Union of India Vs. M/s. Susaka Pvt. Ltd. & Ors.

[Civil Appeal No.8530 of 2009]

Abhay Manohar Sapre, J.

1. This appeal is filed by the Union of India against the final judgment and order dated 11.02.2005 passed by
the High Court of Bombay in Appeal (Ld) No.666 of 2003 in Arbitration Petition No.96 of 2003 whereby the
Division Bench of the High Court allowed the appeal filed by respondent No.1 herein and set aside the order
dated 21.04.2003 passed by the Single Judge in Arbitration Petition No.96 of 2003.

2. The issue involved in the appeal is short and, therefore, it is not necessary to set out the entire factual
scenario of the case except to the extent necessary to appreciate the issue.

3. In short, the question, which arises for consideration in this appeal, is whether the Arbitral Tribunal was
justified in awarding interest on various claims for different periods to the claimant (respondent No.1),
namely,

(i) for a pre-reference period, i.e., 04.03.1996 to 05.05.1999 @ 15% p.a.;

(ii) pendent lite, i.e., for the period from 06.05.1999 to 09.09.2002 @ 12% p.a.; and

(iii) post reference period, i.e., 09.09.2002 till payment @ 18% p.a., total (first and second) Rs.12,89,033/-
on the awarded sum.

Brief facts:

4. A works contract (repairing work of 25 No. stators of TAO-659 Traction Motors of Electric Locomotives
type WCAMI of Electric Loco Shed-Valsad) was awarded by the Union of India (Railways) - the appellant
herein to respondent No.1 (claimant) on 19.12.1994.

5. In execution of the works contract, various disputes arose between the parties. Since the General
Conditions of Contract (in short, "GCC") contained Clause 56(1) to decide the disputes arising out of the
contract through arbitration, respondent No.1(claimant) invoked the arbitration clause and filed an
application in the High Court of Bombay under Section 11(5) of the Arbitration and Conciliation Act
(hereinafter referred to as "the Act") praying therein for appointment of the Arbitral Tribunal in terms of
Clause 56(1) and to make a reference to the Arbitral Tribunal for deciding the disputes which had arisen
between the parties.

6. The High Court, by order dated 27.07.2001, with consent of both the parties allowed respondent No.1's
application and referred the various claims (1 4 to 17) made by the respondent (claimant) against the
appellant for their adjudication by the Arbitral Tribunal, which consisted of three Arbitrators (Railway
Officials). The order making the reference to the Arbitral Tribunal reads as under:

"There is no dispute that claims Nos. 1 to 13 which are mentioned in the letter dated 19th August, 1999,
Exhibit "B" to the Application, are already referred for arbitration to Shri B.B. Verma, Presiding Joint
Arbitrator & FA & CAO (I), Churchgate and two other Arbitrators,

(i) Shri Arunendra Kumar, Jt. Arbitrator & CRSE, Churchgate and

(ii) Shri S.K. Kulshrestha, Jt. Arbitrator & CE, N.F. Railway.

2. By Consent, claim at Sr. No. 16 (Claim No. 2.1) and at Sr. No. 17 (Claim No. 2.2) are also referred for
arbitration to the same Arbitrators who shall decide these claims along with claim Nos. 1 to 15. They shall
also be free to decide pre-reference interest, Pendente lite interest, further interest and costs considering the
agreement. The Respondent shall be free to file counter-claim, if any."

7. Parties submitted to the jurisdiction of the Arbitral Tribunal, filed their statement of claim/reply etc. and
adduced evidence. The Arbitral Tribunal, by their unanimous reasoned award dated 5 11.09.2002, partly
allowed the claims of respondent No.1 against the appellant as under:

Claim No. Brief Description Claim Amount in Rs. Amount awarded

in Rs.
1.1 Loss suffered due to under-utilization of equipment 6,97,554 3,48,777
purchased specially for This contract.
1.2 Material purchased not utilized. 3,00,723 3,00,723
1.3 Loss of Profit 4,65,409 (Revised to 2,32,703
Rs. 4,44,620)
1.4,1.5 & 1.4 -Overheads during contracted period under 4,65,409 3,41,830
2.1 utilized-
1.5-Overheads from 9.6.1995 to 4.3.1996 - 3,89,165
2.1-Overheads from 5.3.1996 to 30.06.1996 3,06,748
1.7 & 2.2 1.7 - Amount for the period 1.7.94 to 29.6.1996 3,28,085 1,64,042
 2.2 - Amount for the period 5.3.96 to 30.09.1996 1,24,174
1.6 Payment under price variation clause 85,106 85,106
1.8 & 2.3 Payment of pre lite interest from 13.12.95 to 5.5.99 As accrued 12,89,033
2.4
Total 27,62,214

8. The appellant-Union of India, felt aggrieved of the Arbitral Award, challenged its legality by filing an
application under Section 34 of the Act in Bombay High Court (Single Judge).

9. The Single Judge, by order dated 21.04.2003, allowed the appeal in part and made two modifications in
the arbitral award with respect to the date of award of interest on the claim of respondent No.1 for damages
and on the claim of one purchase item. The Single Judge made the interest payable from the date of award
till realization. So far as the challenge to other claims including award of interest on such claims were
concerned, the Single Judge rejected the appellant's all objections and upheld the award in totality for all
purposes.

10. Respondent No.1 (claimant), felt aggrieved against that part of the order of the Single Judge which
interfered in part in the arbitral award, filed appeal before the Division Bench. So far as the appellant-Union
of India was concerned, they did not file any appeal against that part of the order of the Single Judge which
had rejected substantially their application filed under Section 34 of the Act. In this view of the matter, the
award to that extent became final.

11. By impugned judgment, the Division Bench of the High Court allowed respondent No.1's appeal and set
aside the order of the Single Judge. It was held that no ground under Section 34 of the Act had been made
out by the Union of India to modify the award to the extent of awarding interest on the claim.

In other words, in the opinion of Division Bench, the ground on which the limited interference was made by
the Single Judge for setting aside a part of the Award in relation to award of interest from a particular date
on two (2) claims to respondent No.1 (claimant) was not a ground falling under Section 34 of the Act and,
therefore, the order of Single Judge was not legally sustainable. It was accordingly set aside resulting in
upholding of the entire award and dismissal of Section 34 application in its entirety. It is against this order,
the Union of India (Railways) felt aggrieved and filed the present appeal by way of special leave in this
Court.

12. Heard Ms. Kiran Suri, learned senior counsel for the appellant and Mr. Vinay Navare, learned counsel
for respondent No.1.

13. Ms. Kiran Suri, learned senior counsel, appearing for the appellant (Union of India) while challenging the
legality and correctness of the impugned judgment has argued only one point.

14. According to learned counsel, the Arbitral Tribunal mis-conducted in awarding interest on various claims
and, therefore, a ground to set aside the arbitral award under Section 34 of the Act is made out.

15. Placing reliance on Clause 13(3) of GCC, learned counsel urged that since clause 13(3) provides that no
interest will be payable upon the earnest money or the security deposit or amounts payable to the contractor
under the contract (except Government securities), respondent No.1 (claimant) was not entitled to claim
interest on any of the heads.

16. In other words, the submission was that the Arbitral Tribunal mis-conducted in awarding interest to
respondent No.1 (claimant) on their various claims when the clause 13(3) of GCC did not allow them to
claim any interest on the sums payable under the contract except on Government securities, if deposited
with the appellant.

17. It was, therefore, her submission that the award to this extent was not legally sustainable and, therefore,
it was liable to be set aside under Section 34 of the Act. Learned counsel elaborated this submission by
placing reliance on the provisions of the Act and some decided cases cited at the Bar.

18. In reply, learned counsel for respondent No.1 (claimant) supported the impugned judgment and
contended that the aforementioned point urged by the appellant was neither raised nor urged before the
Arbitral Tribunal nor the High Court, i.e., Single Judge and also Division Bench and hence it cannot be
permitted to be raised, for the first time, in an 11 appeal under Article 136 of the Constitution for want of any
factual foundation and finding by any Court on such plea.

19. Having heard learned counsel for the parties and on perusal of the record of the case, we are inclined to
accept the argument of learned counsel for respondent No.1 as, in our view, it has a force and hence
deserves acceptance.

20. It is not in dispute that the appellant did not raise the plea based on clause 13(3) of the GCC against
respondent No.1 at any stage of the proceedings either in their reply filed before the Arbitral Tribunal or/and
in submissions except raising it, for the first time, before this Court in this appeal.

21. On the other hand, we find that in Section 11 (5) proceedings, the appellant did not raise this objection in
their reply and instead gave their express consent to refer the issue of award of interest payable on various
claims (1 to 17) to Arbitral Tribunal considering the said claim to be arbitrable under the contract.
22. In our opinion, the appellant could have registered their objection before the Single Judge at the time of
making a reference to the Arbitral Tribunal by pointing out Clause 13(3) of GCC or could have reserved their
right to raise such objection before the Arbitral Tribunal. It was, however, not done.

23. Not only that, we further find that the appellant, in their reply, filed before the Arbitral Tribunal also did
not raise this plea and allowed the Arbitral Tribunal to adjudicate the said issue on merits.

24. If the appellant was so keen to place reliance on clause 13(3) of GCC to defeat the claim of respondent
No.1 relating to the award of interest on various claims, then it was necessary for the appellant to have
raised such plea specifically, in their reply, before the Arbitral Tribunal. No such plea was raised even before
the Arbitral Tribunal.

25. Though we find that the appellant raised this ground, for the first time, in Section 34 proceedings [see-
ground (cc)] before the Single Judge but again this ground was not pressed at the time of arguments. It is
clear from the perusal of the Single Judge's order. Not only that, the appellant again did not raise this plea
before the Division Bench.

26. In the light of aforementioned factual scenario emerging from the record of the case, we cannot grant
any indulgence to the appellant (Union of India) to raise such plea for the first time here. In our view, it is a
clear case of waiver or/and abandonment of a plea at the initial stage itself.

27. Everyone has a right to waive and to agree to waive the advantage of a law made solely for the benefit
and protection of the individual in his private capacity, which may be dispensed with without infringing any
public right or public policy. Cuilibet licet renuntiare juri pro se introducto. (See Maxwell on The Interpretation
of Statutes 12th Edition at page 328)

28. If a plea is available-whether on facts or law, it has to be raised by the party at appropriate stage in
accordance with law. If not raised or/and given up with consent, the party would be precluded from raising
such plea at a later stage of the proceedings on the principle of waiver. If permitted to raise, it causes
prejudice to other party. In our opinion, this principle applies to this case.

29. In our opinion, the appellant is otherwise not entitled to raise the plea on yet another ground. It is not in
dispute that the appellant's application filed under Section 34 of the Act was partly allowed by the Single
Judge only to the extent of two claims regarding award of interest. In other words, the application suffered
dismissal substantially on all other claims except two claims mentioned above. However, despite suffering
substantial dismissal, the appellant did not file any appeal to challenge the part dismissal of their application.

30. In this view of the matter, in our view, the order of the Single Judge insofar as it resulted in dismissal of
the appellant's application became final and attained finality. In order to keep the issue alive, the appellant
was under obligation to file regular appeal before the Division Bench against that part of the Single Judge's
order by which their application under Section 34 of the Act in relation to all other claims had been
dismissed. It was only then in the event of dismissal of the appeal, the issues raised therein could have been
pursued in appeal to this Court under Article 136 of the Constitution and that too only on the grounds raised
therein and decided against the appellant. It was, however, not done by the appellant.

31. In our opinion, therefore, this is yet another infirmity which renders the appeal devoid of any merit.

32. In our considered view, the grant of award of interest on arbitrable claims by the Arbitral Tribunal is not
inherently illegal or against any public policy or per se bad in law or beyond the powers of the Arbitral
Tribunal. In other words, it is permissible to award interest in arbitrable claims by the Arbitral Tribunal.

33. Indeed, Section 31(7) (a) and (b) of the Act empowers the Arbitral Tribunal to award interest on the
awarded sum and secondly, it is always subject to the agreement between the parties.

34. It is a well-settled principle in Arbitration Law that the award of an Arbitral Tribunal once passed is
binding on the parties. The reason being that the parties having chosen their own Arbitrator and given him
an authority to decide the specific disputes arising between them must respect his decision as far as
possible and should not make any attempt to find fault in each issue decided by him only because it is
decided against one party. It is only when the issue decided is found to be bad in law in the light of any of
the specified grounds set out in Section 34 of the Act, the Court may consider it appropriate to interfere in
the award else not. The case at hand falls in former category.

35. This case reminds us of the apt observations made by former Chief Justice M.C. Chagla in Firm Kaluram
Sitaram vs. The Dominion of India, AIR 1954 Bombay

50. That was also a case between the Railways and private party (citizen) wherein the learned Chief Justice,
in his distinctive style of writing, commented upon the manner in which the Railway contested the case
against the private party (citizen) by raising some technical pleas and observed as under: "Now, we have
often had occasion to say that when the State deals with a citizen it should not ordinarily rely on
technicalities, and if the State is satisfied that the case of the citizen is a just one, even though legal
defences may be open to it, it must act, as has been said by eminent judges, as an honest person."

36. The aforementioned observations has full application to the case at hand because here also, the
appellant (railways) pursued their technical legal point up to this Court against respondent No.1 (claimant)
without even raising it at any stage of proceedings much less to find out whether it could be made a ground
under Section 34 of the Act to seek its setting aside. All was being done to defeat respondent No.1's just
claim of interest which was rightly awarded by the Arbitral Tribunal and upheld by the Courts below on other
grounds.
37. Learned counsel for the appellant did not urge any other point to attack the impugned judgment including
the reasoning given in support of the award of interest except to urge the aforesaid point to challenge its
legality, which we have repelled by not permitting the appellant to raise it in this appeal.

38. In view of foregoing discussion, we find no merit in the appeal, which thus fails and is accordingly
dismissed.

............................................J. [ABHAY MANOHAR SAPRE]

............................................J. [NAVIN SINHA]

New Delhi;

December 08, 2017

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V. Gopala Gowda, J****.:— Delay condoned. Leave granted in Special Leave Petition
(Crl.) … Crl. MP No. 9612 of 2015. These appeals arise out of the common judgment
and order dated 27-5-2013 passed in N.K Ganguly v. Central Bureau Of Investigation,
New Delhi. N.K Ganguly v. Central Bureau Of Investigation, New Delhi., 2013 SCC
OnLine All 13774 by the High Court of Judicature at Allahabad dated 7-10-2014 passed
in Application No. 277KH of 2014 in Special Case No. 18 of 2012 by the learned Special
Judge, whereby the High Court dismissed the applications filed by the appellants herein
under section 482 of the code of criminal procedure, 1973 (hereinafter referred to as
“CrPC”) to quash the criminal proceedings of Special Case No. 18 of 2012 as well as the
summoning order dated 8-11-2012 passed by the learned Special Judge, Anti-Corruption,
CBI, Ghaziabad. All the appeals are being disposed of by this common judgment.
2. As the facts in all the appeals are common, for the sake of convenience, we refer to the
facts of Criminal Appeal No. 798 of 2015 in this judgment which are briefly stated
hereunder: the Indian Council of Medical Research (hereinafter referred to as “ICMR”), a
registered society under the Societies Registration Act, 1860 is a premier research
institute dealing with the formulation, coordination and promotion of biomedical
research. Its functional object is to initiate, aid, develop and coordinate medical and
scientific research in India and to promote and assist institutions for the study of diseases,
their prevention, causation and remedy. It is fully funded by the Government of India
through Department of Health Research, Ministry of Health and Family Welfare. The
Institute of Cytology and Preventive Oncology (hereinafter referred to as “ICPO”) is one
of the institutes of ICMR, the main aim of which is to promote research in the field of
cancer.
3. On 30-11-2010, a criminal case was registered under Section 120-B of the Penal Code,
1860 (hereinafter referred to as “IPC”) read with Sections 13(1)(d) and 13(2) of the
Prevention of Corruption Act, 1988 (hereinafter referred to as “the PC Act, 1988”) on the
basis of written complaint filed by M.R Atrey, Sub-Inspector of Police, CBI, EOU, VII,
New Delhi against the appellants herein, namely, N.K Ganguly, the then Director
General; Mohinder Singh, the then Sr. Dy. Director General-Admin.; P.D Seth, the then
Financial Advisor; A.K Srivastava, Executive Engineer, all from ICMR, New Delhi and
B.C Das, the then Director ICPO, Noida and other unknown persons in the matter
relating to the alleged unauthorised and illegal transfer of Plot No. 119, Sector 35, Noida,
measuring 9712.62 sq m from ICPO, Noida to ICPO-ICMR Cooperative Group Housing
Society Ltd., Noida (hereinafter referred to as “the ICPO-ICMR Housing Society”).
4. In the preliminary inquiry in the matter, it was found that the aforesaid officials and the
other unknown persons had entered into a criminal conspiracy by abusing their official
position as public servants and had unauthorisedly and illegally transferred the aforesaid
plot from ICPO to ICPO-ICMR Housing Society at a consideration of Rs 4,33,90,337
which was much lower than the then prevailing sector rate of Rs 18,000 per sq m of
Noida, thereby, giving themselves and other members of the ICPO-ICMR Housing
Society an undue pecuniary advantage. It was also revealed in the enquiry that the
membership of the ICPO-ICMR Housing Society was granted to such persons who were
otherwise not eligible for getting membership as per the bye-laws of the Society and
terms and conditions stipulated and approved by ICMR for membership in the said
Society. It was further revealed that the officers of New Okhla Industrial Development
Authority (hereinafter referred to as “Noida”) allowed the transfer of the said plot
unauthorisedly and illegally from ICPO to ICPO-ICMR Housing Society, despite the fact
that they were not competent to pass such order of transfer.
5. During the course of investigation by CBI, apart from the aforesaid named accused
persons in the FIR, the fact of the involvement of other officials, namely, L.D Pushp, the
then Administrative Officer, ICPO; Jatinder Singh, the then Senior Accounts Officer,
ICMR; Dr S.K Bhattacharya, the then Additional Director General, ICMR; Dr Bela Shah,
Head of NCD Division, ICMR; Smt Bhawani Thiagarajan, the then Joint Secretary,
Ministry of Health and Family Welfare, Government of India; S.C Pabreja, the then
Manager (Residential Plots), Noida and R.S Yadav, OSD (Residential Plots), Noida, was
revealed.
6. After completion of the investigation, a charge-sheet was filed against the appellants
for the alleged offences committed by them on account of unauthorised and illegal
transfer of the plot in question in favour of the ICPO-ICMR Housing Society.
7***. The competent authority of ICMR granted sanction under section 19 of the pc act,
1988 for prosecuting A.K Srivastava and Dr Bela Shah. The charge-sheet was filed
before the learned Special Judge, Anti-Corruption, CBI (hereinafter referred to as “the
Special Judge”) against all the appellants, except R.S Yadav, OSD, Noida, under Section
173(2) CrPC for the offences punishable under section 120-b ipc read with sections
13(1)(d) and 13(2) of the pc act, 1988. The requisite sanction for prosecution against
R.S Yadav was declined by the competent authority. After considering the charge-sheet
and other materials available on record, the learned Special Judge came to the conclusion
that a prima facie case appeared to have been made out by CBI against the appellants.
Accordingly, the learned Special Judge vide his order dated 8-11-2012 has taken
cognizance and summons were issued against the appellants to face the trial for the said
offences.
8. Aggrieved of the order of taking cognizance and issuance of summons, the appellants
filed applications before the High Court of Allahabad under Section 482 CrPC, urging
various grounds and prayed that the entire proceedings on the file of the learned Special
Judge in Case No. 18 of 2012 be quashed. Finding no merit in the applications filed by
the appellants, the High Court refused to interfere with the order of the learned Special
Judge dated 8-11-2012 and dismissed the same.
9. The learned Judge of the High Court held as under: (Prof. N.K Ganguly case, SCC
OnLine All paras 73 & 78)
“73. …. at this stage it cannot be said that no offence under section 120-b ipc read with
sections 13(2) and 13(1)(d) of the prevention of corruption act is made out against the
petitioners. There are sufficient materials available on record which may prima facie
establish the involvement of the petitioners accused in commission of the aforesaid offences
by getting the plot in question transferred for the purposes of constructing flats to ICPO-
ICMR Cooperative Group Housing Society (a private housing society) in which they were
also the members and ultimately after construction of the flats they also obtained individual
flats after getting pecuniary benefit for themselves and others and caused loss to the ICPO-
ICMR (a fully government funded body). Due to the said transfer of plots allotted to ICPO
for staff quarters, the officials of the ICPO have been permanently deprived of getting official
quarters in future.
***
78. In this case, the role of each petitioner in processing, approving and ultimately getting the
plot in question transferred to ICPO-ICMR Cooperative Group Housing Society (a private
housing society) has been categorically assigned by the prosecution and after conducting
thorough and detailed investigation in the matter, the charge-sheet has been submitted against
them, on which the learned Special Judge, Anti-Corruption, CBI, Ghaziabad has taken
cognizance. In my considered opinion, there appears to be no infirmity, illegality, irregularity
or jurisdictional error in submitting the charge-sheet by CBI and taking cognizance thereon
by the learned Special Judge, Anti-Corruption, CBI, Ghaziabad.”
Hence, the present appeals.
10. We have heard Mr P.P Khurana, Mr Gopal Subramanium and Mr R. Basant, the
learned Senior Counsel appearing on behalf of the appellants, and Mr P.S Patwalia, the
learned Additional Solicitor General and Ms Kiran Suri, learned Senior Counsel
appearing on behalf of the respondent.
11. On the basis of the factual evidence on record produced before us, the circumstances
of the case and also in the light of the rival legal contentions urged by the learned Senior
Counsel for both the parties, we have broadly framed the following points that would
arise for our consideration:
11.1 (i) Whether an offence under Section 120-B IPC is made out against the appellants,
and if so, whether previous sanction of the Central Government is required to prosecute
them for the same?
11.2 (ii) Whether the order dated 8-11-2012 passed by the learned Special Judge taking
cognizance of the offence against the appellants is legal and valid?
11.3 (iii) What order?
Answer to Points (i) and (ii)
12. As Points (i) and (ii) are interrelated, we answer them together by assigning the
following reasons: the issue of prior sanction required to be obtained against the
appellants in order to prosecute them for the offence said to have been committed by
them under Section 120-B IPC has to be examined in light of the allegations contained in
the charge-sheet that was filed before the learned Special Judge by the respondent herein.
13. The learned Senior Counsel appearing on behalf of the appellants contended that the
entire transaction of transferring the plot in question in favour of the ICPO-ICMR
Housing Society was handled in a transparent manner, and it was done keeping in view
the dire need of housing of the employees of ICPO-ICMR. The learned Senior Counsel
submitted that the transfer of the said plot from ICPO to the ICPO-ICMR Housing
Society was done after obtaining legal opinions and necessary sanction from the
competent authority of Noida. The learned Senior Counsel further contended that CBI
withheld the report of the Comptroller and Auditor General of India (CAG) while
submitting the charge-sheet before the learned Special Judge, which is not tenable in law.
14. It is further contended by Mr P.P Khurana, and Mr Gopal Subramanium, the learned
Senior Counsel appearing on behalf of some of the appellants that no prior sanction was
obtained from the Central Government, which was mandatorily required under Section
197 CrPC as the appellants were employed as public servants at the time of commission
of the alleged offences. It is contended by them that the transfer of the plot in question
occurred when the appellants were holding public office and the alleged offences were
committed by them, if at all, in discharge of their official duty. Thus, the learned Special
Judge erred in taking cognizance of the offences alleged against the appellants without
prior sanction of the Central Government having been obtained by the respondent. The
learned Senior Counsel further contended that the learned Special Judge should not have
taken cognizance in the absence of prior sanction obtained from the Central Government,
especially in light of the fact that taking cognizance of the alleged offences and setting
the wheel of the criminal justice system in motion is a matter which could affect the
fundamental rights guaranteed to the appellants under Articles 14, 19 and 21 of the
Constitution of India.
15. The other learned counsel appearing on behalf of other appellants have adopted the
arguments made by Mr P.P Khurana and Mr Gopal Subramanium and they have filed
their written submissions in support of their contentions, which are also considered by
this Court.
16. On the other hand, Mr P.S Patwalia, the learned Additional Solicitor General and Ms
Kiran Suri, learned Senior Counsel appearing on behalf of the respondent contended that
the legal submissions advanced by the learned Senior Counsel appearing on behalf of the
appellants are wholly untenable in law for the reason that the very act of the appellants
constitute an offence under IPC, as they entered into a conspiracy to illegally transfer the
plot in question in favour of the said Society referred to supra without obtaining the
permission of the competent authority of Noida, with an ulterior motive to make unlawful
gain for themselves. The appellants became members of the ICPO-ICMR Housing
Society, even though they were not eligible to be enrolled as members of the Society, and
thereafter proceeded to transfer the plot at a value which was much lesser than the
prevailing market rate at the time, thus making an unlawful gain for themselves, which is
an offence under Section 13(1)(d) of the PC Act, 1988, punishable under Section 13(2) of
the Act. It is further contended that CBI filed the charge-sheet against the appellants after
due investigation, and therefore, the High Court has rightly dismissed the applications
filed by them under Section 482 CrPC by passing a valid judgment and order which does
not call for interference by this Court in exercise of its appellate jurisdiction. The illegal
acts done by the appellants in transferring the said plot at a lower price cannot be said to
have been carried out in exercise of their official duty. Therefore, no previous sanction
from the competent authority was required under Section 197 CrPC to prosecute the
appellants for the alleged offence. The learned Additional Solicitor General and the
learned Senior Counsel appearing on behalf of the respondent submit that this is the
reason that the present cases are not ones which warrant for this Court to exercise its
appellate jurisdiction and quash the proceedings as prayed by the appellants.
17. The FIR and the charge-sheet both contain references to the allegations made against
the appellants and other unknown persons, that they entered into a criminal conspiracy by
abusing their official positions as public servants during the year 2006-2007 and illegally
transferred the plot in question from ICPO to the ICPO-ICMR Housing Society at a much
lower price than the then prevailing sector rate. On this basis, it is alleged that the
appellants dishonestly obtained an undue pecuniary advantage for themselves and others
to the extent of Rs 13,14,36,823 by illegally transferring the plot in favour of the
abovesaid Society with an ulterior motive. The process of transfer of the plot was
initiated by B.C Das, the then Director, ICPO, vide letter dated 29-3-2006 on the basis of
a representation prepared by L.D Pushp, the then Administrative Officer, ICPO,
containing signatures of 51 employees of ICPO sent to Mohinder Singh, Sr. Dy. Director
General (Admn.), ICMR. The said representation was for the purpose of establishment of
the ICPO-ICMR Housing Society with an object to promote control, coordinate and take
charge of the plot in question. The final approval for transfer of the plot and formation of
the proposed ICPO-ICMR Society was given by the appellant N.K Ganguly, the then
Director General of ICMR on 6-6-2006 and the same was approved and communicated
by A.K Srivastava, Executive Engineer vide letter dated 9-6-2006 to B.C Das. On 12-6-
2006, N.K Ganguly recorded a note in the file stating that “the proposal was approved
provided it was under the provisions of laws and land use for which it was acquired”. The
aforesaid allegations contained in the charge-sheet suggest that a conspiracy was hatched
by the appellants to commit an offence under section 13(1)(d) of the pc act, 1988. A
perusal of the charge-sheet reveals that there is sufficient material on record to indicate
the existence of the alleged conspiracy. In view of the same, Section 197 CrPC is
squarely applicable to the facts of the present case.
18. At this stage, it is important to examine the concept of criminal conspiracy as defined
in IPC. Section 120-A IPC reads as under:
“120-A. Definition of criminal conspiracy.—When two or more persons agree to do, or cause
to be done—
(1) an illegal act, or
(2) an act which is not illegal by illegal means, such an agreement is designated a criminal
conspiracy:
Provided that no agreement except an agreement to commit an offence shall amount to a
criminal conspiracy unless some act besides the agreement is done by one or more parties to
such agreement in pursuance thereof.”
19. In the instant case, it is alleged in the charge-sheet that the appellants entered into an
agreement to commit an illegal act, which is an offence punishable under section 120-b
ipc. therefore, the provision of section 197 crpc is squarely applicable to the facts of
the case. Prior sanction of the Central Government was required to be taken by the
respondent before the learned Special Judge took cognizance of the offence once the final
report was filed under Section 173(2) CrPC. In this regard, Mr Gopal Subramanium,
learned Senior Counsel appearing on behalf of the appellant has very aptly placed
reliance on the decision of a three-Judge Bench of this Court in R.R Chari v. State of
U.P R.R Chari v. State of U.P, AIR 1951 SC 207, wherein, while examining the scope
of Section 197 CrPC, this Court made an observation indicating that the term
“cognizance” indicates the stage of initiation of proceedings against a public servant. The
Court placed reliance upon the judgment of the Calcutta High Court delivered in Supt.
and Remembrancer of Legal Affairs v. Abani Kumar Banerjee Supt. and
Remembrancer of Legal Affairs v. Abani Kumar Banerjee, 1950 SCC OnLine Cal
49, wherein it was held that before taking cognizance of any offence, a Magistrate must
not only be said to have applied his mind to the contents of the petition: (Supt. and
Remembrancer case, SCC OnLine Cal para 8)
“8. … but he must have done so for the purpose of proceeding in a particular way as
indicated in the subsequent provisions of this Chapter—proceeding under Section 200, and
thereafter sending it for enquiry and report under Section 202. When the Magistrate applies
his mind not for the purpose of proceeding under the subsequent sections of this Chapter, but
for taking action of some other kind, e.g, ordering investigation under Section 156(3), or
issuing a search warrant for the purpose of the investigation, he cannot be said to have taken
cognizance of the offence.”
20. Both the learned Senior Counsel placed reliance on another judgment of a three-Judge
Bench of this Court in Shreekantiah Ramayya Munipalli v. State Of
Bombay Shreekantiah Ramayya Munipalli v. State Of Bombay. In that case, the
allegation against the appellant therein and two other government servants was that they
had conspired to defraud the Government in respect of certain properties and arranged to
sell the goods to the approver. The case against them was registered under section 120-b
read with section 409 ipc. While considering the contention advanced that the said acts
could not be said to have been committed in discharge of official duty, Bose, J. placed
reliance upon the observations made by the Federal Court in Hori Ram Singh v.
Crown Hori Ram Singh v. Crown, 1939 SCC OnLine FC 2, wherein Vardachariar, J.
observed that in respect of a charge under Section 409 IPC, the official capacity is
relevant only for entrustment, and not necessarily in respect of misappropriation or
conversion which may be the act complained of. It was held by this Court that the correct
position of law was laid down in Hori Ram Singh, which is as under: (SCC OnLine FC)
“… I would observe at the outset that the question is substantially one of fact, to be
determined with reference to the act complained of and the attendant circumstances; it seems
neither useful nor desirable to paraphrase the language of the section in attempting to lay
down hard-and-fast tests.”
21. Bose, J., further held in Shreekantiah case referred to supra that there are cases and
cases and each must be decided on its own facts. It was held as under: (AIR pp. 292-93,
para 18)
“18. Now it is obvious that if section 197 of the code of criminal procedure is construed too
narrowly it can never be applied, for of course, it is no part of an official's duty to commit an
offence and never can be. But it is not the duty we have to examine so much as the act,
because an official act can be performed in the discharge of official duty as well as in
dereliction of it.”
(emphasis supplied)
22. While considering the facts of the case, Bose, J. observed that the offence in question,
could not have been committed in any other way, and held as under: (Shreekantiah
case, AIR p. 293, para 19)
“19. … If it was innocent, it was an official act; if dishonest, it was the dishonest doing of an
official act, but in either event the act was official because the second accused could not
dispose of the goods save by the doing of an official act, namely, officially permitting their
disposal; and that he did. He actually permitted their release and purported to do it in an
official capacity, and apart from the fact that he did not pretend to act privately; there was no
other way in which he could have done it. Therefore, whatever the intention or motive behind
the act may have been, the physical part of it remained unaltered, so if it was official in the
one case it was equally official in the other, and the only difference would lie in the intention
with which it was done; in the one event, it would be done in the discharge of an official duty
and in the other, in the purported discharge of it.”
(emphasis supplied)
23. Mr Gopal Subramanium, the learned Senior Counsel on behalf of some of the
appellants has further rightly placed reliance upon the judgment of a three-Judge Bench
of this Court in Amrik Singh v. State Of Pepsu Amrik Singh v. State Of Pepsu, AIR
1955 SC 309 to buttress the contention that the issue of requirement of prior sanction
under Section 197 CrPC can be raised at any stage of the proceedings, and not just at the
stage of framing of charges. The decision in Hori Ram Singh was also quoted with
approval, especially the categorisation of situations in three scenarios, as under: (Amrik
Singh case, AIR p. 311, para 6)
(a) Decision which held that sanction was necessary when the act complained of attached to
the official character of the person doing it;
(b) Judgments which held that sanction was necessary in all cases in which the official
character of the person gave him an opportunity for the commission of the crime; and
(c) Those which held it was necessary when the offence was committed while the accused
was actually engaged in the performance of official duties.
It was further held in Amrik Singh case that: (AIR p. 312, para 8)
“8. The result of the authorities may thus be summed up: It is not every offence committed by
a public servant that requires sanction for prosecution under Section 197 CrPC; nor even
every act done by him while he is actually engaged in the performance of his official duties;
but if the act complained of is directly concerned with his official duties so that, if
questioned, it could be claimed to have been done by virtue of the office, then sanction would
be necessary; and that would be so, irrespective of whether it was, in fact, a proper discharge
of his duties, because that would really be a matter of defence on the merits, which would
have to be investigated at the trial, and could not arise at the stage of grant of sanction, which
must precede the institution of the prosecution.”
(emphasis supplied)
24. The position of law, as laid down in Hori Ram Singh was also approved by the Privy
Council in H.H.B Gill v. R. H.H.B Gill v. R., 1948 SCC OnLine PC 10, wherein it was
observed as under: (SCC OnLine PC)
“… A public servant can only be said to act or purport to act in the discharge of his official
duty, if his act is such as to lie within the scope of his official duty.”
25. Reliance was further rightly placed by the learned Senior Counsel on the decision of a
Constitution Bench of this Court in Matajog Dobey v. H. C. Bhari Matajog Dobey v. H.
C. Bhari , AIR 1956 SC 44, which pertained to an income tax investigation. It was
alleged by the appellant therein that while conducting a search, the officials of the
Income Tax Department had forcibly broke open the entrance door of the house and
interfered with the boxes and drawers of the tables. It was also alleged by the appellant
therein that the officials tied him and beat him up. Upon an enquiry of the said complaint,
the Magistrate came to the conclusion that a prima facie case had been made out and
issued process. During the course of trial, the issue pertaining to want of sanction was
urged. This Court held as under: (AIR p. 48, para 15)
“15. … Article 14 does not render section 197 of the criminal procedure code ‘ultra vires’
as the discrimination is based upon a rational classification.
Public servants have to be protected from harassment in the discharge of official duties while
ordinary citizens not so engaged do not require this safeguard.”
(emphasis supplied)
On the other hand, ordinary citizens not so engaged do not require this safeguard. It was
further observed that: (AIR p. 48, para 15)
“15. … Whether sanction is to be accorded or not is a matter for the government to consider.
The absolute power to accord or withhold sanction on the Government is irrelevant and
foreign to the duty cast on that court, which is the ascertainment of the true nature of the act.”
The Court finally summed up the result of the discussion as follows: (AIR p. 49, para 19)
“19. … There must be a reasonable connection between the act and the discharge of official
duty; the act must bear such relation to the duty that the accused could lay a reasonable, but
not a pretended or fanciful claim, that he did it in the course of the performance of his duty.”
(emphasis supplied)
26. In K. Satwant Singh v. State of Punjab K. Satwant Singh v. State of Punjab, AIR
1960 SC 266, a Constitution Bench of this Court while examining the scope of Section
197 CrPC, observed as follows: (AIR p. 271, para 16)
“16. It appears to us to be clear that some offences cannot by their very nature be regarded as
having been committed by public servants while acting or purporting to act in the discharge
of their official duty. For instance, acceptance of a bribe, an offence punishable under Section
161 IPC, is one of them and the offence of cheating or abetment thereof is another. … where
a public servant commits the offence of cheating or abets another so to cheat, the offence
committed by him is not one while he is acting or purporting to act in the discharge of his
official duty, as such offences have no necessary connection between them and the
performance of the duties of a public servant, the official status furnishing only the occasion
or opportunity for the commission of the offences…. The act of cheating or abetment thereof
has no reasonable connection with the discharge of official duty. The act must bear such
relation to the duty that the public servant could lay a reasonable but not a pretended or
fanciful claim, that he did it in the course of the performance of his duty.”
27. In R.R Chari referred to supra, while examining the scope of Section 197 CrPC, this
Court held as follows:
“19. … It is clear that the first part of Section 197(1) provides a special protection, inter alia,
to public servants who are not removable from their offices save by or with the sanction of
the State Government or the Central Government where they are charged with having
committed offences while acting or purporting to act in the discharge of their official duties;
and the form which this protection has taken is that before a criminal court can take
cognizance of any offence alleged to have been committed by such public servants, a
sanction should have been accorded to the said prosecution by the appropriate authorities. In
other words, the appropriate authorities must be satisfied that there is a prima facie case for
starting the prosecution and this prima facie satisfaction has been interposed as a safeguard
before the actual prosecution commences. The object of Section 197(1) clearly is to save
public servants from frivolous prosecution….”*
(emphasis supplied)
28. The learned Senior Counsel further placed reliance on a three-Judge Bench decision
of this Court in Baijnath v. State of M.P Baijnath v. State of M.P, AIR 1966 SC 220,
wherein the question that arose before this Court was whether the conviction of the
appellant under Sections 409 and 477-A IPC was illegal for want of sanction. This Court
observed as follows: (AIR p. 227, para 16)
“16. It is not every offence committed by a public servant that requires sanction for
prosecution under section 197(1) of the criminal procedure code; nor even every act done
by him while he is actually engaged in the performance of his official duties; but if the act
complained of is directly concerned with his official duties so that, if questioned it could be
claimed to have been done by virtue of the office, then sanction would be necessary. It is the
quality of the act that is important and if it falls within the scope and range of his official
duties the protection contemplated by section 197 of the criminal procedure codewill be
attracted. An offence may be entirely unconnected with the official duty as such or it may be
committed within the scope of the official duty. Where it is unconnected with the official
duty there can be no protection. It is only when it is either within the scope of the official
duty or in excess of it that the protection is claimable.”
(emphasis supplied)
29. In B. Saha v. M.S Kochar B. Saha v. M.S Kochar, 1979 4 SCC 177, the Constitution
Bench of this Court observed that the question of sanction under Section 197 CrPC could
be raised and considered at any stage of the proceedings. On the issue of when the
protection of Section 197 CrPC is attracted, this Court held as under: (SCC p. 185, para
18)
“18. In sum, the sine qua non for the applicability of this section is that the offence charged,
be it one of commission or omission, must be one which has been committed by the public
servant either in his official capacity or under colour of the office held by him.”
30. The learned Senior Counsel further placed reliance on the decision of a Constitution
Bench of this Court in R.S Nayak v. A.R Antulay. R.S Nayak v. A.R Antulay.., wherein
certain observations were made with regard to section 6 of the pc act, 1988, as under:
(SCC pp. 205-06, para 23)
“23. … Therefore, it unquestionably follows that the sanction to prosecute can be given by an
authority competent to remove the public servant from the office which he has misused or
abused because that authority alone would be able to know whether there has been a misuse
or abuse of the office by the public servant and not some rank outsider. By a catena of
decisions, it has been held that the authority entitled to grant sanction must apply its mind to
the facts of the case, evidence collected and other incidental facts before according sanction.
A grant of sanction is not an idle formality but a solemn and sacrosanct act which removes
the umbrella of protection of government servants against frivolous prosecutions and the
aforesaid requirements must therefore, be strictly complied with before any prosecution could
be launched against public servants. … The legislature advisedly conferred power on the
authority competent to remove the public servant from the office to grant sanction for the
obvious reason that that authority alone would be able, when facts and evidence are placed
before him to judge whether a serious offence is committed or the prosecution is either
frivolous or speculative. That authority alone would be competent to judge whether on the
facts alleged, there has been an abuse or misuse of office held by the public servant. That
authority would be in a position to know what was the power conferred on the office which
the public servant holds, how that power could be abused for corrupt motive and whether
prima facie it has been so done. That competent authority alone would know the nature and
functions discharged by the public servant holding the office and whether the same has been
abused or misused. It is the vertical hierarchy between the authority competent to remove the
public servant from that office and the nature of the office held by the public servant against
whom sanction is sought which would indicate a hierarchy and which would therefore,
permit inference of knowledge about the functions and duties of the office and its misuse or
abuse by the public servant. That is why the legislature clearly provided that that authority
alone would be competent to grant sanction which is entitled to remove the public servant
against whom sanction is sought from the office.”
(emphasis supplied)
31. Mr P.P Khurana, the learned Senior Counsel appearing on behalf of some of the
appellants has further placed reliance upon the judgments of this Court in R. Balakrishna
Pillai v. State of Kerala R. Balakrishna Pillai v. State of Kerala, 1996 1 SCC 478, Abdul
Wahab Ansari v. State of Bihar Abdul Wahab Ansari v. State of Bihar, 2000 8 SCC
500, Sankaran Moitra v. Sadhna Das Sankaran Moitra v. Sadhna Das, 2006 4 SCC 584
and State of M.P v. Sheetla Sahai State of M.P v. Sheetla Sahai, 2009 8 SCC 617, in
support of his submission that the acts constituting the offence were alleged to have been
committed by the appellant in discharge of his official duty and that being the fact, it was
not open to the Special Judge Court to take cognizance of the offences without obtaining
the previous sanction of the Central Government by the respondent.
32. The learned Additional Solicitor General, on the other hand, appearing on behalf of
CBI placed strong reliance on the decision of this Court in Parkash Singh Badal v. State
of Punjab Parkash Singh Badal v. State of Punjab, 2007 1 SCC 1 to buttress his
contention that no sanction was required to be taken in the instant case as the appellants
have entered into a criminal conspiracy, therefore, it cannot be said to be a part of their
official duty as the public servants. The act of the appellants of transferring the plot in
question in favour of the aforesaid Society, allotted in favour of ICMR for the purpose of
construction of the flats and allotting the same in favour of the employees of the ICPO-
ICMR Society without obtaining the order from either CEO or Chairman of Noida with a
motive to make wrongful gain for themselves after entering into a conspiracy cannot be
said to be an act that has been carried out in discharge of their official duty. The learned
Additional Solicitor General placed reliance on the following paragraphs of Parkash
Singh Badal case: (SCC pp. 37-38, paras 49-50)
“49. Great emphasis has been laid on certain decisions of this Court to show that even in
relation to offences punishable under Sections 467 and 468 sanction is necessary. The
foundation of the position has reference to some offences in Rakesh Kumar Mishra case
Rakesh Kumar Mishra v. State of Bihar, 2006 1 SCC 557. That decision has no relevance
because ultimately this Court has held that the absence of search warrant was intricately (sic
linked) with the making of search and the allegations about alleged offences had their matrix
on the absence of search warrant and other circumstances had a determinative role in the
issue. A decision is an authority for what it actually decides. Reference to a particular
sentence in the context of the factual scenario cannot be read out of context.
50. The offence of cheating under Section 420 or for that matter offences relatable to sections
467, 468, 471 and 120-b can by no stretch of imagination by their very nature be regarded as
having been committed by any public servant while acting or purporting to act in discharge
of official duty. In such cases, official status only provides an opportunity for commission of
the offence.”
33**. Mr P.P Khurana and Mr Gopal Subramanium, the learned Senior Counsel
appearing on behalf of some of the appellants, on the other hand, contend that the
decision in Parkash Singh Badal case needs to be appreciated in light of the facts of that
case. Thus, while stating that the offences under sections 420, 467, 468, 471 and 120-b
ipc can by no stretch of imagination and by their very nature be regarded as having been
committed by any public servant while acting or purporting to act in discharge of his
official duty, this Court did not mean that merely because an official was charged with an
offence under these sections, no sanction was required to be taken. The learned counsel
placed reliance on the following paragraph of the judgment to emphasise the same: (SCC
p. 38, para 51)
“51. In Baijnath v. State of M.P the position was succinctly stated as follows: ( AIR p. 227,
para 16)
‘16. …it is the quality of the Act that is important and if it falls within the scope and range of
his official duties the protection contemplated by section 197 of the code of criminal
procedure will be attracted.’”
34. The learned Senior Counsel also placed reliance on the three-Judge Bench decision of
this Court rendered in Shreekantiah Ramayya Munipalli, referred to supra, wherein it was
held as under: (AIR pp. 292-93, paras 18-19)
“18. …if section 197 of the code of criminal procedure is construed too narrowly it can never
be applied, for of course it is no part of an official's duty to commit an offence and never can
be. But it is not the duty we have to examine so much as the act, because an official act can
be performed in the discharge of official duty as well as in dereliction of it. …
19. Now an offence seldom consists of a single act. It is usually composed of several
elements and, as a rule, a whole series of acts must be proved before it can be established. …
Now it is evident that the entrustment and/or dominion here were in an official capacity, and
it is equally evident that there could in this case be no disposal, lawful or otherwise, save by
an act done or purporting to be done in an official capacity.”
35. From a perusal of the case law referred to supra, it becomes clear that for the purpose
of obtaining previous sanction from the appropriate Government under Section 197
CrPC, it is imperative that the alleged offence is committed in discharge of official duty
by the accused. It is also important for the Court to examine the allegations contained in
the final report against the appellants, to decide whether previous sanction is required to
be obtained by the respondent from the appropriate Government before taking
cognizance of the alleged offence by the learned Special Judge against the accused. In the
instant case, since the allegations made against the appellants in the final report filed by
the respondent that the alleged offences were committed by them in discharge of their
official duty, therefore, it was essential for the learned Special Judge to correctly decide
as to whether the previous sanction from the Central Government under Section 197
CrPC was required to be taken by the respondent, before taking cognizance and passing
an order issuing summons to the appellants for their presence. 3
Answer to Point (iii)
36. We have adverted to the contentions advanced by the learned counsel appearing on
behalf of both the parties. We find much merit in the contention advanced by the learned
Senior Counsel and other counsel appearing on behalf of the appellants and accept the
same. We accordingly pass the following order.
37. For the aforesaid reasons, we set aside the impugned judgment and order of the High
Court dated 27-5-2013 passed in N.K Ganguly v. Central Bureau Of Investigation, New
Delhi. and order dated 7-10-2014 passed in Application No. 277KH of 2014 in Special
Case No. 18 of 2012 and quash the proceedings taking cognizance and issuing summons
to the appellants in Special Case No. 18 of 2012 by the Special Judge, Anti-Corruption
(CBI), Ghaziabad, U.P in absence of previous sanction obtained from the Central
Government to prosecute the appellants as required under Section 197 CrPC. The appeals
are allowed. All the applications are disposed of.