# ) - STATE OF BIHAR ETC. ETC v. P.P. SHARMA, IAS AND ANR

- **Citation:** [1991] 2 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1991-04-02
- **Case number:** Criminal Appeal Nos. 527-28 of 1990
- **Bench:** Kuldip Singh, K. Ramaswamy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-bihar-etc-etc-v-p-p-sharma-ias-and-anr-11146
- **Pages:** 50

## Headnote

Constitution of India, 1950: Article 226-High Court-When and
under what circumstances would be justified to quash charge sheet
before cognizance of offence taken by criminal court.
Code of Criminal Procedure: Sections 173, 194, 197-Investigation-Powers ofpolice-lntereference by Court when arises.
The Bihar State Co-operative Marketing Union (BISCOMAUN) is
the sole purchaser and distributor of fertilizers in the State. When the
BI SCOMA UN was at the brink of liquidation due to mismanagement,
A
B
c
the State Government superseded its Board of Directors and appointed
D
R.K. Singh, I.A.S., as its Administrator and Managing Director on
July 30, 1988.
In the course of the discharge of his duties, R.K. Singh noted that
financial irregularities had been committed by P.P. Sharma, the first
respondent, Genesh Dutt Misra, the second respondent, and TapeshE
war Singh, in the purchase of fertilizers for distribution in the State. At
the relevant time, P.P. Sharma was the managing Director of BISCOMAUN, Genesh Dutt Misra its advisor, and Tapeshwar Singh its
Chairman.
R.K. Singh laid the information regarding the financial irreguF
larities before the Station House officer, Gandhi Maidan Police Station,
Patna on September 1, 1988. The substratum of the accusations made
against them was that they had conspired with the R&jasthan Multi
Fertilizers Private Limited, through its partners, to cause wrongful
gains to the company and wrongful loss to the BISCOMAUN in the
matter of purchase of sub-standard fertilizers from the Company.
G
On the basis of the report, a case under sections 409, 420, 468,
469, 471, 120B, I.P.C., and section 7 of the Essential Commodities Act,
was registered against eight persons including Tapeshwar Singh, P.P.
Sharma, and Ganesh Dutt Misra. Four other accused persons were the
partners of the Company, and the fifth one was an Assistant in the
H
/
2
SUPREME COURT REPORTS
[1991] 2 S.C.R.
A department who was alleged to have forged the test reports.
The investigation in the case was completed by police and two
police reports, one under section 7 of the Essential Commodities Act
and the other under various sections of the J.P.C., were submitted
before the Competent Court in October 1988. The Special Judge Patna
B heard the arguments of the parties on various dates between January 9,
1989 and January 31, 1989 on the question as to whether there was
sufficient material in the police reports to take cognizance of various
offences projected therein. On January 31, 1989 the learned Special
Judge concluded the arguments and reserved the orders.
Tapeshwar Singh and P.P. Sharma filed writ petitions before the
C Patna High Court praying for quashing of the First Information Report
and the police reports. The High Court allowed the writ petitions and
quashed the FIR and the criminal proceedings against the accusedpetitioners.
[)
The High Court, on appreciation of the documents which were
produced before it, as annexu_res to the writ petitions, came to the
conclusions that no prima facie offence was made out against the
respondents; that though the annexures, being part of BISCO-records,
were to the knowledge of R.K. Singh, he closed his eyes to the facts
contained in these documents and acted in a ma/a-fide manner in lodgE
ing the FIR against the respondents on false facts; that the prosecution
was vitiated because G.N. Sharma, the Investigating officer, acted with
malice in refusing to take the annexures into consideration; and that no
case under Essential Commidities Act was made out from the police
reports and other documents on record. The High Court further held
that the composite order granting sanction under section 197 Cr.P.C.
F
and section 15-A of the Essential Commodities Act was vitiated because
of non application of mind on the part of the competent authority; and
that the F.I.R. and the Charge Sheets violated the constitutional
mandate under Article 21 of the Constitution.
The instant appeals are against the judgment of t

## Text

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)
-
STATE OF BIHAR ETC. ETC.
v.
P.P. SHARMA, IAS AND ANR.
APRIL 2, 1991
[KULDIP SINGH AND K. RAMASWAMY, JJ.]
Constitution of India, 1950: Article 226-High Court-When and
under what circumstances would be justified to quash charge sheet
before cognizance of offence taken by criminal court.
Code of Criminal Procedure: Sections 173, 194, 197-Investigation-Powers ofpolice-lntereference by Court when arises.
The Bihar State Co-operative Marketing Union (BISCOMAUN) is
the sole purchaser and distributor of fertilizers in the State. When the
BI SCOMA UN was at the brink of liquidation due to mismanagement,
A
B
c
the State Government superseded its Board of Directors and appointed
D
R.K. Singh, I.A.S., as its Administrator and Managing Director on
July 30, 1988.
In the course of the discharge of his duties, R.K. Singh noted that
financial irregularities had been committed by P.P. Sharma, the first
respondent, Genesh Dutt Misra, the second respondent, and TapeshE
war Singh, in the purchase of fertilizers for distribution in the State. At
the relevant time, P.P. Sharma was the managing Director of BISCOMAUN, Genesh Dutt Misra its advisor, and Tapeshwar Singh its
Chairman.
R.K. Singh laid the information regarding the financial irreguF
larities before the Station House officer, Gandhi Maidan Police Station,
Patna on September 1, 1988. The substratum of the accusations made
against them was that they had conspired with the R&jasthan Multi
Fertilizers Private Limited, through its partners, to cause wrongful
gains to the company and wrongful loss to the BISCOMAUN in the
matter of purchase of sub-standard fertilizers from the Company.
G
On the basis of the report, a case under sections 409, 420, 468,
469, 471, 120B, I.P.C., and section 7 of the Essential Commodities Act,
was registered against eight persons including Tapeshwar Singh, P.P.
Sharma, and Ganesh Dutt Misra. Four other accused persons were the
partners of the Company, and the fifth one was an Assistant in the
H
/
2
SUPREME COURT REPORTS
[1991] 2 S.C.R.
A department who was alleged to have forged the test reports.
The investigation in the case was completed by police and two
police reports, one under section 7 of the Essential Commodities Act
and the other under various sections of the J.P.C., were submitted
before the Competent Court in October 1988. The Special Judge Patna
B heard the arguments of the parties on various dates between January 9,
1989 and January 31, 1989 on the question as to whether there was
sufficient material in the police reports to take cognizance of various
offences projected therein. On January 31, 1989 the learned Special
Judge concluded the arguments and reserved the orders.
Tapeshwar Singh and P.P. Sharma filed writ petitions before the
C Patna High Court praying for quashing of the First Information Report
and the police reports. The High Court allowed the writ petitions and
quashed the FIR and the criminal proceedings against the accusedpetitioners.
[)
The High Court, on appreciation of the documents which were
produced before it, as annexu_res to the writ petitions, came to the
conclusions that no prima facie offence was made out against the
respondents; that though the annexures, being part of BISCO-records,
were to the knowledge of R.K. Singh, he closed his eyes to the facts
contained in these documents and acted in a ma/a-fide manner in lodgE
ing the FIR against the respondents on false facts; that the prosecution
was vitiated because G.N. Sharma, the Investigating officer, acted with
malice in refusing to take the annexures into consideration; and that no
case under Essential Commidities Act was made out from the police
reports and other documents on record. The High Court further held
that the composite order granting sanction under section 197 Cr.P.C.
F
and section 15-A of the Essential Commodities Act was vitiated because
of non application of mind on the part of the competent authority; and
that the F.I.R. and the Charge Sheets violated the constitutional
mandate under Article 21 of the Constitution.
The instant appeals are against the judgment of the High Court,
G
and the appellants are Girija Nandan Sharma, S.P. CID, Patna, the
investigator, and R.K. Singh, the informant, along with the State of
Bihar.
Before this Court it was contended on behalf of the appellants that
the High Court in the exercise of its extraordinary jurisdiction commitH
led a grave error in taking into consideration the affidavits and docu-
•
I
STATE Of BIHAR v. P.P. SHARMA
3
ments filed alongwith the writ petitions; the High Court virluall)'
usurped the jurisdiction of the Magistrate/Special Judge by appreciating the affidavits and documents produced before it and reaching conclusions contrary to the charge-sheets (police reports) submitted by the
police; the High Court was not justified in quashing the proceeding at
the stage when the Special Judge was seized of the matter and was in the
process of appreciating the material contained in the police reports; and
that the allegations if the police reports, if taken as correct, disclosed
the commission of a cognizable offence by the respondents.
On the other hand, it was contended that the prosecution against
A
B
the respondents was initiated as a result of' malice on the part of the
informant and the investigating officer: that the mala-fides on the part C
of the informant and the investigating officer was writ-large on the facts
of the case, that the composite order granting sanction under section
197 Cr. P.C. and section 15-A of the Essential Commodities Act was
vitiated bacause of non-application of mind on the part of the competent
authority; and that when the evidence collected during the investigation
was not unimpeachable, the prosecution and continuance of the proD
ceedings offended the respondents' right to life and livelihood enshrined
under Article 21 of the Constitution.
Allowing the appeals, setting aside the judgment of the High
Court and dismissing the writ petitions filed by the respondents before
the High Court & this Court.
E
HELD: Per Ku/dip Singh, J.
( 1) The High Court fell into grave error and acted with patent
illegality in quashing the criminal proceedings on the basis of the findings which were wholly wayward. l29D I
F
R.P. Kapurv. State of Punjab, [1960] 3 SCR 388, referred to.
(2) The High Court erred in appreciating the annexures/documents, which were produced by the respondents along with their writ
petitions, and further erred in delving into disputed questions of fact G
while exercising jurisdiction under Article 226/227of the Constitution. [24E]
(3) By treating the annexures which were neither part of the
police reports nor were relied upon by the Investigating Officer, as
evidence, the High Court converted itself into a trial court. The High
Court could not have assumed this jurisdiction and put an end to the
H
4
SUPREME COURT REPORTS
I 1991] 2 S.C.R.
A process of investigation and trial provided under the law. [18E]
(4) The question of ma/a-fide exercise of power assumed signi-
"""'
B
c
0
E
ficance only when the criminal prosecution was initiated on extraneous
considerations and for an unauthorised purpose. [24G I
(5) The allegations of ma/a-fide against the informant based on
the facts after the lodging of the FIR were of no consequence and could
not be the basis for quashing the proceedings. [25D I
( 6) Ther.e was no material whatsoever in this case to show that on
the date when the FIR was lodged by R.K. Singh he was activated by
bias or had any reason to act maliciously. The dominant purpose of
registering the case against the respondents was to have an investigation
done into the allegations contained in the FIR and in the event of there
being sufficient material in support of the allegations to present the
charge-sheet before the court. There was no material to show that the
dominant object of registering the case was the character assasination
of the respondents or to harass and humiliate them. [24H-2SA]
When the information is lodged at the police station and an
offence is registered, the mala fldes of the informant would be of secondary
importance. It is the material collected during the investigation which
decides the fate of the accused person. [258]
State of Bihar v. J.A.C. Saldhana & Ors., [1980] 2 SCR 16 and
State of Haryana v. Ch. Bhajan Lal, J.T. (1990) 4 S.C. 655, referred to.
(7) When the police report under section 173 Cr. P.C. had to go
through the judicial scrutiny, it was not open to the High Court to find
F
fault with the same on the ground that certain documents were not
taken into consideration by the investigating officer. [lSG I
(8) Simply because the Investigating Officer, while acting bonafide ruled out certain documents as irrelevant, it was no ground to
-~
assume that he acted ma/a fide. [25E]
,__\,,
G
(9) The sanction under section 197 Cr. P.C. was not an emptyformality. It was essential that the provisions therein were observed
with complete strictness. The object of obtaining sanction was that the
authority concerned should be able to consider for itself the material
before the investigating officer, before it came to the conclusion that the
H
prosecution in the circumstances be sanctioned or forbidden. To com-
)
STATE OF BIHAR v. P.P. SHARMA
5
ply with the provisions of section 197 it must be proved that the sanction
was given in respect of the facts constituting the offence charged. It was
desirable that the facts should be referred to on the face of the sanction. [28E]
(10) Section 197 did not require the sanction to be in any particular form. If the facts constituting the offence ~barged were not shown on
the fact of the sanction, it was open to the prosecution, if challenged, to
prove before court that those facts were placed before the sanctioning
authority. It should be clear from the form of the sanction that the
sanctioning authority considered the relevant material placed before it
and after a consideration of all the circumstances of the case sanctioned
the prosecution. [28F]
(11) In the present case the investigation was complete on the date
of sanction and police reports had been filed before the Magistrate. The
sanctioning authority had specifically mentioned in the sanction order
that the papers and the case diary had been taken into consideration
before granting the sanctions. [28G I
(12) Case diary was a complete record of the police investigation.
It contained total material in support or otherwise of the allegations.
The sanctioning authority having taken the case diary into consideration before the grant of sanction, it could not be said that there was no
application of mind on the part of the sanctioning authority. [28H-29 A I
(13) The findings of the High Court that no offence was made out
against the respondents under the Essential Commodities Act was also
based on the appreciation of 'the annexures' and other disputed facts on
the record and as such was untanable for the same reasons. [29C]
Per K. Ramaswamy, J.
(1) Grossest error of law has been committed by the High Court
in making pre-trial of a criminal case in exercising its extraordinary
jurisdiction under Art. 226. [ 49B I
A
B
c
D
E
F
State of West Bengal v. Swaran Kumar, [1982] 3 SCR 121 and G
Madhaorao J. Scindia v. Sambhaji Rao, [1988] 1SCC692 distinguished.
(2) Quashing the Charge Sheet even before cognizance is taken by
a criminal Court amounts to "killing a still born child". Till the criminal court takes cognizance of the offence there is no criminal proceeding
pending. [48C]
H
6
SUPREME COURT REPORTS
[ 1991] 2 S.C.R.
A
(3) The arms of the High Court are long enough, when exercising
its prerogative discretionary power under Art. 226 of the Constitution,
to reach injustice wherever it is found in the judicial or quasi-judicial
process of any Court or Tribunal or authority within its jurisdiction.
But it is hedged with self imposed limitation. [32C]
B
(4) The Code of Criminal Procedure, 1973 gives to the police
unfettered power to investigate all cases where they suspect a cognizable
offence has been committed. In an appropriate case an aggrieved
person can always seek a remedy by invoking the power of the High
-'·
Court under Art. 226 of the Constitution. If the court could be convinced that the power of investigation has been exercised by a police
C officer mala fide, a mandamus could be issued restraining the investigator to misuse his legal powers. [358]
S.N. Sharma v. Bipen Kumar Tiwari & Ors., [1970] 3 SCR 945;
State of Bihar & Anr. v. J.A.C. Sa/danha & Ors., [1980] I SCC 554;
State of West Bengal v. Sampat Lal, [1985] I SCC 317; Municipal
D Corporation of Delhi v. Purshotam Dass Jhunjunwa/a & Ors., [1983] l
-!
SCC 9 and Abhinandan Jha & Ors. v. Dinesh Mishra, [1967] 3 SCR
668, referred to.
(5) The function of the judiciary in the course of investigation by
the police should be complementary and full freedom should be
E
accorded to the investigator to collect the evidence connecting the chain
of events leading to the discovery of the truth, viz., the proof of the
commission of the crime. [37D I
King Emperor v. Khawaja Nazir Ahmad, 76 Indian Appeals 203
and Jamuna Chaudhary v. State of Bihar, 3 SCC 774 (1974), referred
F
to.
(6) The determination of a plea of ma/a fide involves two
questions, namely (i) whether there is a personal bias or an oblique
motive; and (ii) whether the administrative action is contrary to the
objects, requirments and conditions of a valid exercise of administra-
,.-'w. .
G
tive power. [38E]
(7) A complainant when he lodges a report to the Station House
Officer accusing a person of commission of an offence, often may be a
person aggrieved, but rarely a probono publico. Therefore, inherent
animosity is licit and by itself is not tended to cloud the veracity of the
H
accusation suspected to have been committed, provided it is based on
factual foundation. [39A-B]
,
STATE OF BIHAR v. P.P. SHARMA
7
(8) The person against whom mala fides or bias was imputed
should be impleaded co-nominee as a party respondent to the proceedings and given an opportunity to meet those allegations. In his/her
absence no enquiry into those allegations would be made. Otherwise it
its~lf is violative of the principles of natural justice, as it amounts to
condemning a person without an opportunity. Admittedly, both R.K.
Singh and G.N. Sharma were not impleaded. [40A-B]
(9) The finding of the High Court that the ma/a fides of the
Investigating Officer lVas established by the subsequ.ent conduct of his
participation in the writ proceedings was obviously illegal. When the
investigation was subject matter of the challenge in the court, it would
be obvious that the investigator alone was to defend the case; he had to
file the counter affidavit and to appear in the proceedings on behalf of
the State. [4 IF]
State of Bihar v. J.A. Saldana, AIR 1980 SC 326.
A
B
c
(IO) Before countenancing allegations of ma/a fides or bias it is
D
salutory and an onerous duty and responsibility of the court not only to
insist upon making specific and definite allegations of personal animosity against the Investigating Officer at the start of the investigation but
also must insist to establish and prove them from the facts and circumstances to the satisfaction of the court. I 42D]
(II) Mere assertion or a vague or bald statement of ma/a fides
was not sufficient. It must be demonstrated either by admitted or
proved facts and circumstances obtainable in a given case. [38F]
( 12) Malice in law could be inferred from doing of wrongful
E
act intentionally without any just cause or excuse or without there
F
being reasonable relation to the purpose of the exercise of statutory
power. [42G]
(13) Malice in law is not established from the omission to consider some documents said to be relevant to the accused. Equally,
reporting the commission of a crime to the Station House Officer G
cannot be held to be a colourable exercise of power with bad faith or
fraud on power. [42H]
(14) The findings of.the High Court that F .I.R. got vitiated by the
ma/a fides of the Administration and the charge sheets were the results
of the ma/a [ides of the informant or investigator, to say the least, was
H
A
B
c
D
E
F
8
SUPREME COURT REPORTS
I 1991] 2 S.C.R.
fantastic and obvious gross error oflaw. [43C]
State of Haryana v. Bhajanlal. J.T. (1990) 4 SC 655, referred to.
( 15) An investigating officer who is not sensitive to the constitutional mandates, may be prone to trample upon the personal liberty of a
person when he is actuated by ma/a /ides. But the accused at the earliest
should bring to the notice of the court of the personal bias and his
reasonable belief that an objective investigation into the crime would
not be had at the hands of the investigator by pleading and proving as of
fact with necessary materials facts. If he stands by till the chargesheet
was filed, it must be assumed that he has waived his objection. He
cannot turn round after seeing the adverse report to plead the alleged
malafides. [43H-44AJ
(16) The finding of the High Court that the F.I.R. charge-sheet
violated the constitutional mandate under Art. 21 was without
substance. [44B]
( 17) The order of sanction is only an administrative act and not a
quasi judicial nor alis involved. The order of sanction need not contain
detailed reasons in support thereof. But the basic facts that constitute
the offence must be apparent on the impugned order and the record
must bear out the reasons in that regard. [46H-47 A]
(18) Filing of charge-sheet before the court without sanction per
se is not illegal, nor a condition precedent. At any time before taking
cognizance of the offence it is open to the competent authority to grant
sanction and the prosecution is entitled to produce the order of
sanction. [47E]
State of U.P. v. R.K. Joshi, [1964] 3 SCR 71, referred to.
(19) 'Proper application of mind to the existence of a prima facie
evidence of the commission of the offence is only a pre-condition to
grant or refuse to grant sanction. The question of giving an opportunity
•
G
to the public servant atthat stage does not arise. [478]
~
(20) A perusal of the sanction order clearly indicates that the
Govt. appears to have applied its mind to the facts placed before it and
considered them and then granted sanction. [47EJ
H
(21) The prior sanction by the appropriate Government is an
STATE OF BIHAR v. P.P. SHARMA
9
assurance to a public servant to discharge his official functions diliA
gently, efficiently and honestly without fear or favour, without haunt of
-f
later harassment and victimization, so that he would serve his best in
the interest of the public. [45G]
Sirajuddin v. State of Madras, [1970] 2 SCR 931, referred to.
(22) The public servant can only be said to act or purported to act
in the discharge of his official duty if his act or omission is such as to lie
.•
within the scope of his official duty. It is not every offence committed by
a public servant that requires sanction for prosecution, nor even every
act by him while he actually engaged under colour of his official duty
B
that receives protection from prosecution. [468 I
C
The offending act must be integrally connected with the discharge
of duty and should not be fanciful or pretended. J45G I
K. Satwaiit Singh v. State of Punjab, [1960] 2 SCR 89; Harihar
Prasad v. State of Bihar, [1972] 3 SCR 89 and S.B. Saha v. Kochar,
[19801 1sec111.
(23) Before granting sanction the authority or the appropriate
Govt. must have before it the .necessary report and the material facts
which prim a facie establish the commission of offence charged for
and that the appropriate Government would apply their mind to those
facts. [46G]
\-
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
Nos. 527-28 of 1990
From the Judgment and Order dated 5.4. 1990 of the Patna High
Court in Cr!. W.J.C. Nos. 90 and 228 of 1989.
WITH
CRIMINAL APPEAL NOS. 523-248, 525-26/90.
D
E
F
Kapil Sibal, Additional Solicitor General, P.P. Rao, P.K. Shahi,
Mrs .. Vimla Sinha, Yunus Malli, Vikash Singh and L.R. Singh for the G
Appellants.
Dr. Shankar Ghose R.K. Jain, Rakesh K. Khanna, Surya Kant,
Rajan Mahapatra, Mrs. Sangeeta Tripathi Manda!, Ms. Abha Sharma.
Dr. S. Jha and R. P. Gupta for the Respondents.
The Judgment of the Court was delivered by
H
10
SUPREME COURT REPORTS
[ 1991] 2 S.C.R.
A
KULDIP SINGH, J. The Bihar State cooperative Marketing
Union Limited (BISCOMAUN) (hereinafter called 'BISCO") is an
apex body operating in the State of Bihar. It is a federation of
Cooperative Societies and its primary function is to supply fertiliser to
farmers through its depots and godowns numbering about 550, spreadover the State ofBihar.
B
Shri P.P. Sharma, IAS took over as Managing Director of
BISCO on May 26, 1986 and continued to hold the said office till June
14, 1987. From December, 31, 1986 to June 14, 1987 he was also
Secretary, Department of Cooperative, Government of Bihar and
Registrar, Cooperative Societies, State of Bihar. G.D. Mishra was
C working as Advisor to BISCO during 1986-88. He resigned from the
said post on August 3, 1988. It may be mentioned that one Tapeshwar
Singh was the Chairman of BISCO during the above said period.
M/s. Rajasthan Multi Fertiliser Pvt. Ltd., Udaipur, Rajasthan
(hereinafter called the 'firm') was holding a Certificate of Registration
D issued on August 8, 1985 by the Director of Agriculture, Bihar. It is
alleged that a letter dated August 19, 1986 was addressed by the firm
to the Managing Director of BISCO offering to supply fertiliser of
specified grade and quality at Rs.2550 per MT plus local taxes. It may
be mentioned that the State of Bihar had issued a notification dated
July 14, 1984 fixing the prices for different grades of fertilisers. The
E price of the grade offered by the firm was fixed at Rs.2559 per MT
under the said notification. The firm sent another letter on October 5,
1986 repeating its offer contained in its earlier letter. The offer of the
.J
firm was accepted and G.D. Mishra, on November 22, 1986, placed an
order with the firm for the supply of 2500 MT of fertiliser (NPK
15: 15:71/2) at Rs.2509.50 per MT. Thereafter G.D. Mishra placed
F further order with the firm on December, 19, 1986 for additional
supply of 408 MT of fertiliser on the same terms. The firm supplied
2916 MT of fertiliser to BISCO. The total price to be paid to the firm
was Rs. 73,16,244. Rs.23.02 lac was paid on December 18, 1986.
Thereafter Rs.30.96 lac was paid on January 22, 1987. Thus a total sum
of about Rs.54 lac was paid to the firm. The samples of the fertiliser
~
G supplied by the firm were got tested by BISCO from Rajendra
Agriculture University, Pusa which were found to be standard.
It is the admitted case of the parties that the fertiliser supplied by
the firm could not be sold to the farmers and huge stock kept on lying
in the godowns of BISCO for long time. The BISCO was manufacturH ing "Harabahar" brand of fertiliser at its two factories. It was ulti-
STATE OF BIHAR v. P.P. SHARMA [KULDIP SINGH, J.]
11
mately decided by the BISCO that the fertiliser which was supplied by
the firm and which was lying in the godowns unsold be used as raw
material for the manufacture of "Harabahar" fertiliser. The fertiliser
was thereafter shifted from various godowns of BISCO to its two
factories for conversion into "Harabahar".
The reports received from the State Laboratory, Mithapur
showed the fertiliser supplied by the firm to be sub-standard. Majority
of the samples sent to the laboratory for testing were found to be
sub-standard. It is alleged that G.D. Mishra on behalf of BISCO wrote
a letter dated October 13, 1987 to the firm requesting to take back the
sub-standard fertiliser from eight depots mentioned in the said letter.
Shri R.K. Singh, !AS took over the charge as the Managing
Director of BISCO on December 29, 1988. The management of
BISCO was superseded by an order of the State Government dated July
30, 1988 and R.K. Singh was appointed as an Administrator.
A
B
c
,..
On September I, 1988 R.K. Singh sent a written report to the
D
Station House Officer, Police Station Gandhi Maidan, Patna on the
basis of which a case under Sections 409, 420, 468, 469, 471, l20B
I.P.C. and 7 of the Essential Commodities Act was registered against
eight persons including Tapeshwar Singh, P.P. Sharma and G.D.
Mishra. Four other accused persons are the directors of the firm and
the fifth one is alleged to have forged the test report given by the
E
Rajendra Agricultural University, Pusa. It would be useful to repro-
>-
duce the First Information Report (hereinafter called 'FIR') hereinafter:
"FIRST INFORMATION REPORT.
BIHAR STA'fl' COOPERATIVE MARKETING
UNION
LTD.
BISCOMAUN
BHAWAN,
WEST
GANDHIMAIDAN,PATNA-800001.
Ref. No. AD/c-70
1.9.1988
The Officer Incharge, Patna Kotwali P.S.
BISCOMAUN is an institution in the Cooperation
Sector and one of its main business activities is to purchase
fertilisers and to sell it through its depots to the farmers of
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the State. It owns two factories -one at Tilrath and the
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other at Jasidih, which produce mixture fertiliser. It is
marketed in the brand name of 'HARABAHAR'.
In course of checking of the stock of fertilisers lying in
the various godowns of BISCOMAUN and position of raw
materials in the factories, 'it was detected that huge
quantity of unsold 'Suraj Brand N.P.K.' mixture fertiliser
was lying in the depots of BISCOMAUN which was being
sent to the fertiliser factories of BISCOMAUN to be used
as raw-material in the manufacture of 'HARABAHAR'
(mixture fertiliser). On perusal of the relevant files, it transpired that 'Suraj Brand N.P.K.' was purchased from a private firm namely Mis. Rajasthan Multi Fertiliser Pvt. Ltd.,
Udaipur (Rajasthan). It is also evident from the relevant
records that the entire transaction for the purchase of the
'Suraj Brand N.P.K.' from the said firm and its utilisation
in the manufacture of HARABAHAR was fraudulent and
a conspiracy for wrongful gain to Mis. Rajasthan Multi
Fertiliser Pvt. Ltd. and erstwhile Chairman of BISCOMAUN, Sri Tapeshwar Singh and some officers responsible for the purchase of said sub-standard fertiliser and
wrongful loss to the institution as well as the farmers of the
State of Bihar". The facts in brief are as follows:
The said firm Mis. Rajasthan Multi Fertilisers Pvt.
Ltd. wrote a letter to the Chairman, BISCOMAUN enclosing its previous letter to the Managing Director, BISCOMA UN, stating therein that they were manufacturing
fertilisers under the brand name of 'Suraj Brand N.P.K.
( 15: 15:71i2) mixture fertiliser and they should be favoured
with orders for supply of the same to BISCOMAUN.
They quoted the selling rate as Rs.2550 per M.T. plus
taxes. The letter was not' received in the normal course in
the office, but was handed over direct to the then Chairman. It is also to be noted that the said letter was not in
response to any advertisement of BISCOMAUN inviting
offers.
The Chairman endorsed this letter to Managing
Director. This letter was not allowed to come down to the
office for examination in the normal course. On this letter,
the then Advisor (Rehabilitation)'Shri G.D. Mishra initiated the file at his own level and put up a proposal from his
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STATE OF BIHAR v. P.P. SHARMA [KULDIP SINGH, J.]
13
own level for the purchase of the said fertiliser from the
said firm. He has mentioned in his note that the question of
purchase had been discussed between himself and the
Chairman and Managing Director. It is clear that the proposal for purchase was put up in pursuance to that discussion, after the meeting of minds had taken place to order
the purchase. Nobody else in the organisation was taken
into confidence about this proposal. Even the advice of
Finance was not taken.
This proposal initiated by Shri G.D. Mishra, Adviser
(Rehabilitation) was endorsed by the then Managing
Director, Shri P.P. Sharma, for the approval of the
Chairman and the proposal was approved by the Chairman.
"No. tenders were called for nor any steps were taken
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to ascertain the competitive prices of similar type of
fertiliser. Even the quality of the fertiliser was not tested
before issuance of purchase order. All this was done in
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extreme haste."
The proposal was accepted on 20.11.1986, and the
adviser (Rehabilitation( through his letter dated 22.11.1986
placed an order for supply of 2500 mts. of fertiliser to the
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One of the conditions of the purchase was that the
said fertiliser will contain nutrient value in proportion
15: 15:71/2 and if it was found that the nutrient value is less
than the above, the consignment will be rejected. The
Chemical examination was to be done either in the laboraF
tory of BISCOMAUN or any other laboratory approved by.
the State/Central Government. Contrary to this condition,
the chemical examination of the fertiliser is said to have
been carried out by one Dr. S.N. Jha, Associate Professor
of Soil Science, Rajendra Agriculture University. It is also
not clear from the records that by whom the samples were
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collected and sent to the said expert. According to Fertiliser Control Order, 1957, the sample must be collected by
the Fertiliser Inspectors of the State Government and an
analysis must be conducted in the laboratory of the State/
Central Government, Dr. Jha .reported that the samples
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taining nutrient in the proportion of 15: 15:71/2.
The said fertiliser was distributed to the different
depots of BISCOMAUN. Against the decision to purchase
2500 mis. the then Adviser (Rehabilitation) Shri G.D.
Mishra gave despatch instruction for 2916 mts. to the said
firm. It needs to be pointed out that the said Rajasthan
Multi Fertilisers Pvt. Ltd. had no E.C.A. Allocation for
sale of their product in Bihar. Even then, the management
of BISCOMAUN placed orders for supply of fertilisers
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with this company.
When the sales of the fertiliser commenced, samples
were taken from various depots in the normal course by the
fertiliser Inspectors. who are officers of the Agriculture
Department through out the State and sent to the authorised laboratories for chemical examination. The analysis
revealed that the said fertiliser was spurious and of substandard quality and lacking in nutrient value. Copies of
the result of the chemical analysis are enclosed. The
samples were taken from BISCOMAUN depots of Benibad, Gangaiya, Bochaha, Dholi, Sakra, Minapur (all from
Muzaffarpur) Bihta, Bakhtiarpur, Karbighaiya (Patna),
(Jahanabad).
As per the terms of purchase, the said spurious
fertiliser was to be taken back by the manufacturer at their
own cost. Accordingly, the then Adviser (Rehabilitation)
wrote to the firm that the said fertilisers from the following
depots be taken back (Aru,al, Minapur, Sakra, Dholi,
Benibad, Gangaiya and Bihta). It is to be noted that wherever the samples of fertiliser were analysed they were found
to be sub-standard. Therefore, the natural presumption
was that the entire lot of the said fertiliser was spurious.
therefore, either the entire lot should have b~en returned
or the entire lot tested. Instead of this, the fertiliser from
only the depots from which the samples were taken were
directed to be returned. 'This was a mala fide act on the
part of the Adviser (Rehabilitation) Shri G.D. Mishra,
with an intention to cause wrongful gain to the supplier and
wrongful loss to the Biscomaun as well as to the farmers of
the State. As a matter of fact, he allowed sale of spurious
sub-standard fertiliser to the farmers of the State from the
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STATE OF BIHAR '· P.P. SHARMA [KULDIP SINGH, J.J
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depots, where from samples were not taken.'
There was undue haste in making payment. The said
Rajasthan Multi-Fertilisers Pvt. Ltd. was paid Rs.23.02
lacs vide sanction dated 17.12.1986. The payment was
released inspite of the fact that it was pointed out in Challan No. 206 and 209 by the Depot Manager that the Fertilisers were not in granulated form and the bags were nonstandard. A further proposal for payment was put up in
December-January, 1986-87. Again it was pointed out by
the Accountant that the test report was not received. It was
also again pointed out that the supplies were made in unstandard bags. The Adviser (Rehabilitation) Shri G.D.
Mishra over-ruled this objection and recommended to the
Managing Director that not only the said bill of
Rs. 13.07 lacs he paid but also two bills of Rs. 12.0J lacs
and Rs.5.83 lacs, which had not been examined by the
accounts also be paid. This was in January, 1987. So in fact
the fertiliser Company was paid Rs.23.02 + Rs.30.94 lacs in
January, 1987 itself. In all, out of the total bill (after
deducting shortage) of Rs.65, 53, 642. 11, Rs.53, 97, 277.
32 had been paid to the company.
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The reports of the fertiliser being sub-standard
started coming from May, 1987. On the 2nd May, 1987, the
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PEO, Bihta informed that the said Suraj Brand fertiliser
was found sub-standard on chemical analysis. On 1st of
June, 1987, the Director of Agriculture wrote to Biscomaun informing Biscomaun that the samples of the said
fertilser taken from Minapur, Bihta, Arwal and Sakra were
found to be sub-standard and spurious. On 18.5. 1987, the
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Regional Officer, BISCOMAUN, Gaya had reported that
the sample of the said fertiliser taken from Arwal Depot by
the Agriculture Officer and tested is spurious.
When reports of the chemical analysis by the State
Laboratory started coming in and it was found that the said
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fertiliser was spurious and sub-standard, the then Management. of Biscomaun made a conspiracy to consume the
spurious fertiliser instead of returning it to the manufacturer and claiming back the money paid.
It has been clarified above that as per the terms of the
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purchase, the entire fertiliser of Suraj Brand ought to have
been returned to the company and refund taken. Instead of
this, in order to cause wrongful gain to the company and
wrongful loss to Biscomaun and the then Management, as
well as to remove the evidence of the stock of spurious
fertilisers, the then Management of Biscomaun took a decision to reprocess old stock of fertiliser in the two factories
of Biscomaun at Tilrath and Jasidih. It was proposed to the
Board that these fertilisers in the stock of Biscomaun
depot, which were very old and difficult to sell should be
used in these two factories for manufacture of Harabahar.
This proposal was put up to the Board on March, 1987. The
Board approved this proposal.
It is to be noted that the Board only approved the
proposal to reprocess the old stock and as the stock of
Suraj Brand was not old one, again to suite their end, a
proposal was mooted before the Executive Committee in
May, 1987 to reprocess all the stock lying in depots, which
was approved. The Executive Committee could not modify
the decision taken by the Board of Directors. The said
Suraj Brand fertiliser could not be said to be an old stock
because it was purchased only in December, 1986. Apart
from that, as soon as the fertiliser was proved to be substandard by the State laboratory, Biscomaun should have
recovered the amount paid to the Company.
However, on the said Executive Committee decision,
the management of Biscomaun along with old stock of
fertiliser also started transferring the said Sura j Brand
fertiliser to the two factories so that it could be converted
into Harabahar and consumed. It is to be noted that out of
2900 mts .. 2500 mts. had remained unsold by June,
1987. Stocks proved "to be spurious and sub-standard were
transferred to the Biscomaun factories at Tilrath and
Jasidih for being converted into Harabahar. The said Suraj
Brand material from Benipad, Bochaha, Gangaiya (muzaffarpur) from where samples had been taken and fertiliser
proved to be spurious were transferred. to the fertiliser
factories. It is clear that the entire reprocessing gimmik
was a conspiracy to cause unlawful gain to the said Rajasthan Multi-Fertilisers Pvt. Ltd. and unlawful personal
gain to the persons involved by consuming spurious fertilis-
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STATE OF BIHAR '· P.P. SHARMA [KULDIP SINGH. J.J
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ers supplied by them thereby also causing wrongful loss to
Biscomaun and the farmers of the State. Not only that the
aforesaid serious offences were committed, but the provisions of Fertiliser Control Order, 1957 were also violated
by supplying spurious and sub-standard fertilisers.
It is, therefore, manifest from aforesaid facts that the
then Chairman, Sri Tapeshwar Singh, Managing Director
Shri B.P. Sharma, Shri G.D. Mishra had entered into a
criminal conspiracy with Shri O.P. Agrawal, M.D. Narayan Lal Agrawal, Banshi Lal Agrawal and Gopal Lal
Agrawal, Directors of Rajasthan Multi Fertilisers Pvt. Ltd.
and thus Biscomaun was cheated of Rs.53,97 ,277.32.
Tapeshwar Singh and P.P. Sharma accused persons filed Writ
Petition 289 of 1988 on September 29, 1988 before the Patna High
Court with a prayer that the First Information Report be quashed. The
petition was adjourned to different dates on the request of the counsel
for the petitioners. Meanwhile the investigation in the case was completed by the police and two police reports, one under Section 7 of the
Essential Commodities Act and the other under various section of the
I. P .C., were submitted before the Competent Court in October, 1988.
the Special Judge, Patna heard the arguments of the parties on various
dates between January 9, 1989 and January 31, 1989 on the question as
to whether there was sufficient material in the police-reports to take
cognizance of various offences projected therein. On January 31, 1989
the learned Special Judge concluded the arguments and reserved the
orders.
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Tapeshwar Singh filed Criminal Miscellaneous Petition in the
High Court on February 17, 1989. the High Court stayed further pro~;·· F
ceedings in the Court of Special Judge, Patna. P.P. Sharma filed writ
petition 90 of 1989 in Patna High Court on March 17, 1989 prayi'ng for
quashing of the First Information Report and the police-reports. The
High Court admitted the writ petition on March 31, 1989 and stayed
further proceedings in the Court below. On July 6, 1989 P.P. Sharma
withdrew writ petition 289 of 1988. G.D. Mishra filed writ petition 228
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of 1989 on August 23, 1989 which was ordered to be heard with writ
petition 90 of 1989. Tapeshwar Singh withdrew writ petition 289 of
1989.
The High Court heard the arguments in writ petition 90 and 228
of 1989 from November 1, 1989 to February 8, 1990. The bench consistH
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ing of S.H.S. Abdi, S.Hoda, JJ allowed the writ petitions by its judgment dated April 5, 1990 and quashed the FIR and the criminal proceedings against the accused-petitioners. These appeals are against the
judgment of the High Court via Special Leave Petitions. In Criminal
Appeal Nos. 525-26/90 Shri Girija Nandan Sharma, S.P. CID, Patna,
the investigating officer and in Criminal Appeal Nos. 523-24/90 Shri
R.K. Singh the informant, are also the appellants along with the State
of Bihar.
Mr. P.P. Rao and Mr. Kapil Sibal, learned senior advocates.
appearing for the appeallants have contended that the High Court in
the exercise of its extra ordinary jurisdiction committed a grave error
in taking into consideration the affidavits and documents filed alongwith the writ petitions. The counsel contended that the High Court
virtually usurped the jurisdiction of the Magistrate/Special Judge by
appreciating the affidavits and documents produced before it and
reaching conclusions contrary to the charge-sheets (police reports)
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submitted by the police. According to the learned counsel two police
reports under Section 173 Cr. P.C.