State by CBI/ACB vs A.N. Dhyaneswaran, A.D. Senthureswaran and S. Narayanan

S. Ashok Kumar, J.—This revision has been filed by the petitioner against the common order passed by the learned Principal Special Judge

for CBI Cases, Chennai in Cr.M.P.Nos.96 and 549 of 2002 in C.C.No. 9 of 2001 dated 7-1-2003 in allowing the above petitions filed by the

respondents herein.

The brief facts of the case are as follows: The first respondent herein was the Managing Director and Chairman of Tamil Nadu Minerals

(TAMIN) between 1991 and 1996 , the second respondent is his son and the third respondent is a close associate of the 1st respondent. The

petitioner CBI filed a charge sheet on 14.3.2001 wherein it was alleged that A1 the first respondent herein has amassed wealth disproportionate to

his known sources of income to the tune of Rs.7,34,58,239/- for which he could not satisfactorily account for. A1 was charge sheeted for the

offence under sections 420 and Section 13(2) r/w 13(1)(e) of the Prevention of Corruption Act, 1988 and u/s 109 IPC. A2 son of A1 and A3 a

close associate of A1 who are alleged to have facilitated A1 in securing assets and purchasing them in their names as Benami of A1, knowing fully

well that they do not have income to acquire these assets and therefore A2 &A3 were charge sheeted for the offence of abetment u/s 109 IPC r/w

13(2) r/w 13(1)(e) of P.C.Act, 1988. The accused filed discharge petitions before the trial court on the ground that no sanction was obtained

before filing of the charge sheet and on that ground A1 was discharged by the trial court and since A1 was discharged, the trial court discharged

A2&A3 also on the ground that since the main accused A1 cannot be proceeded further, it is not now possible to proceed further against A2 and

A3 also. Aggrieved over the said order, this revision has been filed by C.B.I.

Learned Special Public Prosecutor for CBI Cases would contend that the discharge of A1 on the ground that no sanction was obtained before

filing of charge sheet is not legally maintainable since no sanction was necessary against a Government Servant who was not in service and the

discharge of A2 and A3 on the ground that the main accused has been discharged is also not sustainable in law. A perusal of the order of the

learned trial Judge would show that on the day when the charge sheet was filed, the first accused was not a Public Servant since he had been

compulsorily retired by the Government and therefore no sanction was necessary. But subsequently the validity of the order of compulsory

retirement was challenged by the first accused in O.A.No.594 of 2002 before the Central Administrative Tribunal and the Tribunal has passed an

order on 9.10.2002 and thereby quashed the order of compulsory retirement passed against the first accused and directed the Government of

India and the Government of Tamil Nadu to reinstate the first accused forthwith with all consequential benefits. According to the trial court, the first

accused has become ''still in service'' and the order of compulsory retirement is no longer in force and by order dated 9.10.2002 of the CAT the

first accused has got now revived his position as a public servant within the meaning of Sec. 2(c) of the P.C.Act, 1988 and therefore the sanction

by the Government as required u/s 197 Cr.P.C., ought to have been obtained for filing of the charge sheet. The trial court also gave liberty to the

prosecution to get sanction to prosecute A1 and others.

A perusal of the judgement of the CAT would show that the Tribunal has mentioned in two places in para-10 of the judgement that there is no

material except the case under Prevention of Corruption Act initiated against the applicant which is yet to be charge sheeted. The judgement in

O.A.No.594 of 2002 was delivered by the Tribunal on 9.10.2002 whereas the charge sheet against A1 and others have been filed in the Special

Court even on 14.3.2001 itself. Therefore, on this factual aspect which was the sole basis for setting aside the compulsory retirement of A1 was

not actually correct. However, we are not concerned with or interested in the order of the Tribunal at this stage. But, the fact remains that the order

was delivered on an erroneous factual aspect that no charge sheet was filed against the petitioner, even though charge sheet was filed and taken

cognizance about one and half years before the judgement in O.A.No.594 of 2002.

One of the points to be decided is whether the subsequent setting aside of the order of compulsory retirement could nullify the cognizance taken

by the Special Judge.

In the decision reported in Sat Paul Vs. Inspector of Police and Another 1995 Crl.L.J.2898, the Calcutta High Court has held as follows:

Even though a plea had been taken by the petitioner in para 8 of the Revisional Application that the taking of cognizance of the offence by the

court below in the absence of sanction required under S.6 of the Act II of 1947 is bad in law, the said ground, as already noted, had not been

pressed by Mr.Mukherjee during the hearing. Nor, could he, in the facts and circumstances of the relevant case and the settled principles of law on

the point. Undisputedly, the petitioner was placed under suspension on and from 7th August, 1986 and his services had been terminated on 17th

February, 1987. The court below had taken cognizance of the alleged offence on 6th April, 1987. On that date the petitioner had ceased to be a

public servant. The petitioner contends that the Central Administrative Tribunal at New Delhi had, by order dated 18th September, 1989, set aside

the order of his termination and had directed status-quo to be maintained immediately before the date of his termination when he was already under

suspension. It is also contended by him that the Authority concerned by order dated 15th February, 1992 had revoked the order of his

suspension, and he was posted back to Calcutta as Collector of Central Excise, Calcutta. But that is of little consequence in view of the series of

decisions of the different High Courts and the Apex Court on the point, some of which are cited below:-

(1) S.A. Venkataraman Vs. The State,

In view of the catena of decisions on the point, it is now a settled principle of law that, the relevant date with reference to which a valid sanction

is sine qua non for taking cognizance of an offence committed by a public servant as required by S.6 is the date on which the Court is called up to

take cognizance of the offence of which he is accused; and that the terminus a qua for valid sanction is the time when the Court is called upon to

take cognizance of the offence. It, therefore, when the offence is alleged to have been committed, the accused was a public servant but by the time

the Court is called upon to take cognizance of the offence committed by him as public servant, he has ceased to be a public servant, no sanction

would be necessary for taking cognizance of the offence against him. No sanction under S.6 of the Act II of 1947 would thus be required for

taking cognizance of offence by a Special Judge when the accused has ceased to be a public servant on being dismissed from service, as in the

instant case. The subsequent setting aside of the dismissal order during the pendency of a criminal case could neither nullify the cognizance taken by

the Special Judge.

In the decision reported in D''Monte Vs. Central Government 1975 K.L.T. 509 a Division Bench of the High Court of Kerala has held as follows:

It is not disputed that sanction is not necessary if at the time the Court took cognizance of the complaint against an accused, he had ceased to be a

government servant. Nor can it be disputed that every order passed by an authority, which is ultimately set aside, becomes a nullity for the reason

that it was set aside in appeal. Orders which are set aside either because of some procedural irregularity or other technical plea cannot be said to

be void ab initio. The defect must be one which goes to the root of the matter. An order can be said to be ab initio void only when the order is

passed by an authority which had no jurisdiction to do so and when such an order is passed in violation of the principles of natural justice. The

declaration in the appellate order is that the petitioner therein ""should be deemed to be in service"" which means that he was not in fact in service but

was deemed to be in service, importing a legal fiction. Till the original order is set aside, the said order remains in operation and the setting aside of

such orders for some procedural irregularity, although restores to the delinquent certain benefits of services, does not restore to him all the rights of

government servants during the period, the order was in operation. This is available only in cases where the order is ab initio void or is a nullity for

want of compliance of natural justice. Therefore the accused cannot urge that the order of acquittal passed by the President of India would render

the original order of dismissal void and would entitle him to claim that the cognisance of the complaint by the Special Judge without sanction under

S.6 of the Act is bad and that a fresh complaint should be filed against him after obtaining sanction.

In the decision reported in K.S. Dharmadatan Vs. Central Government and Others, , the Supreme Court has held as follows:

A perusal of this section would clearly disclose that the section applies only where at the time when the offence was committed the offender

was acting as a public servant. If the offender had ceased to be a public servant then Section 6 would have no application at all. Furthermore, it is

also manifest from the perusal of Section 6 that the point of time when the sanction has to be taken must be the time when the court takes

cognizance of an offence and not before or after. If at the relevant time, as indicated above, the offender was not a public servant no sanction u/s 6

was necessary at all.

....

To the same effect is a later decision of this Court in the case of C.R. Bansi Vs. The State of Maharashtra, .

In view of the observations referred to above, it is manifest that as the appellant had ceased to be a public servant at the time when the

cognizance of the case was taken against him by the Special Judge no sanction u/s 6 of the Act was necessary.

It was, however, argued by Mr.Swaminadhan, learned Counsel for the appellant that the logical consequence of the order of the President

reinstating the appellant was that he would be deemed to have been put back into service on the date the charge-sheet was submitted against him,

and therefore, he must be deemed to be a public servant within the meaning of Section 6 of the Act. In other words, the learned Counsel wanted

us to import a legal fiction arising from the Presidential order by which even though factually the appellant may not have been a public servant at the

time when the cognizance was taken, he would be deemed to be so by virtue of the Presidential order even though the Presidential order may have

been passed years after the cognizance.

To begin with, the dismissal of the appellant was not a nullity so as to vitiate all proceedings previous or subsequent. It was merely an order

passed by the Presiden in an appeal and the appellant succeeded because of a manifest defect in the charge sheet. The order passed by the

President was therefore not an order on merits. There is nothing to show that the President ever intended that the appellant should be deemed to

have been reinstated even for the purpose of Section 6 of the Act so as to nullify actions completed, consequences ensued or transactions closed.

In fact, when the President observed that the appellant shall be deemed to have been placed under suspension from the date of the original order

of dismissal it merely meant that for the purpose of certain civil consequences flowing from the order of the President, namely, the grant of

subsistence allowance or other benefits the order would be deemed to be retroactive in character. It is well settled that a deeming provision cannot

be pushed too far so as to result in a most anomalous or absurd position.

In the case of C.S.T.Uttar Pradesh Vs. Modi Sugar Mills Ltd. while laying down the principles of the basis of which a deeming provision

should be construed this Court observed as follows:

A legal fiction must be limited to the purpose for which it has been created and cannot be extended beyond its legitimate field.

Similarly in the case of Braithwaite & Co.,(India) Ltd.,V.Employees'' State Insurance Corporation this court further amplifying the principle of

the construction of a deeming provision observed thus:

A legal fiction is adopted in a law for a limited and definite purpose only and there is no justification for extending it beyond the purpose for wich

the legislature adopted.

In the Bengal Immunity Co., Ltd Vs. State of Bihar this court pointed out that ""explanation should be limited to the purpose the Constitution-

makers had and legal fictions are created only for some definite purpose.

In the case of C.I.T. Bombay City V. Elphinstone Spinning and Weaving Mills Co., Ltd., this court observed as follows:

As we have already stated, this fiction cannot be carried further than what it is intended for.

Thus, it is well settled that a deeming fiction should be confined only for the purpose for which it is meant. In the instant case, the order of the

President reinstating the appellant and creating a legal fiction regarding the period of suspension must be limited only so far as the period of and the

incidents of suspension were concerned and could not be carried too far so as to project it even in cases where actions had already been taken

and closed. In other words, the position seems to be that at the time when actual cognizance by the court was taken the appellant had ceased to be

a public servant having been removed from service. If some yeas later he had been reinstated that would not make the cognizance which was

validly taken by the court in October,1970 a nullity or render it nugatory so as to necessitate the taking of a fresh sanction. We, therefore, entirely

agree with the view taken by the High Court that in the facts and circumstances of the present case legal fiction arising out of the Presidential Order

cannot be carried to nullify the order of cognizance taken by the Special Judge. The argument of the learned counsel for the Appellant is, therefore,

overruled. No other point was pressed before us. The appeal being without merit is accordingly dismissed. The Special Judge would now hear the

arguments of the parties and dispose of the case as expeditiously as possible. Let the records be sent back to the Special Judge immediately.

From the above decisions it is clear that on the date of taking cognizance of the offence, whether the accused was a public servant or not, is the

criterion to decide whether sanction has to be obtained to prosecute the Government servant. The subsequent event of reinstating the Government

servant or setting aside the earlier order will be of no consequence and could not nullify the cognizance already taken by Court. In this case A1

was not a public servant as he was already compulsorily retired on the date of filing of charge sheet and hence no sanction as required under Sec.

197 Cr.P.C., is necessary. In the charge sheet itself it is mentioned that no sanction is obtained since the same is not necessary because A1 was

not a Government Servant on the date of filing of the charge sheet. Therefore, the failure to get sanction to prosecute A1 cannot be a ground to

quash the proceedings against him or to discharge him. On this aspect the order of the learned trial Judge is patently wrong and the same is liable to

the set aside.

Learned counsel appearing for A2 and A3 would contend that both of them have availed the advantage of a scheme brought out by the

Revenue Department of the Central Government i.e., Finance Act ( No.2) of 1998. The said Scheme is called Kar Vivad Samadhan Scheme,

1988 (hereinafter referred to as ''The Scheme''). According the learned counsel for A2 and A3, the said scheme undoubtedly grants unconditional

immunity from prosecution or penalty upon filing declaration and payment made under the said scheme. It is argued that the respondents 2&3 filed

declaration long before the date of the charge sheet on 14.3.2001 and issue of summons on 19.3.2001, the date o taking cognizance by the lower

court as noted in the judgement. In support of the said contention, learned counsel for the respondents 2&3 relied upon the decision reported in

Hira Lal Hari Lal Bhaagwati Vs. CBI 2003 SC (Cri) 1121. The said case cited by the learned counsel appearing for A2&A3 arose on a

prosecution against Gujarat Cancer Society for importing certain machines availing of duty exemption under Customs Notification Nos.279/83-

Cus. and 64/88-Cus. on the basis of exemption certificate issued in the name of the said Gujarat Cancer and Research Institute and wherein the

Collector of Customs in view of charitable and philanthropic activities of GCS did not recommend any prosecution and imposed only a token

redemption fine of Re.1/-, wherein the accused persons were senior citizens aged 92 and 70 years and also on facts, the ingredients of Sections

120-B, 420 and 415 were not made out and therefore applying the principles of immunity from prosecution provided u/s 91 of the Scheme Their

Lordships of the Apex Court have acquitted the accused in the said case.

But the facts of the case on hand is different. This is a case under the Prevention of Corruption Act. A2 and A3 are said to be in possession of

huge assets as benami of A1. A2 is the son of A1 and A3 is a close associate of A1. A2 joined service as a clerk and later became an officer in a

bank and A3 was employed as a clerk in a Sugar Mill. They were said to be in possession of huge assets of more than 46 lakhs. Therefore they

were also charge sheeted alongwith A1 for the offences punishable u/s 109 IPC r/w 13(2) r/w 13(1)(e) of Prevention of Corruption Act. The

Scheme by wich A2 &A3 want to take advantage, had got its own object and the said object is as follows:

1.2: The object of the Scheme as explained by the Finance Minister in his speech, para 95, is:

Litigation has been the bane of both direct and indirect taxes. A lot of energy of the Revenue Department is being frittered in pursuing large

number of litigations pending at different levels for long periods of time. Considerable revenue also gets locked up in such disputes. Declogging the

system will not only incentivise honest taxpapers, enable Government to realize its reasonable dues much earlier but coupled with administrative

measures, would also make the system more user-friendly. I, therefore, propose to introduce a new scheme called Samadhan.

The scope of ''Tax Arrear'' for which the scheme applies are narrated in Chapter Two of the Scheme. This Chapter deals with various Acts which

are covered by the provisions of Direct Tax Enactment and Indirect Tax Enactment which would show that the ""Scheme"" is applicable to disputes

of ""Tax arrears"" under the various Acts covered by the ""Scheme"". Persons who cannot avail the benefits of the Scheme are mentioned in Para 3.2

of the Scheme. Under Para 3.2 under the caption who cannot make declaration, the following are mentioned:

3.2 Section 95 of the Finance Act provides for:

Tax Arrear, whether under Direct Tax Enactment or Indirect Tax Enactment, in respect of which a person cannot make declaration [clauses (i) and

(ii) of section 95] (see paras 3.3.to 3.5): and

Persons who are absolutely prohibited from making any declaration under the Scheme [Clauses (iii),(iv) and (v) of section 95 of the Finance Act].

(see para 3.6)

Para 3.6 deals with bar against certain persons who cannot make declaration. The persons who are absolutely prohibited from making any

declaration under the Scheme are laid down in Sec. 95 Clause (iii)(iv) or (v) of the Finance Act. One

such person is, against whom prosecution under Prevention of Corruption Act is initiated. Section 95 deals with the persons to whom the Scheme

is not applicable. u/s 95(iii) to any person in respect of whom prosecution for any offence punishable under the Prevention of Corruption Act,

1988 has been instituted on or before the filing of the declaration, this scheme is not applicable. As far as this case is concerned, the FIR was

lodged on 8.7.1996 and in the FIR itself though the names of A2&A3 are not mentioned in the accused column, in various places the name of A2

has been mentioned as having disproportionate income by way of bank deposits and properties including a palatial bungalow of 5000 sq.ft.

purchased in 1992 at M-26, 10th Street, Anna Nagar, Madras in the name of A2 and his brother is also mentioned. A reading of the FIR would

show that during the course of investigation assets disproportionate to the known source of income of A2 and A3 have also been unearthed. A3

was only a clerk in Government Co-op.Sugar Mills at the relevant point of time. Therefore, it cannot be said that the benefits of the Scheme were

availed by A2 &A3 prior to the investigation in this case and Section 95(iii) of the Scheme squarely applies to A2 & A3 and therefore, they are

not entitled for the benefits of the Scheme.

The next contention of the learned counsel for the respondents is that the complainant in this case who registered the FIR himself investigated the

case and filed the charge sheet and therefore there is no impartial investigation. In support of the said contention, the leaned counsel for the

respondents relied on the decision reported in Ratnam Vs. State 2001 (1) L.W.143 and Megha Singh v. State of Haryana 1997 S C C (Crl) 267.

The facts of the said cases are not applicable to the facts of the case on hand. Those are the cases in which the investigation officer himself was the

complainant. But, this is a case in which the investigation officer lodged the complaint on the order of S.P. by collecting information from the

Income Tax sources. In CBI Cases the Station House Officer is the Superintendent of Police and other D.S.Ps, Inspectors and below are

subordinate to him and assisting him for investigation of the case. In this case, there is no complaint and this case was registered on the basis of a

source information received by the S.P. CBI /ACB/Chennai, Shri V.K.Reghukumar, DSP registered the case and investigated the case as per the

orders of the SP and as per the authorization given to him u/s. 17 of the P.C. Act and hence, the averments of the respondents that

Mr.V.K.Reghukumar, is the complainant and he himself investigated the case and thereby the provision of 154 Cr.P.C., is violated is not correct

and it is also against the factual position. Further the respondents are not able to show in what way they are prejudiced by the investigation

conducted by the same person who registered the case. Therefore, this contention of the respondents also is not sustainable.

In the result, the revision is allowed and the order of the learned trial Judge is set aside. Therefore, the respondents/accused are directed to

appear before the trial court on 25.02.2004, to face the trial.