# 2 S.C.R. 762 V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI & ORS

- **Citation:** [2011] 2 S.C.R. 762
- **Court:** Supreme Court of India
- **Decided:** 2011-02-10
- **Case number:** Criminal Appeal No. 350 of 2006
- **Bench:** P. Sathasivam, Dr. B.S. Chauhan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/2-s-c-r-762-v-s-achuthanandan-v-r-balakrishna-pillai-ors-27463
- **Pages:** 69

## Headnote

CODE OF CRIMINAL PROCEDURE, 1973:
c
Appeal against acquittal -Jurisdiction of appellate court
-Held: The Code puts no limitation on exercise of powers of
appellate court either on questions of fact or of law -However,
an appellate court must bear in mind that in case of acquittal,
there is double presumption in favour of accused -
0 Constitution of India, 1950 -Article 136.
CONSTITUTION OF IND/A, 1950 :
Article 136 -Appeal by way of special leave - Filed by
non-complainant/non party -Maintainability of -Conviction by
E trial court of a Minister and higher officials of State Electricity
Board -For entering into conspiracy and awarding contract to
accused-contractor at exorbitant rates causing huge loss to
Board -Acquittal by High Court - Appeal by erstwhile leader
of opposition party -Held: In the instant case, certain special
F features exist -State has not filed appeal -Taking note of the
importance of the issue, appellant had earlier approached the
Supreme Court when State wanted to close the prosecution
against all the accused including the Minister, and accepting
appellant's claim Special Judge was allowed to proceed in the
G case, which culminated in conviction of the accused by the
Special Court -No objection as to locus of the appellant was
raised on the earlier occasion -In view of the special
circumstances, the instant appeal by the appellant against
H
762
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 763
& ORS.
order of acquittal passed by the High Court is maintainable
A
, -Locus standi.
PENAL CODE, 1860 :
ss. 120-B and 409, and ss. 5(1)(C) and 5(2) of Prevention
of Corruption Act read withs. 120-B /PC -Contract awarded
B
by State Electricity Board to accused-contractor on exorbitant
rates -Member of the Board, Member of Consultative Council
of the Board, Minister for Electricity in the State Government,
the contractor along with others prosecuted -Death of
contractor and another accused -Conviction by trial court of C
the Member of the Board, Member of its Consultative Council
and the Minister -Acquittal by High Court -Held : The Board
is empowered with the authority to award contracts, but being
a Public Undertaking it is not expected to accept tenders at
exorbitant rates causing loss to the Board -Except on policy D
matters the State Government had no role to play in the affairs
of the Board -The evidence clearly shows that the Minister
concerned used to interfere in awarding contracts of the Board
' and the accused-contractor had been chosen in advance by
him -The evidence indicates that the conspiracy to award the
E
work to the accused-contractor at exorbitant rates originated
even prior to submission of tenders -Special Court has rightly
concluded that a criminal conspiracy was hatched out at the
instance of the Minister concerned and the Member of the
Consultative Council -Prosecution has established against
F
the three accused-appellants that the contract was awarded
to the accused-contractor at and exorbitant rates -Besides the
accused-contractor was favoured with special conditions in the
contract causing further loss to the Board -
There were
procedural irregularities and omissions in dealing with the
G
tenders and hasty steps were taken in awarding the contract
in favour of the accused-contractor- Special Court accepting
the prosecution case, rightly convicted the accused -High
Court committed grave error in acquitting the accused without
adverting to reliable and acceptable evidence adduced by H
764
SUPREME COURT REPORTS
[2011] 2 S.C.R.
A prosecution -Judgment of High Court set aside and
conviction of all the three accused as recorded by Special
Court upheld -However, keeping in view the facts and
circumstances of the case, and the fact that the accused have
undergone agony of the proceedings for nearly two decades,
B accused sentenced to rigorous imprisonment for one year
with fine of Rs. 10, 0001- each - Kera/a State Electricity Board
Tender Regulations -Regulation 25 (C).
ADMINSTRA TION OF CRIMINAL JU

## Text

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A
B
[2011) 2 S.C.R. 762
V.S. ACHUTHANANDAN
V.
R. BALAKRISHNA PILLAI & ORS.
(Criminal Appeal No. 350 of 2006)
FEBRUARY 10, 2011
[P. SATHASIVAM AND DR. B.S. CHAUHAN, JJ.]
CODE OF CRIMINAL PROCEDURE, 1973:
c
Appeal against acquittal -Jurisdiction of appellate court
-Held: The Code puts no limitation on exercise of powers of
appellate court either on questions of fact or of law -However,
an appellate court must bear in mind that in case of acquittal,
there is double presumption in favour of accused -
0 Constitution of India, 1950 -Article 136.
CONSTITUTION OF IND/A, 1950 :
Article 136 -Appeal by way of special leave - Filed by
non-complainant/non party -Maintainability of -Conviction by
E trial court of a Minister and higher officials of State Electricity
Board -For entering into conspiracy and awarding contract to
accused-contractor at exorbitant rates causing huge loss to
Board -Acquittal by High Court - Appeal by erstwhile leader
of opposition party -Held: In the instant case, certain special
F features exist -State has not filed appeal -Taking note of the
importance of the issue, appellant had earlier approached the
Supreme Court when State wanted to close the prosecution
against all the accused including the Minister, and accepting
appellant's claim Special Judge was allowed to proceed in the
G case, which culminated in conviction of the accused by the
Special Court -No objection as to locus of the appellant was
raised on the earlier occasion -In view of the special
circumstances, the instant appeal by the appellant against
H
762
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 763
& ORS.
order of acquittal passed by the High Court is maintainable
A
, -Locus standi.
PENAL CODE, 1860 :
ss. 120-B and 409, and ss. 5(1)(C) and 5(2) of Prevention
of Corruption Act read withs. 120-B /PC -Contract awarded
B
by State Electricity Board to accused-contractor on exorbitant
rates -Member of the Board, Member of Consultative Council
of the Board, Minister for Electricity in the State Government,
the contractor along with others prosecuted -Death of
contractor and another accused -Conviction by trial court of C
the Member of the Board, Member of its Consultative Council
and the Minister -Acquittal by High Court -Held : The Board
is empowered with the authority to award contracts, but being
a Public Undertaking it is not expected to accept tenders at
exorbitant rates causing loss to the Board -Except on policy D
matters the State Government had no role to play in the affairs
of the Board -The evidence clearly shows that the Minister
concerned used to interfere in awarding contracts of the Board
' and the accused-contractor had been chosen in advance by
him -The evidence indicates that the conspiracy to award the
E
work to the accused-contractor at exorbitant rates originated
even prior to submission of tenders -Special Court has rightly
concluded that a criminal conspiracy was hatched out at the
instance of the Minister concerned and the Member of the
Consultative Council -Prosecution has established against
F
the three accused-appellants that the contract was awarded
to the accused-contractor at and exorbitant rates -Besides the
accused-contractor was favoured with special conditions in the
contract causing further loss to the Board -
There were
procedural irregularities and omissions in dealing with the
G
tenders and hasty steps were taken in awarding the contract
in favour of the accused-contractor- Special Court accepting
the prosecution case, rightly convicted the accused -High
Court committed grave error in acquitting the accused without
adverting to reliable and acceptable evidence adduced by H
764
SUPREME COURT REPORTS
[2011] 2 S.C.R.
A prosecution -Judgment of High Court set aside and
conviction of all the three accused as recorded by Special
Court upheld -However, keeping in view the facts and
circumstances of the case, and the fact that the accused have
undergone agony of the proceedings for nearly two decades,
B accused sentenced to rigorous imprisonment for one year
with fine of Rs. 10, 0001- each - Kera/a State Electricity Board
Tender Regulations -Regulation 25 (C).
ADMINSTRA TION OF CRIMINAL JUSTICE :
C
Disposal of cases relating to corruption by public servants
-Held: When a matter of this nature is entrusted to a Special
Court or a regular court, such trials should be given priority
and concluded within a reasonable time -High Courts are
expected to monitor and even call for quarterly report from
D courts concerned for speedy disposal -Inasmuch as accused
is entitled to speedy justice, it is the duty of all in charge of
dispensation of justice to see that the issue reaches its end
as early ~s possible -Constitution of India, 1950 -Article 227.
E
The respondents (A-1, A-3 and A-6) along with others
were prosecuted for various offences punishable under
the IPC and the Prevention of Corruption Act, in
connection with awarding of a contract relating to the
works of power tunnel and surge shaft after completion
of the Dam under the ldamalayar Hydro Electric Power
F Project in the State of Kerala (ldamalayar contract). The
prosecution case was that as per decision of the Kerala
State Electricity Board (the Board), the contract relating
to power tunnel was awarded on 19.11.1982 to A-4 at
188% above the Probable Amount of Contract (PAC) and
G the work relating to surge shaft and allied works at 162%
above the estimated amount with many special
conditions involving heavy financial implications at the
expense of the Board; that A-1 was the Minister for
Electricity in the State Government at the relevant time
H and at his instance, the Board awarded the contract to
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 765
& ORS.
A-4. A-3 was thf. Member in the Consultative Committee
A
of the Board and A-6 was the Member of the Board at the
relevant time. The work carried out by the contractor
revealed several leaks and cracks and other defects,
were revealed in the work carried out by the contractor
in the tunnel, which attracted public attraction and the
B
matter was also discussed in the State Legislative
Assembly and, ultimately, led to prosecution of several
persons including the appellants. During the trial A-4 and
A-7 died, A-22 became insane and some accused were
discharged. The trial court convicted A-1, A-3 and A-6 of c
offences punishable u/ss 120-B and 409 IPC and ss. 5(1)
(c) and 5(2) of the Prevention of Corruption Act read with
s~ 120-B IPC and sentenced each of them to 5 years RI
and to pay a fine of Rs. 10,000/- each. All other accused
were acquitted. All the three convicts filed appeals before
0
the High Court, which acquitted them of all the charges.
Aggrieved, the appellant, who was the leader of the
Opposition in the State Assembly at the relevant time, filed
the appeal.
It was contended for the appellant that (i) there was
E
enough material to show that A-1 was very much
interested in favour of A-3 and with the connivance/
assistance of the Board officials, more particularly,
through A-6, the Member of the Board, made the .Board
to accept the tender offered by A-4 at exorbitant rates with
F
various special conditions contrary to the norms and
circulars/procedures of the Board, and there was
inordinate delay in awarding the contract; and (ii) that the
criminal breach of trust was committed by the accused:
(a) by awarding both the works of ldamalayar contract at G
very high and exorbitant rates with special conditions
having heavy financial implic'ations; (b) by reducing the
retention and security amount; (c) by allowing the
contractor to return only fifty per cent of the empty
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[2011) 2 S.C.R.
A cement bags; and (d) by accepting the special condition
for the sale of T & P items (tools & plants) which could
not be sold as per the general conditions of the contract.
The respondents' case, on the other hand, was that:
8 (i) inasmuch as the High Court acquitted all the accused
in respect of all the charges on appreciation of oral and
documentary evidence, interference by Supreme Court
was very limited; in the absence of perversity in such
conclusion, normally, the Court would not interfere with
C the order of acquittal; (ii) that the outcome of the contract
in favour of A-4 was based on a "collective decision" by
the Board and there was no external pressure from
anyone including A-1; (iii) that there was no allegation
that by awarding contract in favour of A-4, A-1 was
monetarily benefited; and (iv) that in any event, inasmuch
D as the State did not challenge the order of acquittal, the
appellant, who was neither a complainant nor a party to
any of the proceedings had no locus to pursue the
appeal. Accordingly, the appeal was not maintainable
and on this ground was liable to be dismissed without
E going into the merits of the case.
Allowing the appeal, the Court
HELD:
F 1. Interference by Supreme Court in an order of acquittal
It is settled principle that an appellate court has full
power to review, re-appreciate and reconsider the
evidence upon which the order of acquittal is founded.
G The Code of Criminal Procedure, 1973 puts no limitation,
restriction or condition on exercise of such power and
an appellate court is free to arrive at such conclusion,
both on questions of fact and of law. An appellate court,
however, must bear in mind that in case of acquittal, there
H is double presumption in favour of the accused. The
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 767
& ORS.
presumption of innocence is available to a person in the
A
criminal jurisprudence that every person shall be
presumed to be innocent unless he is proved guilty by a
competent court of law. It is also settled law that if two
reasonable conclusions are possible on the basis of the
evidence on record, the appellate court should not disturb
B
the finding of acquittal recorded by the trial court. [para
7] [791-E-G]
2. Statutory Provisions
2.1. The Electricity (Supply) Act, 1948 was in force at C
the relevant time and the Board had been constituted in
terms of s.5 thereof, for the management and supply of
electricity. As per s. 78-A, the Board, in discharge of its
functions shall be guided by such directions and
questions of policy as may be given to it by the State D
Government; and except on policy matters, the State
Government had no role in the affairs of the Board. [para
8] [792-B-C]
3. A-1 's interference in the affairs of the Board:
E
3.1. It is the case of the prosecution that A1 while he
was holding office of the Minister for Electricity,
Government of Kerala was interfering in the day-to~day
a~airs of the Board and used to interfere even in··
awarding of contracts of the Board. One of the main
F
charges levelled against A1 and others is that he, in his
, capacity, as Minister for Electricity intended to settle
contracts of the Board in the name of his favourites or
persons of his choice at exorbitant rates with the ulterior
object of making illegal profit either to himself or to his G
favourites. In order to establish its case, the prosecution
has produced evidence through PW-64, PW-66, PW-138,
. and PW-146, who supported the prosecution case. [para
9] [792-E-H]
H
768
SUPREME COURT REPORTS
[2011] 2 S.C.R.
A
3.2. It is clear from the materials on record that the
process of tendering of ldamalayar works was
interrupted on several occasions mainly by the Board by
cancelling the tenders and ordering re-tender and by
extending the period of validity of tenders more than once.
B It was on the last date of extension of the validity of the
tender i.e. on 30.06.1982, that A-4 appeared and submitted
his tender with special conditions which was later
accepted in the Board's meeting dated 19.11.1982. The
Special Judge, placing reliance on Board's resolution
C [Ex. P550(a)], has rightly concluded that there was
inordinate delay in awarding the work which reasoning
was erroneously not accepted by the High Court. The
materials placed clearly show that it was nearly three
years to take a decision. It is also clear from the evidence
0 of PWs 64, 66, 138 and 146 which clinchingly established
the circumstances under which A-1 conceived the idea
for fixing contract of the Board at exorbitant rates in order
to derive monetary benefits. The contrary conclusion
arrived by the High Court, is not in terms of the evidence
led in by the prosecution. [para 14) [795-E-H]
E
4. Whether ldamalayar contract was awarded at
exorbitant rates causing loss to the Board:
4.1. The basic stand of the prosecution is that A-1
F entered into criminal conspiracy to award the disputed
contract involving heavy financial gain to A-4 and the
conspiracy and abuse of power by certain officials
enabled the conspirators to earn a pecuniary advantage
of Rs.2,39,64,253/-, in addition to the financial loss caused
G to the Board. It is the specific case of the prosecution that
the rates awarded in both the contracts are exorbitant. It
is not in dispute that the contract was awarded at 188%
above PAC in the case of tunnel work and 162% above
PAC for the surge shaft work. Verification of Ext. P-52(b)
shows that the sanctioned estimate for the tunnel work
H
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 769
& ORS.
was Rs.1,17,20,633.90. On the other hand, the accepted
A
tender amount as per the award of contract was
Rs.2,45,80,796/- which is clear from Ext P 52. It is further
seen as per Ext P-68 agreement, the sanctioned estimate
for surge shaft was Rs. 7 4 lakhs and it was awarded for
Rs.1,42,94,901/- . The evidence of PW-7, the Chief B
Engineer of the Board, and PW-156, the Investigating
Officer, and the materials produced would show that the
contract was awarded to A-4 at excessive rates. [para 1516] [796-A-D; 797-A-D]
4.2. The evidence of PWs-46 and 122 and the C
statement made by A-1 to both of them clearly show that
A-4 was the contractor chosen in advance by A-1 and
other accused who were also interested in him. The
evidence indicates the conspiracy to award the work to
A-4 at exorbitant rates originated even prior to the
D
submission of tenders by A-4 and other tenderers. The
contrary conclusion arrived at by the High Court
justifying the award at higher rate to A-4 cannot be legally
sustained. [para-17] [798-D-E]
4.3. The Board is empowered with the authority to
award contracts and has discretion to accept tenders,
but, being an authority constituted under the Statute and
a Pubic Undertaking, it is not expected to accept tenders
E
at exorbitant rates with financial implications causing
F
loss to the Board. The Board is always expected to
protect its financial interests while awarding contracts.
The Board mainly relied on the labour problem that was
prevailing at the relevant time. In this regard, it is relevant
to point out that the tenders for the ldamalayar work were G
invited in March, 1982 and four contractors submitted
tenders as indicated by Exts. P78 series dated 21.03.1982.
It is true that the tunnel workers went on strike on
20.04.1981 and the contractors submitted their tenders
when there was labour unrest. However, the reason
H
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SUPREME COURT REPORTS
[2011] 2 S.C.R.
A attributed for the delay cannot be accepted. There were
procedural irregularities and omissions by the Board
authorities in the manner of dealing with tenders'""
submitted by A-4 and PW 64, which ultimately eliminated
PW 64 from the scene, keeping A-4 as the sole tenderer,
s qualified by pre-qualification Committee of the Board;
and hasty steps were taken by the Board in awarding
contract in favour of A-4 in the meeting held on
19.11.1982. All these facts lead to the conclusion that the
award of contract in favour of A-4 was an exorbitant one. ·
c It is relevant to point out that the Special Judge, by
adverting to Ext 550(a) expressed that the reasons stated
by the Board in awarding contract in favour of A-4 at
exorbitant rates are not acceptable. [para 17) [798-F-H;
799-A-C]
D 5. No serious discussion by the Board:
There was no serious discussion in the Board
meeting held on 19.11.1982 and the minutes of the
Meeting were prepared as dictated by A7, the then
E Chairman of the Board. It is the responsibility of the
members, more particularly, full time members of the
Board, who were responsible for the scrutiny of the ·
deviations and conditions suggested by the contractor,
which involved huge financial implications, to see that all
F transactions are beneficial to the Board and within the
permissible limit. It is relevant to point out that the
decision ultimately taken for awarding the contract with
special conditions, as suggested by the contractor,
involved huge financial implications at the risk and loss
G of the Board. Though the High Court has concluded that
the part-time members who were signatory to Ex550(a)
had, subsequently, approved the minutes, the Special
Court made a distinction between the responsibility of
full-time members and that of part-time members in the
H matters of awarding of contract. It is true that all the
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 771
& ORS.
members present subscribed their signatures in the
A
minutes in awarding contract to A-4. It was highlighted
in evidence that A-8, the Financial Adviser to the Board,
in his report has stated that the rates awarded to the
contractor are very high. The then Law Secretary also
conveyed. his opinion during the meeting of the Board B
that the rates were exorbitant. These aspects were taken
note of by the Special Court while considering the
culpability of the accused. The then Deputy Secretary of
the Board (PW-140) also admitted this aspect and stated
that there was no serious discussion in the meeting held c
on 19.11.1982. He explained that Ex.550(a) minutes of the
meeting is a reproduction of the dictation given by the
Chairman of the Board (A-7). The Special Court has
rightly concluded that there was no serious discussion
in the Board Meeting dated 19.11.1982 when the question 0
of award of contract was taken up and the minutes of the
meeting were prepared as dictated by A-7, the then
Chairman of the Board. [para 18] (799-E-H~ 800-A-G]
6. Award of contract to A-4:
E
6.1. Pursuant to the decision that Full Board meeting
should be held on 19.11.1982 to decide the question of
award of ldamalayar contract, PW-7 was directed to issue
notice to all the tenderers. The materials relied on by the
prosecution show that on 18.11.1982, though notices
F
were issued to the contractors, only A-4 was present on
19.11.1982. Without verifying the fact that whether all the
other tenderers were ready, a decision was taken on
. 19.11.1982 itself by accepting the offer of A-4 with special
conditions. The Board being a statutory authority, ought G
to have waited for a reply from the other tenderers to
ascertain whether they actually received notices and
reason for their inability to attend. It was demonstrated
that it was a pre-planned attempt to award the work to A4 alone and the notices issued to other tenderers. were
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[2011) 2 S.C.R.
A in the form of an ultimatum. It was also pointed out that
for the negotiation on 04.11.1982, i.e. prior to 19.11.1982,
held by PW-7, with the tenderers, in the office of the
Board only A-4 and P.W.4 were present. The prequalification Committee, headed by A-7, gave chances to
B A-4 to correct the errors and mistakes in the tender form
submitted by him for the impugned works, on the other
hand, such concession was not afforded to the other
tenderers. [para 20] [802-F-H; 803-A-C-E]
C
6.2. It is significant to note the conduct of A-1 with
regard to settlement of labour dispute. The evidence
shows that there was labour strike in the tunnel area
which started in April, 1981 and continued from the time
of inviting tenders on 05.06.1981 till the time of award of
contract. It was highlighted that there was no effort on the
D part of A-1 to settle the labour dispute before tendering
process was initiated. The labourers submitted the
Memorandum to A-1 on several occasions requesting for
settlement of labour problems. It was not settled and the
matter was kept alive till the tender was fixed in the name
E of A-4 on 19.11.1982. It was only after the award of the
contract, that A-1 took initiative to settle the labour
dispute, more particularly, when he came to know that A1 cannot enter the site because of the obstruction of the
workers to begin the contract work. It is relevant to point
F "- out that PW-7 informed A-1 and A-6 more than once that
in case the labour dispute could be settled in advance,
the contract could be awarded at a reasonable rate. The
evidence of PW-7 clearly shows that his request was not
accepted by A-1 and A-6. [para 21] [804-C-F]
G
H
6.3. The evidence shows that the rate quoted by PW4 by his evidence in court, was 135% above PAC, which
was less than 188% above PAC, quoted by A-4 and
approved by the Board. The High Court fai!ed to take
note of the importance of evidence of PW-4 and justified
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILL.Al 773 .
& ORS.
the action of the Board in not pursuing the tender A
submitted by PW-4 with a lesser rate on the ground that
his tender was liable to be rejected since he wanted an
arbitration clause in the agreement. Further, though PW4 has quoted lesser rate than A-1, in his evidence, he has
highlighted that he was not given an opportunity to
B
consider the reasonableness of the rate quoted by him
i.e. 135% above PAC. The High Court has not only
ignored his assertion but found that the rate quoted by
him for the surge shaft work is not a lesser rate when
compared to one quoted by A-4 i.e., 188% above PAC. c
Though the Special Court has correctly found that PW-4
quoted less than the rate quoted byA-4, the High Court,
on erroneous assumption found fault with the finding of
the Special Court which correctly appreciated the
prosecution case. [para 22] [804-G; 805-A-B] .
D ·
7.Acceptance of Special Conditions & Concessions:
With regard to the case of the prosecution that
certain Special Conditions were accepted by the Board
(Ex. P588) involving huge financial commitments
E
favourable to the accused-contractor causing loss to the
Board, it is relevant to mention that one of the special
conditions, is condition No. 4 relating to tools and plants
sold to the contractor in violation of the General
· Conditions of the contract, which provide that the Board
is bound to make available to the contractors only such
tools and plants as are listed in the Schedule attached
thereto, that too subject to availability. Such items of tools
and plants which are listed in Ext. P52 agreement marked
F
as Ext. P52(d) show 8 items of tools and plants which
can only be hired out to the contractors if requested on
G
the specified rates. In Ext. P58, deviations and conditions
submitted by the contractor as Item No 4, stated that such
tools and plants listed in Ext. P52(d) shall be sold to him
on outright sale at book value deducting depreciation
and the cost may be recovered on pro rata basis from his
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A bills. The full Board, in its decision dated 19.11.1982,
accepted the special condition of the contractor to sell
those items of tools and plants which includes very
costly foreign imported materials. The official examined
on the side of the prosecution pointed out that there is
B no provision in the general conditions of the contract
enabling the Board to effect sale of those tools and plants
to the contractor. These important aspects have been
duly considered by the Special Court but, have been
overlooked by the High Court while upsetting the
c decision of the Special Court. As correctly found by the
Special Court, special condition No.4 relating to sale of
tools and plants is a favour done by the Board to the
contractor for obtaining financial gains at the risk of
Board's loss. [para 23 and 26] [805-D-H; 806-A-B; 808-E]
D 8. Return of empty cement bags by the Contractor:
8.1. Another special condition sanctioned by the
Board in favour of the contractor A-4 relates to the return
of empty cement bags. This special condition provided
E that the contractor shall return only 50% of empty cement
bags in good condition. According to the Auditor,
because of the special condition, the Board had
sustained a loss of Rs.1,08,879.75. The Special Court has
substantiated its finding on the point based on evidence
F furnished by the auditors. However, the High Court
relying on Ext D-28 which provided for recovery of
balance 50% of empty cement bags not returned or
returned in damaged condition and recovery will be
effected as stipulated in the tender condition, erroneously
concluded that no loss could be sustained to the Board.
G The conclusion arrived at by the High Court is contrary
to the special condition No.10 regarding the return of
empty cement bags, according to which the Board is not
entitled to recover the value of balance 50% of
unreturned cement bags. [para 25-26] [807-F-G; 808-F-H;
H 809-A]
. V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 775
& ORS.
9. Fixation of security and retention:
Yet another special condition involving financial
implications sanctioned to the Contractor is with regard
to the fixation of security and retention amount. In the
case on hand, keeping in view the PAC contract works,
the security amount and retention amount due from the
contractor would c·ome to Rs.12 lakhs. However, the
retention amount and the security both were restricted to
Rs. 5 Lakhs and Rs. 1 Lakh for both the works, which is
A
8
a benefit shown to the Contractor. A perusal of Kerala
State Electricity Board Tender Regulations show that the
C
reduction of security deposit is permissible only in the
case of established firm/Company and that the security
deposit of a new contractor shall not be reduced. The
course adopted by the Board is contrary to the condition
contained in Regulation No.25(c) of the Board's D
Regulations. [para 27] [809-C-H; 810-A-B-F]
10. Criminal Conspiracy
10.1. On this aspect, the Special Court has analyzed
E
the evidence of witnesses and considered the
· documents produced and marked by the prosecution
F
/ and has rightly concluded that there is sufficient evidence
that a criminal conspiracy was hatched out at the
instance of A-1, the then Minister for Electricity and A-3,
who was a close associate and political ally of A-1. This
was strengthened by-the evidence of PW-21,the Assistant
Engineer, Quality Control, ldamalayar project and other
witnesses. Nobody has challenged the relationship
between A-1 and A-3 .. lt is the case of the prosecution that
a conspiracy was hatched out at the instance of A1 and
G
others with the illegal object of getting the ldamalayar
project fixed on one among themselves at exorbitant
rates and make illegal profits. It is also the definite case
of the prosecution that though the work was awarded in
the name of A-4, it was actually executed by A-3 and
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[2011] 2 S.C.R.
A another accused A-22(deceased). It has come in evidence
that the amount of work was invested and payments were
made by A-22 and A-3. As rightly observed by the Special
Court, the relationship between A-1 and A-3 is a relevant
factor in arriving at the circumstances leading to the
B formation of the conspiracy. The evidence led in normally
show that A-3 was an intimate friend of A-1 and very
closely moving with him during the relevant period. This
has been established by the evidence of PW-3, who was
a watchman of the Inspection Bungalow at ldamalayar,
c PWs-6, 7 and 8 who were Engineers at the relevant ~ime
at ldamalayar worksite and supervising execution of the
works, PW-24, the workers ( PWs 25 and 26), and PW-19,
the receptionist of a Tourist home, where A-3 was
occupying a room on rent on or about the time of
finalization of the contract in favour of A-4. The Special
D Court noted the significance of his stay during the above
period at Thiruvananthapuram. Under s. 16 of the
Electricity (Supply) Act, 1948, the Constituting Authority
Is the State Government. The evidence led in by the
E prosecution shows that A-1 took initiative to include the
name of A-3 in the list of nominees for constituting the
Consultative Council. The evidence of PWs 18, 27 and 51
and Ext.180(c) established the case of the prosecution.
The evidence further shows that the mandatory
requirements contemplated u/s 16 of the Act regarding
F the constitution of Consultative Council was not adhered
to by A-1 who wanted to include A-3 in the panel
inasmuch as usually the representatives of State Level
Organisers representing various interests alone were
nominated after consultation by the Government with
G such bodies, but A-3 was not representing any such
State Level Organisation. This is evident from the
evidence of PWs 31 and 16. [paras 28, 29 and 34] [811-B·
F; 812-D·F-H; 813-A; 815-D-F]
H
10.2. The prosecution has established the
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 777
& ORS.
relationship of A1 and A-4 even before awarding of A
contract. Even prior to awarding of the contract to A-4,
A-1 had chosen A-4 as prospective contractor for
execution of the work which fact is spoken to by PW-122
and also by PW-46. Their evidence shows that on
29.06.1981 when they met A-1 requesting for the award
B
of the tunnel driving work to the workers at ldamalayar,
A-1 told them that the execution of the ldamalayar work
was proposed to be given to A-4. {para 30] {813-C-D]
10.3. The role played by A-3 in fixing the contract to C
A-4 is also relevant to infer the formation of agreement
between himself and A-1. In addition to the same, the
prosecution has adduced acceptable evidence that a
company by name Hydro Power Construction Company
was registered as a partnership firm with A-4 as Managing
Partner and A3 and A-22 (deceased) as Working Partners.
D
Further, close relatives of A-4, A3 and A-22 were parties
to the partnership deed. The object of the partnership was
to execute the ldamalayar tunnel work and also the surge
shaft work in the name of the firm which was an
assessee under the income tax Act as is evident from Ex.
E
P245, the income-tax assessment of the firm in the year
1984-85 and 1985-86 and the evidence of PW-123, an
Income-tax practitioner. In addition to the same, when A3 was questioned u/s 313 Cr.P.C., he admitted that he
invested good amount for the work and visited the site
F
to watch the progress of the work. The fact that A-1, while
as a Minister for Electricity, interfered with the award of
the contracts of the Board were spoken to by PW-64, PW66, PW-138 and PW-146. It is also clear that A-1 was
awaiting for a probable contractor of his choice to G
undertake the ldamalayar works at exorbitant rates. [para
31] [813-F-H; 814-A-C]
10.4. Further, there was labour agitation prevailing at
· tdamalayar work site. It is in evidence that after execution
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[2011) 2 S.C.R.
A of the agreement of the ldamalayar work by A-4, A-1
interfered and settled the labour dispute by awarding a
compensation of Rs. 11 lakhs to the striking workers and
the worksite was made free of any labour unrest. It is the
prosecution case that this was done to help the
B contractor, a party to the conspiracy for execution of the
work and to make illegal profit therefrom. The evidence
of PW-7, Chief Engineer and other witnesses stated that
the awarding of ldamalayar work at exorbitant rates could
have been avoided in case the labour issue was settled
c earlier. The prosecution has also highlighted labour
unrest at ldamalayar which was kept pending at the
instance of A-1 and other interested parties so as to make
it appear that no contractor will come forward to
undertake the contract, so much so that there is
0 possibility of choosing a contractor of their choice for the
execution of the work at exorbitant rates. (para 32] (814·
D-H; 815-A]
10.5. The prosecution has also highlighted that to
achieve the illegal object of finding the contract in the
E name of A-4 at exorbitant rates, the pre-qualification
system was introduced by the Board by order Ext. P576
dated 24.09.1981. This was after tendering process had
started for the ldamalayar work. PW-138, explained
before the court that pre-qualification bid system was
F misused by the Board to safeguard vested interest by
choosing contractors of their choice. [para 33] [815-B]
10.6. The Special Court, after analysing the evidence
in detail found that A-3 is the man behind the manuring
for getting the contract awarded to A-4, who, however,
G was only a benamidar and A-3 and A-22 were the
beneficiaries though the work was awarded in the name
of A-4. The role played by A-6 in the matter of hatching
out the conspiracy and the fulfillment of the unlawful
object is proved by evidence, particularly, from the
H evidence of PW-7. (para 34] (816-C-D]
V.S. ACHUTHANANDAN v. R. BALAKRISHNA PILLAI 779
& ORS.
10.7. From the materials on record, it is clear that a
A
criminal conspiracy among A-1, A-3 and A-6 can be
inferred. A-1, as Minister for Electricity is all in all dealing
with the efforts of the Board including the awarding or
cancellation of the contracts. The officers and the Board
members were under his pressure and fear which is
B
clearly seen from the statements of prosecution
witnesses, namely, PWs 8, 36, 60, 62, 138, 140, 64, 66 etc.
From the materials on record, as rightly concluded by the
Special Court, it leads to a conclusion that several out of
way methods were adopted by the Board at the instance c
of.A-1 for achieving the object of conspiracy. (para 34]
(816-E-F; 817-A]
10.8. The High Court failed to consider various
instances and materials placed by the prosecution in
, respect of charge relating to conspiracy. Before this
D
Court it was demonstrated that several material aspects
have not been considered by the High Court. PW-7,
former Chief Engineer, a most reliable witness was
examined in the presence of A-3 on 04.11.1982 in the
Board's office. There is no necessity to corroborate or E
further material in addition to the oral evidence of PW-7.
As rightly analysed and concluded by the Special Court,
there is no infirmity in the evidence of PW-7 merely
because there is no documentary evidence in respect of
the presence of A-3 at the Board's meeting, the evidence
F ..
of PW-7 cannot be ignored. [para 35] (817-D; 818-B-C]
10.9. The High Court very much accepted the stand
of the accused that it was a collective decision of the
Board for awarding contract in favour of A-4 at exQrbitant
rates, though the reasons relied on by the Board expose
G
the omission and negligence on its part in fixing the
contract with other contractors, namely, PW-146, P.W. 64
or PW-4, who quoted lower rates then A-4. Even before
this Court it was reiterated that it was a collective decision
of the members of the Board to award the contract in
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SUPREME COURT REPORTS
[2011) 2 S.C.R.
· A favour of A-4, but it has been established, as has been
held by the Special Court, that the contract was awarded
at exorbitant rates, with special conditions. In the instant
case, all the ingredients of criminal conspiracy are
satisfied for convicting A-1, A-3 and A-6 for the offence
· B charged against them. [para 36] [Q18-D·G]
11. Special mention abouf PW-7, retired Chief Engineer
of the Board & PW-46:
11.1. The prosecution heavily relied on the evidence
c of PW 7, a retired Chief Engineer of the Board. By his rich
experience and having worked as a Chief Engineer at the
relevant time, namely, when ldamalayar project was
commissioned, he furnished all the details with reference
to various documents such as his report, opinion,
0 minutes of the meeting of the Board with reference to
ldamalayar project He retired from service on March 1985,
and was first examined on the side of the prosecution on
28.03.1996 and at that time he was 66 years old. He was
called upon to give evidence only in March 1996 nearly
. E after 15 years of the commissioning of the ldamalayar
project. In this view of the matter, there is no reason to
reject his entire evidence for alleged inconsistencies as
claimed by the respondents/accused. In his evidence, he
has mentioned that on the submission of tender by A-4,
it was noted that he quoted 189% above PAC. It is also
F seen from the evidence of PW-7 that after noting that the
rate quoted by A-4 is higher rate, he forwarded the said
information for remarks of FA and CAO. He also asserted
that A-6 told him that A-1, the Minister, was very much
particular to award both the works to A-4. He inspected
G the site on 23.09.1983 and due to slow progress in the
works, he castigated A-22, who conducted the works.
After few days, A-3 and A-22 came to his house and
warned him and then on 13.10.1983, he was transferred
and appointed as an Advisor of Electricity Board In
H respect of Hydroelectric Projects, though such a Post
V.S. ACHUTHAl'JANDAN v. R. BALAKRISHNA PILLAI 781
& ORS.
was not there. [para 37 and 38] [819-A-C; G-H; 820-A-B;
A
E-F; 822-B-C-E]
11.2. As regards the decision of the Board and the
role of PW-7, he has stated that the Chief Engineer has
no right to question the Board's decision. However, he
8
clarified that when he was asked to give his opinion or
report, he was bound by the said direction. Though,
several reports and minutes of the Board meeting were
pressed into service by the respondents/accused in
order to strengthen their case that all important decisions
accepting the contract in favour of A-4 including several
C
special conditions etc., were taken by the Board on the
notes/reports of PW-7, it is clear that due to the pressure
of A-6, the then Member of the Board, who was close to
A-1, as well as the desire of A-1 in awarding the contract
in favour of A-4 with higher rates, PW-7 had no other D
option except to execute the directions of A-6 and A-1.
The analysis of the evidence of PW-7 coupled with the
other prosecution witnesses and other notes and report
prepared for the Board clearly indicate that though he
reminded that certain things were not permissible,
E
because of the fact that the beneficiaries of the contract
are known to A-1 and A-6, he had no other option except
to prepare notes in such a way and, ultimately, the Board
accepted the same. [paras 37, 38, 39 and 41] [821-G-H;
822-A-G-H; 823-C-D]
F
11.3. The evidence of PW-46, a member of RSP, a
political party was led by the prosecution to establish that
A-1 decided and determined to award the contract to A4. PW-46 stated that at the relevant time he was the
President of the workers Union. A memorandum was G
submitted to A-1 and he was requested to give· work to
labourers at least on piece rate basis, but A-1 told them
that the contract had been given to A-4. [para-42] [823-EH]
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A 12. About maintainability of the appeal by the appellant:
In the instant case, certain special features exist.
Though the State has not filed any appeal against the
impugned order of acquittal by the High Court but
8 supported the ultimate conviction and sentence imposed
by the Special Judge and informed this Court that if
permitted, it was ready to file an appeal with an
application for condonation of delay. Though the Court
is not inclined to entertain such a request at this stage,
however, the fact remains that taking note of the
C importance of the issue, allegations against the Minister
and higher officials of the Board in respect of award of
contract with the ulterior motive, the appellant
approached this Court on earlier occasion when the
State wanted to close the prosecution against all the
D accused including the Minister, based on the order of the
High Court in respect of A-5. Further when the very same
appellant filed special leave petition before this Court and
later leave was granted by this Court neither of these
respondents raised
any objection as to the
E maintainability of the petition.