BY TIOL News Service

NEW DELHI, JAN 15, 2016: THE issue is - Whether a Court can take cognizance of an offence by a public servant under the Prevention of Corruption Act when the permission for prosecution of such officer was obtained by CBI from the Govt. without producing relevant documents and statements before the sanctioning authority. The answer is NO.

Facts

The petitioner Mr. Ashok Agarwall, an IRS officer was the Deputy Director of Enforcement Directorate (Delhi Zone), Ministry of Finance during 1997-1998. On 01.01.1998, the petitioner conducted a raid at the office of one Mr. Subhash Chandra Barjatya (‘Mr. Barjatya’) a Delhi based jeweler at the Maurya Sheraton Hotel, Delhi and seized a Fax message dated 23.12.1997 (‘the Fax in question’) from the top of the Fax Machine of the latter. The Fax in question was a debit advice purportedly from the Swiss Bank Corporation, Zurich, Switzerland and reflected that a sum of USD 150,000 was transferred from the account of one Royalle Foundation held in the said bank to one Mr. S.K. Kapoor in the latter’s account in HSBC Bank, Hong Kong. Later in the CBI report, it was asserted that the members who conducted search at the premises of Mr. Barjatya accepted his hospitality and took lunch at Maurya Sheraton Hotel in Delhi. Later, Mr. Barjatya filed a complaint in 1998 addressed to the Director, Directorate of Enforcement, wherein he alleged that the fax in question from the Swiss Bank Corporation, Zurich, Switzerland was forged and planted in his premises during the course of search. Mr. Barjatya was arrested by the ED and later in March, 1998 Mr. Barjatya submitted to the ED a letter dated 17.02.1998 obtained by one Mr. Mandeep Kapur, the Chartered Accountant of Mr. Barjatya allegedly from one Mr. Eric Huggenberger stated to be an attorney of the Swiss Bank Corporation, to the effect that the Fax in question was forged and fabricated. When ED questioned the authenticity of the letter, Mr. Mandeep Kapur, Chartered Accountant went to Zurich once again and obtained a letter dated 20.03.1998 from the Swiss Bank Corporation to the effect that Mr. Eric Huggenberger was the attorney of the Bank and was authorized to author the said letter. Thereafter, on the basis of the said letter Mr. Barjatya was released on bail by the Sessions Court. During the investigation, on the complaint by Mr. Barjatya, one Mr. Abhishek Verma made a statement that he had forged the fax in question and had in fact planted it on Mr. Barjatya’s fax machine at the instance of the petitioner. The purported motive for doing so was stated to be the reward that the Enforcement officer would be entitled to as a consequence of the seizure of the Fax in question. Thereafter, the matter was forwarded by the Director ED to Central vigilance Commission (CVC) and an investigation was initiated against the petitioner which lead to registering a criminal case against him under the provisions of Prevention of Corruption Act and proceedings started in the Trial Court in Tis Hazari. The petitioner was also put under suspension in December, 1999 after 14 years of his services. However, the petitioner always maintained that he was being framed by the Director of ED who pressurized him to change the track of investigation into the matter of Mr. Barjatya.

At the instance of the CBI, a letter-rogatory (LR) dated 29.01.2001 was dispatched to the Competent Judicial Authority in Switzerland requiring information to corroborate the statement of accused Mr. Abhishek Verma. The Trial Court noted that information obtained from the Swiss authorities revealed that the fax in question was dispatched by the Swiss Bank Corporation to Mr. Barjatya albeit by mistake as asserted in the response. The Court noted that apart from the answer that the Fax in question was sent to Mr. Barjatya by mistake by the Swiss Bank Corporation, none of the other questions sent to them were clearly answered by the Swiss Bank Corporation. The Trial Court accepted Mr. Abhishek Verma’s application for being made an Approver and granted him pardon because of his role in establishing the role played by principal accused Ashok Kr. Aggarwal, in framing Subhash Chander Barjartya in a FERA case. Aggrieved, the petitioner instituted a Criminal Miscellaneous Petition No.3741/2001 assailing the said order. The Delhi High Court in 2007 set aside the order of the Trial Court. This Court by way of the judgment and order dated 20.08.2007 set aside the order the Trial Court which was upheld by the Supreme Court. Later, the CBI moved an application before the trial court stating therein that it no longer supported the case of Mr. Abhishek Verma for being granted pardon and made an Approver in the case in view of his criminal antecedents. Later in 2014, Mr. Abhishek Verma through an application made before the Special Judge, CBI, Delhi has retracted from his earlier statement under Section 164 of the Code, implicating the petitioner herein, asserting that the said statement was made under threat, coercion and intimidation from the investigating officer.

In the meantime, the petitioner instituted a Writ Petition in 2001 alleging that the investigation was being conducted in an impartial, unfair and mala fide manner and seeking transfer of the same from the Investigating Officer in the subject case to some other senior officer of the CBI. Later, the petitioner came to know that the CBI had sought sanction from the Ministry of Finance to prosecute the petitioner but without disclosing the crucial fact that response from the Competent Authority in Switzerland shows that the fax from the HSBC Bank was actually sent to Mr. Barjatya and therefore, the allegation made by Mr. Abhishek Verma that the fax was forged was not reliable. The petitioner made representations before the Revenue Secretary contending that the prosecution was mala-fide and illegal. The High Court while disposing of the writ petition directed the CBI judge to dispose of the application on the validity of the sanction order to prosecute the petitioner at the earliest. The CBI judge framed charges against the petitioner but did not return any finding on the sanctioned order. Later in 2011 a VIP reference from the Ministry of Finance was made to the Ministry of Law and Justice for its opinion on the sanctioned prosecution order and it was opined that the said order was passed without application of mind and in the absence of relevant documents which were not supplied by the CBI while seeking the sanction for prosecuting the petitioner. But the then Law Secretary reconsidered and withdrew the opinion of the Ministry of Law & Justice without a speaking order. In 2014, the petitioner made a representation to the Revenue Secretary with a request for implementing the legal opinion given by Ministry of Law & Justice, to which the the officers of Department of Revenue noted the withdrawal of legal opinion has been found to be improper to the extent that the said legal opinion was withdrawn by the then Law Secretary without following the established procedure. Thereafter in 2015, the CVC in its office memorandum observed that the order sanctioned by the Ministry of Finance to prosecute the petitioner was not in conformity with the guidelines reiterated by DoP&T. Thereafter, the PMO had requested the Department of Revenue to afford a personal hearing to the petitioner in light of the opinion of the Law Ministry and requested for an early hearing from the Department of Revenue. On the intervention of the High Court, finally hearing was given to the petitioner by the Department of Revenue on 25.08.2015 which was rejected by the Ministry of Finance.

Having heard the parties, the High Court held that,

++ the Supreme Court, relying on C. Nagarajaswamy has held in Nanjappa vs. State of Karnataka, that what is important is that the grant of a valid sanction is essential before the court takes cognizance. In the case of State of Goa vs. Babu Thomas, the Supreme Court referred to section 19(1) POCA and laid down cognizance by a court is barred under the said provision unless there is a valid sanction backing it. Similarly, in the case of Anil Kumar and Ors vs. M.K. Aiyappa and Anr, the Supreme Court held that the Special Judge could not have taken cognizance and ordered investigation under section 156(3) of the Code if there was no valid sanction.

++ keeping in view the fact that this Court had remitted the question of validity of sanction to the Special Judge, CBI on an earlier occasion, and the Special Judge failed to return a finding on this issue, the order framing charges against the petitioner cannot be sustained. The Special Judge, evidently instead proceeded to frame charges against the petitioner, without looking into the question of validity of the sanction;

++ from a conspectus of the decisions of the Supreme Court the legal position that emerges is that the question of validity of a sanction must be decided as soon as it is raised and cannot be postponed to a later stage of trial, as an invalid sanction goes to the very root of the jurisdiction of the court that has taken cognizance. Considering that the cognizance taken by the Special Judge, CBI would be rendered non-est in light of section 19(1) of POCA, the dispute on validity must be adjudicated at the earliest. It is trite to state that a sanction is a precursory sacrosanct step to initiate criminal proceedings against public officer, and the lack of a valid sanction precludes the court from taking cognizance of an offence under section 19(1) POCA. Section 19(1) POCA affords protection to those public servants, who could get trapped in vexatious proceedings while discharge of their official functions. If this protection is not afforded to a public servant then the cognizance taken under section 19(1) POCA also stands vitiated. In light of the direction of the Supreme Court dated 15.03.2007 in Criminal Appeal No.353/2007 and the decision of the Supreme Court in Nanjappa, this court is duty bound and empowered under its plenary powers to adjudicate on the issue of validity of the sanction order dated 21.06.2002;

++ in view of the above discussion, Issue No.(i) in Writ Petition (Criminal) No.1401/2002 is decided in favour of the petitioner and it is held that the present petition is maintainable under Articles 226/227 of the Constitution of India;

++ after going through the relevant notings dated 18.06.2005, 27.12.2005 and 15.01.2007 made by the then Finance Minister, the considerate view that there is no elaborate conclusion drawn out in the said notings, which appear to have been made only after a cursory examination and the same do not come to the aid of the respondents. Finance Minister merely relies on the statement of the DSP (CBI) to come to a conclusion that all the relevant documents were shown to the sanctioning authority. A glaring irregularity is also noticed from these notings to the effect that the sanctioning authority who accorded sanction for prosecution was not the same as the authority, which summarized the documents in the first instance;

++ after referring to several Supreme Court decisions, the legal propositions that can be culled out is that grant of sanction is a sacrosanct act and is intended to provide safeguard to a public servant against frivolous and vexatious litigation. The sanctioning authority after being apprised of all the facts, must be of an opinion that prima-facie a case is made out against the public servant. Thus, for a valid sanction the sanctioning authority must be apprised of all the relevant material and relevant facts in relation to the commission of the offence. This application of mind by the sanctioning authority is a sine qua non for a valid sanction. The ratio of the sanction order must speak for itself and should enunciate that the sanctioning authority has gone through the entire record of the investigation. Thus, the sanction order must expressly show that the sanctioning authority has perused the material placed before it, and after considering the circumstances in the case against the public servant, has granted sanction;

++ in the present case, the respondents have despairingly failed to discharge the onus of proving that the sanction order dated 21.06.2002 is valid and that all the relevant documents were sent to the sanctioning authority for its perusal. None of the documents that go to demonstrate the innocence of the petitioner viz. the reply to the LR dated 27.06.2001 and the relevant Fax dated 13.01.1998 were shown to have been available to the sanctioning authority. These documents clearly and unequivocally establish that the Fax in question was in fact sent by the Swiss Bank Corporation, however, it is purported to have reached Mr. Barjatya by mistake. Resultantly, the Fax in question was a genuine one, and was not forged or fabricated as alleged by the prosecution. The sanction order dated 21.06.2002 is a verbatim copy of the draft sanction order sent along with the SP’s report on 30.10.2001 and illustrates non-application of mind by the sanctioning authority;

++ the sanctioning authority who, purportedly went through the above-mentioned documents, as per the notings of the then Hon’ble Finance Minister, is not even the sanctioning authority that signed the sanction order dated 21.06.2002. In light of the afore-stated circumstance, the case of the prosecution flounders when seen in light of the documents that did not form a part of the documents sent to the sanctioning authority. Therefore, it would be travesty of justice to call it a mere irregularity. There indeed has occasioned a failure of justice, of which the trial court has failed to take cognizance at the stage of framing of charges even after specific contentions were made on behalf of the petitioner in this regard. In view of the foregoing, the sanction order dated 21.06.2002 is invalid for want of due application of mind by the sanctioning authority. Consequently, the cognizance taken by the Special Judge, CBI in framing charges against the petitioner vide order on charge dated 17.12.2005 in RC No.SI8 E0001 1999 is non-est, void ab-initio, bad in law and in gross violation of the provisions of section 19(1) POCA. Therefore, in view of the foregoing discussion, Issue No.(ii) raised in Writ Petition (Criminal) No. 1401/2002, is answered in the affirmative and it is held that the sanction order dated 21.06.2002 is invalid;

++ the petitioner has suffered great prejudice since 1998 on account of the prolonged litigation between him and the official respondents. He has endured suffering, humiliation and considerable trauma. A sense of dubiety has persisted qua the petitioner since long which reminds one of the lyrics in the famous song by Bob Dylan:

"How many roads must a man walk down Before you call him a man?"

++ normally, the case would have been remitted back to the sanctioning authority for reconsideration on a fresh order of sanction. However, in the circumstance that the instant case commenced as far back as in 1998 and eighteen years have since lapsed; and in the light of the decision of the Supreme Court in Mansukhlal Vithaldas Chauhan vs. State of Gujarat (supra), in my opinion it would be unfair, unjust and contrary to the interests of justice to expose the petitioner to another round of litigation and keep him on trial for an indefinitely long period. It would also offend the principle enshrined in the provisions of Article 21 of the Constitution of India. A quietus must be applied to the present proceedings. Thus, in the interest of justice, finality is given to these proceedings and it is directed that no further proceedings in relation to the subject sanction orders be initiated against the petitioner.

(See 2016-TIOL-94-HC-DEL-SERVICE)