Whether IPC Prosecution Can Continue After Sanction Under PC Act Was Refused: Supreme Court Reserves Judgment

A bench of Justice JB Pardiwala and Justice K Vinod Chandran was hearing a Special Leave Petition (SLP) filed against the Madras High Court judgment which had refused to quash criminal proceedings initiated against the petitioners and their dismissal.

Before the Supreme Court, the petitioners raised two contentions as follows:

1. The Central Bureau of Investigation (CBI) could not have filed its police report without going back to the Central Vigilance Commission (CVC), which had directed the investigation.
2. Once sanction under Section 19 of the PC Act was declined on merits, the proceedings under IPC could not continue on the same facts.

The petitioners submitted before the Court that the CVC began the investigation by an order under Sections 8(1)(b) and 8(1)(d) of the Central Vigilance Commission Act, 2003 (CVC Act). The investigation ended with a police report for non-PC Act offences, including Section 420 IPC (now Section 318(4) of BNS 2023). It was argued that the CVC is the ultimate decision-maker and when it directs an investigation under the statute, the CBI “has to come back to the CVC, and the CVC then directs whether to file a report or otherwise.” It was further pointed out that the CBI “never came back to the CVC.”

He took the Court through Section 8B of the CVC Act. Under Section 8B(2), any agency, including the Delhi Special Police Establishment, must investigate cases referred by the Commission and submit its report to the Commission. Under Section 8B(3), the Commission “shall consider every report received by it” and may decide to file a chargesheet or closure report before the Special Court, or initiate departmental proceedings or other appropriate action.

The Bench asked whether compliance had been done, to which it was informed that, “it has not been done.”

ASG Aishwarya Bhati, appearing for the CBI, submitted that Section 8B(2) was complied with. “We sent a report to the CVC, which was considered,” it was submitted. She relied on the CVC's affidavit, which states that the CBI forwarded a copy of its report to the CVC. The Commission considered the report along with the recommendations of the competent authorities. ASG Bhati traced the sequence as follows : the CBI sought to prosecute, DFS and the bank did not concur, the CVC agreed with them, and the competent authority agreed with the CVC.

The bench asked what showed that the Commission had considered the report and then asked the CBI to proceed with filing charges. ASG Bhati replied that the CVC said no only for the PC Act offences. “There is no embargo on the CBI in proceeding,” it was submitted. She added “this does not take away the power of the CBI in proceeding where we find a cognizable offence.” The yardstick for sanction under the IPC is “very different”, involving considerations such as “official duty, non-official duty, stage of investigation.”

“So your argument comes to this, CVC only said no to corruption and not to IPC,” Justice Pardiwala put to the CBI, to which ASG Bhati replied in affirmative.

The Court was also apprised with the CVC's recommendation denying sanction, which stated that the case had been examined in the Commission and that “the Commission, in agreement with the competent authority, would advise for denial of the sanction for prosecution”. It stated that the competent authority considered the material on record, “including CBI report, evidence available on record,” and declined sanction under Section 19 of the PC Act.

Advocate for the petitioners contended that sanction under Section 19 was refused on merits. He asked whether a prosecution could continue for correlated offences such as Sections 420 and 409 IPC, where “the ingredients are similar or common.” He took the Court through the reasons recorded by the authorities. He said the CBI had sought sanction against 12 former bank officers, three of them government appointees. For one officer, the competent authority noted that the decision “is not based on views of any single individual, but is a collective decision.” It also noted that no material was produced that substantiated any criminal intent of the officer.

ASG Bhati apprised the bench that the case involves a loss of about Rs. 600 crore to the bank. “What they essentially did was that to cure one loan, they have given another loan,” she said, adding that the loan was repaid through another.” It was submitted that there are 29 accused, out of whom 12 are before the Court, rest are beneficiaries, and are facing trial.

In the light of aforesaid, the Supreme Court concluded the hearing and reserved its judgement.

Appearance:

For Appellant: Mr. Sidharth Luthra, Sr. Adv.; M/s Cyril Amarchand Mangaldas AOR; Mr. Juvraj SIngh Bindra, Adv.; Mr. Raunak Dhillon, Adv.; Mr. Kartieye Dang, Adv.; Mr. Gunav Gujral, Adv.; Ms. Bhawna Lakhina, Adv.; Mr. Aadharsh Joshi, Adv.; Ms. Aditi Mishra, Adv.; Ms. Muskan Anand, Adv.

For Respondent: Ms. Aishwarya Bhati, ASG; Mr. Shreekant Neelappa Terdal, AOR; Mr. Rajat Nair, Adv.; Ms Chitrangda Rastravara; Adv. Mr. Padmesh Mishra, Adv.; Mr. Kshitiz Singh, Adv.; Ms. Agrima Singh, Adv.; Mr. Yogesh Vats, Adv.; Mr. Sayooj Mohandas, Adv.