# A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE

- **Citation:** [2023] 10 S.C.R. 11
- **Court:** Supreme Court of India
- **Decided:** 2023-06-15
- **Case number:** Criminal Appeal No. 2417 of 2010
- **Bench:** V. Ramasubramanian, Pankaj Mithal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/a-srinivasulu-v-the-state-rep-by-the-inspector-of-police-36565
- **Pages:** 63

## Headnote

Penal Code, 1860: ss.120B, 193, 420, 468 and 471 - Criminal
conspiracy and cheating - Prosecution case that the appellant,
officials of PSU and other private persons entered into a criminal
conspiracy to cheat the PSU in the matter of award of contract -
Contract granted to one company after resorting to limited/restricted
tenders causing wrongful loss to the PSU - Illegalities alleged in
the procedure followed for inviting the tender - FIR lodged u/s.
120B r/w ss. 193, 420, 468, 471 r/w ss. 13 (2) and 13(1)(d) of PC
Act - Final report against accused persons including the public
servants-officers of PSU - Two accused died during trial - Special
judge acquitted one but convicted four - Upheld by the High Court
- On appeal, held: Culpability of the appellants for offences under
the IPC and the PC Act not established and proved - Thus, the
judgment of the Special Court convicting the appellants for various
offences and judgment of the High Court confirming the same set
aside - Prevention of Corruption Act, 1988 - s.13.
Code of Criminal Procedure, 1973:
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
[2023] 10 S.C.R. 11
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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

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A. SRINIVASULU
v.
THE STATE REP. BY THE INSPECTOR OF POLICE
(Criminal Appeal No. 2417 of 2010)
JUNE 15, 2023
[V. RAMASUBRAMANIAN AND PANKAJ MITHAL, JJ.]
Penal Code, 1860: ss.120B, 193, 420, 468 and 471 - Criminal
conspiracy and cheating - Prosecution case that the appellant,
officials of PSU and other private persons entered into a criminal
conspiracy to cheat the PSU in the matter of award of contract -
Contract granted to one company after resorting to limited/restricted
tenders causing wrongful loss to the PSU - Illegalities alleged in
the procedure followed for inviting the tender - FIR lodged u/s.
120B r/w ss. 193, 420, 468, 471 r/w ss. 13 (2) and 13(1)(d) of PC
Act - Final report against accused persons including the public
servants-officers of PSU - Two accused died during trial - Special
judge acquitted one but convicted four - Upheld by the High Court
- On appeal, held: Culpability of the appellants for offences under
the IPC and the PC Act not established and proved - Thus, the
judgment of the Special Court convicting the appellants for various
offences and judgment of the High Court confirming the same set
aside - Prevention of Corruption Act, 1988 - s.13.
Code of Criminal Procedure, 1973:
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
[2023] 10 S.C.R. 11
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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
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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
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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
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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
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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
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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
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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
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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.
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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.
Case Law Reference
(1955) 2 SCR 925
referred
Para 38
[2004] 3 SCR 504
referred to
Para 39
[2005] 3 SCR 1
referred to
Para 40
[2006] 1 SCR 124
referred to
Para 40
[2016] 6 SCR 295
referred to
Para 41
[2020] 6 SCR 453
relied on
Para 42, 43
[2006] 10 Suppl. SCR 197
referred to
Para 48
[2001] 2 Suppl. SCR 577
referred to
Para 57
[2014] 4 SCR 183
referred to
Para 57, 74
[2016] 2 SCR 486
relied on
Para 74
[2011] 13 SCR 268
relied on
Para 63
[1997] 4 Suppl. SCR 591
referred to
Para 67
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[1994] 1 Suppl. SCR 483
distinguished
Para 72
[1978] 2 SCR 174
relied on
Para 76
[2013] 15 SCR 1
relied on
Para 76
[1957] SCR 953
relied on
Para 83
[1975] 3 SCR 453
relied on
Para 83
[1995] 2 SCR 900
referred to
Para 84
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
2417 of 2010.
From the Judgment and Order dated 17.09.2010 of the High Court
of Madras in CRLA No. 437 of 2006.
With
Criminal Appeal Nos. 16 of 2011 and 2444 of 2010.
Nagamuthu, Mrs. V. Mohana, Huzefa A. Ahmadi, Sr. Advs., Vijay
Kumar, B. Ragunath, N. Sridhar, Mrs. N. C. Kavitha, Karthick
Subramani, Ms. Ranjeeta Rohatgi, Kaushik Mishra, Ms. Rashmi Singh,
Ms. Samten Doma Lachungpa, Nishant Sharm, Rakesh K. Sharma, Advs.
for the Appellant.
Sanjay Jain, ASG, A K Kaul, Ms. Srishti Mishra, Padmesh Mishra,
Ms. Shradha Deshmukh, Madhav Sinhal, Arvind Kumar Sharma, Advs.
for the Respondent.
The Judgment of the Court was delivered by
V. RAMASUBRAMANIAN, J.
1. These three criminal appeals arise out of a common Judgment
passed by the Madurai Bench of the Madras High Court confirming the
conviction of the appellants herein for various offences under the Indian
Penal Code, 18601 and the Prevention of Corruption Act, 19882.
2. We have heard Shri Huzefa A. Ahmadi, Shri S. Nagamuthu,
Mrs. V. Mohana, learned senior counsel and Shri S.R. Raghunathan,
learned counsel appearing for the appellants and Shri Sanjay Jain, learned
ASG assisted by Shri Padmesh Misra, learned Counsel for the Central
Bureau of Investigation.
1 For short, "IPC"
2 For short, "PC Act"
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3. The brief facts leading to the above appeals are as follows:
(i)
Seven persons, four of whom were officers of BHEL,
Trichy (a Public Sector Undertaking), and the remaining
three engaged in private enterprise, were charged by the
Inspector of Police, SPE/CBI/ACB, Chennai, through a final
report dated 16.07.2002, for alleged 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. Cognizance was taken
by the Principal Special Judge for CBI cases, Madurai in
CC No.9 of 2002. During the pendency of trial, two of the
accused, namely, A-5 and A-6 died.
(ii)
By a judgment dated 08.09.2006, the Special Court
acquitted A-2 and convicted A-1, A-3, A-4 and A-7 for
various offences. These four convicted persons filed three
appeals in Criminal Appeal (MD) Nos.437, 445 and 469
of 2006, on the file of the Madurai Bench of the Madras
High Court.
(iii)
By a common Judgment dated 17.09.2010, the High Court
dismissed the appeals, forcing A-1, A-3, A-4 and A-7 to
come up with four criminal appeals, namely, Appeal
Nos.2417, 2443 and 2444 of 2010 and 16 of 2011.
(iv)
However, during the pendency of the above appeals, A-3
(R. Thiagarajan) died and hence Criminal Appeal No.2443
of 2010 filed by him was dismissed as abated.
(v)
Therefore, what is now before us, are three criminal appeals,
namely, Criminal Appeal Nos.2417 and 2444 of 2010 and
16 of 2011 filed respectively by A-1, A-7 and A-4.
4. Since the charges framed against all the appellants were not
the same and also since all the appellants herein were not convicted
uniformly for all the offences charged against them, we present below
in a tabular form, the offences for which charges were framed against
each of them, the offences for which each of them was held guilty and
the offences for which they were not held guilty.
A
B
C
D
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A7
N.Raghunath,
Brother
of
A-5
and son of A-6
Section 120B read
with 420, 468, 471
read with 468 and
193
IPC
and
Section 13(2) read
with 13(1)(d) of
the PC Act.
In
addition,
he
was charged also
under Section 109
IPC.
Section 471 read
with 468 and 109
IPC
read
with
Section
13(2)
read with 13(1)(e)
of the PC Act.
Not found guilty
of the offences
under
Section
120B read with
Section 420 and
193 IPC.
5. For easy appreciation, the punishments awarded offence-wise
to each of the accused, by the Special Court and confirmed by the High
Court, are again presented in a tabular column as follows:
A
B
C
D
E
F
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6. The background facts leading to the prosecution of the appellants
herein and their eventual conviction, may be summarised as follows:-
(i)
During the period 1991-92, the Tamil Nadu Water Supply
and Drainage Board decided to set up "ROD Plants"
(Reverse Osmosis Desalination Plants) to provide potable
water to drought-prone areas in Ramnad District of Tamil
Nadu. They entrusted the work to BHEL, Tiruchirapalli.
(ii)
After resorting to limited/restricted tenders, BHEL awarded
the contract to one Entoma Hydro Systems.
(iii)
A Letter of Intent was issued to the said Company on
06.07.1994 and on 02.08.1994, an interest free mobilisation
advance to the tune of Rs.4.32 crores was released to M/s
Entoma Hydro Systems.
(iv)
But subsequently, the contract was also cancelled on
04.10.1996; the bank guarantee furnished by the Contractor
was invoked on 27.09.1996; and a payment of
Rs.4,84,13,581/- was realised by BHEL.
(v)
Thereafter, on 31.01.1997, CBI registered a First
Information Report in Crime No. RC 8(A) of 97 against
four individuals, three of whom were officials of BHEL
and the fourth, the contractor. It was alleged in the First
Information Report that the three officials of BHEL and
the contractor entered into a criminal conspiracy to cheat
BHEL and caused loss to BHEL to the tune of Rs.4.32
crores by awarding the contract to the aforesaid concern.
The FIR was for offences under Section 120B read with
420, Section 420 IPC and Section 13(2) read with Section
13(1)(d) of PC Act.
(vi)
In November 1998, the person first named in the FIR namely
K.Bhaskar Rao, DGM, was arrested and released on bail
by CBI itself. Thereafter, he gave a confession before the
XVIII Metropolitan Magistrate, Chennai under Section 164
of the Code of Criminal Procedure. After the confession
so made, CBI moved an application in Criminal
Miscellaneous Petition No.562 of 2000 under Section 306
of the Code, before the Chief Judicial Magistrate, Madurai
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for the grant of pardon to K.Bhaskar Rao. The petition
was made over to the Additional Chief Judicial Magistrate,
Madurai, who passed an order dated 18.07.2000 granting
pardon to Bhaskar Rao.
(vii)
Thereafter, CBI requested the Chairman, BHEL to grant
sanction to prosecute the other two officials named in the
FIR, for the offences under the PC Act. But by letter dated
02.05.2001, the Chairman, BHEL refused to grant the
permission to prosecute those two officers named in the
FIR for the offences under the PC Act.
(viii) After completion of investigation, CBI filed a final report
on 16.07.2002 against seven accused namely, (i) A
Srinivasulu, formerly Executive Director, BHEL; (ii) R.
Krishna Rao, Retired General Manager, BHEL; (iii) R.
Thyagarajan, Assistant General Manager (Finance), BHEL;
(iv) K. Chandrasekaran, Deputy General Manager, BHEL;
(v) Mohan Ramnath Proprietor, Entoma Hydro Systems;
(vi) NRN Ayyar; and (vii) N. Raghunath. The final report
was filed directly before the Principal Special Court for
CBI Cases, Madurai.
(ix)
In the final report, the prosecution charged:-

A-1 to A-7 for the offences under Section 120B read
with Sections 420, 468, Section 471 read with Section
468, Section 193 IPC and Section 13(2) read with
Section 13(1)(d) of the PC Act.

A-1 and A-2 for offences under Section 13(2) read
with Section 13(1)(d) of the PC Act, 1988 and Section
109 IPC read with Sections 420, 468, Section 471
read with Section 468 and Section 193 IPC.

A-3 and A-4 for offences under Section 109 IPC
read with Sections 420, 468, Section 471 read with
Section 468 and Section 193 IPC.

A-5, A-6 and A-7 for offences under Sections 420,
468, Section 471 read with Section 468, Section 193
IPC and Section 109 IPC read with Section 13(1)(d)
of the PC Act.
A
B
C
D
E
F
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(x)
The Special Judge framed the charges on 04.07.2003.
(xi)
The prosecution examined 44 witnesses and marked 94
documents. A-5 and A-6 died pending trial and hence the
charges against them were abated.
(xii) By a judgment dated 08.09.2006, the Principal Special Judge
for CBI cases acquitted A-2 but convicted A-1, A-3, A-4
and A-7 for various offences indicated in Column No. 4 of
the Table under paragraph 4 above.
(xiii) Challenging the conviction and punishment, A-1 filed a
separate appeal in Criminal Appeal No.437 of 2006 on the
file of the Madurai Bench of the Madras High Court. A-3
and A-4 joined together and filed a common appeal in
Criminal Appeal No.469 of 2006. A-7 filed a separate appeal
in Criminal Appeal No.445 of 2006.
(xiv) By a judgment dated 17.09.2010, the Madurai Bench of the
Madras High Court dismissed all the three appeals.
(xv) Therefore, A-1, A-3, A-4 and A-7 filed four independent
appeals before this Court respectively in Criminal Appeal
Nos.2417, 2443 and 2444 of 2010 and 16 of 2011. But A-3,
the appellant in Criminal Appeal No.2443 of 2010 died
pending appeal and hence his appeal was dismissed as
abated. Therefore, we are now left with three appeals filed
by A-1, A-4 and A-7 arising out of concurrent judgments of
conviction.
7. In brief, the case of the prosecution was that A-1 to A-7 entered
into a criminal conspiracy to cheat BHEL in the matter of award of
contract for the construction of desalination plants. In pursuance of the
said conspiracy, A-1, the then Executive Director of BHEL instructed
Bhaskar Rao, the DGM (who turned Approver) to go in for limited/
restricted tenders without following the tender procedure of prequalification of prospective tenderers before inviting limited tenders.
According to the prosecution, A-1 dictated the names of four bogus
firms along with the name of M/s Entoma Hydro Systems represented
by its proprietor A-5, for inviting limited tenders. As per the dictates of
A-1, the Approver put up a proposal suggesting the names of the five
firms (including four bogus firms) together with the names of two
companies which were not in the similar line of work. Thereafter, A-2,
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knowing well that the firms were bogus and were neither pre-qualified
nor selected from the approved list of contractors, processed the note
submitted by the Approver and sent it to A-1. When tender enquires
were made, A-5 responded to the same not only in the name of M/s
Entoma Hydro Systems but also on behalf of the four bogus firms. A-7,
the brother of A-5 obtained demand drafts for Rs.20,000/- each in the
names of the bogus firms by remitting cash into Indian Bank, Royapettah
Branch, State Bank of India, Velachery Branch, State Bank of Mysore,
T. Nagar Branch and Bank of Madura, Mount Road Branch and also by
filling up demand draft applications and signing the same in the names of
the bogus firms. Thereafter, the Tender Committee consisting of the
Approver, A-3 and A-4 processed the names of all these firms and
recommended the award of contract to M/s Entoma Hydro Systems,
giving false justifications for recommending them though the said firm
did not have necessary experts or technical expertise. The Committee
even recommended the sanction of interest free mobilisation advance,
in violation of existing practice, to cause pecuniary advantage to A-5.
Accordingly, an interest free mobilisation advance of Rs.4.32 crores
was paid to A-5's firm. The amount was deposited in the account of the
firm with Indian Bank. From the said account, a sum of Rs.1.52 crores
was diverted to a sister concern of A-5, in which A-5, his father (A-6)
and his brother (A-7) were partners. By such an action, A-5 to A-7
obtained wrongful gain from BHEL. The Prosecution alleged that by
these actions, A-1 to A-7 committed the offences charged against them.
8. As stated in para 6 above, the Prosecution examined 44
witnesses, which included the Approver, who was examined as PW-16.
94 documents were marked as exhibits on the side of the prosecution.
One witness was examined on the side of the defence as DW-1 and 6
documents were marked as exhibits Ex. D-1 to D-6.
9. In its judgment dated 08.09.2006, the Special Court brought on
record the charges, the evidence and the rival contentions from paragraphs
1 to 60. The actual discussion and analysis by the Court began from
paragraph 61.
10. To begin with, the Special Court took up for consideration the
contention of the accused that BHEL did not suffer any wrongful loss
and that, therefore, the charge under Section 420 IPC does not lie. But
this contention of the accused was rejected by the Trial Court on the
ground that the entire interest free mobilisation advance of Rs.4.32 crores
A
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was deposited in the account of M/s Entoma Hydro Systems with Indian
Bank and that out of the same, a sum of Rs.1,52,50,000/- was transferred
to a firm by name M/s Insecticides & Allied Chemicals, of which A-5 to
A-7 were partners. Therefore, the Special Court came to the conclusion
that on the date on which the transfer of money took place, a direct
wrongful monetary loss was caused to BHEL and a direct wrongful
monetary gain caused to A-5 to A-7. The Special Court also held that
after the termination of the contract with M/s Entoma Hydro Systems,
BHEL divided the contract into several parts and awarded the contracts
to various persons and that, therefore, the money paid to each of such
contractors was a wrongful loss to BHEL. Though the Special Court
also found that BHEL actually recovered Rs.4.32 crores (by invoking
the bank guarantee), the Court concluded that there was no proof to
show that money was paid out of the firm M/s Insecticides & Allied
Chemicals. Therefore, the Special Court first concluded that BHEL
suffered wrongful loss and that therefore, the offence under Section
420 IPC was made out.
11. The Trial Court then took up for consideration, the argument
that the confession statement of PW-16 (Approver) marked as Exhibit
P-44 had to be rejected, in view of the fact that PW-16 had not stated
anything self-incriminating in his confession statement. But this contention
advanced on behalf of A-1 was rejected by the Court on the ground that
Exhibit P-26 is the chit in which PW-16 admittedly wrote down the names
of four bogus firms and the name of M/s Entoma Hydro Systems, as
dictated by A-1 and that this was sufficient to show that PW-16 was
incriminating himself in the charge of criminal conspiracy with A-1.
12. When it was pointed out that as per the evidence on record,
PW-1 was on leave26.11.1992, due to the death of his mother-in-law
and that therefore, he could not have had any discussion on that date,
the Trial Court turned this very argument against A-1 and held that A-1
should not have approved the Approval Note dated 25.11.1992 marked
as Exhibit P-27, if he was on leave and had not carried out a background
check.
13. The Trial Court thereafter held that the prosecution had
successfully proved that the four other firms whose names were found
in the chit Exhibit P-26 were all bogus. This was on the basis of the
evidence of PW-2, PW-3, PW-5, PW-6, PW-7, PW-9, PW-10 and PW13.
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14. Believing the statement of PW-16 to be true, the Special Court
came to the conclusion that A-1 predetermined the award of contract to
A-5 and created circumstances and records to show as though proper
procedure was followed and that therefore A-1 was guilty of the charges.
15. Coming to the charges against A-2, the Special Court held
that the only role played by him was to prepare the Approval Note dated
25.11.1992 and that in view of the overwhelming evidence against A-1,
the contract would have, in any case, been awarded to the firm in
question. Therefore, the Special Court came to the conclusion (in
paragraph 79 of the judgment) that A-2 was merely asked to sign in
Exhibit P-27, only to give credibility to the list prepared by A-1 and the
Approver acting in conspiracy. After reaching such a finding, the Special
Court acquitted A-2 of the charges framed against him.
16. Insofar as A-3 and A-4 are concerned, it was argued that
they came into the picture only after 23.12.1992, when the Negotiation
Committee comprising of A-3, A-4 and the Approver was formed. But
this argument was rejected by the Trial Court by holding that what was
constituted was a Tender Committee, as seen from Exhibit P-36
(proceedings of the Committee) and that therefore if they were innocent,
they should have questioned and sought details regarding the contractors.
Interestingly, the Trial Court after holding in paragraph 79 that the charges
against A-2 were not proved, again went back to the question of guilt of
A-2, after holding A-3 and A-4 guilty, through a reversal of the logic.
17. Coming to the role played by A-7, the Trial Court held that it
was he who purchased the demand drafts in the names of the bogus
firms, with a view to cheat BHEL and that he obtained wrongful gain for
himself as a partner of the firm Insecticides & Allied Chemicals. On the
basis of these findings, the Trial Court convicted the accused for the
offences mentioned by us in the table under paragraph 4 and sentenced
them to imprisonment and fine indicated in the table under paragraph 5.
18. While dealing with the appeals filed by A-1, A-3, A-4 and A7, the High Court divided the same into two categories, the first dealing
with the complicity of A-1, A-3 and A-4 and the second dealing with the
complicity of A-7. This was perhaps for the reason that A-1, A-3 and A4 were Officers of BHEL, while A-7 was a private individual.
19.