AJOY ACHARYA vs. STATE BUREAU OF INV.AGAINST ECO.OFFENCE

1 “ REPORTABLE” IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.1454 OF 2013 (Arising out of SLP (Crl.) No.61 of 2012) Ajoy Acharya … Appellant Versus State Bureau of Inv. against Eco. Offence … Respondent With CRIMINAL APPEAL NO.1455 OF 2013 (Arising out of SLP (Crl.) No. 400 of 2012) J U D G M E N T Jagdish Singh Khehar, J. JUDGMENT 1. Investigation into the affairs of the Madhya Pradesh Industrial Development Corporation (renamed as Madhya Pradesh State Industrial Development Corporation, hereinafter referred to as the ‘MPSIDC’) was ordered with effect from 3.1.1996, by the State Government. Thereupon, a first information report bearing no. 25 of 2004 was registered under Sections 409, 406, 467, 468 and 120B of the Indian Penal Code, 1860 (hereinafter referred to as the ‘IPC’) and Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988 (hereinafter referred to as the ‘PC Act’). The allegations Page 1 2 levelled in the first information report generally were, that the functionaries of the MPSIDC had permitted investment by way of inter corporate deposits (hereinafter referred to as the ‘ICD’s’) through a resolution of the Board of

(including ICD’s) out of the surplus funds with the MPSIDC, on suitable terms and conditions. The gravamen of the accusation was, that the Board of Directors’ resolution dated 19.4.1995 was passed in disregard of an earlier decision taken in the Cabinet Review Meeting held on 28.1.1994, wherein a decision was taken that the MPSIDC would not extend financial assistance to industries. The petitioner herein had admittedly attended the said meeting held on 28.1.1994. The accusation also included the insinuation, that after the decision of the Cabinet Review Committee dated 28.1.1994, the Board of Directors (of the MPSIDC) had passed an endorsing resolution dated 31.1.1994, wherein it was resolved by the MPSIDC to stop financing industries, from out of JUDGMENT its surplus funds. The petitioner herein had even participated in the instant proceedings held on 31.1.1994. Based on the aforesaid factual position, it was sought to be suggested, that undeterred by the decision during the Cabinet Review Meeting dated 28.1.1994, and the resolution of the Board dated 31.1.1994 (which had prohibited extension of financial assistance to industries), the Board of Directors’ resolution dated 19.4.1995, authorized its Managing Director to extend short term loans (including ICD’s) to industries, out of surplus funds with the MPSIDC, on suitable terms and conditions. It was also alleged, Page 2 3 that the above controversial Board resolution dated 19.4.1995 was passed in complete disregard to the mandate contained in Section 292 of the Companies Act, 1965. After the aforesaid Board resolution dated 19.4.1995, it was alleged,

abovementioned first information report, it was also alleged, that the abovementioned transactions executed by the MPSIDC were illegal and in violation of law. 2. The ICD’s referred to in the foregoing paragraph were executed during the period between 1995 and 2004. It was alleged, that four senior functionaries of the MPSIDC who were then members of the Board of Directors of the MPSIDC had deliberately supported the resolution of the Board of Directors dated 19.4.1995, despite the fact that they were aware of the Cabinet Review Meeting decision dated 28.1.1994, as well as, the earlier resolution of the Board of JUDGMENT Directors of the MPSIDC dated 31.1.1994. Without their participation and support, it was alleged, that the controversial Board resolution dated 19.4.1995 could not have been passed. 3. It would also be relevant to mention, that allegations were also levelled against 42 defaulting companies in the first information report dated 24.7.2004. The said 42 companies had defaulted by not making repayments of the ICD’s released to them, in terms of their contractual obligations. The said first information report, however, did not make any reference to a large number of Page 3 4 other companies in whose favour the MPSIDC had likewise extended ICD’s, simply because the companies had returned the loaned amount to the MPSIDC, in consonance with their contractual obligations.

(I) Rajender Kumar Singh : He was the then State Minister in the Commerce and Industries Department. He was also the then Chairman of the MPSIDC, having been appointed as such on 7.4.1994. (ii) Ajoy Acharya : He was a member of the IAS cadre, belonging to the 1976 batch. While holding the charge of the office of Industries Commissioner, Government of Madhya Pradesh, he was nominated as a Director of the MPSIDC in 1993. He continued as such till 1998. In June 1998, he was transferred as Joint Secretary, Department of Heavy Industries, Government of India, whereupon, he ceased to be on the Board of Directors of the MPSIDC. JUDGMENT (iii) J.M. Ramamurthy : He was also a member of the IAS cadre. He was appointed as Special Director, on the Board of the MPSIDC in 1993. He retired from the IAS on 30.6.1998. Thereupon, he ceased to be on the Board of Directors of the MPSIDC. (iv) Munadutt Pillai Rajan :He was also a member of the IAS cadre. He was appointed as the Managing Director of the MPSIDC. He retired from the IAS on 7.5.2000. Thereupon, he ceased to be the Managing Director of the MPSIDC. Page 4 5 5. The first charge sheet was filed on 24.9.2007. The allegations against the petitioner herein, Ajoy Acharya, were as follows:

b) The petitioner was present in the Board Meeting dated 19.04.1995 in which the Board Resolution was passed to engage itself in Investments by way of ICD, and also in other Board Meeting after 28.01.1994 where decision relating to equity participation was taken. The petitioner did not object to the passing of these resolutions despite of his having been aware of the contrary decision taken at the Cabinet Review Meeting which was endorsed at the Board Meeting dated 31.1.1994. c) The petitioner did not act bonafidely as the Cabinet Review Meeting had specifically stopped giving of any financial assistance to industries out of the surplus funds available with the MPSIDC. d) The Board Resolution dated 19.04.1995 empowering the Managing Director to invest in ICD was in violation of Section 292 of the Companies Act, and also, in violation of Memorandum of Association and Articles of Association. e) The petitioner facilitated the passing of the aforesaid allegedly illegal Board Resolution, which became the foundation for all illegal ICD’s. JUDGMENT f) The petitioner facilitated the passing of the resolutions referred to above, by attending the said Board Meetings, wherein he did not object to the proposed resolutions in the Board Meetings.” 6. The first charge sheet dated 22.9.2007 was filed in Special Case no. 7 of 2007, and the Special Judge, Bhopal, took cognizance thereof. It is the contention of the petitioner Ajoy Acharya, that upon his having perused the charge sheet dated 22.9.2007 (and the documents enclosed therewith), he learnt that no sanction was applied for or obtained, before initiation of the above Page 5 6 prosecution against him. Under the belief, that prior sanction was a pre-requisite under Section 19 of the PC Act, as well as, under Section 197 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the ‘CrPC’), the petitioner

him without seeking sanction of the competent authority. The petition filed under Section 239 of the CrPC was dismissed by the Special Judge, Bhopal, on 11.4.2008. 7. Dissatisfied with the aforesaid order dated 11.4.2008, the petitioner preferred Criminal Revision Petition no. 1422 of 2008, in the High Court of Madhya Pradesh (before its principal seat at Jabalpur, hereinafter referred to as the ‘High Court’). The aforesaid Criminal Revision Petition was dismissed by a Division Bench of the High Court on 29.8.2011. Aggrieved by the order passed by the Special Judge, Bhopal (dated 11.4.2008), and the order passed by the High Court (dated 29.8.2011), the petitioner preferred Petition for Special Leave JUDGMENT to Appeal (Criminal) no. 61 of 2012. This Court issued notice in the above matter (as also in a connected matter i.e., Special Leave to Appeal (Criminal) no. 400 of 2012) on 6.1.2012. While issuing notice, an interim order came to be passed on 6.1.2012, staying proceedings before the Special Judge, Bhopal (in Special Case no. 7 of 2007). 8. We have concluded hearing in the matter. Leave is granted. 9. We shall endeavour to first adjudicate the principal contention advanced at the hands of the appellant, namely, that the initiation of prosecution against the Page 6 7 appellant was not sustainable in law, since sanction of the competent authority was not obtained before cognizance in the matter was taken. The particulars of the allegations levelled against the appellant in the charge sheet filed against him

resulted in the filing of the charge sheet (dated 22.9.2007) involving the appellant. Despite our above determination, it is imperative at the cost of repetition to notice, that the pointed allegation in respect of the appellant’s culpability is drawn from the resolution of the Board of Directors of the MPSIDC dated 19.4.1995. For all intents and purposes, therefore, our determination on the merits of the controversy, will be based on the culpability of the appellant on account of his participation in the meeting of the Board of Directors, wherein the resolution dated 19.4.1995 was passed, without his having objected to the same. 10. Having recorded the cause for his being arrayed as an accused, the next JUDGMENT step in the process of the present adjudication is to determine whether the participation of the appellant in the meetings in question was based on his position as a nominee Director on the Board of Directors of the MPSIDC, and/or in his capacity as a member of the IAS cadre allocated to the State of Madhya Pradesh. The above determination, would make all the difference to the outcome on the principal issue canvassed on behalf of the appellant. If the appellant’s position as nominee director of the MPSIDC was abused, then the holding of the said position itself would be relevant for deciding the present Page 7 8 controversy. If however, the office of Industries Commissioner, Government of Madhya Pradesh was abused, the consideration would be different. In the latter situation, the appellant being a member of the IAS cadre, his said position would

the appellant was simultaneously nominated as a Director of six other companies. The nomination of the appellant as Director in the other companies (besides the MPSIDC), has no nexus to the allegations levelled against him in the charge sheet dated 22.9.2007. However, there is some doubt about the fact, whether the appellant participated in the controversial meeting of the Board of Directors (of the MPSIDC) only because of his holding the office of Industries Commissioner of the Government of Madhya Pradesh, which position he occupied as a member of the IAS cadre of the State of Madhya Pradesh. 11. The case set up by the appellant was, that it was mandatory for the JUDGMENT prosecution to obtain sanction before initiating prosecution against him, as he held a government post, namely, the post of Industries Commissioner, Government of Madhya Pradesh. It was also submitted on the appellant’s behalf, that he was a public servant, and the President of India was his appointing authority, as also his dismissing authority. Even while he was discharging his duties as Industries Commissioner, Government of Madhya Pradesh, and thereafter, when he had proceeded on appointment by way of deputation to the Central Government, his appointing and dismissing authorities Page 8 9 remained the same. Insofar as his being nominated as a Director on the Board of the MPSIDC is concerned, the case set up by the appellant was, that his nomination co-existed with his appointment as Industries Commissioner,

of his holding the office of Industries Commissioner, Government of Madhya Pradesh. It was submitted, that had he not held the office of Industries Commissioner, he would not have been nominated as a Director (with the MPSIDC). It was further asserted, that consequent upon his appointment by way of deputation to the Central Government, his successor on the post of Industries Commissioner, came to be nominated as a Director on the Board of the MPSIDC. It was therefore, sought to be canvassed, that the appellant’s nomination as Director of the Board of the MPSIDC, was a fallout/sequel of his appointment as Industries Commissioner, Government of Madhya Pradesh. It was accordingly his contention, that he continued to occupy the same position as JUDGMENT he had occupied while holding the office of Industries Commissioner, Government of Madhya Pradesh, even after cognizance was taken by the Special Judge, Bhopal. The submission projected was premised on the foundation, that the offices held by the appellant were the outcome of his appointment to the IAS cadre. As such, according to the appellant, his participation in the proceedings of the Board of Directors culminating in its resolution dated 19.4.1995, must be deemed to have been taken in his capacity as a member of the IAS cadre. Page 9 10 12. On the pleas canvassed at the hands of the learned counsel for the appellant, as have been noticed in the foregoing paragraph, there can be no doubt that merely the position held by the appellant as Commissioner Industries,

of the appellant as director of the MPSIDC, that vested in him the authority to participate in the controversial meeting where the MPSIDC passed its resolution dated 19.4.1995. Likewise, his nomination as a Director in six other companies did not vest in him any right whatsoever, to deal with the affairs of the MPSIDC. It is only on account of his being a nominee Director of the MPSIDC, that he assumed the responsibility and the power, to deal with the affairs of the MPSIDC. His participation in the proceedings of the Board of Directors which passed its resolution dated 19.4.1995 was therefore exclusively on account of his having been nominated as a Director on the Board of the MPSIDC. We must therefore, first endeavour, to deal with the credibility of the submission canvassed on behalf JUDGMENT of the appellant, that the appellant’s nomination as Director (with the MPSIDC) was the outcome of his holding the office of Industries Commissioner, Government of Madhya Pradesh. It was not disputed during the course of hearing, that the appellant’s nomination as Director (with the MPSIDC) emerges from clause 89(2) of the Memorandum and Articles of Association of the MPSIDC. Clause 89 aforementioned is being extracted hereunder: Page 10 11 “89 (1) The number of Directors shall not be less than three and more than twelve but the number can be increased or decreased by the Governor subject to the provisions of the Act.

(3) The tenure of all Directors including Chairman and excluding Managing Director shall be for the period as fixed or determined by the State Government from time to time. The Managing Director shall retire on his ceasing to hold the office of the Managing Director. A retiring Director shall be eligible for reappointment. (4) The Governor shall have the power to remove any Director appointed and nominated by him including the Chairman and the Managing Director from Office at any time in his absolute discretion. (5) The Governor shall have the right to fill any vacancy in the Office of a Director caused by retirement, removal, resignation, death or otherwise of the Directors nominated/appointed by him. JUDGMENT A perusal of sub-clause (2) of clause 89 reveals, that nominee Directors to the MPSIDC are appointed by the Governor. The Governor (under sub-clause (4) extracted above) is also vested with the absolute discretion to remove a nominee Director. But what needs emphasis is, that clause 89 of the Memorandum and Articles of Association of the MPSIDC, does not contemplate that the Industries Commissioner, Government of Madhya Pradesh would necessarily, or automatically, or as a matter of course, must be nominated as Director of the MPSIDC. Likewise, clause 89 aforementioned, does not require a nominee Page 11 12 director to be drawn out of members of the IAS cadre. In fact, in our view, the Governor under clause 89 has the absolute discretion to nominate anyone suitable as per his wisdom, as nominee Director to the MPSIDC. In the above

Commissioner, Government of Madhya Pradesh, or on account of his being a member of the IAS cadre. In the above view of the matter it is natural to conclude, that the participation of the appellant in the meeting of the Board of Directors of the MPSIDC on 19.4.1995 was not on account of his holding the office of Industries Commissioner, Government of Madhya Pradesh, or on account of his being a member of the IAS cadre. Having so concluded, we shall now endeavour to determine, on the basis of the law declared by this Court, the veracity of the assertion made by the appellant, that prior sanction was mandatory, and in its absence, the prosecution initiated against the appellant should be considered to be without jurisdiction. JUDGMENT 13. We shall first endeavour to deal with the law declared by this Court on the proposition being canvassed before us. In this behalf, reference may first of all be made to R.S. Naik vs. A.R. Antulay, (1984) 2 SCC 183. Observations made by this Court, as are relevant to the proposition canvassed on behalf of the appellant, are being extracted hereunder : “21. Re: (b) and (c): It was strenuously contended that if the accused has held or holds a plurality of offices occupying each one of which makes him a public servant, sanction of each one of the competent authorities entitled Page 12 13

xxx xxx xxx xxx 23. Offences prescribed in Sections 161, 164 and 165 IPC and Section 5 of the 1947 Act have an intimate and inseparable relation with the office of a public servant. A public servant occupies office which renders him a public servant and occupying the office carries with it the powers conferred on the office. Power generally is not conferred on an individual person. In a society governed by rule of law power is conferred on office or acquired by statutory status and the individual occupying the office or on whom status is conferred enjoys the power of office or power flowing from the status. The holder of the office alone would have opportunity to abuse or misuse the office. These sections codify a well-recognised truism that power has the tendency to corrupt. It is the holding of the office which gives an opportunity to use it for corrupt motives. Therefore, the corrupt conduct is directly attributable and flows from the power conferred on the office. This interrelation and interdependence between individual and the office he holds is substantial and not severable. Each of the three clauses of sub- section (1) of Section 6 uses the expression 'office' and the power to grant sanction is conferred on the authority competent to remove the public servant from his office and Section 6 requires a sanction before taking cognizance of offences committed by public servant. The offence would be committed by the public servant by misusing or abusing the power of office and it is from that office, the authority must be competent to remove him so as to be entitled to grant sanction. The removal would bring about cessation of interrelation between the office and abuse by the holder of the office. The link between power with opportunity to abuse and the holder of office would be severed by removal from office. Therefore, when a public servant is accused of an offence of taking gratification other than legal remuneration for doing or forbearing to do an official act (Section 161 IPC) JUDGMENT Page 13 14

JUDGMENT Page 14 15 sought which would indicate a hierarchy and which would therefore, permit inference of knowledge about the functions and duties of the office and its misuse or abuse by the public servant. That is why the legislature clearly provided that that authority alone would be competent to grant sanction which is entitled to remove the public servant against whom sanction is sought from the office.

JUDGMENT Page 15 16 an interpretation is contrary to all canons of construction and leads to an absurd and product which of necessity must be avoided. Legislation must at all costs be interpreted in such a way that it would not operate as a rougue's charter. (See Davis & Sons Ltd. v. Atkins) xxx xxx xxx xxx

JUDGMENT xxx xxx xxx xxx 68. Re. (f) & (g): The learned Judge after recording a finding that M.L.A. is a public servant within the comprehension of clause (12)(a) and further recording the finding that as on the date on which the Court was invited to take cognizance, the accused was thus a public servant proceeded to examine whether sanction under Section 6 of the 1947 Act is a pre- requisite to taking cognizance of offences enumerated in Section 6 alleged to have been committed by him. He reached the conclusion that a sanction is necessary before cognizance can be taken. As a corollary he proceeded to investigate and identify, which is the sanctioning authority who would be able to give a valid sanction as required by Section 6 for the prosecution of the accused in his capacity as M.L.A.? We have expressed our conclusion that where offences as set out in Section 6 are alleged to have been committed by a public servant, sanction of only that authority would be necessary who would be entitled to remove him from that office which is Page 16 17 alleged to have been misused or abused for corrupt motives. If the accused has ceased to hold that office by the date, the court is called upon to take cognizance of the offences alleged to have been committed by such public servant, no sanction under Section 6 would be necessary despite the fact that he may be holding any other office on the relevant date which may make him a public servant as understood in Sec 21, if there is no allegation that office has been abused or misused for corrupt motives. The allegations in the complaint are all to the effect that the accused misused or abused his office as Chief Minister for corrupt motives. By the time the Court was called upon to take cognizance of those offences, the accused had ceased to hold the office of Chief Minister. The sanction to prosecute him was granted by the Governor of Maharashtra but this aspect we consider irrelevant for concluding that no sanction was necessary to prosecute him under Section 6 on the date on which the court took cognizance of the offences alleged to have been committed by the accused. Assuming that as MLA the accused would be a public servant under Section 21, in the absence of any allegation that he misused or abused his office as MLA that aspect becomes immaterial. Further Section 6 postulates existence of a valid sanction for prosecution of a public servant for offences punishable under Sections 161, 164, 165 IPC and Section 5 of the 1947 Act, if they are alleged to have been committed by a public servant. In view of our further finding that M.L.A. is not a public servant within the meaning of the expression in Section 21 IPC no sanction is necessary to prosecute him for the offences alleged to have been committed by him.” (emphasis is ours) The conclusions drawn by this Court in R.S. Naik’s case (supra) were affirmed by JUDGMENT this Court in Prakash Singh Badal vs. State of Punjab, (2007) 1 SCC 1, wherein this Court held as under: “23. Offences prescribed in Sections 161 , 164 and 165 IPC and Section 5 of the 1947 Act have an intimate and inseparable relation with the office of a public servant. A public servant occupies office which renders him a public servant and occupying the office carries with it the powers conferred on the office. Power generally is not conferred on an individual person. In a society governed by the rule of law power is conferred on office or acquired by statutory status and the individual occupying the office or on whom status is conferred enjoys the power of office or power flowing from the status. The holder of the office alone would have opportunity to abuse or misuse the Page 17 18

JUDGMENT Page 18 19

JUDGMENT 24. Now if the public servant holds two offices and he is accused of having abused one and from which he is removed but continues to hold the other which is neither alleged to have been used (sic) nor abused, is a sanction of the authority competent to remove him from the office which is neither alleged or shown to have been abused or misused necessary? The submission is that if the harassment of the public servant by a frivolous prosecution and criminal waste of his time in law courts keeping him away from discharging public duty, are the objects underlying Section 6, the same would be defeated if it is held that the sanction of the latter authority is not necessary. The submission does not commend to us. We fail to see how the competent authority entitled to remove the public servant from an office which is neither alleged to have been used (sic) or abused would be able to decide whether the prosecution is frivolous or Page 19 20

JUDGMENT 50. The offence of cheating under Section 420 or for that matter offences relatable to Sections 467 , 468 , 471 and 120B can by no stretch of imagination by their very nature be regarded as having been committed by any public servant while acting or purporting to act in discharge of official duty. In such cases, official status only provides an opportunity for commission of the offence.” (emphasis is ours) 14. The judgments referred to in paragraph 13 above, were relied upon by the Courts below to reject the contention advanced at the hands of the appellant, that Page 20 21 sanction was essential before the appellant could be prosecuted. It would be pertinent to mention, that extracts from the judgments referred to in paragraph 13 reproduced above, deal with two pointed situations. Firstly, whether sanction

accused holds a plurality of offices. The second determination was in respect of the requirement of sanction, in situations where the accused no longer holds the office, which he is alleged to have abused/misused, for committing the offence (s) for which he is being blamed. In answer to the first query, it has unambiguously been concluded, that if an accused holds a plurality of offices, each one of which makes him a public servant, sanction is essential only at the hands of the competent authority (entitled to remove him from service) of the office which he had allegedly misused. This leads to the clear inference, that other public offices held by the accused wherein an accused holds a plurality of offices, are irrelevant for purposes of obtaining sanction prior to prosecution. On JUDGMENT the second issue it was concluded, that sanction was essential only if, at the time of taking cognizance, the accused was still holding the public office which he had allegedly abused. If the legal position determined in the above judgments is taken into consideration, there is certainly no doubt, that in the facts and circumstances of this case, sanction if required, ought to have been obtained from the Governor of the State of Madhya Pradesh. The instant determination is premised on the fact, that the appellant is stated to have misused his position while discharging his responsibilities as a nominee Director of the MPSIDC. It is Page 21 22 clear to us, specially from the deliberation recorded hereinabove, that the appellant’s participation in the Cabinet Review Meeting dated 28.1.1994, and in the relevant meetings of the Board of Directors (of the MPSIDC) had no nexus to

Industries, Government of India. Accordingly, in our considered view, sanction of the authorities with reference to the post of Industries Commissioner, Government of Madhya Pradesh and Joint Secretary, Department of Heavy Industries, Government of India held by the appellant, was certainly not required. We therefore, hereby reject the submission advanced at the hands of the learned counsel for the appellant, that since the appellant continued to hold the above- mentioned public office(s) in his capacity as a member of the IAS cadre, at the time the first charge sheet was filed on 24.9.2007, prosecution could be proceeded with, and cognizance taken, only upon sanction by the competent authority(ies) of the said two offices (Industries Commissioner, Government of JUDGMENT Madhya Pradesh and Joint Secretary, Department of Heavy Industries, Government of India), as wholly misconceived. 15. The abuse/misuse of authority, alleged against the appellant pertains to the discharge of his responsibilities as a nominee Director (on the Board of the MPSIDC). Therefore, the further question which arises for our consideration is, whether sanction at the hands of the Governor of the State of Madhya Pradesh, (who had the power to remove any Director appointed or nominated by him Page 22 23 under clause 89 of the Memorandum and Articles of Association of the MPSIDC), was a prerequisite before taking cognizance in the matter. In the facts and circumstances of this case, we are of the view, that answer to the instant

1993 to 1998. The first charge sheet in the matter was filed on 24.9.2007. Well before the filing of the first charge sheet, the appellant had relinquished charge of the office which he is alleged to have abused/misused (i.e. the office of nominee Director of the MPSIDC). In the above view of the matter, since the appellant was not holding the public office which he is alleged to have abused, when the first charge sheet was filed, in terms of the law declared by this Court (referred to in the judgments extracted in paragraph 13 above), there was no need to obtain any sanction before proceeding to prosecute the appellant, for the offences alleged against him. JUDGMENT 16. It would be relevant to mention, that during the course of hearing learned counsel for the appellant placed emphatic reliance on the judgment rendered by this Court in State of Madhya Pradesh vs. Sheetla Sahai & Ors., (2009) 8 SCC 617. It is not necessary for us to refer either to the factual position in the judgment relied upon, or even the conclusions recorded thereon. We say so because, the issues canvassed and determined in the aforesaid judgments were not the ones on the basis whereof we have recorded our conclusions, in the foregoing paragraphs. It is sufficient for us to note, that the judgment rendered Page 23 24 by this Court in State of Madhya Pradesh vs. Sheetla Sahai & Ors. (supra), does not carve out any exception, to the two propositions relied upon for the conclusions drawn by us, from the judgments referred to in paragraph 13 above.

Chakravarty vs. State through CBI, (2007) 5 SCC 403. Pointed reliance was placed by the learned counsel for the appellant on paragraph 23 which is being extracted hereunder:- “23. In a case of this nature, the learned Special Judge also should have considered the question having regard to the 'doctrine of parity' in mind. An accused similarly situated has not been proceeded against only because, the departmental proceedings ended in his favour. Whether an accused before him although stands on a similar footing despite he having not been departmentally proceeded against or had not been completed exonerated also required to be considered. If exoneration in a departmental proceeding is the basis for not framing a charge against an accused person who is said to be similarly situated, the question which requires a further consideration was as to whether the applicant before it was similarly situated or not and/or whether the exonerated officer in the departmental proceeding also faced same charges including the charge of being a party to the larger conspiracy.” JUDGMENT (emphasis is ours) It was the vehement contention of the learned counsel for the appellant, that sanction to prosecute another co-accused similarly situated as the appellant, having been obtained, it was not permissible to treat the appellant differently. We find no substance in the second contention advanced at the hands of the learned counsel for the appellant. Having concluded on the basis of the law declared by this Court, that prior sanction for prosecuting the appellant was Page 24 25 unessential, it is futile to suggest that sanction ought to have been obtained all the same. The instant submission needs no further consideration in view of the deliberations recorded by us hereinabove. Parity in law can be claimed only in

accept on the analogy of the submission advanced at the hands of the learned counsel for the appellant, that merely because sanction was obtained in respect of another co-accused, it needed to have been obtained in the appellant’s case as well. 18. The next contention advanced at the hands of the learned counsel for the appellant was based on Section 141 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘NI Act’). Section 141 aforementioned is being extracted hereunder:- “ 141. Offences by companies.- (1) If the person committing an offence JUDGMENT under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter. Page 25 26

(a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm.” Relying on sub-Section (1) of Section 141 extracted above, it was the vehement contention of the learned counsel for the appellant, that the appellant was not in charge of the conduct of the business of the MPSIDC. It was also his submission, that the appellant was not responsible to the MPSIDC for the conduct of its day to day activities. In this behalf it was sought to be asserted, that the appellant was not aware of the fact, that the functionaries of the MPSIDC were extending short term loans (including ICD’s) out of the surplus funds of the JUDGMENT MPSIDC to industrial establishments. It was also pointed out, that the appellant had neither examined nor approved any financial assistance extended to industries, out of the surplus funds of the MPSIDC, on the basis of the resolution of the Board of Directors dated 19.4.1995. As such it was asserted, that the accusations levelled against the appellant were misconceived. Insofar as the instant aspect of the matter is concerned, learned counsel for the appellant relied on the decision rendered by this Court in National Small Industries Corporation Page 26 27 Ltd. vs. Harmeet Singh Paintal & Anr., (2010) 3 SCC 330. Learned counsel invited our pointed attention to the following observations recorded therein:-

12. It is very clear from the above provision that what is required is that the persons who are sought to be made vicariously liable for a criminal offence under Section 141 should be, at the time the offence was committed, was in-charge of, and was responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. Only those persons who were in-charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. It follows from the fact that if a Director of a Company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable for a criminal offence under the provisions. The liability arises from being in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company.” JUDGMENT (emphasis is ours) 19. We have given our thoughtful consideration to the contention advanced at the hands of the learned counsel for the appellant, as has been noticed in the foregoing paragraph. We are of the view, that the appellant’s reliance on Section 141 of the NI Act, as also, the judgment rendered by this Court in National Small Page 27 28 Industries Corporation Ltd. (supra), is misconceived. The appellant is not being blamed for the implementation of the resolution of the Board of Directors of the MPSIDC dated 19.4.1995. The appellant is being blamed for having allowed the

resolution of the Board of Directors of the MPSIDC dated 31.1.1994. It is not a matter of dispute before us, that the appellant had participated in the decision making process in the meeting of the Cabinet Review Committee dated 28.1.1994, as also, the resolution of the Board of Directors of the MPSIDC dated 31.1.1994. The charge against the appellant is based on the fact, that the appellant allowed the Board of Directors of the MPSIDC to pass the resolution dated 19.4.1995, inspite of the earlier decisions at the hands of the Cabinet Review Committee (in meeting dated 18.1.1994) and the consequential resolution of the Board of Directors (dated 31.1.1994). We, therefore, reject the submission advanced at the hands of the learned counsel for the appellant based JUDGMENT on Section 141 of the NI Act. All the same, it would be relevant to notice, that the second proviso under Section 141(1) of the N.I. Act is inapplicable to the facts of this case, because the appellant was not nominated as a Director of the MPSIDC on account of holding the office of Industries Commissioner, Government of Madhya Pradesh. The appellant’s appointment as nominee Director of the MPSIDC was based on the determination of the Governor of Madhya Pradesh under clause 89 of the Memorandum and Articles of Association of the MPSIDC. If the factual position alleged against the appellant is correct, the culpability of the Page 28 29 appellant would emerge from sub-Section (2) of Section 141 of the N.I. Act. The instant inference is inevitable, because it is not disputed on behalf of the appellant, that he had actually participated in the Cabinet Review Meeting dated

present case, the accusation implicating the appellant, is directly attributable to the appellant, as nominee Director of the MPSIDC. The aforesaid inference has been drawn by us, to negate the submission of the learned counsel for the appellant based on Section 141 of the N.I. Act. In our view, the instant issue does not arise for adjudication in the present controversy in view of the conclusions already drawn hereinabove, that the culpability of the appellant, lies in the mischief of passing the resolution dated 19.4.1995. The implementation of the said resolution is the consequential effect of the said mischief. 20. For the last contention advanced on behalf of the appellant, learned JUDGMENT counsel placed reliance on a decision rendered by this Court in C.K. Jaffer Sharief vs. State (through CBI), (2013) 1 SCC 205. Our pointed attention was drawn to the following observations recorded therein:- “17. It has already been noticed that the appellant besides working as the Minister of Railways was the Head of the two public sector undertakings in question at the relevant time. It also appears from the materials on record that the four persons while in London had assisted the appellant in performing certain tasks connected with the discharge of duties as a Minister. It is difficult to visualise as to how in the light of the above facts, demonstrated by the materials revealed in the course of investigation, the appellant can be construed to have adopted corrupt or illegal means or to have abused his position as a public servant to obtain any valuable thing Page 29 30 or pecuniary advantage either for himself or for any of the aforesaid four persons. If the statements of the witnesses examined under Section 161 Cr.P.C. show that the aforesaid four persons had performed certain tasks to assist the Minister in the discharge of his public duties, however insignificant such tasks may have been, no question of obtaining any pecuniary advantage by any corrupt or illegal means or by abuse of the position of the appellant as a public servant can arise. As a Minister it was for the appellant to decide on the number and identity of the officials and supporting staff who should accompany him to London if it was anticipated that he would be required to perform his official duties while in London. If in the process, the rules or norms applicable were violated or the decision taken shows an extravagant display of redundance it is the conduct and action of the appellant which may have been improper or contrary to departmental norms. But to say that the same was actuated by a dishonest intention to obtain an undue pecuniary advantage will not be correct. That dishonest intention is the gist of the offence under Section 13(1)(d) is implicit in the words used i.e. corrupt or illegal means and abuse of position as a public servant. A similar view has also been expressed by this Court in M. Narayanan Nambiar v. State of Kerala, AIR 1963 SC 1116 while considering the provisions of Section 5 of Act of 1947.” (emphasis is ours) Based on the aforesaid determination, it was the contention of the learned counsel for the appellant, that the allegations levelled against the appellant do not lead to the inference, that the appellant had adopted corrupt or illegal means, JUDGMENT or had abused his position as a public servant to obtain any valuable thing or pecuniary advantage, either for himself or for the industries to whom the MPSIDC extended short term loans (including ICD’s). We are of the view, that the last contention advanced at the hands of the learned counsel for the appellant is a mixed question of fact and law. Determination of the instant issue would be possible only after the rival parties have adduced evidence to establish their respective claims. At the said juncture, it would be possible to record factual conclusions. It would then be possible for the concerned Court(s) to draw Page 30 31 inferences on the basis of the established factual position, whether the accused is guilty of the accusation levelled against him. Therefore, it is neither proper nor possible for us to deal with the last contention advanced at the hands of the

for the appellant. 22. For the reasons recorded hereinabove, we find no merit in the instant appeals. The same are accordingly hereby dismissed. While disposing of the instant appeals, we consider it just and appropriate to direct the trial Court to expedite the trial, keeping in mind, that the charge sheet in the matter was filed as far back as in 2007. On account of the proceedings initiated at the hands of the appellant, no further proceedings were taken by the Special Judge, Bhopal. In the above view of the matter, we consider it appropriate to direct the trial Court to hold proceedings for the disposal of Special Case No. 7 of 2007 on a weekly JUDGMENT basis. …………………………….CJI. (P. Sathasivam) ……………………………….J. (Jagdish Singh Khehar) New Delhi; September 17, 2013. Page 31 32 JUDGMENT Page 32