A. SRINIVASULU versus THE STATE REP. BY THE INSPECTOR OF POLICE on 15 June 2023

[2023] 10 S.C.R. 11

A. SRINIVASULU

v.

THE STATE REP. BY THE INSPECTOR OF POLICE

(Criminal Appeal No. 2417 of 2010)

JUNE 15, 2023

[V. RAMASUBRAMANIAN AND PANKAJ MITHAL, JJ.]

Penal Code, 1860: ss.120B, 193, 420, 468 and 471 – Criminalconspiracy and cheating – Prosecution case that the appellant,officials of PSU and other private persons entered into a criminalconspiracy to cheat the PSU in the matter of award of contract –Contract granted to one company after resorting to limited/restrictedtenders causing wrongful loss to the PSU – Illegalities alleged inthe procedure followed for inviting the tender – FIR lodged u/s.120B r/w ss. 193, 420, 468, 471 r/w ss. 13 (2) and 13(1)(d) of PCAct – Final report against accused persons including the publicservants-officers of PSU – Two accused died during trial – Specialjudge acquitted one but convicted four – Upheld by the High Court– On appeal, held: Culpability of the appellants for offences underthe IPC and the PC Act not established and proved – Thus, thejudgment of the Special Court convicting the appellants for variousoffences and judgment of the High Court confirming the same setaside – Prevention of Corruption Act, 1988 – s.13.

Code of Criminal Procedure, 1973:

s. 197(1) – Prosecution of public servant – Previous sanction– Requirement of – Executive director of PSU with a view to conferan unfair and under advantage, went for restricted tender bydictating the names of four bogus companies along with the nameof the one chosen to whom the contract was awarded – Allegationsthat he got into a criminal conspiracy with others to commit offences– He retired five years before filing of the final report – Previoussanction u/s. 197 not sought for prosecuting the executive director– Correctness of – Held: Prosecution ought to have taken previoussanction in terms of s. 197(1) for prosecuting the executive directorfor the offences under the IPC – Sanction is required not only foracts done in the discharge of official duty but also required for anyact purported to be done in the discharge of official duty and/or

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Aact done under colour of or in excess of such duty or authority – Ifthe very same act of the co-conspirators fell in the realm ofcommercial wisdom, it is impossible that the act of executive director,as part of the criminal conspiracy, fell outside the discharge of hispublic duty, so as to disentitle him for protection u/s.197(1) – Hisact, even if alleged to be lacking in bona fides or in pursuance of aBconspiracy, would be an act in the discharge of his official duty,making the case come within the parameters of s. 197(1).

ss. 306, 307 – Tender of pardon to approver – Procedureprescribed by s. 306(4)(a) – Compliance of – On facts, the additionalChief Judicial Magistrate granted pardon at the stage ofCinvestigation and the prosecution examined him before the SpecialCourt – Plea that the approver, in cases covered by s.306(1), shouldbe examined twice, once as court witness before committal and thenas prosecution witness at the time of trial – Held: When the SpecialCourt chooses to take cognizance, the question of the approverDbeing examined as a witness in the court of the Magistrate asrequired by s. 306 (4)(a) does not arise – Object of examining anapprover twice, is to ensure that the accused is made aware of theevidence against him even at the preliminary stage, so as to enablehim to effectively cross examine the approver during trial, bringout contradictions and show him to be untrustworthy – On facts,Ethe object stood fulfilled – Magistrate who recorded the confessionexamined him and the Additional Chief Judicial Magistrate whogranted pardon also examined – Thus, no violation of the procedureprescribed by s. 306(4)(a) – Prevention of Corruption Act, 1988 –s.5.

FAllowing the appeals, the Court

Conclusion

FAllowing the appeals, the Court

HELD: 1. The judgment of the Special Court convictingthe appellants for various offences under the Penal Code and thePrevention of Corruption Act, 1988, and the judgment of the HighCourt confirming the same are set aside. [Para 139][72-H; 73-A]G

2.1 A-1 to A-4, being officers of a company were ‘publicservants’ within the definition of the said expression under Section21 of the IPC and under Section 2(c)(iii) of the PC Act. Therefore,there is a requirement of previous sanction both under Section 197(1) of the Code and under Section 19(1) of the PC Act, forprosecuting A-1 to A-4 for the offences punishable under the IPCand the PC Act. [Para 29][35-F, G]

2.2 Until the amendment to the PC Act under the Preventionof Corruption (Amendment) Act, 2018 (Act 16 of 2018), with effectfrom 26.07.2018, the requirement of a previous sanction underSection 19(1)(a) was confined only to a person “who is employed”.On the contrary, Section 197(1) made the requirement of previoussanction necessary, both in respect of “any person who is” and inrespect of “any person who was” employed. By the amendmentunder Act 16 of 2018, Section 19(1)(a) of the PC Act was suitablyamended so that previous sanction became necessary even inrespect of a person who “was employed at the time of commissionof the offence”. [Para 30][35-M; 36-A-B]

2.3 The case on hand arose before the coming into force ofthe Prevention of Corruption (Amendment) Act, 2018 (Act 16 of2018). Therefore, no previous sanction under Section 19(1) ofthe PC Act was necessary insofar as A-1 was concerned, as hehad retired by the time a final report was filed in the year 2002.But previous sanction under Section 19(1) of the PC Act wasrequired in respect of A-3 and A-4, as they were in service at thetime of the Special Court taking cognizance. Therefore, theAgency sought sanction, but the Management of PSU refused togrant sanction not once but twice, insofar as A-3 and A-4 areconcerned. It is by a quirk of fate or the unfortunate circumstancesof having been born at a time (and consequently retiring at aparticular time) that the benevolence derived by A-3 and A-4from their employer, was not available to A-1. The refusal to grantsanction for prosecution in respect of A-3 and A-4 may not havea direct bearing upon the prosecution of A-1. But it would certainlyprovide the context in which the culpability of A-1 for the offencesboth under the IPC and under the PC Act has to be determined.[Paras 31, 32, 34][36-C-E, H; 37-A]

2.4 The existing policy shows that A-1 at least had anarguable case, in defence of the decision he took to go in forRestricted Tender. Once this is clear, his act, even if alleged to AB

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Abe lacking in bona fides or in pursuance of a conspiracy, would bean act in the discharge of his official duty, making the case comewithin the parameters of Section 197(1) of the Code. Therefore,the prosecution ought to have obtained previous sanction. TheSpecial Court as well as the High Court did not apply their mindto this aspect. [Para 47][41-G-H; 42-A]B

2.5 The FIR actually implicated only four persons, namelyPW-16, A-3, A-4 and A-5. A-1 was not implicated in the FIR. Itwas only after a confession statement was made by PW-16 in theyear 1998 that A-1 was roped in. The allegations against A-1 werethat he got into a criminal conspiracy with the others to commitCthese offences. But the Management of PSU refused to grantsanction for prosecuting A-3 and A-4, twice, on the ground thatthe decisions taken were in the realm of commercial wisdom ofthe Company. If according to the Management of the Company,the very same act of the co-conspirators fell in the realm ofDcommercial wisdom, it is inconceivable that the act of A-1, aspart of the criminal conspiracy, fell outside the discharge of hispublic duty, so as to disentitle him for protection under Section197(1) of the Code. In view thereof, the prosecution ought tohave taken previous sanction in terms of Section 197(1) of theCode, for prosecuting A-1, for the offences under the IPC. [ParasE52, 53][43-C-F]

3.1 A careful look at the anatomy of Section 306 of the Codeshows that it provides a plethora of steps either in the alternativeor in addition. Section 307 of the Code empowers the Court towhich the commitment is made, to tender pardon. The power canFbe exercised at any time after the commitment of the case butbefore judgment is passed. [Paras 61, 62][48-G; 50-A]

3.1 Sub-section (1) of s. 5 of the PC Act empowers theSpecial Judge to take cognizance of offences without the accusedbeing committed to him for trial. It also says that while trying theGaccused persons, the Special Judge is obliged to follow theprocedure prescribed by the Code for the trial of warrant casesby the Magistrates. The Special Judge under the PC Act, whiletrying offences, has a dual power of the Sessions Judge as well as that of the Magistrate and that such a Special Judge conductsthe proceedings both prior to the filing of the charge sheet andfor holding trial. In contrast, Section 5(2) of the PC Act does notspeak about the stage at which pardon may be tendered by aSpecial Judge. This is perhaps in view of the express provisionsof sub-section (1) of Section 5 which empowers the Special Judgehimself to take cognizance without the accused being committedto him for trial. But the second part of sub-section (2) of Section5 of the PC Act creates a deeming fiction that the pardon tenderedby the Special Judge shall be deemed to be a pardon tenderedunder Section 307 of the Code. However, this deeming fiction islimited for the purposes of Sub-sections (1) to (5) of Section 308of the Code. [Para 65][51-A, B]

3.2 When the Special Court chooses to take cognizance,the question of the approver being examined as a witness in theCourt of the Magistrate as required by Section 306 (4)(a) doesnot arise. [Para 76][57-D]

3.3 The object of examining an approver twice, is to ensurethat the accused is made aware of the evidence against him evenat the preliminary stage, so as to enable him to effectively crossexamine the approver during trial, bring out contradictions andshow him to be untrustworthy. The said object stands fulfilled inthe instant case, since the confession statement of the approverbefore the Metropolitan Magistrate was enclosed to the ChargeSheet. The approver was examined as PW-16 during trial and hewas cross examined on the contents of the confession statement.The Magistrate who recorded the confession was examined asPW 17 and the Additional Chief Judicial Magistrate who grantedpardon was examined as PW-18. The proceedings before theMetropolitan Magistrate, the petition under section 306 of theCode and the proceedings on tender of pardon were markedrespectively. All the accused were given opportunity to crossexamine these witnesses both on the procedure and on thecontents. There was no violation of the procedure prescribed bySection 306(4)(a) of the Code. [Paras 78, 79][57-G; 58-A-D]

4.1 The trial court and the High Court came to theconclusion that the names of two big companies were included in ABCD

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AExhibit P-26 chit only to lend credibility to the process adopted.But it was on record through the statement of PW-4, Manager ofL&T Company that a tender enquiry was received by them fromthe PSU. If the inclusion of the names of those two companieswere intended to be a make belief affair, A-1 would not have takenthe risk of sending the letter and that too to a company like L&T.BTherefore, the evidence of PW-16 was not worthy of credit; thateven assuming that it has some credibility, his statement that“he recommended the contract to be given to A-5 not because ofA-1’s interest”, made the whole edifice upon which the case ofthe prosecution was built, collapse; and that there was no otherCevidence to connect A-1 with the commission of these offences.[Para 102][64-G-H; 65-A, B]

4.2 The only person found by both the courts to be guilty ofthe offence under Section 120B was A-1. Therefore, an argumentwas advanced that a single person cannot be held guilty of criminalDconspiracy. But this contention was repelled by the courts on theground that PW-16 was the second person with whom A-1 hadentered into a conspiracy. In other words, the reasoning adoptedby the trial court and the High Court was that only A-1 and PW-16 were part of the conspiracy. Such a reasoning was a hugeclimbdown from the original charge that A-1 to A-7 entered intoEa criminal conspiracy, to cause wrongful loss to PSU and to confera wrongful gain to A-5 to A-7. Once an offence of Section 120B isnot made out against A-5 to A-7, the very foundation for theprosecution becomes shaky. Therefore, the conviction of A-1 forthe offences under Section 120B read with Sections 420, 468,FSection 471 read with Section 468 and Section 193 IPC andSection 13(2) read with Section 13(1)(d) of the PC Act cannot besustained. [Para 103][65-C-E]

4.3 A-1 was found guilty of an offence under Section 193.Section 193 applies only to false evidence given in any stage of aGjudicial proceeding or the fabrication of false evidence for thepurpose of being used in any stage of a judicial proceeding. Theallegation against A-1 was not even remotely linked to any of theExplanations under Section 193 of the IPC. Therefore, thejudgment of the trial court and that of the High Court convicting H

A-1 for the said offences and sentencing him to imprisonment ofvarying terms and fines of different amounts are liable to bereversed. [Para 104][65-F-G]

4.4 No Court shall take cognizance of any offence punishableunder Section 193 IPC, except on a complaint in writing of thatCourt or of some other Court to which that Court is subordinate.This bar is found in Section 195(1)(b)(i) of the Code. No complaintwas ever made by any Court or by any officer authorized by anyCourt that A-1 or A-3 or A-4 committed an offence punishableunder Section 193 IPC. But unfortunately, the trial courtconvicted A-1, A-3 and A-4, of the offence under Section 193without any application of mind and the same has been upheld bythe High Court. [Para 108][66-E, F]

4.5 The reading of the trial court and the High Court asthough this Committee of which A-3, A-4 and the Approver werea part, was actually a Tender Committee having a larger role toplay, is completely misconceived. In fact, the prosecution had tostand or fall on the strength of the testimony of the Approvernamely PW-16. Despite the assertion on the part of PW-16 givinga clean chit to A-3 and A-4, the trial court found both of themguilty on a convoluted logic that they were part of a TenderCommittee and that “every word and every description in theTender Committee proceedings had been written by them with aview to cheat PSU” and that “if A-3 and A-4 were innocent theyshould have questioned and asked for details regarding thecontractors.” Such a reasoning given by the trial court andapproved by the trial court and approved by the High Court wascompletely perverse. [Paras 110-112][64-D, E; 68-A, B]

4.6 A-4 had no role in choosing the tenderers, but enteredthe picture only after the offers were received from the tenderers.Admittedly, A-4 was subordinate to both PW-16 and A-3.Thecompetent authority refused to grant sanction to prosecute A-3and A-4 for the offences under the PC Act. The trial court and theHigh Court did not find A-4 as a co-conspirator, which is why hewas not held guilty of the offence under Section 120-B IPC. Section193 IPC had been included completely out of context. The ABC

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Aconviction of A-4 by the trial court as confirmed by the High Courtis wholly unsustainable and is liable to be set aside. [Paras 113-115][68-C-E]

4.7 Three out of four bank officials examined by theprosecution to show that A-7 applied for demand drafts on behalfBof four bogus firms, did not identify A-7 as the person who appliedfor the demand drafts. They did not also identify the handwritingin Exhibits P-66, P-90 and P- 92 as that of A-7. The only personwho stated something in favour of the prosecution was PW-32and it was in relation to Exhibit P-76. [Para 122][69-H; 70-A]

C4.8 There was a colossal failure on the part of theprosecution to establish that Exhibits P-66, P-76, P-90 and P-92were in the handwritings/signatures of A-7. This is despite theprosecution examining the bank officials as PW-22, PW-32, PW-40 and PW-41 and the handwriting expert as PW-30. [Para128][71-A]D

4.9 Unfortunately, the trial court adopted a very curiousreasoning that since he was a beneficiary of the money divertedto the account of sister concern, he must have had participationand knowledge that the demand drafts were purchased to cheatPSU. Such a reasoning is wholly unacceptable in view of the factEthat A-7 was accused of forgery and charged u/s. 468 IPC, inrelation to these very same applications for demand drafts.Therefore, it was necessary for the prosecution to prove forgeryand also to show that the purpose of such forgery was cheating.Both were absent. The High Court fortunately realised the pitfallFin the reasoning of the trial court. But in an over-anxiety tosomehow convict A-7, the High Court adopted a very peculiarroute, namely that of undertaking the task of comparing theadmitted signatures/ handwritings with the disputed ones u/s. 73of the Evidence Act. [Paras 129, 130][71-B-E]

G4.10 There was no signature or writing available before theHigh Court, which had been admitted or proved to the satisfactionof the Court to have been written or made. The High Court didnot also direct A-7 to write any words or figures for the purposeof enabling a comparison. Without following the procedure so prescribed in Section 73, the High Court invented a novelprocedure, to uphold the conviction handed over by the trial courtthrough a wrong reasoning. Even in the questioning under Section313 of the Code, no specific question was put to A-7 whetherExhibits P-66, P-76, P-90, P-92 and P- 75 were in his handwritingsand whether they contained his signatures. Therefore, what wascontained in Exhibit P-75 was not even admitted signatures. Inthe absence of either admission or proof of the admittedsignatures, the High Court could not have resorted to Section73 of the Evidence Act. In view thereof, the finding recorded bythe trial court and the High Court as though A-7 committed forgeryand cheating by making applications for the issue of demand draftsin the names of bogus firms is wholly unsustainable. [Paras 132,135-137][71-F, G; 72-C-E]

4.11 The only connecting link pointed out against A-7 wasthe transfer of money to the total extent of Rs.1,52,50,000/- tothe account of a firm of which he was a partner. This by itself willnot constitute any offence. Therefore, the charge that A-7 abettedthe commission of the crime by the other accused, should alsofail. This is especially so when A-5, whose proprietary concernbagged the contract, not only lost the contract but also allowedthe bank guarantee to be invoked by the PSU and in addition, lefta huge amount of Rs.2.60 crores still with the PSU. Therefore,the conviction and sentence awarded to A-7 cannot be sustained.[Para 138][72-F-G]

Suresh Chandra Bahri vs. State of Bihar 1995 Supp (1)SCC 80:[1994] 1 Suppl. SCR 483 – distinguished.

Bangaru Laxman vs. State (through CBI) (2012) 1 SCC500 : [2011] 13 SCR 268; State through CBI vs. V. ArulKumar (2016) 11 SCC 733 : [2016] 2 SCR 486; SardarIqbal Singh vs. State (Delhi Administration) (1977) 4SCC 536 : [1978] 2 SCR 174; Yakub Abdul RazakMemon vs. State of Maharashtra (2013) 13 SCC 1 :[2013] 15 SCR 1; Sarwan Singh vs. State of Punjab1957 SCR 953; Ravinder Singh vs. State of Haryana(1975) 3 SCC 742 : [1975] 3 SCR 453 – relied on.

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[2023] 10 S.C.R.

AMatajog Dobey vs. H.C. Bhari [1955] 2 SCR 925; Dr.Hori Ram Singh vs. The Crown 1939 SCC OnLine FC2; State of Orissa through Kumar Raghvendra Singhvs. Ganesh Chandra Jew (2004) 8 SCC 40 : [2004] 3SCR 504; K. Kalimuthu vs. State by DSP (2005) 4 SCC512 : [2005] 3 SCR 1; Rakesh Kumar Mishra vs. StateBof Bihar (2006) 1 SCC 557 : [2006] 1 SCR 124;Devinder Singh vs. State of Punjab through CBI (2016)12 SCC 87 : [2016] 6 SCR 295; D. Devaraja vs. OwaisSabeer Hussain (2020) 7 SCC 695 : [2020] 6 SCR 453;Parkash Singh Badal vs. State of Punjab (2007) 1 SCCC1 : [2006] 10 Suppl. SCR 197; Harshad S. Mehta vs.State of Maharashtra (2001) 8 SCC 257 : [2001] 2Suppl. SCR 577; State through Central Bureau ofInvestigation, Chennai vs. V. Arul Kumar (2016) 11 SCC733 : [2016] 2 SCR 486; A. Devendran vs. State ofDT.N. (1997) 11 SCC 720 : [1997] 4 Suppl. SCR 591;P.C. Mishra vs. State (CBI) (2014) 14 SCC 629 : [2014]4 SCR 183; M.O. Shamsudhin vs. State of Kerala (1995)3 SCC 351 : [1995] 2 SCR 900 – referred to.

Case Law Reference

A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OFPOLICE

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.2417 of 2010.

From the Judgment and Order dated 17.09.2010 of the High Courtof Madras in CRLA No. 437 of 2006.

C

With

Criminal Appeal Nos. 16 of 2011 and 2444 of 2010.

Nagamuthu, Mrs. V. Mohana, Huzefa A. Ahmadi, Sr. Advs., VijayKumar, B. Ragunath, N. Sridhar, Mrs. N. C. Kavitha, KarthickSubramani, Ms. Ranjeeta Rohatgi, Kaushik Mishra, Ms. Rashmi Singh,Ms. Samten Doma Lachungpa, Nishant Sharm, Rakesh K. Sharma, Advs.for the Appellant.

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Sanjay Jain, ASG, A K Kaul, Ms. Srishti Mishra, Padmesh Mishra,Ms. Shradha Deshmukh, Madhav Sinhal, Arvind Kumar Sharma, Advs.for the Respondent.

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The Judgment of the Court was delivered by

V. RAMASUBRAMANIAN, J.

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1. These three criminal appeals arise out of a common Judgmentpassed by the Madurai Bench of the Madras High Court confirming theconviction of the appellants herein for various offences under the IndianPenal Code, 1860[1] and the Prevention of Corruption Act, 1988[2].

2. We have heard Shri Huzefa A. Ahmadi, Shri S. Nagamuthu,Mrs. V. Mohana, learned senior counsel and Shri S.R. Raghunathan,Glearned counsel appearing for the appellants and Shri Sanjay Jain, learnedASG assisted by Shri Padmesh Misra, learned Counsel for the CentralBureau of Investigation.

1 For short, “IPC”

2 For short, “PC Act”

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A3. The brief facts leading to the above appeals are as follows:

(i) Seven persons, four of whom were officers of BHEL,Trichy (a Public Sector Undertaking), and the remainingthree engaged in private enterprise, were charged by theInspector of Police, SPE/CBI/ACB, Chennai, through a finalBreport dated 16.07.2002, for alleged offences under Section120B read with Sections 420, 468, Section 471 read withSection 468 and Section 193 IPC and Section 13(2) readwith Section 13(1)(d) of the PC Act. Cognizance was takenby the Principal Special Judge for CBI cases, Madurai inCCC No.9 of 2002. During the pendency of trial, two of theaccused, namely, A-5 and A-6 died.

(ii) By a judgment dated 08.09.2006, the Special Courtacquitted A-2 and convicted A-1, A-3, A-4 and A-7 forvarious offences. These four convicted persons filed threeDappeals in Criminal Appeal (MD) Nos.437, 445 and 469of 2006, on the file of the Madurai Bench of the MadrasHigh Court.

(iii) By a common Judgment dated 17.09.2010, the High Courtdismissed the appeals, forcing A-1, A-3, A-4 and A-7 toEcome up with four criminal appeals, namely, AppealNos.2417, 2443 and 2444 of 2010 and 16 of 2011.

(iv) However, during the pendency of the above appeals, A-3(R. Thiagarajan) died and hence Criminal Appeal No.2443of 2010 filed by him was dismissed as abated.F

(v) Therefore, what is now before us, are three criminal appeals,namely, Criminal Appeal Nos.2417 and 2444 of 2010 and16 of 2011 filed respectively by A-1, A-7 and A-4.

4. Since the charges framed against all the appellants were notGthe same and also since all the appellants herein were not convicteduniformly for all the offences charged against them, we present belowin a tabular form, the offences for which charges were framed againsteach of them, the offences for which each of them was held guilty andthe offences for which they were not held guilty.H

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AA7 N.Raghunath, Section 120B read Section 471 read Not found guilty Brother of A-5 with 420, 468, 471 with 468 and 109 of the offences and son of A-6 read with 468 and IPC read with under Section 193 IPC and Section 13(2) 120B read with Section 13(2) read read with 13(1)(e) Section 420 and with 13(1)(d) of of the PC Act. 193 IPC. the PC Act. BIn addition, he was charged also under Section 109 IPC.

5. For easy appreciation, the punishments awarded offence-wiseto each of the accused, by the Special Court and confirmed by the HighCCourt, are again presented in a tabular column as follows:

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6. The background facts leading to the prosecution of the appellantsherein and their eventual conviction, may be summarised as follows:-

(i) During the period 1991-92, the Tamil Nadu Water Supplyand Drainage Board decided to set up “ROD Plants”(Reverse Osmosis Desalination Plants) to provide potablewater to drought-prone areas in Ramnad District of TamilBNadu. They entrusted the work to BHEL, Tiruchirapalli.

(ii) After resorting to limited/restricted tenders, BHEL awardedthe contract to one Entoma Hydro Systems.

(iii) A Letter of Intent was issued to the said Company on06.07.1994 and on 02.08.1994, an interest free mobilisationadvance to the tune of Rs.4.32 crores was released to M/sEntoma Hydro Systems.

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(iv) But subsequently, the contract was also cancelled on04.10.1996; the bank guarantee furnished by the ContractorDwas invoked on 27.09.1996; and a payment ofRs.4,84,13,581/- was realised by BHEL.

(v) Thereafter, on 31.01.1997, CBI registered a FirstInformation Report in Crime No. RC 8(A) of 97 againstfour individuals, three of whom were officials of BHELand the fourth, the contractor. It was alleged in the FirstInformation Report that the three officials of BHEL andthe contractor entered into a criminal conspiracy to cheatBHEL and caused loss to BHEL to the tune of Rs.4.32crores by awarding the contract to the aforesaid concern.The FIR was for offences under Section 120B read with420, Section 420 IPC and Section 13(2) read with Section13(1)(d) of PC Act.

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(vi) In November 1998, the person first named in the FIR namelyK.Bhaskar Rao, DGM, was arrested and released on bailby CBI itself. Thereafter, he gave a confession before theXVIII Metropolitan Magistrate, Chennai under Section 164of the Code of Criminal Procedure. After the confessionso made, CBI moved an application in CriminalMiscellaneous Petition No.562 of 2000 under Section 306of the Code, before the Chief Judicial Magistrate, Madurai G

for the grant of pardon to K.Bhaskar Rao. The petitionwas made over to the Additional Chief Judicial Magistrate,Madurai, who passed an order dated 18.07.2000 grantingpardon to Bhaskar Rao.

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(vii) Thereafter, CBI requested the Chairman, BHEL to grantBsanction to prosecute the other two officials named in theFIR, for the offences under the PC Act. But by letter dated02.05.2001, the Chairman, BHEL refused to grant thepermission to prosecute those two officers named in theFIR for the offences under the PC Act.

C(viii) After completion of investigation, CBI filed a final reporton 16.07.2002 against seven accused namely, (i) ASrinivasulu, formerly Executive Director, BHEL; (ii) R.Krishna Rao, Retired General Manager, BHEL; (iii) R.Thyagarajan, Assistant General Manager (Finance), BHEL;(iv) K. Chandrasekaran, Deputy General Manager, BHEL;D(v) Mohan Ramnath Proprietor, Entoma Hydro Systems;(vi) NRN Ayyar; and (vii) N. Raghunath. The final reportwas filed directly before the Principal Special Court forCBI Cases, Madurai.

(ix) In the final report, the prosecution charged:-E

A-1 to A-7 for the offences under Section 120B readwith Sections 420, 468, Section 471 read with Section468, Section 193 IPC and Section 13(2) read withSection 13(1)(d) of the PC Act.

F A-1 and A-2 for offences under Section 13(2) readwith Section 13(1)(d) of the PC Act, 1988 and Section109 IPC read with Sections 420, 468, Section 471read with Section 468 and Section 193 IPC.

A-3 and A-4 for offences under Section 109 IPCread with Sections 420, 468, Section 471 read withGSection 468 and Section 193 IPC.

A-5, A-6 and A-7 for offences under Sections 420,468, Section 471 read with Section 468, Section 193IPC and Section 109 IPC read with Section 13(1)(d)of the PC Act.

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(x) The Special Judge framed the charges on 04.07.2003.

(xi) The prosecution examined 44 witnesses and marked 94documents. A-5 and A-6 died pending trial and hence thecharges against them were abated.

(xii) By a judgment dated 08.09.2006, the Principal Special Judgefor CBI cases acquitted A-2 but convicted A-1, A-3, A-4and A-7 for various offences indicated in Column No. 4 ofthe Table under paragraph 4 above.

(xiii) Challenging the conviction and punishment, A-1 filed aseparate appeal in Criminal Appeal No.437 of 2006 on thefile of the Madurai Bench of the Madras High Court. A-3and A-4 joined together and filed a common appeal inCriminal Appeal No.469 of 2006. A-7 filed a separate appealin Criminal Appeal No.445 of 2006.

(xiv) By a judgment dated 17.09.2010, the Madurai Bench of theMadras High Court dismissed all the three appeals.

(xv) Therefore, A-1, A-3, A-4 and A-7 filed four independentappeals before this Court respectively in Criminal AppealNos.2417, 2443 and 2444 of 2010 and 16 of 2011. But A-3,the appellant in Criminal Appeal No.2443 of 2010 diedpending appeal and hence his appeal was dismissed asabated. Therefore, we are now left with three appeals filedby A-1, A-4 and A-7 arising out of concurrent judgments ofconviction.

7. In brief, the case of the prosecution was that A-1 to A-7 enteredinto a criminal conspiracy to cheat BHEL in the matter of award ofcontract for the construction of desalination plants. In pursuance of thesaid conspiracy, A-1, the then Executive Director of BHEL instructedBhaskar Rao, the DGM (who turned Approver) to go in for limited/restricted tenders without following the tender procedure of pre-qualification of prospective tenderers before inviting limited tenders.According to the prosecution, A-1 dictated the names of four bogusfirms along with the name of M/s Entoma Hydro Systems representedby its proprietor A-5, for inviting limited tenders. As per the dictates ofA-1, the Approver put up a proposal suggesting the names of the fivefirms (including four bogus firms) together with the names of twocompanies which were not in the similar line of work. Thereafter, A-2, A

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Aknowing well that the firms were bogus and were neither pre-qualifiednor selected from the approved list of contractors, processed the notesubmitted by the Approver and sent it to A-1. When tender enquireswere made, A-5 responded to the same not only in the name of M/sEntoma Hydro Systems but also on behalf of the four bogus firms. A-7,the brother of A-5 obtained demand drafts for Rs.20,000/- each in theBnames of the bogus firms by remitting cash into Indian Bank, RoyapettahBranch, State Bank of India, Velachery Branch, State Bank of Mysore,T. Nagar Branch and Bank of Madura, Mount Road Branch and also byfilling up demand draft applications and signing the same in the names ofthe bogus firms. Thereafter, the Tender Committee consisting of theCApprover, A-3 and A-4 processed the names of all these firms andrecommended the award of contract to M/s Entoma Hydro Systems,giving false justifications for recommending them though the said firmdid not have necessary experts or technical expertise. The Committeeeven recommended the sanction of interest free mobilisation advance,in violation of existing practice, to cause pecuniary advantage to A-5.DAccordingly, an interest free mobilisation advance of Rs.4.32 croreswas paid to A-5’s firm. The amount was deposited in the account of thefirm with Indian Bank. From the said account, a sum of Rs.1.52 croreswas diverted to a sister concern of A-5, in which A-5, his father (A-6)and his brother (A-7) were partners. By such an action, A-5 to A-7Eobtained wrongful gain from BHEL. The Prosecution alleged that bythese actions, A-1 to A-7 committed the offences charged against them.

8. As stated in para 6 above, the Prosecution examined 44witnesses, which included the Approver, who was examined as PW-16.94 documents were marked as exhibits on the side of the prosecution.FOne witness was examined on the side of the defence as DW-1 and 6documents were marked as exhibits Ex. D-1 to D-6.

9. In its judgment dated 08.09.2006, the Special Court brought onrecord the charges, the evidence and the rival contentions from paragraphs1 to 60. The actual discussion and analysis by the Court began fromGparagraph 61.

10. To begin with, the Special Court took up for consideration thecontention of the accused that BHEL did not suffer any wrongful lossand that, therefore, the charge under Section 420 IPC does not lie. Butthis contention of the accused was rejected by the Trial Court on theHground that the entire interest free mobilisation advance of Rs.4.32 crores was deposited in the account of M/s Entoma Hydro Systems with IndianBank and that out of the same, a sum of Rs.1,52,50,000/- was transferredto a firm by name M/s Insecticides & Allied Chemicals, of which A-5 toA-7 were partners. Therefore, the Special Court came to the conclusionthat on the date on which the transfer of money took place, a directwrongful monetary loss was caused to BHEL and a direct wrongfulmonetary gain caused to A-5 to A-7. The Special Court also held thatafter the termination of the contract with M/s Entoma Hydro Systems,BHEL divided the contract into several parts and awarded the contractsto various persons and that, therefore, the money paid to each of suchcontractors was a wrongful loss to BHEL. Though the Special Courtalso found that BHEL actually recovered Rs.4.32 crores (by invokingthe bank guarantee), the Court concluded that there was no proof toshow that money was paid out of the firm M/s Insecticides & AlliedChemicals. Therefore, the Special Court first concluded that BHELsuffered wrongful loss and that therefore, the offence under Section420 IPC was made out.

11. The Trial Court then took up for consideration, the argumentthat the confession statement of PW-16 (Approver) marked as ExhibitP-44 had to be rejected, in view of the fact that PW-16 had not statedanything self-incriminating in his confession statement. But this contentionadvanced on behalf of A-1 was rejected by the Court on the ground thatExhibit P-26 is the chit in which PW-16 admittedly wrote down the namesof four bogus firms and the name of M/s Entoma Hydro Systems, asdictated by A-1 and that this was sufficient to show that PW-16 wasincriminating himself in the charge of criminal conspiracy with A-1.

12. When it was pointed out that as per the evidence on record,PW-1 was on leave26.11.1992, due to the death of his mother-in-lawand that therefore, he could not have had any discussion on that date,the Trial Court turned this very argument against A-1 and held that A-1should not have approved the Approval Note dated 25.11.1992 markedas Exhibit P-27, if he was on leave and had not carried out a backgroundcheck.

13. The Trial Court thereafter held that the prosecution hadsuccessfully proved that the four other firms whose names were foundin the chit Exhibit P-26 were all bogus. This was on the basis of theevidence of PW-2, PW-3, PW-5, PW-6, PW-7, PW-9, PW-10 and PW-13.

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A14. Believing the statement of PW-16 to be true, the Special Courtcame to the conclusion that A-1 predetermined the award of contract toA-5 and created circumstances and records to show as though properprocedure was followed and that therefore A-1 was guilty of the charges.

15. Coming to the charges against A-2, the Special Court heldBthat the only role played by him was to prepare the Approval Note dated25.11.1992 and that in view of the overwhelming evidence against A-1,the contract would have, in any case, been awarded to the firm inquestion. Therefore, the Special Court came to the conclusion (inparagraph 79 of the judgment) that A-2 was merely asked to sign inExhibit P-27, only to give credibility to the list prepared by A-1 and theCApprover acting in conspiracy. After reaching such a finding, the SpecialCourt acquitted A-2 of the charges framed against him.

16. Insofar as A-3 and A-4 are concerned, it was argued thatthey came into the picture only after 23.12.1992, when the NegotiationCommittee comprising of A-3, A-4 and the Approver was formed. ButDthis argument was rejected by the Trial Court by holding that what wasconstituted was a Tender Committee, as seen from Exhibit P-36(proceedings of the Committee) and that therefore if they were innocent,they should have questioned and sought details regarding the contractors.Interestingly, the Trial Court after holding in paragraph 79 that the chargesEagainst A-2 were not proved, again went back to the question of guilt ofA-2, after holding A-3 and A-4 guilty, through a reversal of the logic.

17. Coming to the role played by A-7, the Trial Court held that itwas he who purchased the demand drafts in the names of the bogusfirms, with a view to cheat BHEL and that he obtained wrongful gain forFhimself as a partner of the firm Insecticides & Allied Chemicals. On thebasis of these findings, the Trial Court convicted the accused for theoffences mentioned by us in the table under paragraph 4 and sentencedthem to imprisonment and fine indicated in the table under paragraph 5.

18. While dealing with the appeals filed by A-1, A-3, A-4 and A-G7, the High Court divided the same into two categories, the first dealingwith the complicity of A-1, A-3 and A-4 and the second dealing with thecomplicity of A-7. This was perhaps for the reason that A-1, A-3 and A-4 were Officers of BHEL, while A-7 was a private individual.

19. On the complicity of A-1, A-3 and A-4, the High Court primarilyrelied upon the evidence of PW-8, the Technical Examiner of the CentralH

Vigilance Commission as well as the evidence of PW-16, the Approver.On the basis of their evidence, supported by documents, the High Courtheld that the complicity of A-1, A-3 and A-4 was proved. On the questionas to whether the action of the accused resulted in monetary loss toBHEL, the High Court held that the subsequent remedial measure takenby BHEL by invoking the bank guarantee and realizing the money, cannotlead to the conclusion that there was no wrongful loss.

20. Insofar as the complicity of A-7 is concerned, the High Courtheld that the signatures contained in the applications presented to variousbanks for obtaining demand drafts for procuring the tender document,were obviously that of A-7. In fact, the applications for securing demanddrafts were marked as Exhibits P-66, P-76, P-90 and P-92 and theseexhibits had been sent to a handwriting expert for his opinion. Thehandwriting expert was examined as PW-30. His report was marked asExhibit P-68. The specimen writings and signatures of A-7 were markedas Exhibit P-75 through PW-30.

21. But the High Court found in paragraph 44 of the impugnedjudgment that the handwriting expert had not furnished any opinion in hisreport as to the comparison of the writings found in Exhibit P-75 withthe demand draft application forms Exhibits P-66, P-76, P-90 and P-92.The High Court also found (in paragraph 49 of the impugned judgment)that the admitted handwritings and the signatures were not compared bythe handwriting expert. After recording such a finding, the High Courttook upon itself the task of making a comparison by itself, by invokingSection 73 of the Evidence Act. By so invoking Section 73, the HighCourt came to the conclusion that the signatures found in the demanddraft applications were that of A-7 and that the diversion of funds to M/s. Insecticides & Allied Chemicals is a circumstance which corroboratedthe same.

22. It was argued before the High Court on behalf of A-3 and A-4 that BHEL Administration had refused to accord sanction to prosecutethem for the offences under the PC Act and that therefore they cannotbe held guilty of other offences. But this contention was rejected by theHigh Court, on the ground that the decision taken by the Management ofthe Company cannot have a bearing upon the prosecution case.

23. On the basis of the above findings, the High Court dismissedthe appeals and confirmed the conviction and sentence awarded by theTrial Court.

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A24. Appearing on behalf of A-1, Shri Huzefa Ahmadi, learnedsenior counsel contended:-

(i) That there was no evidence to connect A-1 with thecommission of any of the offences and that none of thecharges stood established beyond reasonable doubt; B(ii)That the substratum of the allegations was based entirelyupon the statement of the approver (PW-16), but the samesuffers from serious irregularities;

(iii) That though no sanction was required to prosecute A-1 forthe offences under the PC Act in view of his retirementCbefore the filing of the final report, a previous sanction wasnecessary under Section 197(1) of the Code, but the samewas not obtained; and

(iv) That the prosecution failed to establish the necessaryingredient of “obtaining any valuable thing or pecuniaryDadvantage either for himself or for any other person”for holding him guilty of the offences under Section 13(1)(d)of the PC Act.

25. Appearing on behalf of A-4, it was contended by Shri S.R.Raghunathan, learned counsel:- E(i)that A-4 played no role either in the preparation of tenderor in choosing the tenderers;

(ii) that what was constituted on 23.12.1992, after the tendererswere shortlisted, allegedly by PW-16 at the instance of A-1, was only a Negotiation Committee; F(iii)that in the said Committee comprising of three members,namely A-3, A-4 and PW-16, he (A-4) was the one whowas subordinate to the other two members and hence thelogic applied to A-2 should have been extended to him also;

(iv) that both the Special Court and the High Court overlookedGthe evidence of PW-14 to the effect that no tender committeewas constituted;

(v) that no wrongful loss was caused to BHEL;

(vi) that on the contrary, due to the role played by A-4, a bankguarantee to the tune of Rs.4.84 crores was obtained fromHEntoma Hydro Systems;

(vii) that the bank guarantee was invoked and the entire amountpaid by BHEL towards mobilization advance was recovered;

(viii) that as a matter of fact a sum of Rs. 2.60 crores is due andpayable by BHEL to Entoma Hydro Systems, after the bankguarantee was invoked and the accounts reconciled;

(ix) that despite repeated requests of the CBI, the Managementof BHEL refused to give sanction to prosecute A-3 and A-4, on the ground that they acted in the best commercialinterest of the Company; and

(x) that once A-4 is not held guilty of the offence under Section120B, it was not possible to convict him for the otheroffences, especially in the facts and circumstances of thecase.

26. Appearing on behalf of A-7, it was contended by Shri S.

Nagamuthu, learned senior counsel:-

(i) that the confession statement of PW-16 was recorded bythe XVIII Metropolitan Magistrate, Chennai, but pardonwas granted by the Additional Chief Judicial Magistrate,Madurai and the final report was filed directly before theSpecial Court for CBI cases;

(ii) that since the Additional Chief Judicial Magistrate grantedpardon in this case, this case is covered by Sub-section (1)of Section 306 and hence the prosecution ought to havefollowed the procedure prescribed under Section 306(4)(a)of the Code;

(iii) that there is no particular reason as to why the petition forpardon was made before the Additional Chief JudicialMagistrate, when the confession statement was recordedby the Metropolitan Magistrate and there is no reason whythe prosecution chose to file the final report directly beforethe Special Court under section 5(1) of the PC Act 1988;

(iv) that neither the evidence of PW-44 (I.O.) nor the evidenceof PW-16 (approver) had anything incriminating A-7;

(v) that A-7 has been roped in, merely because of hisrelationship with A-5 and also on account of a sum of A

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Rs.1,52,50,000/- being transferred to the firm of which heis a partner, from out of the account of Entoma HydroSystems; A

(vi) that while the Special Court, without going into the reportof the handwriting expert marked as Exhibit P-68 andBwithout putting any question to A-7 under Section 313 ofthe Code in relation to his specimen signatures marked asExhibit P-75 came to the conclusion that the applicationsfor demand drafts bore his handwriting and signatures, theHigh Court rejected the said reasoning but took to the routeavailable under Section 73 of the Indian Evidence Act, 1872.

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(vii) That the procedure under Section 73 of the Evidence Actis available to a Court only when there are admitted orproved handwritings, which were absent in this case;

(viii) That in any case there was no loss caused to BHEL, whichis a sine qua non for the offence under the PC Act; and D

(ix) That by a strange logic A-7 was convicted for the offenceunder Section 13(1)(e) of the PC Act.

27. Countering the submissions made on behalf of the appellants,it was argued by Shri Padmesh Mishra, learned counsel for the State:

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(i) that there was cogent evidence, both oral and documentary, toconnect all the accused with the offences for which theywere found guilty;

(ii) that the evidence of the Approver (PW-16) stoodcorroborated by the testimonies of other witnesses, on allFaspects such as the deliberate act of going in for limitedtender, predetermining the person in whose favour thecontract was to be awarded, sanction of an interest freemobilisation advance far in excess of the normal businessnorm, diversion of such advance by the contractor to anotherGfirm in which he was a partner along with is father andbrother and the eventual termination of the contract onaccount of these malpractices;

(iii) that there is no requirement in law that actual loss shouldhave been suffered for an offence under Section 13(1)(d)Hof the PC Act to be made out;

(iv) that in any case what was recovered by the invocation ofAthe bank guarantee was the loss suffered in the first instance;

(v) that it is well settled that previous sanction to prosecuteunder Section 197(1) of the Code is necessary only whenthe act complained of is in the discharge of official duties; B

(vi) that an offence of cheating cannot by any stretch ofimagination be seen as part of official duties;

(vii) that the power to grant pardon is available concurrently tothe Chief Judicial Magistrate/ Metropolitan Magistrate aswell as the Court of Session; C

(viii) that therefore there was nothing wrong in the AdditionalChief Judicial Magistrate, Madurai granting pardon; and

(ix) that therefore the concurrent judgments of conviction ofthe appellants do not warrant any interference.

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28. We have carefully considered the rival contentions. For theDpurpose of easy appreciation, we shall divide the discussion and analysisinto three parts, the first dealing with the contention revolving aroundSection 197 of the Code, the second dealing with the correctness of theprocedure adopted while granting pardon under Section 306 of the Codeand the third revolving around the merits of the case qua culpability ofEeach of the appellants before us.

Discussion and Analysis

Part-I (Revolving around Section 197 of the Code)

29. There is no dispute about the fact that A-1 to A-4, being officersFof a company coming within the description contained in the Twelfthitem of Section 21 of the IPC, were ‘public servants’ within the definitionof the said expression under Section 21 of the IPC. A-1 to A-4 werealso public servants within the meaning of the expression under Section2(c)(iii) of the PC Act. Therefore, there is a requirement of previoussanction both under Section 197(1) of the Code and under Section 19(1)Gof the PC Act, for prosecuting A-1 to A-4 for the offences punishableunder the IPC and the PC Act.

30. Until the amendment to the PC Act under the Prevention ofCorruption (Amendment) Act, 2018 (Act 16 of 2018), with effect from26.07.2018, the requirement of a previous sanction under Section 19(1)(a)

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Awas confined only to a person “who is employed”. On the contrary,Section 197(1) made the requirement of previous sanction necessary,both in respect of “any person who is” and in respect of “any personwho was” employed. By the amendment under Act 16 of 2018, Section19(1)(a) of the PC Act was suitably amended so that previous sanctionbecame necessary even in respect of a person who “was employed atBthe time of commission of the offence”.

31. The case on hand arose before the coming into force of thePrevention of Corruption (Amendment) Act, 2018 (Act 16 of 2018).Therefore, no previous sanction under Section 19(1) of the PC Act wasnecessary insofar as A-1 was concerned, as he had retired by the timeCa final report was filed. He actually retired on 31.08.1997, after 7 monthsof registration of the FIR (31.01.1997) and 5 years before the filing ofthe final report (16.07.2002) and 6 years before the Special Court tookcognizance (04.07.2003). But previous sanction under Section 19(1) ofthe PC Act was required in respect of A-3 and A-4, as they were inDservice at the time of the Special Court taking cognizance. Therefore,the Agency sought sanction, but the Management of BHEL refused togrant sanction not once but twice, insofar as A-3 and A-4 are concerned.

32. It is by a quirk of fate or the unfortunate circumstances ofhaving been born at a time (and consequently retiring at a particularEtime) that the benevolence derived by A-3 and A-4 from their employer,was not available to A-1. Had he continued in service, he could not havebeen prosecuted for the offences punishable under the PC Act, in viewof the stand taken by BHEL.

33. It appears that BHEL refused to accord sanction by a letterFdated 24.11.2000, providing reasons, but the CVC insisted, vide a letterdated 08.02.2001. In response to the same, a fresh look was taken by theCMD of BHEL. Thereafter, by a decision dated 02.05.2001, he refusedto accord sanction on the ground that it will not be in the commercialinterest of the Company nor in the public interest of an efficient, quick anddisciplined working in PSU.G

34. The argument revolving around the necessity for previoussanction under Section 197(1) of the Code, has to be considered keepingin view the above facts. It is true that the refusal to grant sanction forprosecution under the PC Act in respect of A-3 and A-4 may not have adirect bearing upon the prosecution of A-1. But it would certainly provideH

the context in which the culpability of A-1 for the offences both underthe IPC and under the PC Act has to be determined.

35. It is admitted by the respondent-State that no previous sanctionunder section 197(1) of the Code was sought for prosecuting A-1. Thestand of the prosecution is that the previous sanction under Section 197(1)may be necessary only when the offence is allegedly committed “while”acting or purporting to act in the discharge of his official duty.Almost all judicial precedents on Section 197(1) have turned on thesewords. Therefore, we may now take a quick but brief look at some ofthe decisions.

36. Dr. Hori Ram Singh vs. The Crown[3] is a decision of theFederal Court, cited with approval by this court in several decisions. Itarose out of the decision of the Lahore High Court against the decisionof the Sessions Court which acquitted the appellant of the charges underSections 409 and 477A IPC for want of consent of the Governor. Sir S.Varadachariar, with whose opinion Gwyer C.J., concurred, examinedthe words, “any act done or purporting to be done in the executionof his duty” appearing in Section 270(1) of the Government of IndiaAct, 1935, which required the consent of the Governor. The FederalCourt observed at the outset that this question is substantially one offact, to be determined with reference to the act complained of andthe attendant circumstances. The Federal Court then referred by wayof analogy to a number of rulings under Section 197 of the Code andheld as follows:-

“The reported decisions on the application of sec. 197 of theCriminal Procedure Code are not by any means uniform. In mostof them, the actual conclusion will probably be found to beunexceptionable, in view of the facts of each ease; but, in some,the test has been laid down in terms which it is difficult to acceptas exhaustive or correct. Much the same may be said even ofdecisions pronounced in England, on the language, of similarstatutory provisions (see observations in Booth v. Clive . It doesnot seem to me necessary to review in detail the decisionsgiven under sec. 197 of the Criminal Procedure Code whichmay roughly be classified as falling into three groups, sofar as they attempted to state something in the nature of a AB

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Atest. In one group of cases, it is insisted that there must besomething in the nature of the act complained of thatattaches it to the official character of the person doing it: cf.In re Sheik Abdul Khadir Saheb ; Kamisetty RajaRao v. Ramaswamy, AmanatAli v. King-emperor, King-Emperor v. Maung Bo Maung and GurushidayyaBShantivirayya Kulkarni v. King-Emperor. In another group,more stress has been laid on the circumstance that theofficial character or status of the accused gave him theopportunity to commit the offence. It seems to me that thefirst is the correct view. In the third group of cases, stressCis laid almost exclusively on the fact that it was at a timewhen the accused was engaged in his official duty that thealleged offence was said to have been committed[see Gangaraju v. Venki , quoting from Mitra’s Commentaryon the (criminal Procedure Code). The use of theexpression “while acting” etc., in sec. 197 of the CriminalDProcedure Code (particularly its introduction by way ofamendment in 1923) has been held to lend some supportto this view. While I do not wish to ignore the significanceof the time factor, it does not seem to me right to make itthe test. To take an illustration suggested in the course ofEthe argument, if a medical officer, while on duty in thehospital, is alleged to have committed rape on one of thepatients or to have stolen a jewel from the patient’s person,it is difficult to believe that it was the intention of theLegislature that he could not be prosecuted for suchoffences except with the previous sanction of the LocalFGovernment”

37. It is seen from the portion of the decision extracted abovethat the Federal Court categorised in Dr. Hori Ram Singh (supra),the decisions given under Section 197 of the Code into three groupsnamely (i)cases where it was held that there must be somethingGin the nature of the act complained of that attaches it to theofficial character of the person doing it;(ii) cases where morestress has been laid on the circumstance that the officialcharacter or status of the accused gave him the opportunity tocommit the offence; and (iii) cases where stress is laid almostHexclusively on the fact that it was at a time when the accused was engaged in his official duty that the alleged offence wassaid to have been committed. While preferring the test laid down inthe first category of cases, the Federal Court rejected the test given inthe third category of cases by providing the illustration of a medicalofficer committing rape on one of his patients or committing theft of ajewel from the patient’s person.

38. In Matajog Dobey vs. H.C. Bhari[4 ]a ConstitutionBench ofthis Court was concerned with the interpretation to be given to the words,“any offence alleged to have been committed by him while acting orpurporting to act in the discharge of his official duty” in Section 197of the Code. After referring to the decision in Dr. Hori Ram Singh, theConstitution Bench summed up the result of the discussion, in paragraph19 by holding: “There must be a reasonable connection between theact and the discharge of official duty; the act must bear such relationto the duty that the accused could lay a reasonable, but not apretended or fanciful claim, that he did it in the course of theperformance of his duty.”

39. In State of Orissa through Kumar Raghvendra Singh vs.Ganesh Chandra Jew[5], a two Member Bench of this Court explainedthat the protection under Section 197 has certain limits and that it isavailable only when the alleged act is reasonably connected with thedischarge of his official duty and is not merely a cloak for doing theobjectionable act. The Court also explained that if in doing his officialduty, he acted in excess of his duty, but there is a reasonable connectionbetween the act and the performance of the official duty, the excesswill not be a sufficient ground to deprive the public servant of theprotection.

40. The above decision in State of Orissa (supra) was followed(incidentally by the very same author) in K. Kalimuthu vs. State byDSP[6] and Rakesh Kumar Mishra vs. State of Bihar[7].

41. In Devinder Singh vs. State of Punjab through CBI[8], thisCourt took note of almost all the decisions on the point and summarizedthe principles emerging therefrom, in paragraph 39 as follows:

4 (1955) 2 SCR 9255 (2004) 8 SCC 40:6 (2005) 4 SCC 5127 (2006) 1 SCC 5578 (2016) 12 SCC 87

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“39. The principles emerging from the aforesaid decisions aresummarised hereunder:

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39.1. Protection of sanction is an assurance to an honestand sincere officer to perform his duty honestly and to thebest of his ability to further public duty. However, authoritycannot be camouflaged to commit crime.

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39.2. Once act or omission has been found to have beencommitted by public servant in discharging his duty it mustbe given liberal and wide construction so far its officialnature is concerned. Public servant is not entitled to indulgeCin criminal activities. To that extent Section 197 CrPC hasto be construed narrowly and in a restricted manner.

39.3. Even in facts of a case when public servant hasexceeded in his duty, if there is reasonable connection itwill not deprive him of protection under Section 197 CrPC.There cannot be a universal rule to determine whetherthere is reasonable nexus between the act done and officialduty nor is it possible to lay down such rule.

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39.4. In case the assault made is intrinsically connectedwith or related to performance of official duties, sanctionwould be necessary under Section 197 CrPC, but suchrelation to duty should not be pretended or fanciful claim.The offence must be directly and reasonably connectedwith official duty to require sanction. It is no part of officialduty to commit offence. In case offence was incompletewithout proving, the official act, ordinarily the provisionsof Section 197 CrPC would apply.

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….”

42. In D. Devaraja vs. Owais Sabeer Hussain[9], this Courtexplained that sanction is required not only for acts done in the dischargeof official duty but also required for any act purported to be done in theGdischarge of official duty and/or act done under colour of or in excess ofsuch duty or authority. This Court also held that to decide whether sanctionis necessary, the test is whether the act is totally unconnected with officialduty or whether there is a reasonable connection with the official duty.

H9 (2020) 7 SCC 695

43. Keeping in mind the above principles, if we get back to thefacts of the case, it may be seen that the primary charge against A-1 isthat with a view to confer an unfair and undue advantage upon A-5, hedirected PW-16 to go for limited tenders by dictating the names of fourbogus companies, along with the name of the chosen one and eventuallyawarded the contract to the chosen one. It was admitted by theprosecution that at the relevant point of time, the Works Policy of BHELmarked as Exhibit P-11, provided for three types of tenders, namely (i)Open Tender; (ii) Limited/Restricted Tender; and (iii) Single Tender.

44. Paragraph 4.2.1 of the Works Policy filed as Exhibit P-11 andrelied upon by the prosecution laid down that as a rule, only works up toRs.1,00,000/- should be awarded by Restricted Tender. However,paragraph 4.2.1 also contained a rider which reads as follows:

“4.2.1 … However even in cases involving more thanRs.1,00,000/- if it is felt necessary to resort to Restricted Tenderdue to urgency or any other reasons it would be open to the GeneralManagers or other officers authorised for this purpose to do soafter recording reasons therefor.”

45. Two things are clear from the portion of the Works Policyextracted above. One is that a deviation from the rule was permissible.The second is that even General Managers were authorised to take acall, to deviate from the normal rule and resort to Restricted Tender.

46. Admittedly, A-1 was occupying the position of ExecutiveDirector, which was above the rank of a General Manager. Accordingto him he had taken a call to go for Restricted Tender, after discussingwith the Chairman and Managing Director. The Chairman and ManagingDirector, in his evidence as PW-28, denied having had any discussion inthis regard.

47. For the purpose of finding out whether A-1 acted or purportedto act in the discharge of his official duty, it is enough for us to seewhether he could take cover, rightly or wrongly, under any existing policy.Paragraph 4.2.1 of the existing policy extracted above shows that A-1at least had an arguable case, in defence of the decision he took to go infor Restricted Tender. Once this is clear, his act, even if alleged to belacking in bona fides or in pursuance of a conspiracy, would be an act inthe discharge of his official duty, making the case come within theparameters of Section 197(1) of the Code. Therefore, the prosecution AB

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Aought to have obtained previous sanction. The Special Court as well asthe High Court did not apply their mind to this aspect.

48. Shri Padmesh Mishra, learned counsel for the respondentplaced strong reliance upon the observation contained in paragraph 50of the decision of this Court in Parkash Singh Badal vs. State ofBPunjab[10]. It reads as follows:- “50.The offence of cheating under Section 420 or for thatmatter offences relatable to Sections 467, 468, 471 and 120-B can by no stretch of imagination by their very nature beregarded as having been committed by any public servantCwhile acting or purporting to act in discharge of official duty.In such cases, official status only provides an opportunity forcommission of the offence.”

49. On the basis of the above observation, it was contended bythe learned counsel for the respondent that any act done by a publicDservant, which constitutes an offence of cheating, cannot be taken tohave been committed while acting or purporting to act in the dischargeof official duty.

50. But the above contention in our opinion is far-fetched. Theobservations contained in paragraph 50 of the decision in Parkash SinghEBadal (supra) are too general in nature and cannot be regarded as theratio flowing out of the said case. If by their very nature, the offencesunder sections 420, 468, 471 and 120B cannot be regarded as havingbeen committed by a public servant while acting or purporting to act inthe discharge of official duty, the same logic would apply with muchmore vigour in the case of offences under the PC Act. Section 197 ofFthe Code does not carve out any group of offences that will fall outsideits purview. Therefore, the observations contained in para 50 of thedecision in Parkash Singh Badal cannot be taken as carving out anexception judicially, to a statutory prescription. In fact, Parkash SinghBadal cites with approval the other decisions (authored by the veryGsame learned Judge) where this Court made a distinction between anact, though in excess of the duty, was reasonably connected with thedischarge of official duty and an act which was merely a cloak for doingthe objectionable act. Interestingly, the proposition laid down in RakeshKumar Mishra (supra) was distinguished in paragraph 49 of the decision in Parkash Singh Badal, before the Court made the observations inparagraph 50 extracted above.

51. No public servant is appointed with a mandate or authority tocommit an offence. Therefore, if the observations contained in paragraph50 of the decision in Parkash Singh Badal are applied, any act whichconstitutes an offence under any statute will go out of the purview of anact in the discharge of official duty. The requirement of a previous sanctionwill thus be rendered redundant by such an interpretation.

52. It must be remembered that in this particular case, the FIRactually implicated only four persons, namely PW-16, A-3, A-4 an A-5.A-1 was not implicated in the FIR. It was only after a confessionstatement was made by PW-16 in the year 1998 that A-1 was roped in.The allegations against A-1 were that he got into a criminal conspiracywith the others to commit these offences. But the Management of BHELrefused to grant sanction for prosecuting A-3 and A-4, twice, on theground that the decisions taken were in the realm of commercial wisdomof the Company. If according to the Management of the Company,the very same act of the co-conspirators fell in the realm ofcommercial wisdom, it is inconceivable that the act of A-1, as partof the criminal conspiracy, fell outside the discharge of his publicduty, so as to disentitle him for protection under Section 197(1) ofthe Code.

53. In view of the above, we uphold the contention advanced onbehalf of A-1 that the prosecution ought to have taken previous sanctionin terms of Section 197(1) of the Code, for prosecuting A-1, for theoffences under the IPC.

Part-II (Revolving around grant of pardon)

54. As we have indicated elsewhere, the FIR was filed on31.01.1997 against 4 persons namely K. Bhaskar Rao (the person whoturned Approver later) and A-3 to A-5. K. Bhaskar Rao, who later turnedapprover, was arrested in August, 1998 and released on bail by therespondents themselves. After his release, the said K. Bhaskar Raogave a confession statement under Section 164 of the Code before theXVIII Metropolitan Magistrate, Chennai on 16.11.1998. On the basis ofthe statement so given by K. Bhaskar Rao, prosecution filed a petition inCriminal M.P No.562 of 2000 before theChief Judicial Magistrate,Maduraiunder Section 306 of the Code for the grant of pardon. On the ABC

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Asaid petition so filed on 22.06.2000, the Additional Chief JudicialMagistrate, Madurai (to whom it was made over) summoned K. BhaskarRao to appear before him on 17.07.2000. After broadly informing K.Bhaskar Rao of the consequences of his action, the Additional ChiefJudicial Magistrate adjourned the matter to 18.07.2000. On 18.07.2000,the Additional Chief Judicial Magistrate read out the contents of hisBconfession statement and asked Bhaskar Rao whether it was voluntarilygiven by him after knowing the consequences. Once K. Bhaskar Raoanswered the questions in the affirmative, the Additional Chief JudicialMagistrate passed an order on 18.07.2000 granting pardon to K. BhaskarRao under Section 306 of the Code. Thereafter, the respondents filed aCfinal report on 16.07.2002 directly before the Special Judge for CBIcases, Chennai, without the case being committed by the Magistrate.Since the aforesaid K. Bhaskar Rao had already been granted pardonby the Additional Chief Judicial Magistrate, the prosecution examinedhim as PW-16 before the Special Court for CBI cases and marked (i)the statement of K. Bhaskar Rao under Section 164 of the Code asDExhibit P-44; (ii) the copy of the petition filed under Section 306 of theCode dated 22.06.2000 as Exhibit P-51; and (iii) the proceedings dated17.07.2000 and 18.07.2000 of the Additional Chief Judicial Magistrate,Madurai, relating to the tender of pardon, as Exhibit P-52.

55. Appearing on behalf of A-7, Shri S. Nagamuthu, learned seniorEcounsel assailed the procedure so followed. According to the learnedsenior counsel, the Chief Judicial Magistrate/Metropolitan Magistrate isempowered to grant pardon during investigation, inquiry or trial and aMagistrate of first class is empowered to grant pardon while inquiringinto or trying an offence. This is by virtue of sub-section (1) of SectionF306 of the Code. In the case on hand, the Additional Chief JudicialMagistrate granted pardon at the stage of investigation. Therefore, it iscontended by the learned senior counsel that the approver, in casescovered by Section 306(1), should be examined twice, once beforecommittal and then at the time of trial. The difference between the examination of an approver at these two stages is that the approver isGexamined as a court witness before committal, but as a prosecutionwitness during trial. Therefore, the learned senior counsel contendedthat such examination of an approver twice, is a mandatory requirementof clause (a) of sub-section (4) of Section 306 and that it has been heldby a catena of decisions that the non-compliance with Section 306(4)(a)Hwould vitiate the proceedings. It is the contention of the learned senior counsel that if the Magistrate, who grants pardon, has failed to examinehim as a witness as soon as pardon is accepted by the approver, theevidence of the approver is liable to be eschewed from consideration. Itis submitted by the learned senior counsel that in this case, the AdditionalChief Judicial Magistrate examined as PW-18 had not complied with therequirement of Section 306(4)(a) of the Code and that therefore theevidence of the approver is liable to be eschewed.

56. Shri S. Nagamuthu, learned senior counsel also submitted thatthe requirement of examining an approver once as a court witness beforecommittal and then as a prosecution witness during trial, prescribed bySection 306(4)(a), will not be applicable to a case covered by Section307 of the Code, which empowers the Court to which the case iscommitted for trial, itself to grant pardon. But in the case on hand, thecase was not committed by any Magistrate/Additional Chief JudicialMagistrate to the Special Court and hence, the prosecution cannot evenrely upon Section 307 of the Code.

57. Adverting to the provisions of sub-sections (1) and (2) ofSection 5 of the PC Act, it was contended by Shri S. Nagamuthu, learnedsenior counsel that the power to tender a pardon was available even tothe Special Court. The pardon so tendered by the Special Court is deemedunder sub-section (2) of Section 5 to be a pardon tendered under Section307 of the Code. But this deeming fiction is limited in its applicabilityonly for the purposes of sub-sections (1) to (5) of Section 308 of theCode. In other words, the power of the Court to grant pardon underSection 307 of the Code is materially different from the power of theSpecial Court under Section 5(2) of the PC Act. In fact, Section 5(1)of the PC Act empowers the Special Court to take cognizance withoutthe case being committed to it by any Magistrate. The provisions ofSection 193 of the Code thus stand excluded in their application. TheSpecial Court is thus conferred by Section 5(1) of the PC Act, originaljurisdiction to take cognizance. This principle has been recognized bythis Court in Bangaru Laxman vs. State (through CBI)[11], wherein itwas held that the Special Judge has a dual power, namely that of aCourt of Session and that of a Magistrate. Relying upon the decision inHarshad S. Mehta vs. State of Maharashtra[12 ]and the decisions inP.C. Mishra vs. State (Central Bureau of Investigation)[13 ]and State 11 (2012) 1 SCC 500

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Athrough Central Bureau of Investigation, Chennai vs. V. ArulKumar[14], the learned senior counsel contended that the request for pardonshould have been made in this case at the stage of investigation onlybefore the Special Court. Even assuming that it was a curable defect,there must be an evidence of good faith on the part of PW-18 (theAdditional Chief Judicial Magistrate). In the absence of such an evidence,Bit is contended that the testimony of the approver was liable to beeschewed in this case.

58. We have carefully considered the above submissions.

59. Before we proceed with our analysis, it is necessary to bringon record Sections 306 and 307 of the Code and Section 5 of the PCCAct. Section 306 and 307 of the Code reads as follows:

“306.Tender of pardon to accomplice.-(1) With a view toobtaining the evidence of any person supposed to have been directlyor indirectly concerned in or privy to an offence to which thissection applies, the Chief Judicial Magistrate or a MetropolitanDMagistrate at any stage of the investigation or inquiry into, or thetrial of, the offence, and the Magistrate of the first class inquiringinto or trying the offence, at any stage of the inquiry or trial, maytender a pardon to such person on condition of his making a fulland true disclosure of the whole of the circumstances within hisEknowledge relative to the offence and to every other personconcerned, whether as principal or abettor, in the commissionthereof.

(2) This section applies to—

(a) any offence triable exclusively by the Court of SessionFor by the Court of a Special Judge appointed underthe Criminal Law Amendment Act, 1952 (46 of 1952)

(b) any offence punishable with imprisonment which mayextend to seven years or with a more severe sentence.

(3) Every Magistrate who tenders a pardon under sub-sectionG(1) shall record- (a)his reasons for so doing; (b)whether the tender was or was not accepted by theperson to whom it was made, H14 (2016) 11 SCC 733

and shall, on application made by the accused, furnish him with acopy of such record free of cost.

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(4) Every person accepting a tender of pardon made undersub-section (1)—

(a) shall be examined as a witness in the Court of theMagistrate taking cognizance of the offence and inthe subsequent trial, if any, B

(b) shall, unless he is already on bail, be detained incustody until the termination of the trial.

(5) Where a person has accepted a tender of pardon madeunder sub-section (1) and has been examined under sub-section(4), the Magistrate taking cognizance of the offence shall, withoutmaking any further inquiry in the case, C

(a) commit it for trial-

(i) to the Court of Session if the offence is triableexclusively by that Court or if the Magistratetaking cognizance is the Chief JudicialMagistrate; D

(ii) to a Court of Special Judge appointed underthe Criminal Law Amendment Act, 1952 (46of 1952), if the offence is triable exclusivelyEby that Court; (b)in any other case, make over the case to the ChiefJudicial Magistrate who shall try the case himself.

307. Power to direct tender of pardon.—At any time aftercommitment of a case but before judgment is passed, the Court towhich the commitment is made may, with a view to obtaining atthe trial the evidence of any person supposed to have been directlyor indirectly concerned in, or privy to, any such offence, tender apardon on the same condition to such person.”

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60. Section 5 of the PC Act reads as follows:

“5. Procedure and powers of special Judge.—(1)A specialJudge may take cognizance of offences without the accused beingcommitted to him for trial and, in trying the accused persons, shallfollow the procedure prescribed by the Code of Criminal Procedure,1973 (2 of 1974), for the trial of warrant cases by the Magistrates.

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A(2) A special Judge may, with a view to obtaining the evidence ofany person supposed to have been directly or indirectly concernedin, or privy to, an offence, tender a pardon to such person oncondition of his making a full and true disclosure of the wholecircumstances within his knowledge relating to the offence and toevery other person concerned, whether as principal or abettor, inBthe commission thereof and any pardon so tendered shall, for thepurposes of sub-sections (1) to (5) of section 308 of the Code ofCriminal Procedure, 1973 (2 of 1974), be deemed to have beentendered under section 307 of that Code.

(3) Save as provided in sub-section (1) or sub-section (2), theCprovisions of the Code of Criminal Procedure, 1973 (2 of 1974),shall, so far as they are not inconsistent with this Act, apply to theproceedings before a special Judge; and for purposes of the saidprovisions, the Court of the special Judge shall be deemed to be aCourt of Session and the person conducting a prosecution beforeDa special Judge shall be deemed to be a public prosecutor.

(4) In particular and without prejudice to the generality of theprovisions contained in sub-section (3), the provisions of sections326 and 475 of the Code of Criminal Procedure, 1973 (2 of 1974),shall, so far as may be, apply to the proceedings before a specialEJudge and for the purposes of the said provisions, a special Judgeshall be deemed to be a Magistrate.

(5) A special Judge may pass upon any person convicted by himany sentence authorised by law for the punishment of the offenceof which such person is convicted.

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(6) A special Judge, while trying an offence punishable under thisAct, shall exercise all the powers and functions exercisable by aDistrict Judge under the Criminal Law Amendment Ordinance,1944 (Ord. 38 of 1944).”

61. A careful look at the anatomy of Section 306 of the CodeGshows that it provides a plethora of steps either in the alternative or inaddition. They are as follows:-

(i) Section 306(1) divides a criminal case into three stages,namely, (i) investigation; (ii) inquiry; and (iii) trial of theoffence.

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(ii) A Chief Judicial Magistrate or a Metropolitan MagistrateAis empowered to grant pardon to any person, at any of thethree stages, namely the stage of investigation, the stageof inquiry or the stage of trial. In contrast, the Magistrateof the first class can grant pardon only in two stages,namely the stage of inquiring into or the stage of tryingBthe offence.

(iii) Sub-section (2) of Section 306 makes the provisions ofSection 306 applicable to any offence triable exclusively bya Court of Session or a Court of Special Judge appointedunder the Criminal Law Amendment Act, 1952 and to anyoffence punishable with imprisonment which may extendto seven years or more.

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(iv) Sub-section (3) of Section 306 obliges the Magistratetendering pardon, not only to record reasons for doing sobut also to state whether the tender was accepted by theperson to whom it was made; DEF

(v) Sub-section (4) of Section 306 makes it mandatory that everyperson accepting a tender of pardon made under sub-section(1) shall be examined as a witness both in the Court of theMagistrate taking cognizance and in the subsequent trial.Sub-section (4) also imposes an additional condition thatthe person accepting a tender of pardon shall be detainedin custody till the termination of the trial, except when he isalready on bail.

(vi) A careful look at clauses (a) and (b) of sub-section (4)shows that the procedure prescribed therein is applicableonly to cases covered by sub-section (1).

(vii) Sub-section (5) prescribes that once a person has accepteda tender of pardon under sub-section (1) and has beenexamined under sub-section (4) then the Magistrate takingcognizance should commit the case for trial either to theCourt of Session or to the Court of Special Judge. In casesnot covered by clause (a) of sub-section (5), the Magistratetaking cognizance should make over the case to the ChiefJudicial Magistrate in terms of clause (b).

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A62. Section 307 of the Code empowers the Court to which thecommitment is made, to tender pardon. The power can be exercised atany time after the commitment of the case but before judgment is passed.

63. Coming to Section 5 of the PC Act, it is seen that sub-section(1) empowers the Special Judge to take cognizance of offences withoutBthe accused being committed to him for trial. It also says that whiletrying the accused persons, the Special Judge is obliged to follow theprocedure prescribed by the Code for the trial of warrant cases by theMagistrates. This is why this court held in Bangaru Laxman (in para40 of the report) that the Special Judge under the PC Act, whiletrying offences, has a dual power of the Sessions Judge as well asCthat of the Magistrate and that such a Special Judge conducts theproceedings both prior to the filing of the charge sheet and forholding trial. In fact what was in question in Bangaru Laxman waswhether the pardon tendered by the Special Judge, one day before thefiling of the charge sheet, was correct or not. This court found the sameDto be in order.

64. Interestingly, sub-section (2) of Section 5 which empowersthe Special Judge to tender a pardon, does not speak about the stage atwhich a Special Judge may tender pardon. This point can be appreciatedif we go back once again to Sections 306 and 307 of the Code whichElays down the following rules:-

(i) A Chief Judicial Magistrate or a Metropolitan Magistrate isempowered to tender pardon at any of the three stages;

(ii) The Magistrate of first class is empowered to tender pardonat two stage; and F

(iii) The Court to which commitment is made (meaning therebyeither a Court of Session or a Court of Special Judge namedin sub-clauses (i) and (ii) of clause (a) of sub-section (5) ofSection 306) is empowered to tender pardon at only onestage namely the trial of the offence. Though the word trial,Gused in Section 306(1) is not used in Section 307, the wordsappearing in Section 307, namely “at any time aftercommitment of a case but before judgment is passed”can only indicate the stage of trial, in view of the fact thatunder sub-section (5) of Section 306, committal takes placeafter cognizance is taken.H

65. In contrast, Section 5(2) of the PC Act does not speak aboutthe stage at which pardon may be tendered by a Special Judge. This isperhaps in view of the express provisions of sub-section (1) of Section 5which empowers the Special Judge himself to take cognizance withoutthe accused being committed to him for trial. But the second part of sub-section (2) of Section 5 of the PC Act creates a deeming fiction that thepardon tendered by the Special Judge shall be deemed to be a pardontendered under Section 307 of the Code. However, as rightly contendedby the learned Senior Counsel for A-7, this deeming fiction is limited forthe purposes of Sub-sections (1) to (5) of Section 308 of the Code.

66. It appears that before the advent of the Code of CriminalProcedure, 1973, the Courts were taking a view that the Magistrateshad the power to tender pardon even after the commitment of the casefor trial to the Court of Session/Special Judge. This was because of theway in which Section 338 of the Code of Criminal Procedure, 1898 wasworded. A comparison of Section 307 of the Code of Criminal Procedure,1973 with Section 338 of the Code of Criminal Procedure, 1898 will make the position more clear.

Section 307 of the Code of Section 338 of the Code of Criminal Criminal Procedure, 1973 Procedure, 1898 307. Power to direct tender of 338. Power to direct tender of pardon.—At any time after pardon.- At any time after commitment of a case but before commitment, but before judgment is judgment is passed, the Court to passed, the Court to which the which the commitment is made commitment is made may, with the may, with a view to obtaining at view of obtaining on the trial the the trial the evidence of any person evidence of any person supposed to supposed to have been directly or have been directly or indirectly indirectly concerned in, or privy concerned in, or privy to, any such to, any such offence, tender a offence, tender, or order the pardon on the same condition to committing Magistrate or the such person. District Magistrate to tender, a pardon on the same condition to such person.

67. The change brought about by the legislature to the procedureprescribed in Sections 306 and 307 of the Code of 1973 was noted bythis Court in A. Devendran vs. State of T.N.[15]. Incidentally, a questionarose in A. Devendran (supra) as to whether the non-examination of AB

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Athe Approver as a witness after grant of pardon was a non-complianceof sub-section (4)(a) of Section 306 and whether it would vitiate theproceedings. Paragraph 10 of the decision in A.Devendran is ofimportance and hence it is extracted as follows:-

“10. The next question that arises for consideration is as toBwhether non-examination of the approver as a witness aftergrant of pardon and thereby non-compliance of sub-section4(a) of Section 306 vitiates the entire proceeding. In the casein hand there is no dispute that after the Chief Judicial Magistrategranted pardon to the accused he was not examined immediatelyafter the grant of pardon and was only examined once by theClearned Sessions Judge in course of trial. The question that arisesfor consideration is: When an accused is granted pardon after thecase is committed to the Court of Session would it be necessaryto comply with sub-section (4)(a) of Section 306 of the Code.The contention of Mr Mohan, the learned counsel appearing forDthe State, in this connection is that Section 307 merely mandatesthat pardon should be tendered on the same condition and suchcondition obviously refers to the condition indicated in sub-section(1) of Section 306, namely, on the accused making a full and truedisclosure of the whole of the circumstances within his knowledgerelating to the offence and to every other person concerned,Ewhether as principal or abettor, in the commission thereof.According to the learned counsel, sub-section (4) of Section 306is not a condition for tendering pardon but is merely a procedurewhich has to be followed when a person is tendered pardon by aMagistrate in exercise of power under Section 306. Since after aFcase committed to the Court of Session pardon is tendered by thecourt to whom the commitment is made, it would not be necessaryfor such court to comply with sub-section (4)(a) of Section 306.Mr Murlidhar, the learned counsel appearing for theappellants, on the other hand contended, that the objectand purpose engrafted in clause (a) of sub-section (4) ofGSection 306 is to provide a safeguard to the accused whocan cross-examine even at the preliminary stage on knowingthe evidence of the approver against him and can impeach thesaid testimony when the approver is examined in court duringtrial, if any contradictions or improvements are made by him. ThisHright of the accused cannot be denied to him merely because H

pardon is tendered after the proceeding is committed to the Courtof Session.

68. As seen from what is extracted above, the Chief JudicialMagistrate granted pardon to the accused in that case but he was notexamined immediately after the grant of pardon and was only examinedonce before the Sessions Judge in the course of trial. Therefore, thequestion that arose was whether it was necessary to comply with sub-section (4)(a) of Section 306, when an accused is granted pardon afterthe case is committed to the Court of Session. As seen from the argumentadvanced before this Court in A. Devendran was that the object ofclause (a) of sub-section (4) of Section 306 is to provide a safeguard tothe accused so that he can cross examine even at the preliminary stageon knowing the evidence of the approver and can impeach the saidtestimony when the approver is examined in Court during trial.

69. For finding an answer to the said question, the Court in A.Devendran, first made a distinction between a case where tender ofpardon was made before the commitment of the same to the Court ofSession and a case where pardon is tendered after commitment. Aftermaking such a distinction, on the basis of whether pardon was tenderedbefore or after the committal, this Court held in Devendran (para 11) asfollows:-

“11. … A combined reading of sub-section (4) of Section 306and Section 307 would make it clear that in a case exclusivelytriable by the Sessions Court if an accused is tendered pardonand is taken as an approver before commitment thencompliance of sub-section (4) of Section 306 becomesmandatory and non-compliance of such mandatoryrequirements would vitiate the proceedings but if an accusedis tendered pardon after the commitment by the Court to whichthe proceeding is committed in exercise of powers under Section307 then in such a case the provisions of sub-section (4) of Section306 are not attracted. …”

70. To come to the above conclusion, this Court relied upon itsprevious decision in Suresh Chandra Bahri vs. State of Bihar[16],whereinit was held as follows:- AB

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“30. A bare reading of clause (a) of sub-section (4) of Section306 of the Code will go to show that every person accepting thetender of pardon made under sub-section (1) has to be examinedas a witness in the Court of the Magistrate taking cognizance ofthe offence and in the subsequent trial, if any. Sub-section (5)further provides that the Magistrate taking cognizance of theoffence shall, without making any further enquiry in the casecommit it for trial to any one of the courts mentioned in clauses (i)or (ii) of clause (a) of sub-section (5), as the case may be. Section209 of the Code deals with the commitment of cases to the Courtof Session when offence is tried exclusively by that court. Theexamination of accomplice or an approver after acceptingthe tender of pardon as a witness in the Court of the Magistratetaking cognizance of the offence is thus a mandatoryprovision and cannot be dispensed with and if this mandatoryprovision is not complied with it vitiates the trial. As envisagedin sub-section (1) of Section 306, the tender of pardon is made onthe condition that an approver shall make a full and true disclosureof the whole of the circumstances within his knowledge relatingto the offence. Consequently, the failure to examine theapprover as a witness before the committing Magistrate wouldnot only amount to breach of the mandatory provisionscontained in clause (a) of sub-section (4) of Section 306 but itwould also be inconsistent with and in violation of the duty tomake a full and frank disclosure of the case at all stages.The breach of the provisions contained in clause (a) of sub-section (4) of Section 306 is of a mandatory nature and notmerely directory and, therefore, non-compliance of the samewould render committal order illegal. The object and purposein enacting this mandatory provision is obviously intended to providea safeguard to the accused inasmuch as the approver has to makea statement disclosing his evidence at the preliminary stage beforethe committal order is made and the accused not only becomesaware of the evidence against him but he is also afforded anopportunity to meet with the evidence of an approver before thecommitting court itself at the very threshold so that he may takesteps to show that the approver’s evidence at the trial wasuntrustworthy in case there are any contradictions or improvementsmade by him during his evidence at the trial. It is for this reason

that the examination of the approver at two stages has beenprovided for and if the said mandatory provision is not compliedwith, the accused would be deprived of the said benefit. This maycause serious prejudice to him resulting in failure of justice as hewill lose the opportunity of showing the approver’s evidence asunreliable. Further clause (b) of sub-section (4) of Section 306 ofthe Code will also go to show that it mandates that a person whohas accepted a tender of pardon shall, unless he is already on bailbe detained in custody until the termination of the trial. We have,therefore, also to see whether in the instant case these twomandatory provisions were complied with or not and if thesame were not complied with, what is the effect of such anon-compliance on the trial?”

71. It is interest to see that in Suresh Chandra Bahri, this courtfirst held that the procedure prescribed in Section 306(4)(a) of the Codeis mandatory and not directory and that its non-compliance will renderthe committal order illegal. After so holding, this court raised a questionin the last line of para 30 extracted above, as to what is the effect ofsuch non-compliance on the trial. While answering this question, thiscourt found in Suresh Chandra Bahri, that the Court to which the casewas committed, noticed this irregularity even at the threshold and henceremanded the matter back to the Magistrate for recording the evidenceof the approver. Thus the defect got cured before trial and hence thiscourt held in paragraph 31 of the decision that eventually no prejudiceor disadvantage was shown to have been caused to the accused.

72. Thus, there were two distinguishing features in SureshChandra Bahri. The first was that the Chief Judicial Magistrate whotendered pardon in that case committed the case to the Court of Sessionfor trial (unlike the case on hand) without examining the approver as awitness in the Court. The second distinguishing feature was that theCourt to whom the case was committed for trial noticed the defect andhence remanded the case back to the Court of Chief Judicial Magistrate.Therefore, this court applied the prejudice test in that case.

73. But more importantly, what was held in Suresh ChandraBahri to be vitiated, was the committal order. Therefore, it wasconcluded eventually in Suresh Chandra Bahri that the moment thedefect in the committal order is cured before trial, the trial does not getvitiated.

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A74. But in cases where a Special Court itself is competent to takecognizance and also empowered to grant pardon, the procedure underSection 306 of the Code gets by-passed, as held by this Court in Statethrough CBI vs. V. Arul Kumar[17]. An argument was advanced in ArulKumar (supra) (as seen from paragraph 20 of the Report) that Section306 of the Code has no application to cases relating to offences underBthe PC Act. In support of the said argument, the decision in P.C. Mishravs. State (CBI)[18] was also relied upon. While dealing with the saidcontention, this Court held in Arul Kumar as follows:-

“21. Sub-section (1) of Section 5, while empowering a SpecialJudge to take cognizance of offence without the accused beingCcommitted to him for trial, only has the effect of waiving theotherwise mandatory requirement of Section 193 of the Code.Section 193 of the Code stipulates that the Court of Session cannottake cognizance of any offence as a court of original jurisdictionunless the case has been committed to it by a Magistrate underDthe Code. Thus, embargo of Section 193 of the Code has beenlifted. It, however, nowhere provides that the cognizance cannotbe taken by the Magistrate at all. There is, thus, an option given tothe Special Judge to straightaway take cognizance of the offencesand not to have the committal route through a Magistrate.However, normal procedure prescribed under Section 190 of theECode empowering the Magistrate to take cognizance of suchoffences, though triable by the Court of Session, is not given a go-by. Both the alternatives are available. In those cases wherecharge-sheet is filed before the Magistrate, he will have to commitit to the Special Judge. In this situation, the provisions of SectionF306 of the Code would be applicable and the Magistrate would beempowered to exercise the power under the said provision. Incontrast, in those cases where Special Judge takes cognizance ofoffence directly, as he is authorised to do so in view of Section5(2) of the PC Act, 1988, Section 306 of the Code would get bypassed and as the Special Judge has taken cognizance, it isGSection 307 of the Code which would become applicable. Sub-section (2) of Section 5 of the PC Act, 1988 makes this positionclear by prescribing that it is the Special Judge who would exercise 17 (2016) 11 SCC 733H18 (2014) 14 SCC 629

his powers to tender of pardon as can clearly be spelled out bythe language employed in that provision. Section 5(2) is to be readin conjunction with Section 5(1) of the PC Act, 1988. Theaforesaid legal position would also answer the argument of thelearned counsel for the respondent based on the judgment of thisCourt in A. Devendran [A. Devendran v. State of T.N., (1997)11 SCC 720 : 1998 SCC (Cri) 220] . In that case, this Court heldthat once the proceedings are committed to the Court of Session,it is that court only to which commitment is made which can grantpardon to the approver. The view taken by us is, rather, in tunewith the said judgment.”

75. In other words, this Court recognised in Arul Kumar twotypes of cases, namely (i) those which come through the committal route;and (ii) those where cognizance is taken directly by the Special Judgeunder Section 5(1) of the PC Act. In the second category of cases, theCourt held that Section 306 of the Code would get by-passed.

76. Therefore, it is clear that when the Special Court chooses totake cognizance, the question of the approver being examined as a witnessin the Court of the Magistrate as required by Section 306 (4)(a) does notarise. Shri Padmesh Mishra, learned counsel for the respondent istherefore right in relying upon the decisions of this Court in SardarIqbal Singh vs. State (Delhi Administration)[19 ]and Yakub Abdul RazakMemon vs. State of Maharashtra[20]

77. In Sardar Iqbal Singh (supra) the offence was triable by theSpecial Judge who also took cognizance. Therefore, there were nocommittal proceedings. Though Sardar Iqbal Singh arose under the1898 Code, sub-section (2) of Section 337 of the 1898 Code was in parimateria with Section 306(4)(a) of the 1973 Code. Therefore, the ratiolaid down in Sardar Iqbal Singh was rightly applied in Yakub AbdulRazak Memon (supra) for coming to the conclusion that where a SpecialJudge takes cognizance of the case, the occasion for examining theapprover as a witness arises only once.

78. In any case, all decisions cited so far, uniformly say that theobject of examining an approver twice, is to ensure that the accused ismade aware of the evidence against him even at the preliminary stage, 19 (1977) 4 SCC 536

20 (2013) 13 SCC 1

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Aso as to enable him to effectively cross examine the approver duringtrial, bring out contradictions and show him to be untrustworthy. Thesaid object stands fulfilled in this case, since the confession statement ofthe approver before the XVIII Metropolitan Magistrate was enclosed tothe Charge Sheet. The approver was examined as PW-16 during trialand he was cross examined on the contents of the confession statement.BThe Magistrate who recorded the confession was examined as PW 17and the Additional Chief Judicial Magistrate who granted pardon wasexamined as PW-18. The proceedings before the XVIII MetropolitanMagistrate, the petition under section 306 of the Code and the proceedingson tender of pardon were marked respectively as EXX. P-50, 51 andC52. All the accused were given opportunity to cross examine thesewitnesses both on the procedure and on the contents.

79. In view of the above, we are of the considered view thatthere was no violation of the procedure prescribed by Section 306(4)(a)of the Code. Thus, we answer the second issue against the appellants.DPart-III (Revolving around the merits of the case quaculpability of each of the appellants before us)

As regards A-1

80. Though we have found in Part-I of this judgment that theEfailure of the prosecution to take previous sanction under Section 197(1)of the Code has vitiated the proceedings against A-1, we wouldnevertheless deal with his case on merits to see if the offences underthe IPC or under the PC Act stood proved beyond reasonable doubt.

81. To recapitulate, the allegations against A-1 are (i) that byFentering into a criminal conspiracy to cheat BHEL and award the tenderto A-5’s firm and by instructing PW-16 to go in for limited tenders withoutfollowing the procedure of pre-qualification of prospective tenderers andwithout selecting any one from the approved list of contractors, hecommitted various offences punishable under the IPC; and (ii) that byGabusing his official position and awarding the contract to A-5, he causeda wrongful loss to the tune of Rs.4.32 crores to BHEL.

82. For proving the allegations with regard to the criminalconspiracy and for establishing that A-1 decided to go in for RestrictedTender for the purpose of awarding the contract to a chosen firm andHalso for showing that A-1 directed the inclusion of four bogus firms, the prosecution relied upon its star witness, namely PW-16. But PW-16 wasthe first-named accused in the FIR, who later turned approver by givinga confession statement.

83. As rightly contended by Shri Huzefa Ahmadi, learned seniorcounsel, this Court has laid down two tests in Sarwan Singh vs. Stateof Punjab[21], to be satisfied before accepting the evidence of an approver.The first is that the approver is a reliable witness and the second is thathis statement should be corroborated with sufficient evidence. Again, inRavinder Singh vs. State of Haryana[22 ]this Court pointed out that, “anapprover is a most unworthy friend” and that he having bargained forhis immunity, must prove his worthiness for credibility in court. The testto be fulfilled was pithily put in paragraph 12 of the Report by this Courtas follows:-

“12. … This test is fulfilled, firstly, if the story he relates involveshim in the crime and appears intrinsically to be a natural andprobable catalogue of events that had taken place. The story ifgiven of minute details according with reality is likely to save itfrom being rejected brevi manu. Secondly, once that hurdle iscrossed, the story given by an approver so far as the accused ontrial is concerned, must implicate him in such a manner as to giverise to a conclusion of guilt beyond reasonable doubt. In a rarecase taking into consideration all the factors, circumstances andsituations governing a particular case, conviction based on theuncorroborated evidence of an approver confidently held to betrue and reliable by the Court may be permissible. Ordinarily,however, an approver’s statement has to be corroborated inmaterial particulars bridging closely the distance between the crimeand the criminal. Certain clinching features of involvementdisclosed by an approver appertaining directly to an accused, ifreliable, by the touchstone of other independent credible evidence,would give the needed assurance for acceptance of his testimonyon which a conviction may be based.”

84. Section 133 of the Indian Evidence Act, 1872 declares anaccomplice to be a competent witness and that a conviction is not illegalmerely because it proceeds upon the uncorroborated testimony of an 21 1957 SCR 953

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Aaccomplice. However, while considering the import of Section 133. thisCourt held in M.O. Shamsudhin vs. State of Kerala[23 ]that the court isbound to take note of a precautionary provision contained in Illustration(b) to Section 114 of the Evidence Act, which provides that anaccomplice is unworthy of credit unless he is corroborated inmaterial particulars.B

85. Keeping the above principles in mind, if we turn our attentionto the evidence of PW-16, it will be seen that he was trying to shift theburden on A-1, to save his own skin. The following admissions made byhim during the cross-examination showed that he was unworthy of credit:-

(i) There was no approved list of contractors maintained atBHEL, Trichy, till 1994; C

(ii) It is not correct to say that open tender system was not atall resorted to by Civil Engineering Department in BHEL,Trichy till 1994. I cannot recollect single instance of opentender as I have forgotten;D

(iii) During my tenure I did not initiate anything to cancel theaward of contract to Entoma Hydro Systems. It is true thatI did not take steps to annul the contract as the circumstancesdid not warrant that; E(iv)I am the competent person to call the tenderers fornegotiation and in that capacity I wrote several letters tothe contractors;

(v) Exhibit P-55 is the letter dated 02.01.1993 by me to EntomaHydro Systems asking them to send fresh offer before07.01.1993;F

(vi) Exhibit P-53 is one such letter dated 31.12.1992 written byme to Mercantile Construction Corporation;

(vii) In Exhibits P-53 and P-54 it is mentioned as “incontinuation of the telephonic conversation we had”;G(viii) As per Exhibit P-39, one Mr. R. Ilango representedMercantile Construction Corporation in the meeting heldon 11.01.1993. As per Exhibit P-40 one Mr. J.N.J. Chandranattended the meeting held on 11.01.1993 representingRaghav Engineers and Builders; and H23 (1995) 3 SCC 351

(ix) As per the limited tender policy, tender enquiry ought to beaddressed only to eligible and qualified parties. Keeping itin my mind I have prepared Exhibit P-27 note, dated25.11.1992.

86. In his examination-in-chief, PW-16 claimed thatsomewherein 1992 he came to know for the first time from A-1 regarding theproposal for construction of Desalination Plants and that one dayA-1 called him to his office and said that he had located a person inChennai who was a dynamic person, resourceful person, go-getterand an achiever.It was his positive assertion in chief examination thaton the same day A-1 told him to prepare tender documents and hencehe returned to his office and instructed the Tender Department to preparethe tender document. What has happened subsequently is narrated byPW-16 in chief examination as follows:

“… After some time A1 again called me to his office and told methat he had collected the names and addresses of some contractorsfrom TWAD Board who were in a position to take up the work ifawarded. Then I told him that the tender documents were readyand that I could send the same if it was furnished with the namesand address of the contractors. Then, A1 dictated the following 5names

1) Entomo Hydro Systems, Madras.

2) East Coast Builders, Madras.

3) Turn Key Construction Company, Madras.

4) Raghava Engineers and Builders, Madras.

5) Mercantile Construction Company, Madras.

I noted down these names. Then I told him that I had no knowledgeof any of these 5 companies, might be they were exclusively theTWAD Board contractors and I might not be aware of them.Some of these names like East Coast Builders, Turn KeyConstruction Company, Raghava Engineers and Builders appearedto be similar to the names of big companies i.e. may be subsidiariesof some big companies. I further told him that big companies likeL&T and Geo Miller could also be included in that list because itwould give some respectability to the list. A1 thought for sometime and told me that these two companies may also be included.”

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A87. But in cross-examination, he admitted that Exhibit P-33 was aletter dated 22.10.1992 written by one Sri Kantarao, Manager (Civil/Design) to Ganesan (PW-14) and that there was a note in that letter tothe effect that Ganesan has discussed this matter with DGM, Civil. PW-16 further admitted that it was possible that Ganesan might have discussedwith him.B

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88. The above statement in cross-examination shows that thediscussion between PW-16 and PW-14 took place on 22.10.1992. Butthe discussion with A-1 and the dictation of five names took place evenaccording to PW-16, only in November, 1992. In fact, Exhibit P-33 letterwhich was dated 22.10.1992, according to PW-16 dealt with invitingClimited tender.

89. If discussions had taken place between PW-16 and someoneelse in October, 1992 and a decision taken in that meeting to go forlimited tender, it is inconceivable as to how the original sin can be attributedto A-1, especially when the discussion between PW-16 and A-1 tookDplace only in November, 1992 wherein the dictation of four bogus namesand that of the prospective contractor allegedly took place.

90. PW-16 admitted during cross-examination that he discussedwith A-1 on the day when tender documents were dispatched through‘speed post’ and that was on 26.11.1992. But it was brought on recordEthrough the evidence of DW-2 and DW-3 that A-1 was absent on26.11.1992 due to the death of his mother-in-law. In any case, PW-16admitted in cross-examination that he had signed Exhibit P-27 note evenon 25.11.1992, which was one day before the date on which he haddiscussion with A-1.

F91. The story advanced by PW-16 that the other four firms wereactually bogus firms, is belied by his own statement to the effect that asper Exhibits P-39 and P-40, two individuals represented two out of thosefour firms in the meeting held on 11.01.1993. If those firms were bogusfirms, there is no explanation as to how they were represented in themeeting.G

92. It was admitted by PW-16 that in Exhibits P-53 and P-54,(letters written to two of those firms) there was an indication as thoughthe letters were in continuation of the telephonic conversation they had.

93. In other words, two of the four firms, which were branded asbogus firms by PW-16, have had discussions with PW-16 and they haveHalso attended the meetings.

94. To cap all this, PW-16 admitted:

“I recommended the contract to be given to Entoma who wasthe lowest tenderer. I recommended the contract to be givento A5 not because of A1’s interest.”

95. Therefore, nothing more was required to show that PW-16was unworthy of credit and the conviction based upon such a person asa star witness, cannot be sustained.

96. On the question whether BHEL suffered a wrongful loss orwhether A-5 or any other firm with which he was associated had awrongful gain, the evidence of PW-24 who was the Deputy Manager(Finance) BHEL is crucial. In his cross-examination, PW-24 stated asfollows:- “…In the course of the enquiry by the CBI official they asked meto send a detailed account copies. As per their request I sentthem. Ex. D1 is the true copy of the accounts I sent to CBI. Asfar as this contract is concerned as the bank guarantee was revokedM/s BHEL Trichy has not lost any money in this contract. As amatter of fact A.5 the contractors’ money to the tune ofRs.1,61,86,234/- in with M/s BHEL Trichy. Apart from this amountan amount of Rs.98,52,286/- is payable to accused No.5 by BHELtowards the work done by him…”

97. Two things are borne out of the above admission made byPW-24. The first is that even at the time of investigation, PW-24 hadprovided to the I.O., a detailed accounts copy showing that BHEL hadnot suffered any loss and that on the contrary, a sum of Rs.2.60 croreswas payable to Entoma. But for some inexplicable reason, the copy ofthe said accounts statement was not produced by the CBI before theCourt. The same had to be marked as Defense Exhibit D-1 while cross-examining PW-24. Therefore, it is clear that this statement of accountwas burked, so that a picture is painted as though BHEL suffered wrongfulloss.

98. The second thing that flows out of PW-24’s cross-examinationextracted above, is that even after invoking the bank guarantee andappropriating the same towards the monies already paid, BHEL was stillleft with the contractor’s money of Rs.1,61,86,234/- apart from an amountof Rs.98,52,286/- payable to A-5 by BHEL towards the work done.

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A99. Therefore, it is clear that it was A-5 who actually got into amess, both financially and legally, by bagging the contract. Rather thanmaking any gain much less unlawful gain, the contractor has lost theabove two amounts, in addition to having the bank guarantee invoked.

100. Unfortunately, the Trial Court fell into a trap because of theBstatement that an amount of Rs.1,52,50,000/- was transferred by EntomaHydro Systems from the amount of mobilization advance, to the accountof another firm of which A-5 to A-7 were partners. The Trial Courtconcluded that the partnership firm M/s Insecticides & Allied Chemicalshad a wrongful gain to the extent of this amount, forgetting for a momentthat if it was BHEL’s money that was received by the said firm, whatCwas paid back, by the same logic should have been the firm’s money.There cannot be two different yardsticks, one relating to the moneyreceived by the partnership firm and another relating to the money realizedby BHEL. As a matter of fact, mobilization advance is intended to beused for the purchase of materials. The DGM (EMS), BHEL, examinedDas PW-34 stated even in chief examination that in the initial stages, thecontract had gone very well and that up to the stage of water qualitytesting, the contractor was doing well. Therefore, the mobilization advancewas necessarily to be spent. A suspicion cannot be thrown, solely on thebasis of the person to whom the payments were made. If what was paidby BHEL to A-5 had been shared by A-6 and A-7, what was realizedEfrom A-5 through the invocation of the bank guarantee, cannot be takenadvantage of to contend that A-6 and A-7 did not repay the money. Thelogic adopted by Trial Court in this regard was completely flawed.

101. Both the Trial Court and the High Court considered the oralevidence of PW-2 (a Chartered Accountant), PW-3 (an officer of theFChennai Telephones) and a few others to come to the conclusion thatthe names of four other firms included in Exhibit P-26 chit were bogus.But both the Trial Court and the High Court overlooked the admissionsmade by PW-16 that he held negotiations at least with two out of thosefour firms and that the representatives of those two firms even attendedGthe meetings.

102. The Trial Court and the High Court came to the conclusionthat the names of two big companies were included in Exhibit P-26 chitonly to lend credibility to the process adopted. But it was on recordthrough the statement of PW-4, Manager of L&T Company that a tenderHenquiry was received by them from BHEL. If the inclusion of the names of those two companies were intended to be a make belief affair, A-1would not have taken the risk of sending the letter and that too to acompany like L&T. Therefore, we are of the view, (i) that the evidenceof PW-16 was not worthy of credit; (ii) that even assuming that ithas some credibility, his statement that “he recommended thecontract to be given to A-5 not because of A-1’s interest”, made thewhole edifice upon which the case of the prosecution was built,collapse; and (iii)that there was no other evidence to connect A-1with the commission of these offences.

103. In fact, the only person found by both the Courts to be guiltyof the offence under Section 120B was A-1. Therefore, an argumentwas advanced that a single person cannot be held guilty of criminalconspiracy. But this contention was repelled by the Courts on the groundthat PW-16 was the second person with whom A-1 had entered into aconspiracy. In other words, the reasoning adopted by the Trial Court andthe High Court was that only A-1 and PW-16 were part of the conspiracy.Such a reasoning was a huge climbdown from the original charge thatA-1 to A-7 entered into a criminal conspiracy, to cause wrongful loss toBHEL and to confer a wrongful gain to A-5 to A-7. Once an offence ofSection 120B is not made out against A-5 to A-7, the very foundation forthe prosecution becomes shaky. Therefore, we are of the view that theconviction of A-1 for the offences under Section 120B read with Sections420, 468, Section 471 read with Section 468 and Section 193 IPC andSection 13(2) read with Section 13(1)(d) of the PC Act cannot besustained.

104. We are surprised that A-1 was found guilty of an offenceunder Section 193. Section 193 applies only to false evidence given inany stage of a judicial proceeding or the fabrication of false evidence forthe purpose of being used in any stage of a judicial proceeding. Theallegation against A-1 was not even remotely linked to any of theExplanations under Section 193 of the IPC. Therefore, the judgment ofthe Trial Court and that of the High Court convicting A-1 for the aforesaidoffences and sentencing him to imprisonment of varying terms and finesof different amounts are liable to be reversed.

As regards A-4

105. As can be seen from the judgment of the Trial Court, A-4was convicted for the offences under Section 109 read with Section420, 468 IPC, Section 471 read with 468 IPC and Section 193 IPC.

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A106. As we have pointed out in the last paragraph dealing with thecase of A-1, Section 193 IPC deals with punishment for false evidence,given intentionally in any stage of a judicial proceeding. It also includesfabrication of false evidence for the purpose of being used in any stageof a judicial proceeding. There are three Explanations under Section193. Explanation 2 under Section 193 makes an investigation directed byBlaw preliminary to a proceeding before a Court of Justice, to be a stageof judicial proceeding, though that investigation may not take place beforea Court of Justice. Similarly, Explanation 3 makes an investigation directedby a Court of Justice according to law, and conducted under the authorityof a Court of Justice, to be a stage of judicial proceeding, though thatCinvestigation may not take place before a Court of Justice.

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107. Interestingly, there was no allegation that either A-1 or A-3or A-4 either gave false evidence or fabricated false evidence in anystage of a judicial proceeding, falling within any of the three Explanationsunder Section 193. But unfortunately, the Trial Court found A-4 guilty ofDthe offence under Section 193, without there being any specific allegationin the charge-sheet and without there being any specific finding on merits.

108. As rightly contended by Shri S.R. Raghunathan, learnedcounsel for A-4, no Court shall take cognizance of any offence punishableunder Section 193 IPC, except on a complaint in writing of that Court orEof some other Court to which that Court is subordinate. This bar is foundin Section 195(1)(b)(i) of the Code. No complaint was ever made byany Court or by any officer authorized by any Court that A-1 or A-3 orA-4 committed an offence punishable under Section 193 IPC. Butunfortunately, the Trial Court convicted A-1, A-3 and A-4, of the offenceunder Section 193 without any application of mind and the same hasFbeen upheld by the High Court.

109. Even according to the prosecution, the only role played byA-4 was that of being a member of a Committee constituted on23.12.1992. Much ado was sought to be made, about the nature of theCommittee and as to whether it was a Tender Committee or NegotiationGCommittee. Due to the heat and dust created about the role and thename of the Committee, it was completely overlooked that this Committeecame into the picture only after much water had flown under the bridge,by (i) deciding to go for a Restricted Tender; (ii) by issuing tender noticesto seven identified contractors; (iii) by receiving the offers from fiveHcontractors; and (iv) by opening the tender documents on 18.12.1992

for the purpose of further processing. For the purpose of establishing anoffence of cheating, what is important is the mindset at the beginning,when the criminal conspiracy was hatched. At the time when the criminalconspiracy was allegedly hatched in October/November, 1992, A-3 andA-4 were not at all in the picture. They came into the picture only on23.12.1992. The Note dated 23.12.1992 by which the NegotiationCommittee was constituted brings on record the fact that five namedcontractors had submitted their offers. The names and addresses of allthe five contractors, the amounts quoted by them and the date and modeof receipt of the offers are all presented in the form of a table in theNote dated 23.12.1992. After noting all these particulars, the Note datedated 23.12.1992 proceeds to state the object behind the constitution ofthe Committee as follows:- “As the quoted value by the tenderers are very high, it is proposedto conduct negotiation with the lowest three tenderers under SerialNos.1 to 3.”

110. Therefore, the reading of the trial Court and the High Courtas though this Committee of which A-3, A-4 and the Approver were apart, was actually a Tender Committee having a larger role to play, iscompletely misconceived.

111. In fact, the prosecution had to stand or fall on the strength ofthe testimony of the Approver namely PW-16. But this is what PW-16said about the role played by A-3 and A-4.

“A3 Thiagarajan and A4 Chandrasekaran had absolutely nothingto do in choosing the contractors in this case. Their only job wasto negotiate with the three lowest tenderers. With that their jobwill be over. As the members of the committee A3 and A4 didtheir job well. In this case the contractor awarded 50% asmobilization advance and that was reduced to 30% because ofthe negotiation by the committee. The negotiation committee hadinsisted the bank guarantee for the amount and obtained the bankguarantee also. Though the negotiations were completed as earlyas in January, 1993 letter of intent came to be issued only in July1994 i.e. after 18 months. It is true that because of the efforts ofthe negotiation committee the contractor was persuaded not tohike the rate because of the delay of 18 months in issuing thework order.”

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A112. Despite the above assertion on the part of PW-16 giving aclean chit to A-3 and A-4, the Trial Court found both of them guilty on aconvoluted logic that they were part of a Tender Committee and that“every word and every description in Exhibit P-36 (Tender Committeeproceedings) had been written by them with a view to cheat BHEL”and that “if A-3 and A-4 were innocent they should have questionedBand asked for details regarding the contractors.” Such a reasoninggiven by the trial Court and approved by the Trial Court and approved bythe High Court was completely perverse.

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113. As rightly contended by the learned counsel, A-4 had no rolein choosing the tenderers, but entered the picture only after the offersCwere received from the tenderers. Admittedly, A-4 was subordinate toboth PW-16 and A-3.

114. At the cost of repetition, it should be pointed out that thecompetent authority refused to grant sanction to prosecute A-3 and A-4for the offences under the PC Act. The Trial Court and the High CourtDdid not find A-4 as a co-conspirator, which is why he was not held guiltyof the offence under Section 120-B IPC. Section 193 IPC had beenincluded completely out of context.

115. For all the above reasons, we are of the view that theconviction of A-4 by the Trial Court as confirmed by the High Court isEwholly unsustainable and is liable to be set aside.

As regards A-7

116. The role attributed to A-7 was that he applied for and obtaineddemand drafts, in the names of four different bogus firms, drawn inFfavour of BHEL for a sum of Rs.20,000/- each to make it appear asthough they were real firms, though they were not in existence. A-7 wasalso accused of causing wrongful loss to BHEL along with A-5 and A-6to the tune of Rs.4.32 crores. A-7 was also accused of abetting A-1 andA-2 to commit criminal misconduct by misusing their official positionand obtaining pecuniary advantage to themselves.G

117. To establish that A-7 filed applications with different banksfor the issue of demand drafts in the names of four bogus firms, theprosecution examined PW-22, a Senior Manager of Indian Bank, PW-32, the Branch Manager of State Bank of India, PW-40, the SeniorManager of Bank of Madura, PW-41, the Chief Manager of State BankHof Mysore and PW-30, the handwriting expert. The prosecution marked Exhibits P-66, P-76, P-90 and P-92, which were the applications submittedin the names of the four bogus firms, to these banks for the issue ofdemand drafts.

118. PW-22 through whom Exhibit P-66 was marked did not sayeven in the chief-examination that the application form was signed byA-7. PW-32 through whom Exhibit P-76 was marked, stated in the chief-examination that on the date of the application for the issue of demanddraft he was not working in that branch and that he joined the branch sixyears later. He also admitted that he could not know anything about thedemand draft application personally. But he claimed in the chief-examination that A-6, the father of A-5 and A-7, was the owner of thepremises in which the branch was located and that he could identify thesignature of A-7 in Exhibit P-76. However, in cross-examination headmitted:

“the applicant’s signature was available in the branch. I did notcompare the specimen signature with the signature in the DDApplication. When I was examined by CBI, I did not ask for thespecimen signature of the applicant.”

119. PW-40 through whom Exhibit P-90 was marked, did not sayanything in the chief-examination that A-7 signed the application formfor demand draft. He merely identified the demand draft applicationform and the party on whose behalf the demand draft was taken. Inother words, PW-40, like PW-22 did not implicate A-7 as the personwho signed the application for the issue of demand draft on behalf ofsome bogus firms.

120. PW-41 through whom Exhibit P-92 was marked, merely statedas to who obtained the demand draft. He did not also specifically nameA-7 as the person who signed the application form or who received thedemand draft.

121. In fact, PW-40 stated that no statement under Section 161 ofthe Code was recorded by the I.O. though he was examined. Similarly,PW-41 stated that he was examined by the Inspector, CBI but he did notknow whether a statement under Section 161 was recorded.

122. Thus, three out of four bank officials examined by theprosecution to show that A-7 applied for demand drafts on behalf offour bogus firms, did not identify A-7 as the person who applied for the AB

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Ademand drafts. They did not also identify the handwriting in Exhibits P-66, P-90 and P-92 as that of A-7. The only person who stated somethingin favour of the prosecution was PW-32 and it was in relation to ExhibitP-76.

123. It is on account of the slippery nature of their evidence thatBthe prosecution chose to send Exhibits P-66, P-76, P-90 and P-92 forexamination by the handwriting expert. The handwriting expert wasexamined as PW-30 and his Report dated 16.09.1998 was marked asExhibit P-68.

124. The specimen writings and signatures of A-5 were identifiedCby PW-30 as S1 to S31 and marked as Exhibit P-70. The specimenwritings/signatures of A-7 were identified as S63 to S73A and markedas Exhibit P-75 series.

125. In the chief-examination, PW-30, the handwriting expertstated that in his opinion, the writer of the specimen writings/ signaturesDmarked as S1 to S31 in Exhibit P-70, was the person responsible forwriting the red-encircled questioned writings in certain documents. Thewriter of the specimen writings and signatures identified in Exhibit P-70was A-5 and not A-7.

126. Similarly, PW-30 identified the writer of the specimen writingsEin S40 and S41 marked as Exhibit P-73 as the person responsible forwriting Exhibit P-26. This related to K. Bhaskar Rao (PW-16) and thereference was to the chit in which the names of five firms were originallydictated and the names of two later included. Similarly, PW-30 identifiedin chief examination, the specimen writings marked in S42 to S62 andS93 to S96 in Exhibit P-74 as that of the person whose writings areFfound in Exhibit P-26. S42 to S62 and S93 to S96 were that of A-6.

127. After thus relating the specimen writings and signatures ofA-5, PW-16 and A-6 to some of the questioned writings, the handwritingexpert made it clear even in his chief examination that it was not possiblefor him to express any opinion on the rest of the questioned items on theGbasis of the material on hand. In other words, the handwriting expertexamined as PW-30, did not go to the rescue of the prosecution even inhis chief examination in so far as A-7 is concerned. His report markedas Exhibit P-68 did not implicate A-7 as the person in whose handwritingand signature, Exhibits P-66, P-76, P-90 and P-92 were written andsigned.H

128. Thus, there was a colossal failure on the part of theprosecution to establish that Exhibits P-66, P-76, P-90 and P-92 were inthe handwritings/signatures of A-7. This is despite the prosecutionexamining the bank officials as PW-22, PW-32, PW-40 and PW-41 andthe handwriting expert as PW-30.

129. Unfortunately, the Trial Court adopted a very curious reasoningin paragraph 91 (the only paragraph in which the reasons were given inthis regard) that since he was a beneficiary of the money diverted to theaccount of Insecticides & Allied Chemicals, he must have hadparticipation and knowledge that the demand drafts were purchased tocheat BHEL. Such a reasoning is wholly unacceptable in view of thefact that A-7 was accused of forgery and charged under Section 468IPC, in relation to these very same applications for demand drafts.Therefore, it was necessary for the prosecution to prove forgery andalso to show that the purpose of such forgery was cheating. Both wereabsent.

130. The High Court fortunately realised the pitfall in the reasoningof the Trial Court. But in an over-anxiety to somehow convict A-7, theHigh Court adopted a very peculiar route, namely that of undertakingthe task of comparing the admitted signatures/ handwritings with thedisputed ones under Section 73 of the Evidence Act.

131. For invoking Section 73, there must first have been somesignature or writing admitted or proved to the satisfaction of the Court,to have been written or made by that person. The Section empowers theCourt also to direct any person present in Court to write any words orfigures for the purpose of enabling the Court to compare the words orfigures.

132. There was no signature or writing available before the HighCourt, which had been admitted or proved to the satisfaction of theCourt to have been written or made. The High Court did not also directA-7 to write any words or figures for the purpose of enabling acomparison. Without following the procedure so prescribed in Section73, the High Court invented a novel procedure, to uphold the convictionhanded over by the Trial Court through a wrong reasoning.

133. In fact, the High Court considered Exhibit P-75 to be thedocument containing the admitted handwritings and signatures of A-7and compared what was found therein with the handwritings/signaturesfound in Exhibits P-66, P-76, P-90 and P-92.

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A134. But what was contained in Exhibit P-75 was never admittedby A-7 to be in his handwriting. Exhibit P-75 was marked through PW-30, the handwriting expert, and not even by the I.O. At least if the I.O.had identified and marked the specimen writings and signatures of A-7as Exhibit P-75, it was possible for the prosecution to contend that thespecimen signatures stood proved. But the I.O. did not identify ExhibitBP-75. PW-30 through whom Exhibit P-75 was marked did not directlyobtain the specimen writings of A-7. The statement of PW-30 that thespecimen writings of A-7 are in Exhibit P-75 was only hearsay evidence,as he did not directly obtain those specimen signatures. Thus, Exhibit P-75 never stood proved.C

A

135. Even in the questioning under Section 313 of the Code, nospecific question was put to A-7 whether Exhibits P-66, P-76, P-90, P-92 and P-75 were in his handwritings and whether they contained hissignatures. Therefore, what was contained in Exhibit P-75 was not evenadmitted signatures.D

136. In the absence of either admission or proof of the admittedsignatures, the High Court could not have resorted to Section 73 of theEvidence Act.

137. In view of the above, the finding recorded by the Trial Courtand the High Court as though A-7 committed forgery and cheating byEmaking applications for the issue of demand drafts in the names of bogusfirms is wholly unsustainable.

138. The only connecting link pointed out against A-7 was thetransfer of money to the total extent of Rs.1,52,50,000/- to the accountFof a firm of which he was a partner. This by itself will not constitute anyoffence. Therefore, the charge that A-7 abetted the commission of thecrime by the other accused, should also fail. This is especially so whenA-5, whose proprietary concern bagged the contract, not only lost thecontract but also allowed the bank guarantee to be invoked by BHELand in addition, left a huge amount of Rs.2.60 crores still with BHEL.GTherefore, the conviction and sentence awarded to A-7 cannot besustained.

Conclusion

139. In the light of the above discussion, all the appeals are allowedand the judgment of the Special Court for CBI cases convicting theH

appellants for various offences and the judgment of the High Courtconfirming the same are set aside. The appellants are acquitted of allthe charges. The bail bonds, if any, furnished by them shall standdischarged.

Nidhi Jain(Assisted by : Tamana, LCRA)

Appeals allowed.

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