A. Srinivasulu vs The State Rep. by the Inspector of Police

s. 197(1) – Prosecution of public servant – Previous sanction – Requirement of – Executive director of PSU with a view to confer an unfair and under advantage, went for restricted tender by dictating the names of four bogus companies along with the name of the one chosen to whom the contract was awarded – Allegations that he got into a criminal conspiracy with others to commit offences – He retired five years before filing of the final report – Previous sanction u/s. 197 not sought for prosecuting the executive director – Correctness of – Held: Prosecution ought to have taken previous sanction in terms of s. 197(1) for prosecuting the executive director for the offences under the IPC – Sanction is required not only for acts done in the discharge of official duty but also required for any act purported to be done in the discharge of official duty and/or act done under colour of or in excess of such duty or authority – If the very same act of the co-conspirators fell in the realm of commercial wisdom, it is impossible that the act of executive director, as part of the criminal conspiracy, fell outside the discharge of his public duty, so as to disentitle him for protection u/s.197(1) – His act, even if alleged to be lacking in bona fides or in pursuance of a conspiracy, would be an act in the discharge of his official duty, making the case come within the parameters of s. 197(1). ss. 306, 307 – Tender of pardon to approver – Procedure prescribed by s. 306(4)(a) – Compliance of – On facts, the additional Chief Judicial Magistrate granted pardon at the stage of investigation and the prosecution examined him before the Special Court – Plea that the approver, in cases covered by s.306(1), should be examined twice, once as court witness before committal and then as prosecution witness at the time of trial – Held: When the Special Court chooses to take cognizance, the question of the approver being examined as a witness in the court of the Magistrate as required by s. 306 (4)(a) does not arise – Object of examining an approver twice, is to ensure that the accused is made aware of the evidence against him even at the preliminary stage, so as to enable him to effectively cross examine the approver during trial, bring out contradictions and show him to be untrustworthy – On facts, the object stood fulfilled – Magistrate who recorded the confession examined him and the Additional Chief Judicial Magistrate who granted pardon also examined – Thus, no violation of the procedure prescribed by s. 306(4)(a) – Prevention of Corruption Act, 1988 – s.5.

Allowing the appeals, the Court

HELD: 1. The judgment of the Special Court convicting the appellants for various offences under the Penal Code and the Prevention of Corruption Act, 1988, and the judgment of the High Court confirming the same are set aside. [Para 139][72-H; 73-A]

2.1 A-1 to A-4, being officers of a company were ‘public servants’ within the definition of the said expression under Section

21 of the IPC and under Section 2(c)(iii) of the PC Act. Therefore, there is a requirement of previous sanction both under Section 197(1) of the Code and under Section 19(1) of the PC Act, for prosecuting A-1 to A-4 for the offences punishable under the IPC and the PC Act. [Para 29][35-F, G]

2.2 Until the amendment to the PC Act under the Prevention of Corruption (Amendment) Act, 2018 (Act 16 of 2018), with effect from 26.07.2018, the requirement of a previous sanction under Section 19(1)(a) was confined only to a person “who is employed”. On the contrary, Section 197(1) made the requirement of previous sanction necessary, both in respect of “any person who is” and in respect of “any person who was” employed. By the amendment under Act 16 of 2018, Section 19(1)(a) of the PC Act was suitably amended so that previous sanction became necessary even in respect of a person who “was employed at the time of commission of the offence”. [Para 30][35-M; 36-A-B]

2.3 The case on hand arose before the coming into force of the Prevention of Corruption (Amendment) Act, 2018 (Act 16 of 2018). Therefore, no previous sanction under Section 19(1) of the PC Act was necessary insofar as A-1 was concerned, as he had retired by the time a final report was filed in the year 2002. But previous sanction under Section 19(1) of the PC Act was required in respect of A-3 and A-4, as they were in service at the time of the Special Court taking cognizance. Therefore, the Agency sought sanction, but the Management of PSU refused to grant sanction not once but twice, insofar as A-3 and A-4 are concerned. It is by a quirk of fate or the unfortunate circumstances of having been born at a time (and consequently retiring at a particular time) that the benevolence derived by A-3 and A-4 from their employer, was not available to A-1. The refusal to grant sanction for prosecution in respect of A-3 and A-4 may not have a direct bearing upon the prosecution of A-1. But it would certainly provide the context in which the culpability of A-1 for the offences both under the IPC and under the PC Act has to be determined. [Paras 31, 32, 34][36-C-E, H; 37-A]

2.4 The existing policy shows that A-1 at least had an arguable case, in defence of the decision he took to go in for Restricted Tender. Once this is clear, his act, even if alleged to be lacking in bona fides or in pursuance of a conspiracy, would be an act in the discharge of his official duty, making the case come within the parameters of Section 197(1) of the Code. Therefore, the prosecution ought to have obtained previous sanction. The Special Court as well as the High Court did not apply their mind to this aspect. [Para 47][41-G-H; 42-A]

2.5 The FIR actually implicated only four persons, namely PW-16, A-3, A-4 and A-5. A-1 was not implicated in the FIR. It was only after a confession statement was made by PW-16 in the year 1998 that A-1 was roped in. The allegations against A-1 were that he got into a criminal conspiracy with the others to commit these offences. But the Management of PSU refused to grant sanction for prosecuting A-3 and A-4, twice, on the ground that the decisions taken were in the realm of commercial wisdom of the Company. If according to the Management of the Company, the very same act of the co-conspirators fell in the realm of commercial wisdom, it is inconceivable that the act of A-1, as part of the criminal conspiracy, fell outside the discharge of his public duty, so as to disentitle him for protection under Section 197(1) of the Code. In view thereof, the prosecution ought to have taken previous sanction in terms of Section 197(1) of the Code, for prosecuting A-1, for the offences under the IPC. [Paras 52, 53][43-C-F]

3.1 A careful look at the anatomy of Section 306 of the Code shows that it provides a plethora of steps either in the alternative or in addition. Section 307 of the Code empowers the Court to which the commitment is made, to tender pardon. The power can be exercised at any time after the commitment of the case but before judgment is passed. [Paras 61, 62][48-G; 50-A]

3.1 Sub-section (1) of s. 5 of the PC Act empowers the Special Judge to take cognizance of offences without the accused being committed to him for trial. It also says that while trying the accused persons, the Special Judge is obliged to follow the procedure prescribed by the Code for the trial of warrant cases by the Magistrates. The Special Judge under the PC Act, while trying offences, has a dual power of the Sessions Judge as well as that of the Magistrate and that such a Special Judge conducts the proceedings both prior to the filing of the charge sheet and for holding trial. In contrast, Section 5(2) of the PC Act does not speak about the stage at which pardon may be tendered by a Special Judge. This is perhaps in view of the express provisions of sub-section (1) of Section 5 which empowers the Special Judge himself to take cognizance without the accused being committed to him for trial. But the second part of sub-section (2) of Section

5 of the PC Act creates a deeming fiction that the pardon tendered by the Special Judge shall be deemed to be a pardon tendered under Section 307 of the Code. However, this deeming fiction is limited for the purposes of Sub-sections (1) to (5) of Section 308 of the Code. [Para 65][51-A, B]

3.2 When the Special Court chooses to take cognizance, the question of the approver being examined as a witness in the Court of the Magistrate as required by Section 306 (4)(a) does not arise. [Para 76][57-D]

3.3 The object of examining an approver twice, is to ensure that the accused is made aware of the evidence against him even at the preliminary stage, so as to enable him to effectively cross examine the approver during trial, bring out contradictions and show him to be untrustworthy. The said object stands fulfilled in the instant case, since the confession statement of the approver before the Metropolitan Magistrate was enclosed to the Charge Sheet. The approver was examined as PW-16 during trial and he was cross examined on the contents of the confession statement. The Magistrate who recorded the confession was examined as PW 17 and the Additional Chief Judicial Magistrate who granted pardon was examined as PW-18. The proceedings before the Metropolitan Magistrate, the petition under section 306 of the Code and the proceedings on tender of pardon were marked respectively. All the accused were given opportunity to cross examine these witnesses both on the procedure and on the contents. There was no violation of the procedure prescribed by Section 306(4)(a) of the Code. [Paras 78, 79][57-G; 58-A-D]

4.1 The trial court and the High Court came to the conclusion that the names of two big companies were included in Exhibit P-26 chit only to lend credibility to the process adopted. But it was on record through the statement of PW-4, Manager of L&T Company that a tender enquiry was received by them from the PSU. If the inclusion of the names of those two companies were intended to be a make belief affair, A-1 would not have taken the risk of sending the letter and that too to a company like L&T. Therefore, the evidence of PW-16 was not worthy of credit; that even assuming that it has some credibility, his statement that “he recommended the contract to be given to A-5 not because of A-1’s interest”, made the whole edifice upon which the case of the prosecution was built, collapse; and that there was no other evidence to connect A-1 with the commission of these offences. [Para 102][64-G-H; 65-A, B]

4.2 The only person found by both the courts to be guilty of the offence under Section 120B was A-1. Therefore, an argument was advanced that a single person cannot be held guilty of criminal conspiracy. But this contention was repelled by the courts on the ground that PW-16 was the second person with whom A-1 had entered into a conspiracy. In other words, the reasoning adopted by the trial court and the High Court was that only A-1 and PW16 were part of the conspiracy. Such a reasoning was a huge climbdown from the original charge that A-1 to A-7 entered into a criminal conspiracy, to cause wrongful loss to PSU and to confer a wrongful gain to A-5 to A-7. Once an offence of Section 120B is not made out against A-5 to A-7, the very foundation for the prosecution becomes shaky. Therefore, the conviction of A-1 for the offences under Section 120B read with Sections 420, 468, Section 471 read with Section 468 and Section 193 IPC and Section 13(2) read with Section 13(1)(d) of the PC Act cannot be sustained. [Para 103][65-C-E]

4.3 A-1 was found guilty of an offence under Section 193. Section 193 applies only to false evidence given in any stage of a judicial proceeding or the fabrication of false evidence for the purpose of being used in any stage of a judicial proceeding. The allegation against A-1 was not even remotely linked to any of the Explanations under Section 193 of the IPC. Therefore, the judgment of the trial court and that of the High Court convicting A-1 for the said offences and sentencing him to imprisonment of varying terms and fines of different amounts are liable to be reversed. [Para 104][65-F-G]

4.4 No Court shall take cognizance of any offence punishable under Section 193 IPC, except on a complaint in writing of that Court or of some other Court to which that Court is subordinate. This bar is found in Section 195(1)(b)(i) of the Code. No complaint was ever made by any Court or by any officer authorized by any Court that A-1 or A-3 or A-4 committed an offence punishable under Section 193 IPC. But unfortunately, the trial court convicted A-1, A-3 and A-4, of the offence under Section 193 without any application of mind and the same has been upheld by the High Court. [Para 108][66-E, F]

4.5 The reading of the trial court and the High Court as though this Committee of which A-3, A-4 and the Approver were a part, was actually a Tender Committee having a larger role to play, is completely misconceived. In fact, the prosecution had to stand or fall on the strength of the testimony of the Approver namely PW-16. Despite the assertion on the part of PW-16 giving a clean chit to A-3 and A-4, the trial court found both of them guilty on a convoluted logic that they were part of a Tender Committee and that “every word and every description in the Tender Committee proceedings had been written by them with a view to cheat PSU” and that “if A-3 and A-4 were innocent they should have questioned and asked for details regarding the contractors.” Such a reasoning given by the trial court and approved by the trial court and approved by the High Court was completely perverse. [Paras 110-112][64-D, E; 68-A, B]

4.6 A-4 had no role in choosing the tenderers, but entered the picture only after the offers were received from the tenderers. Admittedly, A-4 was subordinate to both PW-16 and A-3.The competent authority refused to grant sanction to prosecute A-3 and A-4 for the offences under the PC Act. The trial court and the High Court did not find A-4 as a co-conspirator, which is why he was not held guilty of the offence under Section 120-B IPC. Section

193 IPC had been included completely out of context. The conviction of A-4 by the trial court as confirmed by the High Court is wholly unsustainable and is liable to be set aside. [Paras 113115][68-C-E]

4.7 Three out of four bank officials examined by the prosecution to show that A-7 applied for demand drafts on behalf of four bogus firms, did not identify A-7 as the person who applied for the demand drafts. They did not also identify the handwriting in Exhibits P-66, P-90 and P- 92 as that of A-7. The only person who stated something in favour of the prosecution was PW-32 and it was in relation to Exhibit P-76. [Para 122][69-H; 70-A]

4.8 There was a colossal failure on the part of the prosecution to establish that Exhibits P-66, P-76, P-90 and P-92 were in the handwritings/signatures of A-7. This is despite the prosecution examining the bank officials as PW-22, PW-32, PW40 and PW-41 and the handwriting expert as PW-30. [Para 128][71-A]

4.9 Unfortunately, the trial court adopted a very curious reasoning that since he was a beneficiary of the money diverted to the account of sister concern, he must have had participation and knowledge that the demand drafts were purchased to cheat PSU. Such a reasoning is wholly unacceptable in view of the fact that A-7 was accused of forgery and charged u/s. 468 IPC, in relation to these very same applications for demand drafts. Therefore, it was necessary for the prosecution to prove forgery and also to show that the purpose of such forgery was cheating. Both were absent. The High Court fortunately realised the pitfall in the reasoning of the trial court. But in an over-anxiety to somehow convict A-7, the High Court adopted a very peculiar route, namely that of undertaking the task of comparing the admitted signatures/ handwritings with the disputed ones u/s. 73 of the Evidence Act. [Paras 129, 130][71-B-E]

4.10 There was no signature or writing available before the High Court, which had been admitted or proved to the satisfaction of the Court to have been written or made. The High Court did not also direct A-7 to write any words or figures for the purpose of enabling a comparison. Without following the procedure so prescribed in Section 73, the High Court invented a novel procedure, to uphold the conviction handed over by the trial court through a wrong reasoning. Even in the questioning under Section

313 of the Code, no specific question was put to A-7 whether Exhibits P-66, P-76, P-90, P-92 and P- 75 were in his handwritings and whether they contained his signatures. Therefore, what was contained in Exhibit P-75 was not even admitted signatures. In the absence of either admission or proof of the admitted signatures, the High Court could not have resorted to Section

73 of the Evidence Act. In view thereof, the finding recorded by the trial court and the High Court as though A-7 committed forgery and cheating by making applications for the issue of demand drafts in the names of bogus firms is wholly unsustainable. [Paras 132, 135-137][71-F, G; 72-C-E]

4.11 The only connecting link pointed out against A-7 was the transfer of money to the total extent of Rs.1,52,50,000/- to the account of a firm of which he was a partner. This by itself will not constitute any offence. Therefore, the charge that A-7 abetted the commission of the crime by the other accused, should also fail. This is especially so when A-5, whose proprietary concern bagged the contract, not only lost the contract but also allowed the bank guarantee to be invoked by the PSU and in addition, left a huge amount of Rs.2.60 crores still with the PSU. Therefore, the conviction and sentence awarded to A-7 cannot be sustained. [Para 138][72-F-G]

Suresh Chandra Bahri vs. State of Bihar 1995 Supp (1) SCC 80:[1994] 1 Suppl. SCR 483 – distinguished. Bangaru Laxman vs. State (through CBI) (2012) 1 SCC

500 : [2011] 13 SCR 268; State through CBI vs. V. Arul Kumar (2016) 11 SCC 733 : [2016] 2 SCR 486; Sardar Iqbal Singh vs. State (Delhi Administration) (1977) 4 SCC 536 : [1978] 2 SCR 174; Yakub Abdul Razak Memon vs. State of Maharashtra (2013) 13 SCC 1 : [2013] 15 SCR 1; Sarwan Singh vs. State of Punjab 1957 SCR 953; Ravinder Singh vs. State of Haryana (1975) 3 SCC 742 : [1975] 3 SCR 453 – relied on. Matajog Dobey vs. H.C. Bhari [1955] 2 SCR 925; Dr. Hori Ram Singh vs. The Crown 1939 SCC OnLine FC 2; State of Orissa through Kumar Raghvendra Singh vs. Ganesh Chandra Jew (2004) 8 SCC 40 : [2004] 3 SCR 504; K. Kalimuthu vs. State by DSP (2005) 4 SCC

512 : [2005] 3 SCR 1; Rakesh Kumar Mishra vs. State of Bihar (2006) 1 SCC 557 : [2006] 1 SCR 124; Devinder Singh vs. State of Punjab through CBI (2016)

12 SCC 87 : [2016] 6 SCR 295; D. Devaraja vs. Owais Sabeer Hussain (2020) 7 SCC 695 : [2020] 6 SCR 453; Parkash Singh Badal vs. State of Punjab (2007) 1 SCC

1 : [2006] 10 Suppl. SCR 197; Harshad S. Mehta vs. State of Maharashtra (2001) 8 SCC 257 : [2001] 2 Suppl. SCR 577; State through Central Bureau of Investigation, Chennai vs. V. Arul Kumar (2016) 11 SCC

733 : [2016] 2 SCR 486; A. Devendran vs. State of T.N. (1997) 11 SCC 720 : [1997] 4 Suppl. SCR 591; P.C. Mishra vs. State (CBI) (2014) 14 SCC 629 : [2014]

4 SCR 183; M.O. Shamsudhin vs. State of Kerala (1995)

3 SCC 351 : [1995] 2 SCR 900 – referred to.