No Interim Bail For Chandrababu Naidu In Skill Development Scam Case; Supreme Court Reserves Verdict

Awstika Das

17 Oct 2023 12:18 PM GMT

  • No Interim Bail For Chandrababu Naidu In Skill Development Scam Case; Supreme Court Reserves Verdict

    The Supreme Court on Tuesday reserved its verdict on a plea by former Andhra Pradesh Chief Minister Chandrababu Naidu for quashing of a first information report (FIR) in the skill development scam case. However, despite fervent appeals on behalf of the Telugu Desam Party president, the court declined to grant interim bail.A bench of Justices Aniruddha Bose and Bela M Trivedi was hearing...

    The Supreme Court on Tuesday reserved its verdict on a plea by former Andhra Pradesh Chief Minister Chandrababu Naidu for quashing of a first information report (FIR) in the skill development scam case. However, despite fervent appeals on behalf of the Telugu Desam Party president, the court declined to grant interim bail.

    A bench of Justices Aniruddha Bose and Bela M Trivedi was hearing Naidu’s special leave petition challenging an order passed by the Andhra Pradesh High Court last month declining to quash a first information report (FIR) arraigning the ex-chief minister as one of the accused in the scam. Naidu was arrested in connection with this case on September 9 by the AP CID and has been in custody since.

    At the end of his rejoinder, Senior Advocate Harish Salve today urged the court, "He is a 73-year-old man who has been inside for 40 days. I have a request for interim bail. Your Lordships may consider releasing him. If you eventually rule against me, he can go back. In the 2015-16 inquiry, the government's lament was that nothing came of it. Now, in 2021, they are desperately grasping at straws."

    Senior Advocate Sidharth Luthra, also representing the politician accused of corruption, endorsed the request for interim bail, pointing to a 'specific prayer' made in his application. This request was, however, strongly resisted on behalf of the State of Andhra Pradesh; with the state's counsel indicating that a bail application was pending before the trial court, which would have to be considered on its own merits.

    "That's not on Section 17A," Luthra quickly objected. He added -

    "Here, we made a specific prayer. We had not closed our right to seek relief with respect to Section 17A. My learned friend who argued before the trial court did not even touch the provision because it was subject to adjudication by this court. We are saying that if the remand order is held to be bad, then release has to follow."

    At the end of the submissions, the court decided against directing Naidu's release on interim bail. Reserving the verdict, Justice Bose said, "Hearing concluded. We have heard the main matter and we will deliver the judgment."

    What has happened so far?

    The court started hearing Naidu's plea on October 3, after Justice SVN Bhatti recused himself from hearing it on October 1, leading to the matter being reassigned to the current bench headed by Justice Bose. The discussion has mainly revolved around the applicability of Section 17A of the Prevention of Corruption Act, 1988. Section 17A, inserted in July 2018 by way of an amendment, mandates that the competent authority's prior sanction must be obtained before launching an investigation against a public servant. It is this provision that Naidu has cited to challenge his arrest by the Andhra Pradesh police's CID. The thrust of his argument is that the department did not obtain the governor's sanction before arraigning him as the 37th accused in the skill development scam case.

    On the first day of the hearing, the Justice Bose-led bench raised questions about whether the provision would apply to an offence predating the 2018 amendment that introduced it. The court also questioned whether Section 17A would be applicable when the FIR mentioned offences under both the Prevention of Corruption Act and the Indian Penal Code, 1860. A battery of lawyers - including senior advocates Harish Salve, Abhishek Manu Singhvi, and Sidharth Luthra - appearing for Naidu, argued that Section 17A should be applicable since the inquiry commenced after the 2018 amendment, notwithstanding the date of the offence. On the contrary, the State, represented by Senior Advocate Mukul Rohatgi, contended that Section 17A would not apply to the present case inasmuch as it was introduced in July 2018, after the alleged offences had already been committed and the probe initiated. The hearing was finally adjourned with an instruction to the state government to provide the entire compilation of documents submitted to the high court.

    The debate over the interpretation of Section 17A of the Prevention of Corruption Act continued on the subsequent three dates of hearing. On the next day, Salve argued that Section 17A was introduced to prevent instances of "regime revenge." Maintaining that the inquiry against Naidu only began in 2021, the senior counsel asserted that Naidu would be entitled to the protective cover of Section 17A. In this connection, he relied on the union government's standard operating procedure on Section 17A to argue that prior approval was required at every stage, from inquiry to the investigation. In response to this, the court asked the senior counsel if it could adopt an interpretation of the section that would "defeat the objectives of the act". Salve countered this by saying that the interpretation would strengthen the legislation, allowing public servants to act freely and instituting a framework of accountability for the investigating agency.

    When the matter was taken up again, Salve argued that charges against the former chief minister under the Prevention of Corruption Act could not be separated from the criminal conspiracy, cheating, forgery, and other charges under the Indian Penal Code, 1860. This was in response to a question posed during the previous hearings about whether the criminal proceedings could continue against Naidu even if the offences under the PC Act were dropped or did not survive. But even if the Prevention of Corruption Act is 'taken out', Salve said, it is not a sessions judge, but a magistrate who can grant a remand. This would mean the order remanding the legislator to custody would be denuded of jurisdiction and liable to be set aside, the senior counsel told the bench. Rohatgi, however, did not agree that the special court's remand order would become invalid if the offences under the Prevention of Corruption Act do not survive or are dropped on grounds of non-compliance with the prior sanction provision. Not that I am conceding that the PC Act 'goes', he said, but even if it does, the special judge will retain its jurisdiction to try all offences not under the Prevention of Corruption Act.

    On the last occasion, the state police's crime investigation department cautioned the Supreme Court against nipping the investigation at the bud at this stage. In particular, Rohatgi emphasised the losses to the tune of hundreds of crores suffered by the public exchequer to highlight the seriousness of the allegations and the need for a probe. He also disputed the petitioner's contention that this was a case of political vendetta or 'regime revenge' by pointing to the contemporaneous inquiries being conducted by central agencies like the Directorate of Goods and Services Tax (DGST), the Securities and Exchange Board of India (SEBI), and income tax authorities. "The number of central agencies examining the issue shows that this is not the state government's vendetta," the senior counsel insisted.

    On the applicability of Section 17A, Rohatgi not only insisted on its prospective application, but also argued that the allegations could never remotely be considered to be a decision, determination, or recommendation in discharge of public functions to come within the protective cover of the section. The Supreme Court has held that even stricter bars on the prosecution under Section 197 of the Code of Criminal Procedure, 1973 or Section 19 of the Prevention of Corruption Act cannot have a 'stultifying' effect, the senior counsel contended. He then said the provision cannot be read in isolation to provide an 'umbrella of protection' and must be interpreted in line with the object of the anti-corruption legislation. Where there is a doubt regarding an interpretation, he told the bench, the Supreme Court has favoured an interpretation that enabled the eradication of corruption. In any case, the application of Section 17A, he further argued, can only be debated when the facts are examined by the judge trying the case. Such questions cannot be decided in a petition for quashing of criminal proceedings under Section 482 of the Code of Criminal Procedure, unless the parties are in agreement about whether an act is in discharge of a public duty. In related news, the court also orally asked the AP CID to not arrest Naidu in the FiberNet scam case till the next date of hearing.

    During today's hearing, Rohatgi reiterated that the special court would be competent to exercise its jurisdiction irrespective of whether the charges under the Prevention of Corruption Act are dropped, saying that the back-and-forth between courts envisioned if this were not allowed would be contrary to 'legislative convenience'. When the bench expressed doubt about what it said was an inference and not a point directly dealt with by the court in earlier judgments, Rohatgi argued -

    "Today it's a simple case. We are at a very nascent stage. Whether there's discharge or not under any of the acts or sections pressed into service...These issues have not arisen. Does the FIR make out cognizable offences? That's the simple question here. It's good to have a debate, but this is not a case where the stage to have this debate has arisen. The same police is investigation the offences under the Prevention of Corruption Act as well as under other acts. How will the FIR be quashed? This court or a high court should refuse to intervene in this case because Section 482 provides for discretionary reliefs, which are governed by principles on how such discretion ought to be exercised. Ultimately, the judicial conscience of the court will be shocked by the material placed in the counter-affidavit. Therefore, this is not a case where discretion under Section 482 of the Code ought to be exercised."

    "What is wrong with them?", Rohatgi added, "It cannot be argued that Supreme Court should become court of first instance."

    Smiling, Justice Trivedi quipped, "Tomorrow you'll be on other side."

    "I admit. Somehow this tendency has occurred," Rohatgi replied.

    Finally, the senior counsel concluded by rejecting the petitioner's contention that the concurring opinion by retired Supreme Court judge KM Joseph in the Yashwant Sinha case would have a binding effect on the current petition. In his separate opinion, Justice Joseph had written that the dismissal of the Rafale review would not bar the Central Bureau of Investigation from taking lawful action on the complaint raising corruption allegations on the Rafale deal, subject to getting approval under Section 17A of the Prevention of Corruption Act. Interestingly, the alleged offences in this case dates back to 2016, a fact that Naidu's lawyers strongly relied upon to insist on the retrospectivity of Section 17A of the Prevention of Corruption Act. 

    Referring to Justice Joseph's concurring judgment, Rohatgi said, "These are thoughts of the judge which have no binding precedence value because it was neither raised in the first instance nor commented on by the other two [judges]. Besides this, on merits, it's wrong in my respectful submission. Section 17A cannot be a bar when the investigation is ordered by this court, but the learned judge held that even the Supreme Court is helpless."

    In rejoinder, among other things, Salve addressed Rohatgi's contention that Section 17A would not apply to cases of corruption and only to 'errors in judgment', saying, "The legislature has been very careful in drafting this section. The official duty is now given in a context. If you say acting corruptly is not a part of official duty, you are injecting the principle underlying Section 197 of the Code of Criminal Procedure here. Look at how absurd the State's argument is. They are saying Section 17A would apply only to innocent people. So, essentially the entire inquiry has to be conducted first to determine their innocence. They have turned the provision on its head."

    Since the prior sanction requirement had not been met vis à vis any of the public servants implicated in the case, "everything goes", Salve insisted. Before concluding his rebuttal, the senior counsel said -

    "Section 17A must be taken at the first instance. I understand that in today's political context, it might be an inconvenience because after an election, they're in a hurry to fix somebody...But this is the protection that the statute grants. Unless my learned friend goes to the extent of saying that prosecuting political opponents is a vested right in a chief minister. If I am right, where are we? I have made two points: First, there's a composite charge-sheet. This kind of a rumbled up argument...The whole thing goes. There is a litany of public servants and not one single sanction under Section 17A. My respectful submission is that today if there's no prior sanction obtained for any of them, everything goes. Let me assume I'm wrong: in any case, they got all these orders based on Section 17A which will have to go. And, if the remand order goes, the man has to be set at liberty."


    Nara Chandrababu Naidu, Telugu Desam Party president and erstwhile Andhra Pradesh chief minister, has been arrested in connection with a skill development scam in the state, with the state crime investigation department claiming to have prime facie evidence of the former chief minister’s key role in the alleged embezzlement of around Rs 371 crore from the Andhra Pradesh Skill Development Corporation through fictitious companies during the TDP's rule between 2014 and 2019. He is the 37th accused in a 2021 FIR related to the multi-crore scam involving the state skill development corporation.

    The opposition Telugu Desam Party leader was arrested by the Andhra Pradesh CID on September 9 and has remained in custody since. Subsequently, a Vijayawada court remanded Naidu to police custody for September 23 and 24. On Sunday, Naidu’s judicial remand was extended till October 5.

    Last week, the Andhra Pradesh High Court dismissed Naidu’s plea for quashing of the FIR. In his petition, he argued that the trial court’s order remanding him to custody did not consider that the CID had failed to obtain prior approval from the governor, as required by Section 17A of the Prevention of Corruption Act. However, a bench of Justice K Sreenivas Reddy ruled that prior sanction from the competent authority was unnecessary for the investigation since the use of public funds, allegedly for personal gain, did not constitute an act in the discharge of official duties. The court also agreed that given the seriousness of economic offences, the investigation should not be hindered, especially at this early stage.

    Challenging this ruling, the TDP leader has approached the Supreme Court in a special leave petition.

    Case Details

    Nara Chandrababu Naidu v. State of Andhra Pradesh & Anr. | Special Leave Petition (Criminal) No. 12289 of 2023

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