Criminal prosecution cannot continue after merits-based exoneration on identical charges in departmental proceedings.

An audit of Kolabira LAMPS Ltd. for the years 2009–10 to 2014–15 allegedly revealed embezzlement and misuse of approximately ₹2,06,32,286.70.

A subsequent joint enquiry confirmed the alleged irregularities, following which the District Co-operative Officer lodged Seraikella P.S. Case No. 34 of 2018 against several persons, including the petitioner, for offences under Sections 409, 420, 467, 468, 471/34 IPC and the Prevention of Corruption Act, 2018.

An amount of ₹2,20,672 was allegedly recoverable from the petitioner.

The allegations against the petitioner concerned: withdrawal of ₹30,000 without recording it in the cash register; transfer of ₹41,500 received from sale of stock into his personal account; and withdrawal of ₹42,057 for purchase of fertilisers without proper entries or deposit of sale proceeds into the society’s account.

A surcharge proceeding under Section 40 of the Jharkhand Co-operative Societies Act, 1935 was initiated against him.

By order dated 16.02.2019, the Joint Registrar, Co-operative Societies, exonerated the petitioner on merits, finding that the relevant transactions had been entered in the cash register.

Despite the exoneration, a charge-sheet was submitted against the petitioner.

The learned Chief Judicial Magistrate, Seraikella took cognizance on 29.09.2022 and issued summons on 28.01.2023.

The petitioner consequently invoked the High Court’s inherent jurisdiction to quash those orders.

1. Whether the criminal proceedings against the petitioner could continue when the allegations in the criminal case and the surcharge proceeding were identical and the petitioner had been exonerated on merits in the surcharge proceeding?

2. Whether the orders dated 29.09.2022 taking cognizance and 28.01.2023 issuing summons constituted an abuse of the process of court warranting interference under the inherent jurisdiction of the High Court?

The Court exercised its inherent jurisdiction under Section 482 of the Code of Criminal Procedure, described in the judgment as Section 528 of the BNSS, to prevent abuse of the process of court.

Relying on Radheshyam Kejriwal v. State of West Bengal, (2011) 3 SCC 581, the Court held that criminal prosecution may continue after departmental or adjudicatory exoneration if the exoneration is technical, but where the allegations are identical and the accused is exonerated on merits, continuation of the criminal prosecution is impermissible.

The Court further relied on P.S. Rajya v. State of Bihar, (1996) 9 SCC 1, Lokesh Kumar Jain v. State of Rajasthan, (2013) 11 SCC 130, and Ashoo Surendranath Tewari v. Deputy Superintendent of Police, EOW, CBI, (2020) 9 SCC 636, applying the principle that a criminal proceeding should not continue where the identical allegations have failed on merits in the departmental or adjudicatory proceeding and the prosecution’s case is thereby rendered unsustainable.

Although departmental and criminal proceedings may ordinarily proceed simultaneously, that principle does not apply where the exoneration is on merits and relates to the same factual allegations.

The Court compared the allegations in the FIR with those in Surcharge Case No. 10 of 2016 and found them to be identical: the three alleged withdrawals, the alleged transfer of sale proceeds, and the alleged failure to record or deposit transactions.

The Joint Registrar had examined the relevant material and specifically found that the disputed withdrawals and fertiliser transactions were recorded in the cash register, thereby exonerating the petitioner on merits rather than on a technical ground.

The relevant cash-register pages were also produced before the High Court, and the State failed to controvert those entries.

Since the cash register formed the evidentiary foundation of the criminal allegations, the finding that the transactions had in fact been recorded removed the factual basis of the prosecution.

The Court therefore held that continuation of the criminal case would amount to an abuse of the process of court.

It held that, because the criminal and surcharge proceedings involved identical allegations and the petitioner had been exonerated on merits in the surcharge proceeding, continuation of the criminal prosecution was impermissible and abusive.

Accordingly, the orders dated 29.09.2022 taking cognizance and 28.01.2023 issuing summons in Seraikella P.S. Case No. 34 of 2018, corresponding to G.R. Case No. 288 of 2018, were quashed insofar as they related to the petitioner.

The criminal miscellaneous petition was allowed, and pending interlocutory applications were disposed of.