K. M. Philip and P. S. George @ Kunhu v. State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **THURSDAY, THE 28TH DAY OF JANUARY 2021 / 8TH MAGHA, 1942** ## **Crl.MC.No.5604 OF 2019(A)** **AGAINST THE ORDER IN CC 28/2016 OF COURT OF ENQUIRY COMMISSIONER. & SPECIAL JUDGE, KANNUR AT THALASSERY** ## **CRIME NO.16/2003 OF VACB, KANNUR, Kannur** ## **REVISION PETITIONERS/ACCUSED 2 & 4:** **1 K.M.PHILIP AGED 67 YEARS S/O. AUGUSTINE, FORMER SECRETARY, THADIKKADAVU SERVICE CO-OPERATIVE BANK, PERMANENTLY RESIDING AT KALLUMADATHIL HOUSE, THERTHALLY P. O., KANNUR.** **2 P. S. GEORGE @ KUNHU AGED 66 YEARS S/O. SEBASTIAN, FORMER CHIEF ACCOUNTANT, THADIKKADAVU SERVICE CO-OPERATIVE BANK, PERMANENTLY RESIDING AT MANJAPPALLILL HOUSE, ERUVATTY P. O., KANNUR.** ## **BY ADV. SRI.NANDAGOPAL S.KURUP** ## **RESPONDENT/RESPONDENT:** ## **STATE OF KERALA** **REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM, THROUGH THE SUPERINTENDENT OF POLICE, VIGILANCE AND ANTI-CORRUPTION BUREAU, KOZHIKODE - 682031.** **BY PUBLIC PROSECUTOR SRI A RAJESH SPL PP VACB** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 18.01.2021, THE COURT ON 28.01.2021 PASSED THE FOLLOWING:** **Crl.MC.No.5604 OF 2019(A)** **2** ## **R. NARAYANA PISHARADI, J** ## **---------------------------------------------------Crl.M.C.No.5604 of 2019** **-----------------------------------------------------** Dated this the 28[th] day of January, 2021 ## **O R D E R** The petitioners are the second and the fourth accused in the case C.C.No.28/2016 pending in the Court of the Enquiry Commissioner and Special Judge, Thalassery. 2. The offences alleged against the accused in the case are punishable under Sections 13(1)(d) read with 13(2) of the Prevention of Corruption Act, 1988 (for short 'the Act') and also under Sections 468, 471 and 120B of the Indian Penal Code. 3. There are altogether eleven accused in the case. At the time of commission of the alleged offences, accused 1 to 4 were the President, Secretary, Assistant Secretary and the Chief Accountant of the Thadikkadavu Service Co-operative Bank (hereinafter referred to as 'the Bank'). Accused 5 to 8 were Agricultural Officers. Accused 9 to 11 were copra traders. 4. The prosecution case, as stated in the final report filed against the accused by the Deputy Superintendent, Vigilance and Anti- **Crl.MC.No.5604 OF 2019(A)** **3** ## Corruption Bureau (VACB), Kannur Unit, is as follows: _“The charge against the accused is that A2 to A4 while working as Secretary, Assistant Secretary and Chief Accountant of Thadikkadavu Service Cooperative Bank, respectively, being public servants abused their official position with the connivance of A1, the then President of the above bank and committed criminal misconduct by making false records, connived and criminally conspired together with A5 to A8 Agricultural Officers of Kanichar, Chapparappadavu, Nadavil and Alakode Krishibhavan and A9 to A11 copra merchants and in furtherance of their criminal conspiracy, dishonestly and fraudulently cheated the Government and farmers, for obtaining undue pecuniary advantage of Rs.42,16,273/- (Rupees Forty two Lakhs Sixteen Thousand Two Hundred and Seventy Three only) to themselves by procuring copra from source other than farmers during the period 2000-2001 and thereby A1 to A11 committed offences punishable under Section 13(1)(d) read with 13(2) of P.C. Act, 1988 and Sections 468,471 and 120B IPC”._ ## 5. The trial court took cognizance of the offences on the basis of the final report. It has also framed charge against the accused on 31.08.2017. **Crl.MC.No.5604 OF 2019(A)** **4** 6. The petitioners have filed this application under Section 482 of the Code of Criminal Procedure, 1973 (for short 'the Code') to quash the final report (Annexure-A2) and all proceedings taken against them on the basis of the final report. 7. Heard the learned counsel for the petitioners and also the learned Public Prosecutor. 8. Learned counsel for the petitioner has raised the following contentions: The trial court has taken cognizance of the offences against the petitioners without the previous sanction of the authority competent under Section 19(1)(c) of the Act. The trial court has taken cognizance of the offences against the petitioners with the previous sanction of the State Government which is not the authority competent to grant it. The petitioners were employees of the Bank, which is a co-operative society registered under the Kerala Cooperative Societies Act, 1969. The authority competent to remove them from service is the Board of Directors of the Bank and therefore, it is the authority which is competent under Section 19(1)(c) of the Act to grant sanction for prosecution against them. The Board of Directors of the Bank had declined to grant sanction for prosecution against the petitioners. Cognizance of the offences taken against the petitioners, with the previous sanction of the State Government, which **Crl.MC.No.5604 OF 2019(A)** **5** is incompetent to grant it, is bad in law and a nullity. 9. Learned Public Prosecutor has submitted that the State Government is competent to grant sanction for prosecution against the petitioners who were public servants and that the validity of the sanction granted can be examined only during the course of the trial of the case. 10. The petitioners were the Secretary and the Chief Accountant of the Bank. The Bank is a co-operative society registered under the Kerala Co-operative Socities Act, 1969. 11. The petitioners were public servants at the time of the commission of the offences alleged against them. They have not raised any dispute in that regard. 12. Section 19(1) of the Act (as it stood before the amendment by Act 16 of 2018) read as follows: _"19. Previous sanction necessary for prosecution.-- (1) No Court shall take cognizance of an offence punishable under Sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction,-- (a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, of that Government; (b) in the case of a person who is employed in connection with the affairs of a State and is_ **Crl.MC.No.5604 OF 2019(A)** **6** _not removable from his office save by or with the sanction of the State Government, of that Government; (c) in the case of any other person, of the authority competent to remove him from his office.”_ 13. The petitioners were public servants but not coming within the purview of clauses (a) and (b) of Section 19(1) of the Act. Therefore, the Central Government or the State Government is not the authority competent to grant sanction for prosecution against them. As per Clause (c) of Section 19(1) of the Act, in case of any person, other than a person who comes under the purview of clauses (a) and (b) of Section 19(1), the authority competent to grant sanction for prosecution against him, is the authority competent to remove him from his office. 14. As per Rule 198(3) of the Kerala Co-operative Societies Rules, the authority competent to impose the penalty of dismissal from service on the petitioners, is the Executive Committee of the Bank, that is, the Board of Directors of the Bank. Therefore, as per Section 19(1)(c) of the Act, the authority competent to accord sanction for prosecution against the petitioners, is the Board of Directors of the Bank. 15. The decision in **Sagar Thomas v. State: ILR 2005 (1) Ker 506** , which has been referred to by the learned Public Prosecutor, has got no application to the facts of the present case. It is a decision **Crl.MC.No.5604 OF 2019(A)** **7** rendered in the context of Section 161 I.P.C and Sections 2 and 6 of the Prevention of Corruption Act, 1947 (as amended by the Kerala Criminal Law Amendment Act, 1962). 16. Annexure-A5 is the copy of the proceedings of the meeting of the Board of Directors of the Bank held on 07.02.2006. It shows that the Director of the Vigilance and Anti-Corruption Bureau had requested the Board of Directors to grant sanction for prosecution against the petitioners but the Board of Directors declined to grant sanction for prosecution against the petitioners. 17. Annexure-A7 is the copy of the Government Order dated 23.03.2006. It shows that sanction was granted by the government for prosecution against accused 1 to 8 in the case. 18. It is on the basis of Annexure-A7 sanction accorded by the government that final report was filed against the petitioners and the other accused. The trial court took cognizance of the offences against the petitioners on the basis of Annexure-A7 government order granting sanction for prosecution. 19. When a sanction is granted by a person not authorised in law, the same being without jurisdiction, would be a nullity (See **Sub Inspector of Police v. Surya Sankaram Karri : (2006) 7 SCC 172** ). **Crl.MC.No.5604 OF 2019(A)** **8** 20. Sub-section (1) of Section 19 of the Act prohibits the Court from taking cognizance of an offence punishable under Sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction as stated in clauses (a), (b) and (c). Absence of sanction for prosecution from the competent authority goes to the root of the prosecution case. It is a fundamental error which invalidates the cognizance taken by the court as without jurisdiction (See **State of Goa v. Babu Thomas : AIR 2005 SC 3606** ). 21. The legal position regarding the importance of sanction under Section 19 of the Act is much too clear to admit equivocation. A plain reading of Section 19(1) of the Act leaves no manner of doubt that the same is couched in mandatory terms and forbids Courts from taking cognizance of any offence punishable under Sections 7, 10, 11, 13 and 15 against public servants except with the previous sanction of the competent authority enumerated in Clauses (a), (b) and (c) to sub-section (1) of Section 19. The provision contained in sub-section (1) would operate in absolute terms but for the presence of subsection (3) to Section 19. Sub-section (1) of Section 19 operates as a complete and absolute bar to any Court taking cognizance of the offences mentioned therein against a public servant except with the **Crl.MC.No.5604 OF 2019(A)** **9** previous sanction of the competent authority (See **Nanjappa v. State of Karnataka : AIR 2015 SC 3060** ). 22. Ordinarily, the question as to whether a proper sanction has been accorded for prosecution of the accused persons or not is a matter which should be dealt with at the stage of taking cognizance. Grant of proper sanction by a competent authority is sine qua non for taking cognizance of the offence. It is desirable that the question as regards sanction may be determined at an early stage. Even if cognizance of the offence is taken erroneously and the same comes to the court's notice at a later stage, a finding to that effect is permissible. Prosecution launched without a valid sanction is a nullity (See **State of Karnataka v. Nagarajaswamy : AIR 2005 SC 4308** ). 23. True, clause (a) of Section 19(3) of the Act provides that, notwithstanding anything contained in the Code of Criminal Procedure, no finding, sentence or order passed by a Special Judge shall be reversed or altered by a Court in appeal, confirmation or revision on the ground of the absence of, or any error, omission or irregularity in, the sanction required under sub-section (1), unless in the opinion of that Court, a failure of justice has in fact been occasioned thereby. Section 19(4) of the Act states that, in **Crl.MC.No.5604 OF 2019(A)** **10** determining under sub-section (3) whether the absence of, or any error, omission or irregularity in, such sanction has occasioned or resulted in a failure of justice, the Court shall have regard to the fact whether the objection could and should have been raised at any earlier stage in the proceedings. The explanation provided to Section 19 of the Act states that, for the purposes of that section, error includes competency of the authority to grant sanction. 24. In **Nanjappa** (supra), the scope of Section 19(3) of the Act has been explained as follows: _“A careful reading of sub-section (3) to Section 19 would show that the same interdicts reversal or alteration of any finding, sentence or order passed by a Special Judge, on the ground that the sanction order suffers from an error, omission or irregularity, unless of course the Court before whom such finding, sentence or order is challenged in appeal or revision is of the opinion that a failure of justice has occurred by reason of such error, omission or irregularity. Sub-section (3), in other words, simply forbids interference with an order passed by Special Judge in appeal, confirmation or revisional proceedings on the ground that the sanction is bad save and except, in cases where the appellate or revisional Court finds that failure of justice has occurred by such invalidity. What is noteworthy is that sub-_ **Crl.MC.No.5604 OF 2019(A)** **11** _section (3) has no application to proceedings before the Special Judge, who is free to pass an order discharging the accused, if he is of the opinion that a valid order sanctioning prosecution of the accused had not been produced as required under Section 19(1). Subsection (3), in our opinion, postulates a prohibition against a higher court reversing an order passed by the Special Judge on the ground of any defect, omission or irregularity in the order of sanction. It does not forbid a Special Judge from passing an order at whatever stage of the proceedings holding that the prosecution is not maintainable for want of a valid order sanctioning the same. The language employed in sub-section (3) is, in our opinion, clear and unambiguous. This is, in our opinion, sufficiently evident even from the language employed in sub-section (4) according to which the appellate or the revisional Court shall, while examining whether the error, omission or irregularity in the sanction had occasioned in any failure of justice, have regard to the fact whether the objection could and should have been raised at an early stage. Suffice it to say, that a conjoint reading of subsections 19(3) and (4) leaves no manner of doubt that the said provisions envisage a challenge to the validity of the order of sanction or the validity of the proceedings including finding, sentence or order passed by the_ **Crl.MC.No.5604 OF 2019(A)** **12** _Special Judge in appeal or revision before a higher court and not before the Special Judge trying the accused. The rationale underlying the provision obviously is that if the trial has proceeded to conclusion and resulted in a finding or sentence, the same should not be lightly interfered with by the appellate or the revisional Court simply because there was some omission, error or irregularity in the order sanctioning prosecution under Section 19(1). Failure of justice is, what the appellate or revisional Court would in such cases look for. And while examining whether any such failure had indeed taken place, the Court concerned would also keep in mind whether the objection touching the error, omission or irregularity in the sanction could or should have been raised at an earlier stage of the proceedings meaning thereby whether the same could and should have been raised at the trial stage instead of being urged in appeal or revision”._ 25. The provision contained in clause (a) of Section 19(3) of the Act does not interdict this Court in examining whether the sanction for prosecution against the accused was granted by an authority competent to do so. In fact, in **Nanjappa** (supra) it has been held that this is a matter which should be examined by the court at the earliest stage of the case. **Crl.MC.No.5604 OF 2019(A)** **13** 26. In the present case, cognizance of the offences has been taken against the petitioners by the trial court without previous sanction by the authority which is competent to grant it. The order of the trial court taking cognizance of the offences against the petitioners is, therefore, liable to be quashed. 27. Learned counsel for the petitioners has submitted that the petitioners have retired from service long back and therefore, they are not liable to be prosecuted again after obtaining fresh sanction from the competent authority. Learned counsel for the petitioners has placed reliance upon the decision of the Apex Court in **Chittaranjan Das v. State of Orissa (AIR 2011 SC 2893)** in this regard. 28. In **Chittaranjan Das** (supra) it has been held as follows: _“We are of the opinion that in a case in which sanction sought is refused by the competent authority, while the public servant is in service, he cannot be prosecuted later after retirement, notwithstanding the fact that no sanction for prosecution under the Prevention of Corruption Act is necessary after the retirement of public servant. Any other view will render the protection illusory. Situation may be different when sanction is refused by the competent authority after the retirement of the public servant as in that case sanction is not at all necessary and any exercise in this regard would be action in futility”._ **Crl.MC.No.5604 OF 2019(A)** **14** 29. However, the question whether prosecution can be launched afresh against the petitioners on the basis of any fresh sanction from competent authority, does not arise for consideration now. If prosecution is launched against the petitioners afresh, they would be at liberty to challenge the same. 30. Consequently, the petition is allowed. The order of the trial court taking cognizance of the offences against the petitioners and all further proceedings thereafter taken against the petitioners by the trial court are quashed. **Sd/-R. NARAYANA PISHARADI JUDGE** lsn **Crl.MC.No.5604 OF 2019(A)** **15** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **ANNEXURE A1 TRUE COPY OF THE FIRST INFORMATION REPORT IN CRIME NO.16/2003 VIGILANCE AND ANTICORRUPTION BUREAU, KANNUR.** - **ANNEXURE A2 CERTIFIED COPY OF THE FINAL REPORT IN CC NO.28/2016 ON THE FILES OF THE ENQUIRY COMMISSIONER AND SPECIAL JUDGE, THALASSERY.** - **ANNEXURE A3 TRUE COPY OF THE MEMO OF EVIDENCE SUBMITTED BY THE PROSECUTION IN CC NO.28/2016.** - **ANNEXURE A4 TRUE COPY OF THE LETTER FROM THE DIRECTOR, VIGILANCE AND ANTI-CORRUPTION BUREAU, THIRUVANANTHAPURAM TO THE THADIKKADAVU SERVICE CO-OPERATIVE BANK, KANNUR.** - **ANNEXURE A5 TRUE COPY OF THE PROCEEDINGS OF THE MEETING OF THE BOARD OF DIRECTORS OF THADIKKADAVU SERVICE CO-OPERATIVE BANK DATED 07.02.2006.** - **ANNEXURE A6 TRUE COPY OF THE LETTER SENT TO THE DIRECTOR, VIGILANCE AND ANTI-CORRUPTION BUREAU DATED 11.02.2006.** - **ANNEXURE A7 TRUE COPY OF THE SANCTION ORDER PASSED BY THE PRINCIPAL SECRETARY TO GOVERNMENT, VIGILANCE DEPARTMENT, THIRUVANANTHAPURAM DATED 23.03.2016.** - **ANNEXURE A8 TRUE COPY OF THE INTERIM ORDER DATED 22.11.2000 IN C.M.P. NO.36962/2000 IN O.P. NO.21962/2000 PASSED BY THIS HON'BLE COURT.** - **ANNEXURE A9 TRUE COPY OF THE COMMUNICATION BETWEEN THE MANAGING DIRECTOR, KERAFED AND THE REGIONAL MANGER, KERAFED.** - **ANNEXURE A10 TRUE COPY OF THE LETTER DATED 18.12.2000 SENT TO THE MANAGING DIRECTOR, KERAFED BY THE SECRETARY, THADIKKADAVU SERVICE COOPERATIVE BANK.** **ANNEXURE A11 TRUE COPY OF THE LETTER DATED 09.02.2001 ISSUED BY THE REGIONAL MANAGER, KERAFED TO THE THADIKKADAVU SERVICE CO-OPERATIVE BANK.** **Crl.MC.No.5604 OF 2019(A)** **16** |**ANNEXURE A12**|**TRUE COPY OF THE LETTER DATED 20.02.2001**| |---|---| ||**ISSUED BY THE SECRETARY, THADIKKADAVU**| ||**SERVICE CO-OPERATIVE BANK TO THE REGIONAL**| ||**MANAGER, KERAFED.**| |**ANNEXURE A13**|**CERTIFIED COPY OF THE COURT CHARGE FRAMED**| ||**AGAINST THE PETITIONERS IN CC NO.28/2016 ON**| ||**THE FILES OF THE ENQUIRY COMMISSIONER AND**| ||**SPECIAL JUDGE, THALASSERY.**| |**RESPONDENTS EXHIBITS:**|**NIL**| **TRUE COPY P.A TO JUDGE** ## **LSN**