorded the cause for his being arrayed as an accused, the next
step in the process of the present adjudication is to determine whether the
participation of the appellant in the meetings in question was based on his
position as a nominee Director on the Board of Directors of the MPSIDC, and/or
in his capacity as a member of the IAS cadre allocated to the State of Madhya
Pradesh. The above determination, would make all the difference to the
outcome on the principal issue canvassed on behalf of the appellant. If the
appellant’s position as nominee director of the MPSIDC was abused, then the
holding of the said position itself would be relevant for deciding the present
controversy. If however, the office of Industries Commissioner, Government of
Madhya Pradesh was abused, the consideration would be different. In the latter
situation, the appellant being a member of the IAS cadre, his said position would
necessarily have a relevant nexus to the issue in hand. It is essential to notice,
that besides being a nominee Director of the Board of Directors of the MPSIDC,
the appellant was simultaneously nominated as a Director of six other
companies. The nomination of the appellant as Director in the other companies
(besides the MPSIDC), has no nexus to the allegations levelled against him in
the charge sheet dated 22.9.2007. However, there is some doubt about the fact,
whether the appellant participated in the controversial meeting of the Board of
Directors (of the MPSIDC) only because of his holding the office of Industries
Commissioner of the Government of Madhya Pradesh, which position he
occupied as a member of the IAS cadre of the State of Madhya Pradesh.
11. The case set up by the appellant was, that it was mandatory for the
prosecution to obtain sanction before initiating prosecution against him, as he
held a government post, namely, the post of Industries Commissioner,
Government of Madhya Pradesh. It was also submitted on the appellant’s
behalf, that he was a public servant, and the President of India was his
appointing authority, as also his dismissing authority. Even while he was
discharging his duties as Industries Commissioner, Government of Madhya
Pradesh, and thereafter, when he had proceeded on appointment by way of
deputation to the Central Government, his appointing and dismissing authorities
remained the same. Insofar as his being nominated as a Director on the Board
of the MPSIDC is concerned, the case set up by the appellant was, that his
nomination co-existed with his appointment as Industries Commissioner,
Government of Madhya Pradesh. In this behalf it was asserted, that his being
nominated as a Director (with the MPSIDC) was the outcome/consequence/result
of his holding the office of Industries Commissioner, Government of Madhya
Pradesh. It was submitted, that had he not held the office of Industries
Commissioner, he would not have been nominated as a Director (with the
MPSIDC). It was further asserted, that consequent upon his appointment by way
of deputation to the Central Government, his successor on the post of Industries
Commissioner, came to be nominated as a Director on the Board of the
MPSIDC. It was therefore, sought to be canvassed, that the appellant’s
nomination as Director of the Board of the MPSIDC, was a fallout/sequel of his
appointment as Industries Commissioner, Government of Madhya Pradesh. It
was accordingly his contention, that he continued to occupy the same position as
he had occupied while holding the office of Industries Commissioner,
Government of Madhya Pradesh, even after cognizance was taken by the
Special Judge, Bhopal. The submission projected was premised on the
foundation, that the offices held by the appellant were the outcome of his
appointment to the IAS cadre. As such, according to the appellant, his
participation in the proceedings of the Board of Directors culminating in its
resolution dated 19.4.1995, must be deemed to have been taken in his capacity
as a member of the IAS cadre.
12. On the pleas canvassed at the hands of the learned counsel for the
appellant, as have been noticed in the foregoing paragraph, there can be no
doubt that merely the position held by the appellant as Commissioner Industries,
Government of Madhya Pradesh, would not have vested in him the right to
participate in the affairs of the MPSIDC. It was only on account of the nomination
of the appellant as director of the MPSIDC, that vested in him the authority to
participate in the controversial meeting where the MPSIDC passed its resolution
dated 19.4.1995. Likewise, his nomination as a Director in six other companies
did not vest in him any right whatsoever, to deal with the affairs of the MPSIDC.
It is only on account of his being a nominee Director of the MPSIDC, that he
assumed the responsibility and the power, to deal with the affairs of the MPSIDC.
His participation in the proceedings of the Board of Directors which passed its
resolution dated 19.4.1995 was therefore exclusively on account of his having
been nominated as a Director on the Board of the MPSIDC. We must therefore,
first endeavour, to deal with the credibility of the submission canvassed on behalf
of the appellant, that the appellant’s nomination as Director (with the MPSIDC)
was the outcome of his holding the office of Industries Commissioner,
Government of Madhya Pradesh. It was not disputed during the course of
hearing, that the appellant’s nomination as Director (with the MPSIDC) emerges
from clause 89(2) of the Memorandum and Articles of Association of the
MPSIDC. Clause 89 aforementioned is being extracted hereunder:
“89 (1) The number of Directors shall not be less than three and more
than twelve but the number can be increased or decreased by the
Governor subject to the provisions of the Act.
(2) Unless otherwise determined by the Governor from time to
time not more than five Directors shall be nominated by the
Governor so long as the Government’s share does not exceed
Rs.26 lakhs. In the event of Government’s share exceeding this
amount, the number of Directors to be nominated by the Governor
will increase. The number of Directors so increased will be in
proportion to the Government’s share in excess of Rs.26 lakhs and
the shares held by persons other than Government. The Directors
other than those nominated by the Governor shall be appointed by
the Company in the general meeting.
(3) The tenure of all Directors including Chairman and excluding
Managing Director shall be for the period as fixed or determined by
the State Government from time to time. The Managing Director
shall retire on his ceasing to hold the office of the Managing Director.
A retiring Director shall be eligible for reappointment.
(4) The Governor shall have the power to remove any Director
appointed and nominated by him including the Chairman and the
Managing Director from Office at any time in his absolute discretion.
(5) The Governor shall have the right to fill any vacancy in the
Office of a Director caused by retirement, removal, resignation,
death or otherwise of the Directors nominated/appointed by him.
A perusal of sub-clause (2) of clause 89 reveals, that nominee Directors to the
MPSIDC are appointed by the Governor. The Governor (under sub-clause (4)
extracted above) is also vested with the absolute discretion to remove a nominee
Director. But what needs emphasis is, that clause 89 of the Memorandum and
Articles of Association of the MPSIDC, does not contemplate that the Industries
Commissioner, Government of Madhya Pradesh would necessarily, or
automatically, or as a matter of course, must be nominated as Director of the
MPSIDC. Likewise, clause 89 aforementioned, does not require a nominee
director to be drawn out of members of the IAS cadre. In fact, in our view, the
Governor under clause 89 has the absolute discretion to nominate anyone
suitable as per his wisdom, as nominee Director to the MPSIDC. In the above
view of the matter, it is not possible to accept, that the appellant’s nomination as
Director of the MPSIDC, was the outcome of his holding the office of Industries
Commissioner, Government of Madhya Pradesh, or on account of his being a
member of the IAS cadre. In the above view of the matter it is natural to
conclude, that the participation of the appellant in the meeting of the Board of
Directors of the MPSIDC on 19.4.1995 was not on account of his holding the
office of Industries Commissioner, Government of Madhya Pradesh, or on
account of his being a member of the IAS cadre. Having so concluded, we shall
now endeavour to determine, on the basis of the law declared by this Court, the
veracity of the assertion made by the appellant, that prior sanction was
mandatory, and in its absence, the prosecution initiated against the appellant
should be considered to be without jurisdiction.
13. We shall first endeavour to deal with the law declared by this Court on the
proposition being canvassed before us. In this behalf, reference may first of all
be made to R.S. Naik vs. A.R. Antulay, (1984) 2 SCC 183. Observations made
by this Court, as are relevant to the proposition canvassed on behalf of the
appellant, are being extracted hereunder :
“21. Re: (b) and (c): It was strenuously contended that if the accused has
held or holds a plurality of offices occupying each one of which makes him
a public servant, sanction of each one of the competent authorities entitled
to remove him from each one of the offices held by him, would be
necessary and if anyone of the competent authorities fails or declines to
grant sanction, the court is precluded or prohibited from taking cognizance
of the offence with which the public servant is charged. This submission
was sought to be repelled urging that it is implicit in Section 6 that sanction
of that authority alone is necessary which is competent to remove the
public servant from the office which he is alleged to have misused or
abused for corrupt motives. Section 6(1)(c) is the only provision relied
upon on behalf of the accused to contend that as M.L.A. he was a public
servant on the date of taking cognizance of the offences, and therefore,
sanction of that authority competent to remove him from that office is a
sine qua non for taking cognizance of offences. Section 6 (1)(c) bars taking
cognizance of an offence alleged to have been committed by public
servant except with the previous sanction of the authority competent to
remove him from his office.
23. Offences prescribed in Sections 161, 164 and 165 IPC and Section
5 of the 1947 Act have an intimate and inseparable relation with the office
of a public servant. A public servant occupies office which renders him a
public servant and occupying the office carries with it the powers conferred
on the office. Power generally is not conferred on an individual person. In a
society governed by rule of law power is conferred on office or acquired by
statutory status and the individual occupying the office or on whom status
is conferred enjoys the power of office or power flowing from the status.
The holder of the office alone would have opportunity to abuse or misuse
the office. These sections codify a well-recognised truism that power has
the tendency to corrupt. It is the holding of the office which gives an
opportunity to use it for corrupt motives. Therefore, the corrupt conduct is
directly attributable and flows from the power conferred on the office. This
interrelation and interdependence between individual and the office he
holds is substantial and not severable. Each of the three clauses of subsection
(1) of Section 6 uses the expression 'office' and the power to grant
sanction is conferred on the authority competent to remove the public
servant from his office and Section 6 requires a sanction before taking
cognizance of offences committed by public servant. The offence would be
committed by the public servant by misusing or abusing the power of office
and it is from that office, the authority must be competent to remove him so
as to be entitled to grant sanction. The removal would bring about
cessation of interrelation between the office and abuse by the holder of the
office. The link between power with opportunity to abuse and the holder of
office would be severed by removal from office. Therefore, when a public
servant is accused of an offence of taking gratification other than legal
remuneration for doing or forbearing to do an official act (Section 161 IPC)
or as a public servant abets offences punishable under Sections 161 and
163 (Section 164 IPC) or as public servant obtains a valuable thing without
consideration from person concerned in any proceeding or business
transacted by such public servant (Section 165 IPC) or commits criminal
misconduct as defined in Section 5 of the 1947 Act, it is implicit in the
various offences that the public servant has misused or abused the power
of office held by him as public servant. The expression 'office' in the three
sub-clauses of Section 6(1) would clearly denote that office which the
public servant misused or abused for corrupt motives for which he is to be
prosecuted and in respect of which a sanction to prosecute him is
necessary by the competent authority entitled to remove him from that
office which he has abused. This interrelation between the office and its
abuse if severed would render Section 6 devoid of any meaning. And this
interrelation clearly provides a clue to the understanding of the provision in
Section 6 providing for sanction by a competent authority who would be
able to judge the action of the public servant before removing the bar, by
granting sanction, to the taking of the cognizance of offences by the court
against the public servant. Therefore, it unquestionably follows that the
sanction to prosecute can be given by an authority competent to remove
the public servant from the office which he has misused or abused
because that authority alone would be able to know whether there has
been a misuse or abuse of the office by the public servant and not some
rank outsider. By a catena of decisions, it has been held that the authority
entitled to grant sanction must apply its mind to the facts of the case,
evidence collected and other incidental facts before according sanction. A
grant of sanction is not an idle formality but a solemn and sacrosanct act
which removes the umbrella of protection of government servants against
frivolous prosecutions and the aforesaid requirements must therefore, be
strictly complied with before any prosecution could be launched against
public servants. (See Mohd. Iqbal Ahmad v. State of Andhra Pradesh,
[1979] 2 S.C.R. 1007). The Legislature advisedly conferred power on the
authority competent to remove the public servant from the office to grant
sanction for the obvious reason that that authority alone would be able,
when facts and evidence are placed before him, to judge whether a
serious offence is committed or the prosecution is either frivolous or
speculative. That authority alone would be competent to judge whether on
the facts alleged, there has been an abuse or misuse of office held by the
public servant. That authority would be in a position to know what was the
power conferred on the office which the public servant holds, how that
power could be abused for corrupt motive and whether prima facie it has
been so done. That competent authority alone would know the nature and
functions discharged by the public servant holding the office and whether
the same has been abused or misused. It is the vertical hierarchy between
the authority competent to remove the public servant from that office and
the nature of the office held by the public servant against whom sanction is
sought which would indicate a hierarchy and which would therefore, permit
inference of knowledge about the functions and duties of the office and its
misuse or abuse by the public servant. That is why the legislature clearly
provided that that authority alone would be competent to grant sanction
which is entitled to remove the public servant against whom sanction is
sought from the office.
24. Now if the public servant holds two offices and he is accused of
having abused one and from which he is removed but continues to hold
the other which is neither alleged to have been used nor abused, is a
sanction of the authority competent to remove him from the office which is
neither alleged or shown to have been abused or misused necessary? The
submission is that if the harassment of the public servant by a frivolous
prosecution and criminal waste of his time in law courts keeping him away
from discharging public duty, are the objects underlying Section 6, the
same would be defeated if it is held that the sanction of the latter authority
is not necessary. The submission does not commend to us. We fail to see
how the competent authority entitled to remove the public servant from an
office which is neither alleged to have been used or abused would be able
to decide whether the prosecution is frivolous or tendentious. An illustration
was posed to the learned counsel that a Minister who is indisputably a
public servant greased his palms by abusing his office as Minister, and
then ceased to hold the office before the court was called upon to take
cognizance of the offence against him and therefore, sanction as
contemplated by Section 6 would not be necessary; but if after committing
the offence and before the date of taking of cognizance of the offence, he
was elected as a Municipal President in which capacity he was a public
servant under the relevant Municipal law, and was holding that office on
the date on which court proceeded to take cognizance of the offence
committed by him as a Minister, would a sanction be necessary and that
too of that authority competent to remove him from the office of the
Municipal President. The answer was in affirmative. But the very illustration
would show that such cannot be the law. Such an interpretation of Section
6 would render it as a shield to an unscrupulous public servant. Someone
interested in protecting may shift him from one office of public servant to
another and thereby defeat the process of law. One can legitimately
envisage a situation wherein a person may hold a dozen different offices,
each one clothing him with the status of a public servant under Section 21
IPC and even if he has abused only one office for which either there is a
valid sanction to prosecute him or he has ceased to hold that office by the
time court was called upon to take cognizance, yet on this assumption,
sanction of 11 different competent authorities each of which was entitled to
remove him from 11 different public offices would be necessary before the
court can take cognizance of the offence committed by such public
servant, while abusing one office which he may have ceased to hold. SuchPage 16
16
an interpretation is contrary to all canons of construction and leads to an
absurd and product which of necessity must be avoided. Legislation must
at all costs be interpreted in such a way that it would not operate as a
rougue's charter. (See Davis & Sons Ltd. v. Atkins)
xxx xxx xxx xxx
26. Therefore, upon a true construction of Section 6, it is implicit therein
that sanction of that competent authority alone would be necessary which
is competent to remove the public servant from the office which he is
alleged to have misused or abused for corrupt motive and for which a
prosecution is intended to be launched against him.
27. In the complaint filed against the accused it has been repeatedly
alleged that the accused as Chief Minister of Maharashtra State accepted
gratification other than legal remuneration from various sources and thus
committed various offences set out in the complaint. Nowhere, not even by
a whisper, it is alleged that the accused has misused or abused for corrupt
motives his office as M.L.A. Therefore, it is crystal clear that the complaint
filed against the accused charged him with criminal abuse or misuse of
only his office as Chief Minister. By the time, the court was called upon to
take cognizance of the offences, so alleged in the complaint, the accused
had ceased to hold the office of the Chief Minister. On this short ground, it
can be held that no sanction to prosecute him was necessary as former
Chief Minister of Maharashtra State. The appeal can succeed on this short
ground. However, as the real bone of contention between the parties was
whether as M.L.A. the accused was a public servant and the contention
was canvassed at some length, we propose to deal with the same.
xxx xxx xxx xxx
68. Re. (f) & (g): The learned Judge after recording a finding that M.L.A.
is a public servant within the comprehension of clause (12)(a) and further
recording the finding that as on the date on which the Court was invited to
take cognizance, the accused was thus a public servant proceeded to
examine whether sanction under Section 6 of the 1947 Act is a prerequisite
to taking cognizance of offences enumerated in Section 6 alleged
to have been committed by him. He reached the conclusion that a sanction
is necessary before cognizance can be taken. As a corollary he proceeded
to investigate and identify, which is the sanctioning authority who would be
able to give a valid sanction as required by Section 6 for the prosecution of
the accused in his capacity as M.L.A.? We have expressed our conclusion
that where offences as set out in Section 6 are alleged to have been
committed by a public servant, sanction of only that authority would be
necessary who would be entitled to remove him from that office which isPage 17
17
alleged to have been misused or abused for corrupt motives. If the
accused has ceased to hold that office by the date, the court is called upon
to take cognizance of the offences alleged to have been committed by
such public servant, no sanction under Section 6 would be necessary
despite the fact that he may be holding any other office on the relevant
date which may make him a public servant as understood in Sec 21, if
there is no allegation that office has been abused or misused for corrupt
motives. The allegations in the complaint are all to the effect that the
accused misused or abused his office as Chief Minister for corrupt
motives. By the time the Court was called upon to take cognizance of
those offences, the accused had ceased to hold the office of Chief
Minister. The sanction to prosecute him was granted by the Governor of
Maharashtra but this aspect we consider irrelevant for concluding that no
sanction was necessary to prosecute him under Section 6 on the date on
which the court took cognizance of the offences alleged to have been
committed by the accused. Assuming that as MLA the accused would be a
public servant under Section 21, in the absence of any allegation that he
misused or abused his office as MLA that aspect becomes immaterial.
Further Section 6 postulates existence of a valid sanction for prosecution
of a public servant for offences punishable under Sections 161, 164, 165
IPC and Section 5 of the 1947 Act, if they are alleged to have been
committed by a public servant. In view of our further finding that M.L.A. is
not a public servant within the meaning of the expression in Section 21 IPC
no sanction is necessary to prosecute him for the offences alleged to have
been committed by him.”
(emphasis is ours)
The conclusions drawn by this Court in R.S. Naik’s case (supra) were affirmed by
this Court in Prakash Singh Badal vs. State of Punjab, (2007) 1 SCC 1, wherein
this Court held as under:
“23. Offences prescribed in Sections 161, 164 and 165 IPC and Section
5 of the 1947 Act have an intimate and inseparable relation with the
office of a public servant. A public servant occupies office which
renders him a public servant and occupying the office carries with it
the powers conferred on the office. Power generally is not conferred
on an individual person. In a society governed by the rule of law
power is conferred on office or acquired by statutory status and the
individual occupying the office or on whom status is conferred enjoys
the power of office or power flowing from the status. The holder of
the office alone would have opportunity to abuse or misuse thePage 18
18
office. These sections codify a well-recognised truism that power
has the tendency to corrupt. It is the holding of the office which gives
an opportunity to use it for corrupt motives. Therefore, the corrupt
conduct is directly attributable and flows from the power conferred
on the office. This interrelation and interdependence between
individual and the office he holds is substantial and not severable.
Each of the three clauses of Sub-section (1) of Section 6 uses the
expression ‘office' and the power to grant sanction is conferred on
the authority competent to remove the public servant from his office
and Section 6 requires a sanction before taking cognizance of
offences committed by public servant. The offence would be
committed by the public servant by misusing or abusing the power of
office and it is from that office, the authority must be competent to
remove him so as to be entitled to grant sanction. The removal
would bring about cessation of interrelation between the office and
abuse by the holder of the office. The link between power with
opportunity to abuse and the holder of office would be severed by
removal from office. Therefore, when a public servant is accused of
an offence of taking gratification other than legal remuneration for
doing or forbearing to do an official act (Section 161 IPC) or as a
public servant abets offences punishable under Sections 161 and
163 (Section 164 IPC) or as public servant obtains a valuable thing
without consideration from person concerned in any proceeding or
business transacted by such public servant (Section 165 IPC) or
commits criminal misconduct as defined in Section 5 of the 1947
Act, it is implicit in the various offences that the public servant has
misused or abused the power of office held by him as public servant.
The expression 'office' in the three Sub-clauses of Section 6(1)
would clearly denote that office which the public servant misused or
abused for corrupt motives for which he is to be prosecuted and in
respect of which a sanction to prosecute him is necessary by the
competent authority entitled to remove him from that office which he
has abused. This interrelation between the office and its abuse if
severed would render Section 6 devoid of any meaning. And this
interrelation clearly provides a clue to the understanding of the
provision in Section 6 providing for sanction by a competent
authority who would he able to judge the action of the public servant
before removing the bar, by granting sanction, to the taking of the
cognizance of offences by the court against the public servant.
Therefore, it unquestionably follows that the sanction to prosecute
can he given by an authority competent to remove the public servant
from the office which he has misused or abused because that
authority alone would be able to know whether there has been a
misuse or abuse of the office by the public servant and not some
rank outsider. By a catena of decisions, it has been held that thePage 19
19
authority entitled to grant sanction must apply its mind to the facts of
the case, evidence collected and other incidental facts before
according sanction. A grant of sanction is not an idle formality but a
solemn and sacrosanct act which removes the umbrella of protection
of Government servants against frivolous prosecutions and the
aforesaid requirements must therefore, be strictly complied with
before any prosecution could be launched against public servants.
(See Mohd. Iqbal Ahmad v. State of A.P., (1979) 4 SCC 172). The
Legislature advisedly conferred power on the authority competent to
remove the public servant from the office to grant sanction for the
obvious reason that that authority alone would be able, when facts
and evidence are placed before him, to judge whether a serious
offence is committed or the prosecution is either frivolous or
speculative. That authority alone would be competent to judge
whether on the facts alleged, there has been an abuse or misuse of
office held by the public servant. That authority would be in a
position to know what was the power conferred on the office which
the public servant holds, how that power could he abused for corrupt
motive and whether prima facie it has been so done. That competent
authority alone would know the nature and functions discharged by
the public servant holding the office and whether the same has been
abused or misused. It is the vertical hierarchy between the authority
competent to remove the public servant from that office and the
nature of the office held by the public servant against whom sanction
is sought which would indicate a hierarchy and which would
therefore, permit inference of knowledge about the functions and
duties of the office and its misuse or abuse by the public servant.
That is why the Legislature clearly provided that that authority alone
would be competent to grant sanction which is entitled to remove the
public servant against whom sanction is sought from the office.
24. Now if the public servant holds two offices and he is accused of
having abused one and from which he is removed but continues to
hold the other which is neither alleged to have been used (sic) nor
abused, is a sanction of the authority competent to remove him from
the office which is neither alleged or shown to have been abused or
misused necessary? The submission is that if the harassment of the
public servant by a frivolous prosecution and criminal waste of his
time in law courts keeping him away from discharging public duty,
are the objects underlying Section 6, the same would be defeated if
it is held that the sanction of the latter authority is not necessary.
The submission does not commend to us. We fail to see how the
competent authority entitled to remove the public servant from an
office which is neither alleged to have been used (sic) or abused
would be able to decide whether the prosecution is frivolous orPage 20
20
tendentious. An illustration was posed to the Learned Counsel that a
Minister who is indisputably a public servant greased his palms by
abusing his office as Minister, and then ceased to hold the office
before the court was called upon to take cognizance of the offence
against him and therefore, sanction as contemplated by Section 6
would not be necessary; but if after committing the offence and
before the date of taking of cognizance of the offence, he was
elected as a Municipal President in which capacity he was a public
servant under the relevant Municipal law, and was holding that office
on the date on which court proceeded to take cognizance of the
offence committed by him as a Minister, would a sanction be
necessary and that too of that authority competent to remove him
from the office of the Municipal President. The answer was in
affirmative. But the very illustration would show that such cannot be
the law. Such an interpretation of Section 6 would render it as a
shield to an unscrupulous public servant. Someone interested in
protecting may shift him from one office of public servant to another
and thereby defeat the process of law. One can legitimately
envisage a situation wherein a person may hold a dozen different
offices, each one clothing him with the status of a public servant
under Section 21 IPC and even if he has abused only one office for
which either there is a valid sanction to prosecute him or he has
ceased to hold that office by the time court was called upon to take
cognizance, yet on this assumption, sanction of 11 different
competent authorities each of which was entitled to remove him from
11 different public offices would be necessary before the court can
take cognizance of the offence committed by such public servant,
while abusing one office which he may have ceased to hold. Such
an interpretation is contrary to all canons of construction and leads
to an absurd and product which of necessity must be avoided.
Legislation must at all costs be interpreted in such a way that it
would not operate as a rougue's charter. (See W. Davis & Sons Ltd.
v. Atkins, (1977) 3 All ER 40.
50. The offence of cheating under Section 420 or for that matter
offences relatable to Sections 467, 468, 471 and 120B can by no
stretch of imagination by their very nature be regarded as having
been committed by any public servant while acting or purporting to
act in discharge of official duty. In such cases, official status only
provides an opportunity for commission of the offence.”
(emphasis is ours)
14. The judgments referred to in paragraph 13 above, were relied upon by the
Courts below to reject the contention advanced at the hands of the appellant, thatPage 21
21
sanction was essential before the appellant could be prosecuted. It would be
pertinent to mention, that extracts from the judgments referred to in paragraph 13
reproduced above, deal with two pointed situations. Firstly, whether sanction
before prosecution is required from each of the competent authorities entitled to
remove an accused from the offices held by him, in situations wherein the
accused holds a plurality of offices. The second determination was in respect of
the requirement of sanction, in situations where the accused no longer holds the
office, which he is alleged to have abused/misused, for committing the offence
(s) for which he is being blamed. In answer to the first query, it has
unambiguously been concluded, that if an accused holds a plurality of offices,
each one of which makes him a public servant, sanction is essential only at the
hands of the competent authority (entitled to remove him from service) of the
office which he had allegedly misused. This leads to the clear inference, that
other public offices held by the accused wherein an accused holds a plurality of
offices, are irrelevant for purposes of obtaining sanction prior to prosecution. On
the second issue it was concluded, that sanction was essential only if, at the time
of taking cognizance, the accused was still holding the public office which he had
allegedly abused. If the legal position determined in the above judgments is
taken into consideration, there is certainly no doubt, that in the facts and
circumstances of this case, sanction if required, ought to have been obtained
from the Governor of the State of Madhya Pradesh. The instant determination is
premised on the fact, that the appellant is stated to have misused his position
while discharging his responsibilities as a nominee Director of the MPSIDC. It isPage 22
22
clear to us, specially from the deliberation recorded hereinabove, that the
appellant’s participation in the Cabinet Review Meeting dated 28.1.1994, and in
the relevant meetings of the Board of Directors (of the MPSIDC) had no nexus to
the post of Industries Commissioner, Government of Madhya Pradesh, or the
subsequent office held by him as Joint Secretary, Department of Heavy
Industries, Government of India. Accordingly, in our considered view, sanction of
the authorities with reference to the post of Industries Commissioner,
Government of Madhya Pradesh and Joint Secretary, Department of Heavy
Industries, Government of India held by the appellant, was certainly not required.
We therefore, hereby reject the submission advanced at the hands of the learned
counsel for the appellant, that since the appellant continued to hold the abovementioned
public office(s) in his capacity as a member of the IAS cadre, at the
time the first charge sheet was filed on 24.9.2007, prosecution could be
proceeded with, and cognizance taken, only upon sanction by the competent
authority(ies) of the said two offices (Industries Commissioner, Government of
Madhya Pradesh and Joint Secretary, Department of Heavy Industries,
Government of India), as wholly misconceived.
15. The abuse/misuse of authority, alleged against the appellant pertains to
the discharge of his responsibilities as a nominee Director (on the Board of the
MPSIDC). Therefore, the further question which arises for our consideration is,
whether sanction at the hands of the Governor of the State of Madhya Pradesh,
(who had the power to remove any Director appointed or nominated by himPage 23
23
under clause 89 of the Memorandum and Articles of Association of the MPSIDC),
was a prerequisite before taking cognizance in the matter. In the facts and
circumstances of this case, we are of the view, that answer to the instant
question has also to be in the negative. Our aforesaid determination is based on
the fact that the appellant remained a nominee Director of the MPSIDC from
1993 to 1998. The first charge sheet in the matter was filed on 24.9.2007. Well
before the filing of the first charge sheet, the appellant had relinquished charge of
the office which he is alleged to have abused/misused (i.e. the office of nominee
Director of the MPSIDC). In the above view of the matter, since the appellant
was not holding the public office which he is alleged to have abused, when the
first charge sheet was filed, in terms of the law declared by this Court (referred to
in the judgments extracted in paragraph 13 above), there was no need to obtain
any sanction before proceeding to prosecute the appellant, for the offences
alleged against him.
16. It would be relevant to mention, that during the course of hearing learned
counsel for the appellant placed emphatic reliance on the judgment rendered by
this Court in State of Madhya Pradesh vs. Sheetla Sahai & Ors., (2009) 8 SCC
617. It is not necessary for us to refer either to the factual position in the
judgment relied upon, or even the conclusions recorded thereon. We say so
because, the issues canvassed and determined in the aforesaid judgments were
not the ones on the basis whereof we have recorded our conclusions, in the
foregoing paragraphs. It is sufficient for us to note, that the judgment renderedPage 24
24
by this Court in State of Madhya Pradesh vs. Sheetla Sahai & Ors. (supra), does
not carve out any exception, to the two propositions relied upon for the
conclusions drawn by us, from the judgments referred to in paragraph 13 above.
17. The second contention advanced at the hands of the learned counsel for
the appellant, was based on the determination rendered by this Court in Soma
Chakravarty vs. State through CBI, (2007) 5 SCC 403. Pointed reliance was
placed by the learned counsel for the appellant on paragraph 23 which is being
extracted hereunder:-
“23. In a case of this nature, the learned Special Judge also should have
considered the question having regard to the 'doctrine of parity' in
mind. An accused similarly situated has not been proceeded against
only because, the departmental proceedings ended in his favour.
Whether an accused before him although stands on a similar footing
despite he having not been departmentally proceeded against or
had not been completed exonerated also required to be considered.
If exoneration in a departmental proceeding is the basis for not
framing a charge against an accused person who is said to be
similarly situated, the question which requires a further consideration
was as to whether the applicant before it was similarly situated or
not and/or whether the exonerated officer in the departmental
proceeding also faced same charges including the charge of being a
party to the larger conspiracy.”
(emphasis is ours)
It was the vehement contention of the learned counsel for the appellant, that
sanction to prosecute another co-accused similarly situated as the appellant,
having been obtained, it was not permissible to treat the appellant differently.
We find no substance in the second contention advanced at the hands of the
learned counsel for the appellant. Having concluded on the basis of the law
declared by this Court, that prior sanction for prosecuting the appellant wasPage 25
25
unessential, it is futile to suggest that sanction ought to have been obtained all
the same. The instant submission needs no further consideration in view of the
deliberations recorded by us hereinabove. Parity in law can be claimed only in
respect of action rightfully executed. And not otherwise. Having concluded that
sanction was not required in the case of the appellant, it is not possible for us to
accept on the analogy of the submission advanced at the hands of the learned
counsel for the appellant, that merely because sanction was obtained in respect
of another co-accused, it needed to have been obtained in the appellant’s case
as well.
18. The next contention advanced at the hands of the learned counsel for the
appellant was based on Section 141 of the Negotiable Instruments Act, 1881
(hereinafter referred to as the ‘NI Act’). Section 141 aforementioned is being
extracted hereunder:-
“141. Offences by companies.- (1) If the person committing an offence
under section 138 is a company, every person who, at the time the
offence was committed, was in charge of, and was responsible to
the company for the conduct of the business of the company, as well
as the company, shall be deemed to be guilty of the offence and
shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall
render any person liable to punishment if he proves that the offence
was committed without his knowledge, or that he had exercised all
due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director
of a company by virtue of his holding any office or employment in the
Central Government or State Government or a financial corporation
owned or controlled by the Central Government or the State
Government, as the case may be, he shall not be liable for
prosecution under this Chapter.Page 26
26
(2) Notwithstanding anything contained in sub-section (1), where
any offence under this Act has been committed by a company and it
is proved that the offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the part of, any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to
be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
Explanation.--For the purposes of this section,--
(a) "company" means any body corporate and includes a firm or other
association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm.”
Relying on sub-Section (1) of Section 141 extracted above, it was the vehement
contention of the learned counsel for the appellant, that the appellant was not in
charge of the conduct of the business of the MPSIDC. It was also his
submission, that the appellant was not responsible to the MPSIDC for the
conduct of its day to day activities. In this behalf it was sought to be asserted,
that the appellant was not aware of the fact, that the functionaries of the MPSIDC
were extending short term loans (including ICD’s) out of the surplus funds of the
MPSIDC to industrial establishments. It was also pointed out, that the appellant
had neither examined nor approved any financial assistance extended to
industries, out of the surplus funds of the MPSIDC, on the basis of the resolution
of the Board of Directors dated 19.4.1995. As such it was asserted, that the
accusations levelled against the appellant were misconceived. Insofar as the
instant aspect of the matter is concerned, learned counsel for the appellant relied
on the decision rendered by this Court in National Small Industries CorporationPage 27
27
Ltd. vs. Harmeet Singh Paintal & Anr., (2010) 3 SCC 330. Learned counsel
invited our pointed attention to the following observations recorded therein:-
“6. In the connected appeal, the appellant - DCM Financial Services
Ltd., entered into a hire purchase agreement on 25.2.1996 with M/s
International Agro Allied Products Ltd. At the time of entering into
contract, the Company handed over post-dated cheques to the
appellant towards payment of monthly hire/rental charges.
Respondent No. 1, Dev Sarin was one of the Directors of the said
Company. The cheque issued by International Agro and Allied
Products Ltd. in favour of the appellant was duly presented for
payment on 28.10.1998 and the same was returned unpaid for the
reason that the Company had issued instructions to the bankers
stopping payment of the cheque.
12. It is very clear from the above provision that what is required is that
the persons who are sought to be made vicariously liable for a
criminal offence under Section 141 should be, at the time the
offence was committed, was in-charge of, and was responsible to
the company for the conduct of the business of the company. Every
person connected with the company shall not fall within the ambit of
the provision. Only those persons who were in-charge of and
responsible for the conduct of the business of the company at the
time of commission of an offence will be liable for criminal action. It
follows from the fact that if a Director of a Company who was not in
charge of and was not responsible for the conduct of the business of
the company at the relevant time, will not be liable for a criminal
offence under the provisions. The liability arises from being in
charge of and responsible for the conduct of the business of the
company at the relevant time when the offence was committed and
not on the basis of merely holding a designation or office in a
company.”
(emphasis is ours)
19. We have given our thoughtful consideration to the contention advanced at
the hands of the learned counsel for the appellant, as has been noticed in the
foregoing paragraph. We are of the view, that the appellant’s reliance on Section
141 of the NI Act, as also, the judgment rendered by this Court in National SmallPage 28
28
Industries Corporation Ltd. (supra), is misconceived. The appellant is not being
blamed for the implementation of the resolution of the Board of Directors of the
MPSIDC dated 19.4.1995. The appellant is being blamed for having allowed the
aforesaid resolution dated 19.4.1995 to be passed despite the earlier decision
taken in the Cabinet Review Meeting held on 28.1.1994, as also, the earlier
resolution of the Board of Directors of the MPSIDC dated 31.1.1994. It is not a
matter of dispute before us, that the appellant had participated in the decision
making process in the meeting of the Cabinet Review Committee dated
28.1.1994, as also, the resolution of the Board of Directors of the MPSIDC dated
31.1.1994. The charge against the appellant is based on the fact, that the
appellant allowed the Board of Directors of the MPSIDC to pass the resolution
dated 19.4.1995, inspite of the earlier decisions at the hands of the Cabinet
Review Committee (in meeting dated 18.1.1994) and the consequential
resolution of the Board of Directors (dated 31.1.1994). We, therefore, reject the
submission advanced at the hands of the learned counsel for the appellant based
on Section 141 of the NI Act. All the same, it would be relevant to notice, that the
second proviso under Section 141(1) of the N.I. Act is inapplicable to the facts of
this case, because the appellant was not nominated as a Director of the MPSIDC
on account of holding the office of Industries Commissioner, Government of
Madhya Pradesh. The appellant’s appointment as nominee Director of the
MPSIDC was based on the determination of the Governor of Madhya Pradesh
under clause 89 of the Memorandum and Articles of Association of the MPSIDC.
If the factual position alleged against the appellant is correct, the culpability of the
appellant would emerge from sub-Section (2) of Section 141 of the N.I. Act. The
instant inference is inevitable, because it is not disputed on behalf of the
appellant, that he had actually participated in the Cabinet Review Meeting dated
28.1.1984, as well as, in the meetings of the Board of Directors leading to the
passing of the resolutions dated 31.1.1994 and 19.4.1995. In the facts of the
present case, the accusation implicating the appellant, is directly attributable to
the appellant, as nominee Director of the MPSIDC. The aforesaid inference has
been drawn by us, to negate the submission of the learned counsel for the
appellant based on Section 141 of the N.I. Act. In our view, the instant issue
does not arise for adjudication in the present controversy in view of the
conclusions already drawn hereinabove, that the culpability of the appellant, lies
in the mischief of passing the resolution dated 19.4.1995. The implementation of
the said resolution is the consequential effect of the said mischief.
20. For the last contention advanced on behalf of the appellant, learned
counsel placed reliance on a decision rendered by this Court in C.K. Jaffer
Sharief vs. State (through CBI), (2013) 1 SCC 205. Our pointed attention was
drawn to the following observations recorded therein:-
“17. It has already been noticed that the appellant besides working as the
Minister of Railways was the Head of the two public sector
undertakings in question at the relevant time. It also appears from
the materials on record that the four persons while in London had
assisted the appellant in performing certain tasks connected with the
discharge of duties as a Minister. It is difficult to visualise as to how
in the light of the above facts, demonstrated by the materials
revealed in the course of investigation, the appellant can be
construed to have adopted corrupt or illegal means or to have
abused his position as a public servant to obtain any valuable thing
or pecuniary advantage either for himself or for any of the aforesaid
four persons. If the statements of the witnesses examined under
Section 161 Cr.P.C. show that the aforesaid four persons had
performed certain tasks to assist the Minister in the discharge of his
public duties, however insignificant such tasks may have been, no
question of obtaining any pecuniary advantage by any corrupt or
illegal means or by abuse of the position of the appellant as a public
servant can arise. As a Minister it was for the appellant to decide on
the number and identity of the officials and supporting staff who
should accompany him to London if it was anticipated that he would
be required to perform his official duties while in London. If in the
process, the rules or norms applicable were violated or the decision
taken shows an extravagant display of redundance it is the conduct
and action of the appellant which may have been improper or
contrary to departmental norms. But to say that the same was
actuated by a dishonest intention to obtain an undue pecuniary
advantage will not be correct. That dishonest intention is the gist of
the offence under Section 13(1)(d) is implicit in the words used i.e.
corrupt or illegal means and abuse of position as a public servant. A
similar view has also been expressed by this Court in M. Narayanan
Nambiar v. State of Kerala, AIR 1963 SC 1116 while considering the
provisions of Section 5 of Act of 1947.”
(emphasis is ours)
Based on the aforesaid determination, it was the contention of the learned
counsel for the appellant, that the allegations levelled against the appellant do
not lead to the inference, that the appellant had adopted corrupt or illegal means,
or had abused his position as a public servant to obtain any valuable thing or
pecuniary advantage, either for himself or for the industries to whom the MPSIDC
extended short term loans (including ICD’s). We are of the view, that the last
contention advanced at the hands of the learned counsel for the appellant is a
mixed question of fact and law. Determination of the instant issue would be
possible only after the rival parties have adduced evidence to establish their
respective claims. At the said juncture, it would be possible to record factual
conclusions. It would then be possible for the concerned Court(s) to draw
inferences on the basis of the established factual position, whether the accused
is guilty of the accusation levelled against him. Therefore, it is neither proper nor
possible for us to deal with the last contention advanced at the hands of the
learned counsel for the appellant, at the present juncture.
21. No further contention was advanced at the hands of the learned counsel
for the appellant.
22. For the reasons recorded hereinabove, we find no merit in the instant
appeals. The same are accordingly hereby dismissed. While disposing of the
instant appeals, we consider it just and appropriate to direct the trial Court to
expedite the trial, keeping in mind, that the charge sheet in the matter was filed
as far back as in 2007. On account of the proceedings initiated at the hands of
the appellant, no further proceedings were taken by the Special Judge, Bhopal.
In the above view of the matter, we consider it appropriate to direct the trial Court
to hold proceedings for the disposal of Special Case No. 7 of 2007 on a weekly
basis.
…………………………….CJI.
(P. Sathasivam)
……………………………….J.
(Jagdish Singh Khehar)
New Delhi;
September 17, 2013.
Print Page
having abused one and from which he is removed but continues to hold
the other which is neither alleged to have been used nor abused, is a
sanction of the authority competent to remove him from the office which is
neither alleged or shown to have been abused or misused necessary? The
submission is that if the harassment of the public servant by a frivolous
prosecution and criminal waste of his time in law courts keeping him away
from discharging public duty, are the objects underlying Section 6, the
same would be defeated if it is held that the sanction of the latter authority
is not necessary. The submission does not commend to us. We fail to see
how the competent authority entitled to remove the public servant from an
office which is neither alleged to have been used or abused would be able
to decide whether the prosecution is frivolous or tendentious. An illustration
was posed to the learned counsel that a Minister who is indisputably a
public servant greased his palms by abusing his office as Minister, and
then ceased to hold the office before the court was called upon to take
cognizance of the offence against him and therefore, sanction as
contemplated by Section 6 would not be necessary; but if after committing
the offence and before the date of taking of cognizance of the offence, he
was elected as a Municipal President in which capacity he was a public
servant under the relevant Municipal law, and was holding that office on
the date on which court proceeded to take cognizance of the offence
committed by him as a Minister, would a sanction be necessary and that
too of that authority competent to remove him from the office of the
Municipal President. The answer was in affirmative. But the very illustration
would show that such cannot be the law. Such an interpretation of Section
6 would render it as a shield to an unscrupulous public servant. Someone
interested in protecting may shift him from one office of public servant to
another and thereby defeat the process of law. One can legitimately
envisage a situation wherein a person may hold a dozen different offices,
each one clothing him with the status of a public servant under Section 21
IPC and even if he has abused only one office for which either there is a
valid sanction to prosecute him or he has ceased to hold that office by the
time court was called upon to take cognizance, yet on this assumption,
sanction of 11 different competent authorities each of which was entitled to
remove him from 11 different public offices would be necessary before the
court can take cognizance of the offence committed by such public
servant, while abusing one office which he may have ceased to hold. Such
an interpretation is contrary to all canons of construction and leads to an
absurd and product which of necessity must be avoided. Legislation must
at all costs be interpreted in such a way that it would not operate as a
rougue's charter. (See Davis & Sons Ltd. v. Atkins)
26. Therefore, upon a true construction of Section 6, it is implicit therein
that sanction of that competent authority alone would be necessary which
is competent to remove the public servant from the office which he is
alleged to have misused or abused for corrupt motive and for which a
prosecution is intended to be launched against him.
“ REPORTABLE”
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.1454 OF 2013
(Arising out of SLP (Crl.) No.61 of 2012)
Ajoy Acharya … Appellant
Versus
State Bureau of Inv. against Eco. Offence … Respondent
With
CRIMINAL APPEAL NO.1455 OF 2013
(Arising out of SLP (Crl.) No. 400 of 2012)
Dated:September 17, 2013.
Citation:2016 ALLSCR (CRI)648
1. Investigation into the affairs of the Madhya Pradesh Industrial
Development Corporation (renamed as Madhya Pradesh State Industrial
Development Corporation, hereinafter referred to as the ‘MPSIDC’) was ordered
with effect from 3.1.1996, by the State Government. Thereupon, a first
information report bearing no. 25 of 2004 was registered under Sections 409,
406, 467, 468 and 120B of the Indian Penal Code, 1860 (hereinafter referred to
as the ‘IPC’) and Section 13(1)(d) read with Section 13(2) of the Prevention of
Corruption Act, 1988 (hereinafter referred to as the ‘PC Act’). The allegations
levelled in the first information report generally were, that the functionaries of the
MPSIDC had permitted investment by way of inter corporate deposits
(hereinafter referred to as the ‘ICD’s’) through a resolution of the Board of
Directors (of the MPSIDC) dated 19.4.1995. By the instant resolution, the Board
(of the MPSIDC) authorized its Managing Director, to extend short term loans
(including ICD’s) out of the surplus funds with the MPSIDC, on suitable terms
and conditions. The gravamen of the accusation was, that the Board of
Directors’ resolution dated 19.4.1995 was passed in disregard of an earlier
decision taken in the Cabinet Review Meeting held on 28.1.1994, wherein a
decision was taken that the MPSIDC would not extend financial assistance to
industries. The petitioner herein had admittedly attended the said meeting held
on 28.1.1994. The accusation also included the insinuation, that after the
decision of the Cabinet Review Committee dated 28.1.1994, the Board of
Directors (of the MPSIDC) had passed an endorsing resolution dated 31.1.1994,
wherein it was resolved by the MPSIDC to stop financing industries, from out of
its surplus funds. The petitioner herein had even participated in the instant
proceedings held on 31.1.1994. Based on the aforesaid factual position, it was
sought to be suggested, that undeterred by the decision during the Cabinet
Review Meeting dated 28.1.1994, and the resolution of the Board dated
31.1.1994 (which had prohibited extension of financial assistance to industries),
the Board of Directors’ resolution dated 19.4.1995, authorized its Managing
Director to extend short term loans (including ICD’s) to industries, out of surplus
funds with the MPSIDC, on suitable terms and conditions. It was also alleged,
that the above controversial Board resolution dated 19.4.1995 was passed in
complete disregard to the mandate contained in Section 292 of the Companies
Act, 1965. After the aforesaid Board resolution dated 19.4.1995, it was alleged,
that the MPSIDC had extended ICD’s to a large number of companies, out of
which 42 companies had committed default in repayments. In the
abovementioned first information report, it was also alleged, that the
abovementioned transactions executed by the MPSIDC were illegal and in
violation of law.
2. The ICD’s referred to in the foregoing paragraph were executed during the
period between 1995 and 2004. It was alleged, that four senior functionaries of
the MPSIDC who were then members of the Board of Directors of the MPSIDC
had deliberately supported the resolution of the Board of Directors dated
19.4.1995, despite the fact that they were aware of the Cabinet Review Meeting
decision dated 28.1.1994, as well as, the earlier resolution of the Board of
Directors of the MPSIDC dated 31.1.1994. Without their participation and
support, it was alleged, that the controversial Board resolution dated 19.4.1995
could not have been passed.
3. It would also be relevant to mention, that allegations were also levelled
against 42 defaulting companies in the first information report dated 24.7.2004.
The said 42 companies had defaulted by not making repayments of the ICD’s
released to them, in terms of their contractual obligations. The said first
information report, however, did not make any reference to a large number of
other companies in whose favour the MPSIDC had likewise extended ICD’s,
simply because the companies had returned the loaned amount to the MPSIDC,
in consonance with their contractual obligations.
4. A brief description of the four senior functionaries of the MPSIDC, against
whom allegations were levelled, is being delineated below:
(I) Rajender Kumar Singh : He was the then State Minister in the
Commerce and Industries Department. He
was also the then Chairman of the
MPSIDC, having been appointed as such
on 7.4.1994.
(ii) Ajoy Acharya : He was a member of the IAS cadre,
belonging to the 1976 batch. While holding
the charge of the office of Industries
Commissioner, Government of Madhya
Pradesh, he was nominated as a Director
of the MPSIDC in 1993. He continued as
such till 1998. In June 1998, he was
transferred as Joint Secretary, Department
of Heavy Industries, Government of India,
whereupon, he ceased to be on the Board
of Directors of the MPSIDC.
(iii) J.M. Ramamurthy : He was also a member of the IAS cadre.
He was appointed as Special Director, on
the Board of the MPSIDC in 1993. He
retired from the IAS on 30.6.1998.
Thereupon, he ceased to be on the Board
of Directors of the MPSIDC.
(iv) Munadutt Pillai Rajan :He was also a member of the IAS cadre.
He was appointed as the Managing
Director of the MPSIDC. He retired from
the IAS on 7.5.2000. Thereupon, he
ceased to be the Managing Director of the
MPSIDC.
5. The first charge sheet was filed on 24.9.2007. The allegations against the
petitioner herein, Ajoy Acharya, were as follows:
“a) The petitioner was present at the Cabinet Review Meeting dated
28.01.1994 and Board Meeting dated 31.01.1994, where the
decision relating to discontinuance of project financing/providing
financial assistance was taken, and thus, the instant factual position
was within petitioner’s personal knowledge.”
b) The petitioner was present in the Board Meeting dated 19.04.1995 in
which the Board Resolution was passed to engage itself in
Investments by way of ICD, and also in other Board Meeting after
28.01.1994 where decision relating to equity participation was taken.
The petitioner did not object to the passing of these resolutions
despite of his having been aware of the contrary decision taken at
the Cabinet Review Meeting which was endorsed at the Board
Meeting dated 31.1.1994.
c) The petitioner did not act bonafidely as the Cabinet Review Meeting
had specifically stopped giving of any financial assistance to
industries out of the surplus funds available with the MPSIDC.
d) The Board Resolution dated 19.04.1995 empowering the Managing
Director to invest in ICD was in violation of Section 292 of the
Companies Act, and also, in violation of Memorandum of
Association and Articles of Association.
e) The petitioner facilitated the passing of the aforesaid allegedly illegal
Board Resolution, which became the foundation for all illegal ICD’s.
f) The petitioner facilitated the passing of the resolutions referred to
above, by attending the said Board Meetings, wherein he did not
object to the proposed resolutions in the Board Meetings.”
6. The first charge sheet dated 22.9.2007 was filed in Special Case no. 7 of
2007, and the Special Judge, Bhopal, took cognizance thereof. It is the
contention of the petitioner Ajoy Acharya, that upon his having perused the
charge sheet dated 22.9.2007 (and the documents enclosed therewith), he learnt
that no sanction was applied for or obtained, before initiation of the above
prosecution against him. Under the belief, that prior sanction was a pre-requisite
under Section 19 of the PC Act, as well as, under Section 197 of the Code of
Criminal Procedure, 1973 (hereinafter referred to as the ‘CrPC’), the petitioner
filed a petition under Section 239 of the CrPC (as well as, Section 19 of the PC
Act) seeking discharge on the ground, that prosecution had been initiated against
him without seeking sanction of the competent authority. The petition filed under
Section 239 of the CrPC was dismissed by the Special Judge, Bhopal, on
11.4.2008.
7. Dissatisfied with the aforesaid order dated 11.4.2008, the petitioner
preferred Criminal Revision Petition no. 1422 of 2008, in the High Court of
Madhya Pradesh (before its principal seat at Jabalpur, hereinafter referred to as
the ‘High Court’). The aforesaid Criminal Revision Petition was dismissed by a
Division Bench of the High Court on 29.8.2011. Aggrieved by the order passed
by the Special Judge, Bhopal (dated 11.4.2008), and the order passed by the
High Court (dated 29.8.2011), the petitioner preferred Petition for Special Leave
to Appeal (Criminal) no. 61 of 2012. This Court issued notice in the above matter
(as also in a connected matter i.e., Special Leave to Appeal (Criminal) no. 400 of
2012) on 6.1.2012. While issuing notice, an interim order came to be passed on
6.1.2012, staying proceedings before the Special Judge, Bhopal (in Special Case
no. 7 of 2007).
8. We have concluded hearing in the matter. Leave is granted.
9. We shall endeavour to first adjudicate the principal contention advanced at
the hands of the appellant, namely, that the initiation of prosecution against the
appellant was not sustainable in law, since sanction of the competent authority
was not obtained before cognizance in the matter was taken. The particulars of
the allegations levelled against the appellant in the charge sheet filed against him
(and others) are irrelevant for the determination of the present controversy. We
have already recorded hereinabove briefly, an outline of the controversy which
resulted in the filing of the charge sheet (dated 22.9.2007) involving the
appellant. Despite our above determination, it is imperative at the cost of
repetition to notice, that the pointed allegation in respect of the appellant’s
culpability is drawn from the resolution of the Board of Directors of the MPSIDC
dated 19.4.1995. For all intents and purposes, therefore, our determination on
the merits of the controversy, will be based on the culpability of the appellant on
account of his participation in the meeting of the Board of Directors, wherein the
resolution dated 19.4.1995 was passed, without his having objected to the same.
10. Having recorded the cause for his being arrayed as an accused, the next
step in the process of the present adjudication is to determine whether the
participation of the appellant in the meetings in question was based on his
position as a nominee Director on the Board of Directors of the MPSIDC, and/or
in his capacity as a member of the IAS cadre allocated to the State of Madhya
Pradesh. The above determination, would make all the difference to the
outcome on the principal issue canvassed on behalf of the appellant. If the
appellant’s position as nominee director of the MPSIDC was abused, then the
holding of the said position itself would be relevant for deciding the present
controversy. If however, the office of Industries Commissioner, Government of
Madhya Pradesh was abused, the consideration would be different. In the latter
situation, the appellant being a member of the IAS cadre, his said position would
necessarily have a relevant nexus to the issue in hand. It is essential to notice,
that besides being a nominee Director of the Board of Directors of the MPSIDC,
the appellant was simultaneously nominated as a Director of six other
companies. The nomination of the appellant as Director in the other companies
(besides the MPSIDC), has no nexus to the allegations levelled against him in
the charge sheet dated 22.9.2007. However, there is some doubt about the fact,
whether the appellant participated in the controversial meeting of the Board of
Directors (of the MPSIDC) only because of his holding the office of Industries
Commissioner of the Government of Madhya Pradesh, which position he
occupied as a member of the IAS cadre of the State of Madhya Pradesh.
11. The case set up by the appellant was, that it was mandatory for the
prosecution to obtain sanction before initiating prosecution against him, as he
held a government post, namely, the post of Industries Commissioner,
Government of Madhya Pradesh. It was also submitted on the appellant’s
behalf, that he was a public servant, and the President of India was his
appointing authority, as also his dismissing authority. Even while he was
discharging his duties as Industries Commissioner, Government of Madhya
Pradesh, and thereafter, when he had proceeded on appointment by way of
deputation to the Central Government, his appointing and dismissing authorities
remained the same. Insofar as his being nominated as a Director on the Board
of the MPSIDC is concerned, the case set up by the appellant was, that his
nomination co-existed with his appointment as Industries Commissioner,
Government of Madhya Pradesh. In this behalf it was asserted, that his being
nominated as a Director (with the MPSIDC) was the outcome/consequence/result
of his holding the office of Industries Commissioner, Government of Madhya
Pradesh. It was submitted, that had he not held the office of Industries
Commissioner, he would not have been nominated as a Director (with the
MPSIDC). It was further asserted, that consequent upon his appointment by way
of deputation to the Central Government, his successor on the post of Industries
Commissioner, came to be nominated as a Director on the Board of the
MPSIDC. It was therefore, sought to be canvassed, that the appellant’s
nomination as Director of the Board of the MPSIDC, was a fallout/sequel of his
appointment as Industries Commissioner, Government of Madhya Pradesh. It
was accordingly his contention, that he continued to occupy the same position as
he had occupied while holding the office of Industries Commissioner,
Government of Madhya Pradesh, even after cognizance was taken by the
Special Judge, Bhopal. The submission projected was premised on the
foundation, that the offices held by the appellant were the outcome of his
appointment to the IAS cadre. As such, according to the appellant, his
participation in the proceedings of the Board of Directors culminating in its
resolution dated 19.4.1995, must be deemed to have been taken in his capacity
as a member of the IAS cadre.
12. On the pleas canvassed at the hands of the learned counsel for the
appellant, as have been noticed in the foregoing paragraph, there can be no
doubt that merely the position held by the appellant as Commissioner Industries,
Government of Madhya Pradesh, would not have vested in him the right to
participate in the affairs of the MPSIDC. It was only on account of the nomination
of the appellant as director of the MPSIDC, that vested in him the authority to
participate in the controversial meeting where the MPSIDC passed its resolution
dated 19.4.1995. Likewise, his nomination as a Director in six other companies
did not vest in him any right whatsoever, to deal with the affairs of the MPSIDC.
It is only on account of his being a nominee Director of the MPSIDC, that he
assumed the responsibility and the power, to deal with the affairs of the MPSIDC.
His participation in the proceedings of the Board of Directors which passed its
resolution dated 19.4.1995 was therefore exclusively on account of his having
been nominated as a Director on the Board of the MPSIDC. We must therefore,
first endeavour, to deal with the credibility of the submission canvassed on behalf
of the appellant, that the appellant’s nomination as Director (with the MPSIDC)
was the outcome of his holding the office of Industries Commissioner,
Government of Madhya Pradesh. It was not disputed during the course of
hearing, that the appellant’s nomination as Director (with the MPSIDC) emerges
from clause 89(2) of the Memorandum and Articles of Association of the
MPSIDC. Clause 89 aforementioned is being extracted hereunder:
“89 (1) The number of Directors shall not be less than three and more
than twelve but the number can be increased or decreased by the
Governor subject to the provisions of the Act.
(2) Unless otherwise determined by the Governor from time to
time not more than five Directors shall be nominated by the
Governor so long as the Government’s share does not exceed
Rs.26 lakhs. In the event of Government’s share exceeding this
amount, the number of Directors to be nominated by the Governor
will increase. The number of Directors so increased will be in
proportion to the Government’s share in excess of Rs.26 lakhs and
the shares held by persons other than Government. The Directors
other than those nominated by the Governor shall be appointed by
the Company in the general meeting.
(3) The tenure of all Directors including Chairman and excluding
Managing Director shall be for the period as fixed or determined by
the State Government from time to time. The Managing Director
shall retire on his ceasing to hold the office of the Managing Director.
A retiring Director shall be eligible for reappointment.
(4) The Governor shall have the power to remove any Director
appointed and nominated by him including the Chairman and the
Managing Director from Office at any time in his absolute discretion.
(5) The Governor shall have the right to fill any vacancy in the
Office of a Director caused by retirement, removal, resignation,
death or otherwise of the Directors nominated/appointed by him.
A perusal of sub-clause (2) of clause 89 reveals, that nominee Directors to the
MPSIDC are appointed by the Governor. The Governor (under sub-clause (4)
extracted above) is also vested with the absolute discretion to remove a nominee
Director. But what needs emphasis is, that clause 89 of the Memorandum and
Articles of Association of the MPSIDC, does not contemplate that the Industries
Commissioner, Government of Madhya Pradesh would necessarily, or
automatically, or as a matter of course, must be nominated as Director of the
MPSIDC. Likewise, clause 89 aforementioned, does not require a nominee
director to be drawn out of members of the IAS cadre. In fact, in our view, the
Governor under clause 89 has the absolute discretion to nominate anyone
suitable as per his wisdom, as nominee Director to the MPSIDC. In the above
view of the matter, it is not possible to accept, that the appellant’s nomination as
Director of the MPSIDC, was the outcome of his holding the office of Industries
Commissioner, Government of Madhya Pradesh, or on account of his being a
member of the IAS cadre. In the above view of the matter it is natural to
conclude, that the participation of the appellant in the meeting of the Board of
Directors of the MPSIDC on 19.4.1995 was not on account of his holding the
office of Industries Commissioner, Government of Madhya Pradesh, or on
account of his being a member of the IAS cadre. Having so concluded, we shall
now endeavour to determine, on the basis of the law declared by this Court, the
veracity of the assertion made by the appellant, that prior sanction was
mandatory, and in its absence, the prosecution initiated against the appellant
should be considered to be without jurisdiction.
13. We shall first endeavour to deal with the law declared by this Court on the
proposition being canvassed before us. In this behalf, reference may first of all
be made to R.S. Naik vs. A.R. Antulay, (1984) 2 SCC 183. Observations made
by this Court, as are relevant to the proposition canvassed on behalf of the
appellant, are being extracted hereunder :
“21. Re: (b) and (c): It was strenuously contended that if the accused has
held or holds a plurality of offices occupying each one of which makes him
a public servant, sanction of each one of the competent authorities entitled
to remove him from each one of the offices held by him, would be
necessary and if anyone of the competent authorities fails or declines to
grant sanction, the court is precluded or prohibited from taking cognizance
of the offence with which the public servant is charged. This submission
was sought to be repelled urging that it is implicit in Section 6 that sanction
of that authority alone is necessary which is competent to remove the
public servant from the office which he is alleged to have misused or
abused for corrupt motives. Section 6(1)(c) is the only provision relied
upon on behalf of the accused to contend that as M.L.A. he was a public
servant on the date of taking cognizance of the offences, and therefore,
sanction of that authority competent to remove him from that office is a
sine qua non for taking cognizance of offences. Section 6 (1)(c) bars taking
cognizance of an offence alleged to have been committed by public
servant except with the previous sanction of the authority competent to
remove him from his office.
23. Offences prescribed in Sections 161, 164 and 165 IPC and Section
5 of the 1947 Act have an intimate and inseparable relation with the office
of a public servant. A public servant occupies office which renders him a
public servant and occupying the office carries with it the powers conferred
on the office. Power generally is not conferred on an individual person. In a
society governed by rule of law power is conferred on office or acquired by
statutory status and the individual occupying the office or on whom status
is conferred enjoys the power of office or power flowing from the status.
The holder of the office alone would have opportunity to abuse or misuse
the office. These sections codify a well-recognised truism that power has
the tendency to corrupt. It is the holding of the office which gives an
opportunity to use it for corrupt motives. Therefore, the corrupt conduct is
directly attributable and flows from the power conferred on the office. This
interrelation and interdependence between individual and the office he
holds is substantial and not severable. Each of the three clauses of subsection
(1) of Section 6 uses the expression 'office' and the power to grant
sanction is conferred on the authority competent to remove the public
servant from his office and Section 6 requires a sanction before taking
cognizance of offences committed by public servant. The offence would be
committed by the public servant by misusing or abusing the power of office
and it is from that office, the authority must be competent to remove him so
as to be entitled to grant sanction. The removal would bring about
cessation of interrelation between the office and abuse by the holder of the
office. The link between power with opportunity to abuse and the holder of
office would be severed by removal from office. Therefore, when a public
servant is accused of an offence of taking gratification other than legal
remuneration for doing or forbearing to do an official act (Section 161 IPC)
or as a public servant abets offences punishable under Sections 161 and
163 (Section 164 IPC) or as public servant obtains a valuable thing without
consideration from person concerned in any proceeding or business
transacted by such public servant (Section 165 IPC) or commits criminal
misconduct as defined in Section 5 of the 1947 Act, it is implicit in the
various offences that the public servant has misused or abused the power
of office held by him as public servant. The expression 'office' in the three
sub-clauses of Section 6(1) would clearly denote that office which the
public servant misused or abused for corrupt motives for which he is to be
prosecuted and in respect of which a sanction to prosecute him is
necessary by the competent authority entitled to remove him from that
office which he has abused. This interrelation between the office and its
abuse if severed would render Section 6 devoid of any meaning. And this
interrelation clearly provides a clue to the understanding of the provision in
Section 6 providing for sanction by a competent authority who would be
able to judge the action of the public servant before removing the bar, by
granting sanction, to the taking of the cognizance of offences by the court
against the public servant. Therefore, it unquestionably follows that the
sanction to prosecute can be given by an authority competent to remove
the public servant from the office which he has misused or abused
because that authority alone would be able to know whether there has
been a misuse or abuse of the office by the public servant and not some
rank outsider. By a catena of decisions, it has been held that the authority
entitled to grant sanction must apply its mind to the facts of the case,
evidence collected and other incidental facts before according sanction. A
grant of sanction is not an idle formality but a solemn and sacrosanct act
which removes the umbrella of protection of government servants against
frivolous prosecutions and the aforesaid requirements must therefore, be
strictly complied with before any prosecution could be launched against
public servants. (See Mohd. Iqbal Ahmad v. State of Andhra Pradesh,
[1979] 2 S.C.R. 1007). The Legislature advisedly conferred power on the
authority competent to remove the public servant from the office to grant
sanction for the obvious reason that that authority alone would be able,
when facts and evidence are placed before him, to judge whether a
serious offence is committed or the prosecution is either frivolous or
speculative. That authority alone would be competent to judge whether on
the facts alleged, there has been an abuse or misuse of office held by the
public servant. That authority would be in a position to know what was the
power conferred on the office which the public servant holds, how that
power could be abused for corrupt motive and whether prima facie it has
been so done. That competent authority alone would know the nature and
functions discharged by the public servant holding the office and whether
the same has been abused or misused. It is the vertical hierarchy between
the authority competent to remove the public servant from that office and
the nature of the office held by the public servant against whom sanction is
sought which would indicate a hierarchy and which would therefore, permit
inference of knowledge about the functions and duties of the office and its
misuse or abuse by the public servant. That is why the legislature clearly
provided that that authority alone would be competent to grant sanction
which is entitled to remove the public servant against whom sanction is
sought from the office.
24. Now if the public servant holds two offices and he is accused of
having abused one and from which he is removed but continues to hold
the other which is neither alleged to have been used nor abused, is a
sanction of the authority competent to remove him from the office which is
neither alleged or shown to have been abused or misused necessary? The
submission is that if the harassment of the public servant by a frivolous
prosecution and criminal waste of his time in law courts keeping him away
from discharging public duty, are the objects underlying Section 6, the
same would be defeated if it is held that the sanction of the latter authority
is not necessary. The submission does not commend to us. We fail to see
how the competent authority entitled to remove the public servant from an
office which is neither alleged to have been used or abused would be able
to decide whether the prosecution is frivolous or tendentious. An illustration
was posed to the learned counsel that a Minister who is indisputably a
public servant greased his palms by abusing his office as Minister, and
then ceased to hold the office before the court was called upon to take
cognizance of the offence against him and therefore, sanction as
contemplated by Section 6 would not be necessary; but if after committing
the offence and before the date of taking of cognizance of the offence, he
was elected as a Municipal President in which capacity he was a public
servant under the relevant Municipal law, and was holding that office on
the date on which court proceeded to take cognizance of the offence
committed by him as a Minister, would a sanction be necessary and that
too of that authority competent to remove him from the office of the
Municipal President. The answer was in affirmative. But the very illustration
would show that such cannot be the law. Such an interpretation of Section
6 would render it as a shield to an unscrupulous public servant. Someone
interested in protecting may shift him from one office of public servant to
another and thereby defeat the process of law. One can legitimately
envisage a situation wherein a person may hold a dozen different offices,
each one clothing him with the status of a public servant under Section 21
IPC and even if he has abused only one office for which either there is a
valid sanction to prosecute him or he has ceased to hold that office by the
time court was called upon to take cognizance, yet on this assumption,
sanction of 11 different competent authorities each of which was entitled to
remove him from 11 different public offices would be necessary before the
court can take cognizance of the offence committed by such public
servant, while abusing one office which he may have ceased to hold. SuchPage 16
16
an interpretation is contrary to all canons of construction and leads to an
absurd and product which of necessity must be avoided. Legislation must
at all costs be interpreted in such a way that it would not operate as a
rougue's charter. (See Davis & Sons Ltd. v. Atkins)
xxx xxx xxx xxx
26. Therefore, upon a true construction of Section 6, it is implicit therein
that sanction of that competent authority alone would be necessary which
is competent to remove the public servant from the office which he is
alleged to have misused or abused for corrupt motive and for which a
prosecution is intended to be launched against him.
27. In the complaint filed against the accused it has been repeatedly
alleged that the accused as Chief Minister of Maharashtra State accepted
gratification other than legal remuneration from various sources and thus
committed various offences set out in the complaint. Nowhere, not even by
a whisper, it is alleged that the accused has misused or abused for corrupt
motives his office as M.L.A. Therefore, it is crystal clear that the complaint
filed against the accused charged him with criminal abuse or misuse of
only his office as Chief Minister. By the time, the court was called upon to
take cognizance of the offences, so alleged in the complaint, the accused
had ceased to hold the office of the Chief Minister. On this short ground, it
can be held that no sanction to prosecute him was necessary as former
Chief Minister of Maharashtra State. The appeal can succeed on this short
ground. However, as the real bone of contention between the parties was
whether as M.L.A. the accused was a public servant and the contention
was canvassed at some length, we propose to deal with the same.
xxx xxx xxx xxx
68. Re. (f) & (g): The learned Judge after recording a finding that M.L.A.
is a public servant within the comprehension of clause (12)(a) and further
recording the finding that as on the date on which the Court was invited to
take cognizance, the accused was thus a public servant proceeded to
examine whether sanction under Section 6 of the 1947 Act is a prerequisite
to taking cognizance of offences enumerated in Section 6 alleged
to have been committed by him. He reached the conclusion that a sanction
is necessary before cognizance can be taken. As a corollary he proceeded
to investigate and identify, which is the sanctioning authority who would be
able to give a valid sanction as required by Section 6 for the prosecution of
the accused in his capacity as M.L.A.? We have expressed our conclusion
that where offences as set out in Section 6 are alleged to have been
committed by a public servant, sanction of only that authority would be
necessary who would be entitled to remove him from that office which isPage 17
17
alleged to have been misused or abused for corrupt motives. If the
accused has ceased to hold that office by the date, the court is called upon
to take cognizance of the offences alleged to have been committed by
such public servant, no sanction under Section 6 would be necessary
despite the fact that he may be holding any other office on the relevant
date which may make him a public servant as understood in Sec 21, if
there is no allegation that office has been abused or misused for corrupt
motives. The allegations in the complaint are all to the effect that the
accused misused or abused his office as Chief Minister for corrupt
motives. By the time the Court was called upon to take cognizance of
those offences, the accused had ceased to hold the office of Chief
Minister. The sanction to prosecute him was granted by the Governor of
Maharashtra but this aspect we consider irrelevant for concluding that no
sanction was necessary to prosecute him under Section 6 on the date on
which the court took cognizance of the offences alleged to have been
committed by the accused. Assuming that as MLA the accused would be a
public servant under Section 21, in the absence of any allegation that he
misused or abused his office as MLA that aspect becomes immaterial.
Further Section 6 postulates existence of a valid sanction for prosecution
of a public servant for offences punishable under Sections 161, 164, 165
IPC and Section 5 of the 1947 Act, if they are alleged to have been
committed by a public servant. In view of our further finding that M.L.A. is
not a public servant within the meaning of the expression in Section 21 IPC
no sanction is necessary to prosecute him for the offences alleged to have
been committed by him.”
(emphasis is ours)
The conclusions drawn by this Court in R.S. Naik’s case (supra) were affirmed by
this Court in Prakash Singh Badal vs. State of Punjab, (2007) 1 SCC 1, wherein
this Court held as under:
“23. Offences prescribed in Sections 161, 164 and 165 IPC and Section
5 of the 1947 Act have an intimate and inseparable relation with the
office of a public servant. A public servant occupies office which
renders him a public servant and occupying the office carries with it
the powers conferred on the office. Power generally is not conferred
on an individual person. In a society governed by the rule of law
power is conferred on office or acquired by statutory status and the
individual occupying the office or on whom status is conferred enjoys
the power of office or power flowing from the status. The holder of
the office alone would have opportunity to abuse or misuse thePage 18
18
office. These sections codify a well-recognised truism that power
has the tendency to corrupt. It is the holding of the office which gives
an opportunity to use it for corrupt motives. Therefore, the corrupt
conduct is directly attributable and flows from the power conferred
on the office. This interrelation and interdependence between
individual and the office he holds is substantial and not severable.
Each of the three clauses of Sub-section (1) of Section 6 uses the
expression ‘office' and the power to grant sanction is conferred on
the authority competent to remove the public servant from his office
and Section 6 requires a sanction before taking cognizance of
offences committed by public servant. The offence would be
committed by the public servant by misusing or abusing the power of
office and it is from that office, the authority must be competent to
remove him so as to be entitled to grant sanction. The removal
would bring about cessation of interrelation between the office and
abuse by the holder of the office. The link between power with
opportunity to abuse and the holder of office would be severed by
removal from office. Therefore, when a public servant is accused of
an offence of taking gratification other than legal remuneration for
doing or forbearing to do an official act (Section 161 IPC) or as a
public servant abets offences punishable under Sections 161 and
163 (Section 164 IPC) or as public servant obtains a valuable thing
without consideration from person concerned in any proceeding or
business transacted by such public servant (Section 165 IPC) or
commits criminal misconduct as defined in Section 5 of the 1947
Act, it is implicit in the various offences that the public servant has
misused or abused the power of office held by him as public servant.
The expression 'office' in the three Sub-clauses of Section 6(1)
would clearly denote that office which the public servant misused or
abused for corrupt motives for which he is to be prosecuted and in
respect of which a sanction to prosecute him is necessary by the
competent authority entitled to remove him from that office which he
has abused. This interrelation between the office and its abuse if
severed would render Section 6 devoid of any meaning. And this
interrelation clearly provides a clue to the understanding of the
provision in Section 6 providing for sanction by a competent
authority who would he able to judge the action of the public servant
before removing the bar, by granting sanction, to the taking of the
cognizance of offences by the court against the public servant.
Therefore, it unquestionably follows that the sanction to prosecute
can he given by an authority competent to remove the public servant
from the office which he has misused or abused because that
authority alone would be able to know whether there has been a
misuse or abuse of the office by the public servant and not some
rank outsider. By a catena of decisions, it has been held that thePage 19
19
authority entitled to grant sanction must apply its mind to the facts of
the case, evidence collected and other incidental facts before
according sanction. A grant of sanction is not an idle formality but a
solemn and sacrosanct act which removes the umbrella of protection
of Government servants against frivolous prosecutions and the
aforesaid requirements must therefore, be strictly complied with
before any prosecution could be launched against public servants.
(See Mohd. Iqbal Ahmad v. State of A.P., (1979) 4 SCC 172). The
Legislature advisedly conferred power on the authority competent to
remove the public servant from the office to grant sanction for the
obvious reason that that authority alone would be able, when facts
and evidence are placed before him, to judge whether a serious
offence is committed or the prosecution is either frivolous or
speculative. That authority alone would be competent to judge
whether on the facts alleged, there has been an abuse or misuse of
office held by the public servant. That authority would be in a
position to know what was the power conferred on the office which
the public servant holds, how that power could he abused for corrupt
motive and whether prima facie it has been so done. That competent
authority alone would know the nature and functions discharged by
the public servant holding the office and whether the same has been
abused or misused. It is the vertical hierarchy between the authority
competent to remove the public servant from that office and the
nature of the office held by the public servant against whom sanction
is sought which would indicate a hierarchy and which would
therefore, permit inference of knowledge about the functions and
duties of the office and its misuse or abuse by the public servant.
That is why the Legislature clearly provided that that authority alone
would be competent to grant sanction which is entitled to remove the
public servant against whom sanction is sought from the office.
24. Now if the public servant holds two offices and he is accused of
having abused one and from which he is removed but continues to
hold the other which is neither alleged to have been used (sic) nor
abused, is a sanction of the authority competent to remove him from
the office which is neither alleged or shown to have been abused or
misused necessary? The submission is that if the harassment of the
public servant by a frivolous prosecution and criminal waste of his
time in law courts keeping him away from discharging public duty,
are the objects underlying Section 6, the same would be defeated if
it is held that the sanction of the latter authority is not necessary.
The submission does not commend to us. We fail to see how the
competent authority entitled to remove the public servant from an
office which is neither alleged to have been used (sic) or abused
would be able to decide whether the prosecution is frivolous orPage 20
20
tendentious. An illustration was posed to the Learned Counsel that a
Minister who is indisputably a public servant greased his palms by
abusing his office as Minister, and then ceased to hold the office
before the court was called upon to take cognizance of the offence
against him and therefore, sanction as contemplated by Section 6
would not be necessary; but if after committing the offence and
before the date of taking of cognizance of the offence, he was
elected as a Municipal President in which capacity he was a public
servant under the relevant Municipal law, and was holding that office
on the date on which court proceeded to take cognizance of the
offence committed by him as a Minister, would a sanction be
necessary and that too of that authority competent to remove him
from the office of the Municipal President. The answer was in
affirmative. But the very illustration would show that such cannot be
the law. Such an interpretation of Section 6 would render it as a
shield to an unscrupulous public servant. Someone interested in
protecting may shift him from one office of public servant to another
and thereby defeat the process of law. One can legitimately
envisage a situation wherein a person may hold a dozen different
offices, each one clothing him with the status of a public servant
under Section 21 IPC and even if he has abused only one office for
which either there is a valid sanction to prosecute him or he has
ceased to hold that office by the time court was called upon to take
cognizance, yet on this assumption, sanction of 11 different
competent authorities each of which was entitled to remove him from
11 different public offices would be necessary before the court can
take cognizance of the offence committed by such public servant,
while abusing one office which he may have ceased to hold. Such
an interpretation is contrary to all canons of construction and leads
to an absurd and product which of necessity must be avoided.
Legislation must at all costs be interpreted in such a way that it
would not operate as a rougue's charter. (See W. Davis & Sons Ltd.
v. Atkins, (1977) 3 All ER 40.
50. The offence of cheating under Section 420 or for that matter
offences relatable to Sections 467, 468, 471 and 120B can by no
stretch of imagination by their very nature be regarded as having
been committed by any public servant while acting or purporting to
act in discharge of official duty. In such cases, official status only
provides an opportunity for commission of the offence.”
(emphasis is ours)
14. The judgments referred to in paragraph 13 above, were relied upon by the
Courts below to reject the contention advanced at the hands of the appellant, thatPage 21
21
sanction was essential before the appellant could be prosecuted. It would be
pertinent to mention, that extracts from the judgments referred to in paragraph 13
reproduced above, deal with two pointed situations. Firstly, whether sanction
before prosecution is required from each of the competent authorities entitled to
remove an accused from the offices held by him, in situations wherein the
accused holds a plurality of offices. The second determination was in respect of
the requirement of sanction, in situations where the accused no longer holds the
office, which he is alleged to have abused/misused, for committing the offence
(s) for which he is being blamed. In answer to the first query, it has
unambiguously been concluded, that if an accused holds a plurality of offices,
each one of which makes him a public servant, sanction is essential only at the
hands of the competent authority (entitled to remove him from service) of the
office which he had allegedly misused. This leads to the clear inference, that
other public offices held by the accused wherein an accused holds a plurality of
offices, are irrelevant for purposes of obtaining sanction prior to prosecution. On
the second issue it was concluded, that sanction was essential only if, at the time
of taking cognizance, the accused was still holding the public office which he had
allegedly abused. If the legal position determined in the above judgments is
taken into consideration, there is certainly no doubt, that in the facts and
circumstances of this case, sanction if required, ought to have been obtained
from the Governor of the State of Madhya Pradesh. The instant determination is
premised on the fact, that the appellant is stated to have misused his position
while discharging his responsibilities as a nominee Director of the MPSIDC. It isPage 22
22
clear to us, specially from the deliberation recorded hereinabove, that the
appellant’s participation in the Cabinet Review Meeting dated 28.1.1994, and in
the relevant meetings of the Board of Directors (of the MPSIDC) had no nexus to
the post of Industries Commissioner, Government of Madhya Pradesh, or the
subsequent office held by him as Joint Secretary, Department of Heavy
Industries, Government of India. Accordingly, in our considered view, sanction of
the authorities with reference to the post of Industries Commissioner,
Government of Madhya Pradesh and Joint Secretary, Department of Heavy
Industries, Government of India held by the appellant, was certainly not required.
We therefore, hereby reject the submission advanced at the hands of the learned
counsel for the appellant, that since the appellant continued to hold the abovementioned
public office(s) in his capacity as a member of the IAS cadre, at the
time the first charge sheet was filed on 24.9.2007, prosecution could be
proceeded with, and cognizance taken, only upon sanction by the competent
authority(ies) of the said two offices (Industries Commissioner, Government of
Madhya Pradesh and Joint Secretary, Department of Heavy Industries,
Government of India), as wholly misconceived.
15. The abuse/misuse of authority, alleged against the appellant pertains to
the discharge of his responsibilities as a nominee Director (on the Board of the
MPSIDC). Therefore, the further question which arises for our consideration is,
whether sanction at the hands of the Governor of the State of Madhya Pradesh,
(who had the power to remove any Director appointed or nominated by himPage 23
23
under clause 89 of the Memorandum and Articles of Association of the MPSIDC),
was a prerequisite before taking cognizance in the matter. In the facts and
circumstances of this case, we are of the view, that answer to the instant
question has also to be in the negative. Our aforesaid determination is based on
the fact that the appellant remained a nominee Director of the MPSIDC from
1993 to 1998. The first charge sheet in the matter was filed on 24.9.2007. Well
before the filing of the first charge sheet, the appellant had relinquished charge of
the office which he is alleged to have abused/misused (i.e. the office of nominee
Director of the MPSIDC). In the above view of the matter, since the appellant
was not holding the public office which he is alleged to have abused, when the
first charge sheet was filed, in terms of the law declared by this Court (referred to
in the judgments extracted in paragraph 13 above), there was no need to obtain
any sanction before proceeding to prosecute the appellant, for the offences
alleged against him.
16. It would be relevant to mention, that during the course of hearing learned
counsel for the appellant placed emphatic reliance on the judgment rendered by
this Court in State of Madhya Pradesh vs. Sheetla Sahai & Ors., (2009) 8 SCC
617. It is not necessary for us to refer either to the factual position in the
judgment relied upon, or even the conclusions recorded thereon. We say so
because, the issues canvassed and determined in the aforesaid judgments were
not the ones on the basis whereof we have recorded our conclusions, in the
foregoing paragraphs. It is sufficient for us to note, that the judgment renderedPage 24
24
by this Court in State of Madhya Pradesh vs. Sheetla Sahai & Ors. (supra), does
not carve out any exception, to the two propositions relied upon for the
conclusions drawn by us, from the judgments referred to in paragraph 13 above.
17. The second contention advanced at the hands of the learned counsel for
the appellant, was based on the determination rendered by this Court in Soma
Chakravarty vs. State through CBI, (2007) 5 SCC 403. Pointed reliance was
placed by the learned counsel for the appellant on paragraph 23 which is being
extracted hereunder:-
“23. In a case of this nature, the learned Special Judge also should have
considered the question having regard to the 'doctrine of parity' in
mind. An accused similarly situated has not been proceeded against
only because, the departmental proceedings ended in his favour.
Whether an accused before him although stands on a similar footing
despite he having not been departmentally proceeded against or
had not been completed exonerated also required to be considered.
If exoneration in a departmental proceeding is the basis for not
framing a charge against an accused person who is said to be
similarly situated, the question which requires a further consideration
was as to whether the applicant before it was similarly situated or
not and/or whether the exonerated officer in the departmental
proceeding also faced same charges including the charge of being a
party to the larger conspiracy.”
(emphasis is ours)
It was the vehement contention of the learned counsel for the appellant, that
sanction to prosecute another co-accused similarly situated as the appellant,
having been obtained, it was not permissible to treat the appellant differently.
We find no substance in the second contention advanced at the hands of the
learned counsel for the appellant. Having concluded on the basis of the law
declared by this Court, that prior sanction for prosecuting the appellant wasPage 25
25
unessential, it is futile to suggest that sanction ought to have been obtained all
the same. The instant submission needs no further consideration in view of the
deliberations recorded by us hereinabove. Parity in law can be claimed only in
respect of action rightfully executed. And not otherwise. Having concluded that
sanction was not required in the case of the appellant, it is not possible for us to
accept on the analogy of the submission advanced at the hands of the learned
counsel for the appellant, that merely because sanction was obtained in respect
of another co-accused, it needed to have been obtained in the appellant’s case
as well.
18. The next contention advanced at the hands of the learned counsel for the
appellant was based on Section 141 of the Negotiable Instruments Act, 1881
(hereinafter referred to as the ‘NI Act’). Section 141 aforementioned is being
extracted hereunder:-
“141. Offences by companies.- (1) If the person committing an offence
under section 138 is a company, every person who, at the time the
offence was committed, was in charge of, and was responsible to
the company for the conduct of the business of the company, as well
as the company, shall be deemed to be guilty of the offence and
shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall
render any person liable to punishment if he proves that the offence
was committed without his knowledge, or that he had exercised all
due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director
of a company by virtue of his holding any office or employment in the
Central Government or State Government or a financial corporation
owned or controlled by the Central Government or the State
Government, as the case may be, he shall not be liable for
prosecution under this Chapter.Page 26
26
(2) Notwithstanding anything contained in sub-section (1), where
any offence under this Act has been committed by a company and it
is proved that the offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the part of, any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be deemed to
be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
Explanation.--For the purposes of this section,--
(a) "company" means any body corporate and includes a firm or other
association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm.”
Relying on sub-Section (1) of Section 141 extracted above, it was the vehement
contention of the learned counsel for the appellant, that the appellant was not in
charge of the conduct of the business of the MPSIDC. It was also his
submission, that the appellant was not responsible to the MPSIDC for the
conduct of its day to day activities. In this behalf it was sought to be asserted,
that the appellant was not aware of the fact, that the functionaries of the MPSIDC
were extending short term loans (including ICD’s) out of the surplus funds of the
MPSIDC to industrial establishments. It was also pointed out, that the appellant
had neither examined nor approved any financial assistance extended to
industries, out of the surplus funds of the MPSIDC, on the basis of the resolution
of the Board of Directors dated 19.4.1995. As such it was asserted, that the
accusations levelled against the appellant were misconceived. Insofar as the
instant aspect of the matter is concerned, learned counsel for the appellant relied
on the decision rendered by this Court in National Small Industries CorporationPage 27
27
Ltd. vs. Harmeet Singh Paintal & Anr., (2010) 3 SCC 330. Learned counsel
invited our pointed attention to the following observations recorded therein:-
“6. In the connected appeal, the appellant - DCM Financial Services
Ltd., entered into a hire purchase agreement on 25.2.1996 with M/s
International Agro Allied Products Ltd. At the time of entering into
contract, the Company handed over post-dated cheques to the
appellant towards payment of monthly hire/rental charges.
Respondent No. 1, Dev Sarin was one of the Directors of the said
Company. The cheque issued by International Agro and Allied
Products Ltd. in favour of the appellant was duly presented for
payment on 28.10.1998 and the same was returned unpaid for the
reason that the Company had issued instructions to the bankers
stopping payment of the cheque.
12. It is very clear from the above provision that what is required is that
the persons who are sought to be made vicariously liable for a
criminal offence under Section 141 should be, at the time the
offence was committed, was in-charge of, and was responsible to
the company for the conduct of the business of the company. Every
person connected with the company shall not fall within the ambit of
the provision. Only those persons who were in-charge of and
responsible for the conduct of the business of the company at the
time of commission of an offence will be liable for criminal action. It
follows from the fact that if a Director of a Company who was not in
charge of and was not responsible for the conduct of the business of
the company at the relevant time, will not be liable for a criminal
offence under the provisions. The liability arises from being in
charge of and responsible for the conduct of the business of the
company at the relevant time when the offence was committed and
not on the basis of merely holding a designation or office in a
company.”
(emphasis is ours)
19. We have given our thoughtful consideration to the contention advanced at
the hands of the learned counsel for the appellant, as has been noticed in the
foregoing paragraph. We are of the view, that the appellant’s reliance on Section
141 of the NI Act, as also, the judgment rendered by this Court in National SmallPage 28
28
Industries Corporation Ltd. (supra), is misconceived. The appellant is not being
blamed for the implementation of the resolution of the Board of Directors of the
MPSIDC dated 19.4.1995. The appellant is being blamed for having allowed the
aforesaid resolution dated 19.4.1995 to be passed despite the earlier decision
taken in the Cabinet Review Meeting held on 28.1.1994, as also, the earlier
resolution of the Board of Directors of the MPSIDC dated 31.1.1994. It is not a
matter of dispute before us, that the appellant had participated in the decision
making process in the meeting of the Cabinet Review Committee dated
28.1.1994, as also, the resolution of the Board of Directors of the MPSIDC dated
31.1.1994. The charge against the appellant is based on the fact, that the
appellant allowed the Board of Directors of the MPSIDC to pass the resolution
dated 19.4.1995, inspite of the earlier decisions at the hands of the Cabinet
Review Committee (in meeting dated 18.1.1994) and the consequential
resolution of the Board of Directors (dated 31.1.1994). We, therefore, reject the
submission advanced at the hands of the learned counsel for the appellant based
on Section 141 of the NI Act. All the same, it would be relevant to notice, that the
second proviso under Section 141(1) of the N.I. Act is inapplicable to the facts of
this case, because the appellant was not nominated as a Director of the MPSIDC
on account of holding the office of Industries Commissioner, Government of
Madhya Pradesh. The appellant’s appointment as nominee Director of the
MPSIDC was based on the determination of the Governor of Madhya Pradesh
under clause 89 of the Memorandum and Articles of Association of the MPSIDC.
If the factual position alleged against the appellant is correct, the culpability of the
appellant would emerge from sub-Section (2) of Section 141 of the N.I. Act. The
instant inference is inevitable, because it is not disputed on behalf of the
appellant, that he had actually participated in the Cabinet Review Meeting dated
28.1.1984, as well as, in the meetings of the Board of Directors leading to the
passing of the resolutions dated 31.1.1994 and 19.4.1995. In the facts of the
present case, the accusation implicating the appellant, is directly attributable to
the appellant, as nominee Director of the MPSIDC. The aforesaid inference has
been drawn by us, to negate the submission of the learned counsel for the
appellant based on Section 141 of the N.I. Act. In our view, the instant issue
does not arise for adjudication in the present controversy in view of the
conclusions already drawn hereinabove, that the culpability of the appellant, lies
in the mischief of passing the resolution dated 19.4.1995. The implementation of
the said resolution is the consequential effect of the said mischief.
20. For the last contention advanced on behalf of the appellant, learned
counsel placed reliance on a decision rendered by this Court in C.K. Jaffer
Sharief vs. State (through CBI), (2013) 1 SCC 205. Our pointed attention was
drawn to the following observations recorded therein:-
“17. It has already been noticed that the appellant besides working as the
Minister of Railways was the Head of the two public sector
undertakings in question at the relevant time. It also appears from
the materials on record that the four persons while in London had
assisted the appellant in performing certain tasks connected with the
discharge of duties as a Minister. It is difficult to visualise as to how
in the light of the above facts, demonstrated by the materials
revealed in the course of investigation, the appellant can be
construed to have adopted corrupt or illegal means or to have
abused his position as a public servant to obtain any valuable thing
or pecuniary advantage either for himself or for any of the aforesaid
four persons. If the statements of the witnesses examined under
Section 161 Cr.P.C. show that the aforesaid four persons had
performed certain tasks to assist the Minister in the discharge of his
public duties, however insignificant such tasks may have been, no
question of obtaining any pecuniary advantage by any corrupt or
illegal means or by abuse of the position of the appellant as a public
servant can arise. As a Minister it was for the appellant to decide on
the number and identity of the officials and supporting staff who
should accompany him to London if it was anticipated that he would
be required to perform his official duties while in London. If in the
process, the rules or norms applicable were violated or the decision
taken shows an extravagant display of redundance it is the conduct
and action of the appellant which may have been improper or
contrary to departmental norms. But to say that the same was
actuated by a dishonest intention to obtain an undue pecuniary
advantage will not be correct. That dishonest intention is the gist of
the offence under Section 13(1)(d) is implicit in the words used i.e.
corrupt or illegal means and abuse of position as a public servant. A
similar view has also been expressed by this Court in M. Narayanan
Nambiar v. State of Kerala, AIR 1963 SC 1116 while considering the
provisions of Section 5 of Act of 1947.”
(emphasis is ours)
Based on the aforesaid determination, it was the contention of the learned
counsel for the appellant, that the allegations levelled against the appellant do
not lead to the inference, that the appellant had adopted corrupt or illegal means,
or had abused his position as a public servant to obtain any valuable thing or
pecuniary advantage, either for himself or for the industries to whom the MPSIDC
extended short term loans (including ICD’s). We are of the view, that the last
contention advanced at the hands of the learned counsel for the appellant is a
mixed question of fact and law. Determination of the instant issue would be
possible only after the rival parties have adduced evidence to establish their
respective claims. At the said juncture, it would be possible to record factual
conclusions. It would then be possible for the concerned Court(s) to draw
inferences on the basis of the established factual position, whether the accused
is guilty of the accusation levelled against him. Therefore, it is neither proper nor
possible for us to deal with the last contention advanced at the hands of the
learned counsel for the appellant, at the present juncture.
21. No further contention was advanced at the hands of the learned counsel
for the appellant.
22. For the reasons recorded hereinabove, we find no merit in the instant
appeals. The same are accordingly hereby dismissed. While disposing of the
instant appeals, we consider it just and appropriate to direct the trial Court to
expedite the trial, keeping in mind, that the charge sheet in the matter was filed
as far back as in 2007. On account of the proceedings initiated at the hands of
the appellant, no further proceedings were taken by the Special Judge, Bhopal.
In the above view of the matter, we consider it appropriate to direct the trial Court
to hold proceedings for the disposal of Special Case No. 7 of 2007 on a weekly
basis.
…………………………….CJI.
(P. Sathasivam)
……………………………….J.
(Jagdish Singh Khehar)
New Delhi;
September 17, 2013.
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