AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2012 (3) TMI 583
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....supported by reasons and charge sheet has already been filed. 2. The appellant has served the respondent/Bank for a period of 33 years under various positions. While he was working as Chief Manager of Indira Nagar Branch, Chennai, in the year 2005, an explanation was called for in respect of some of the commissions and omissions stated to have been committed by him during 2003-2005. At that time, he was working in New Delhi. The appellant has submitted his explanation. Rejecting the said explanation, charges were framed against him and enquiry was conducted and based on the report of the Enquiry Officer, the Employer/Bank, by an order dated 13.11.2008, has imposed a punishment of reduction in basic pay by one stage in the time scale of pay for a period of one year with further direction that he will not earn increment of pay during the period of such reduction and on the expiry of such period, the reduction will have the effect of postponing his future increment of pay. That order of punishment imposed in the departmental proceeding has become final. 3. It appears that after he was transferred from New Delhi Branch, certain complaint has been lodged with the Central Bureau of....
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....round that for sanction of prosecution under the Prevention of Corruption Act there is no need to apply judicial mind and therefore, as and when new materials come to light, the Authority is entitled to change its view and on that basis, it was the case of the respondent/Bank before the learned Single Judge that the writ petition is not maintainable. It is further stated that the Disciplinary Authority has given a finding accepting the report of the Enquiry Officer about the guilt of the appellant and it has prima facie satisfied itself to come to a conclusion that there are sufficient materials available for the purpose of granting sanction and therefore, it is not open to the appellant to say that there were no prima facie materials available. 7. It is also the case of the Bank that simply because on an earlier occasion certain mistakes have been committed by the Authority Competent in declining the grant of sanction, that does not prevent the Authority to take a different decision as long as sufficient materials are available and the action has been taken bona fide giving independent reasons. 8. It is also the case of the respondent/Bank that the decision to grant sanction....
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....ecretary, CVC came to the conclusion and advised that the DA reconsider his decision of not giving sanction for prosecution for the following reasons. 1)The Bank has lost substantial money by entering into One Time Settlement with the party. 2)In one of the accounts, there is still an outstanding of Rs. 77.46 lakhs which is likely to result in loss to the Bank. 3)The member has chosen to sanction packing credit limits of Rs. 95 lakhs each to four borrowers without proper verification of KYC of the borrowers concerned and CBI has been able to establish the link between these four parties and Mr.G.D.Bansal. 4) The member has accepted the valuation of nearly Rs. 1.31 crores for a property which was registered with Sub-Registrar for a sum of Rs. 2.55 lacs nine months prior to the date of valuation. In this case, Bank was able to actually realise only Rs. 19.00 lacs after liquidation of their property." Hence, we request you to re-examine the matter and advise your decision." and the letter dated 04.09.2009 of the Central Vigilance Commission is as follows: "Dated: 04.09.2009 OFFICE MEMORANDUM SUB:RC4(E)/2007/EOW-II/DL....
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....ced before the learned Judge, after arguments were heard and reserved for orders, the learned Judge has referred to the said letter. The learned Judge has also referred to some of the passages in the impugned order of sanction which relate to the grant of Packing Credit Limit Facility to M/s.Padmakar Iron and Steel Company and has come to a conclusion that the reference of the incident shows the independent application of mind by the Authority for granting prosecution. Therefore, relying upon the judgment of the Supreme Court in State of Karnataka Vs. Ameerjan, (2007) 11 SCC 273, which contemplates independent application of mind as an imperative character for granting sanction, the learned Judge has concluded that the impugned sanction order is a speaking order. The learned Judge has also held that it can never be contended that for granting the sanction, the Authority has no power of review. What is required is an independent application of mind and materials. The learned Judge has also held that there is no delay on the part of the Authority in granting sanction order, since it was only after the Central Vigilance Commission has brought to the notice of the Sanctioning Aut....
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....ger in the year 1996 and was posted in New Delhi and was transferred to Chennai in that capacity on 01.11.2007. It was in respect of some commissions and omissions, while he was working in Chennai, there was certain disciplinary proceeding initiated against him, in which, after conducting enquiry and based on the report of the Enquiry Officer, punishment of reduction in basic pay in two stages in the time scale of pay for a period of one year to the effect that the reduction will not have the effect of postponing his future increment of pay was imposed. That order of punishment imposed in the departmental proceeding has become final. 13. In this case also, like that of the Appellant, wherein the fact was explained about the complaint that was registered, making the petitioner as one of the accused and the Central Bureau of Investigation forwarded a letter on 28.07.2004 to the Authority Competent to grant sanction to prosecute the petitioner for alleged offences under Section 120-B read with Sections 420, 467, 468, 471 of the I.P.C. and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. The General Manager, Central Office, who is the Compete....
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....vention of Corruption Act, 1988, he would also rely upon the judgment in Mansukhlal Vithaldas Chauhan V. State of Gujarat, (1997) 7 SCC 622, apart from Gopikant Choudhary V. State of Bihar and others, (2000) 9 SCC 53, to submit that in the absence of any fresh materials, there is no question of reviewing an earlier sanction by the Sanctioning Authority, he would also rely upon the judgment in State of Punjab and another V. Mohammed Iqbal Bhatti, (2009) 17 SCC 92. 17. The learned Senior Counsel further submits that even though the appellant as well as the petitioner have taken a stand that the Sanctioning Authority has no power to review, such power of review is possible when there are new materials. Therefore, there cannot be any review of earlier decision based on the same materials, which were the basis for earlier rejection. To substantiate the same, he would rely upon the latest judgment of the Hon'ble Supreme Court in State of Himachal Pradesh V. Nishant Sareen, AIR 2011 SC 404. 18. On the other hand, it is the contention of Mr.N.G.R.Prasad, learned counsel for respondents 1 and 2 that the sanction order is not a decision, but it is only a statutory requirement. Agai....
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....n was passed. On a reference to the impugned order of sanction, it is seen that in respect of the appellant, while he was working in New Delhi, he has abused his official position by fraudulently sanctioning Packing Credit Limit of Rs. 95 lakhs to M/s.Padmakar Iron and Steel Company on the basis of fabricated balance sheets. It is also stated that in furtherance of the same, there has been a conspiracy in allowing M/s.Padmakar Iron and Steel Company, a Proprietary concern floated by Shri Om Prakash Malik, to open the Current Account No.3948 and thereafter it is alleged that the appellant has visited the premises of M/s.Padmakar Iron and Steel Company on 10.02.2005 and he has filed a report, in which he states that the value of the collateral security is Rs. 1.31 crores as per the valuer of the Indian Overseas Bank, S.S.K.Bhagat. Further, the stock statements submitted by M/s.Padmakar Iron and Steel Company from time to time, signed by Shri Om Prakash Malik showing a godown address in Narela, New Delhi, has been accepted by the appellant, while such godown does not exist in the said premises. Therefore, by sanctioning such loan facilities to the said party, loss has been....
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....ubsequently noted in respect of the mortgage which was created as security for the repayment, and that on 31.10.2001, the writ petitioner went along with the Proprietor of M/s.Lalitha Oils and T.Ramaswamy, Approved Panel Lawyer to inspect the agricultural land at Gummidipoondi for valuation and the valuation report has been submitted by him by increasing the value, resulting in the grant of facilities to the said account holder. It is also alleged under the sanction order that by granting the said loan facilities, RBI instructions have been breached and therefore, the sanction order shows that the writ petitioner is alleged to have committed offences punishable under Section 120-B read with Sections 420, 419, 467, 468, 471 of the I.P.C., apart from Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. As stated above, in respect of the writ petitioner, earlier, the General Manager, on the said materials has declined to grant sanction and subsequently, on the CBI approaching the Chairman cum Managing Director, the said stand was reiterated and it was thereafter, the General Manager has granted the impugned sanction order based on the same re....
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....assed. The opinion on the same materials, thus, may keep on changing and there may not be any end to such statutory exercise. In our opinion, a change of opinion per se on the same materials cannot be a ground for reviewing or reconsidering the earlier order refusing to grant sanction. However, in a case where fresh materials have been collected by the investigating agency subsequent to the earlier order and placed before the sanctioning authority and on that basis, the matter is reconsidered by the sanctioning authority and in light of the fresh materials an opinion is formed that sanction to prosecute the public servant may be granted, there may not be any impediment to adopt such course." 26. Therefore, legally it is settled that the power of review is possible only when there is an express provision enabling the Authority to review the earlier stand. It is equally settled that in respect of the grant of sanction to prosecute, when once on certain materials the Sanctioning Authority decides not to grant sanction, certainly on the same materials, the Sanctioning Authority cannot change its opinion. 27. It cannot be said that the sanction order is not an order, as stated by ....
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....he 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. (See Mohd. Iqbal Ahmad v. State of A.P., (1979) 4 SCC 172) 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 a....
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....of the offences specified therein, it envisages that the Central or the State Government or the 'other authority' has not only the right to consider the question of grant of sanction, it has also the discretion to grant or not to grant sanction. 15. In Gokulchand Dwarkadas Morarka v. King, AIR 1948 PC 82 it was pointed out that: The sanction to prosecute is an important matter; it constitutes a condition precedent to the institution of the prosecution and the Government have an absolute discretion to grant or withhold their sanction. They are not, as the High Court seem to have thought, concerned merely to see that the evidence discloses a prima facie case against the person sought to be prosecuted. They can refuse sanction on any ground which commends itself to them, for example, that on political or economic grounds they regard a prosecution as inexpedient. Looked at as a matter of substance it is plain that the Government cannot adequately discharge the obligation of deciding whether to give or withhold a sanction without a knowledge of the facts of the case. (emphasis supplied) 16. In Basdeo Agarwalla v. Emperor, AIR 1945 FC 16, it was pointed out that sanction u....
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....ot been affected by any extraneous consideration. If it is shown that the sanctioning authority was unable to apply its independent mind for any reason whatsoever or was under an obligation or compulsion or constraint to grant the sanction, the order will be bad for the reason that the discretion of the authority 'not to sanction' was taken away and it was compelled to act mechanically to sanction the prosecution. 20. The narration of facts, set out in the beginning of the judgment, would show that while the matter of grant of sanction was under the consideration of the State Government, Harshadrai had filed a petition on behalf of his firm in the Gujarat High Court under Article 226 of the Constitution for a writ in the nature of mandamus directing the State Government to grant sanction. In this petition, the Secretary of the Department who, originally was not impleaded, was, subsequently, arrayed as Respondent 7 and a direction was issued to him to grant sanction and the Secretary, acting in pursuance of the order of the High Court, granted the sanction. 21. The question is whether the High Court could issue a mandamus of this nature and whether the order of sanction, in th....
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.... being administrative act the need to provide an opportunity of hearing to the accused before according sanction does not arise. The High Court, therefore, was clearly in error in holding that the order of sanction is vitiated by violation of the principles of natural justice." It is not the case of the appellant as well as the petitioner in this case that no opportunity was given before the impugned sanction order came to be passed and therefore, the said judgment is not applicable to the facts of the case. 30.Further reliance is placed by the learned counsel for the respondents on the judgment of the Hon'ble Supreme Court Paul Varghese V. State of Kerala and another in (2007) 14 SCC 783, which again relates to the sanction under Section 197 of the Code of Criminal Procedure. It was held that the sanction under Section 19(1) of the Prevention of Corruption Act, 1988 does not go into the root of jurisdiction, while it is altogether different under Section 197 of the Code of the Criminal Procedure. The Hon'ble Supreme Court has differentiated the two statutes holding that they are absolutely different. Ultimately, the Hon'ble Supreme Court has held as follows: ....
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....ure. 32.It was in Gopikant Choudhary V. State of Bihar and others, (2000) 9 SCC 53, the Hon'ble Supreme Court has reiterated that independent application of mind is sine qua non for granting sanction to prosecute. In that case, originally, the matter was placed before the Minister of Law to revise the grant of sanction and after retirement of the delinquent, the Chief Minister has granted sanction and it was in those circumstances, the Hon'ble Supreme Court having found that the investigating agency has not collected any fresh materials and therefore, the Chief Minister has no authority to change the earlier decision of the Minister of Law, has held as follows: "5. In the case in hand, the matter was initially placed before the Minister of Law who refused to accord sanction after applying his mind to the entire materials and an order to that effect was passed. Subsequent to the same, the appellant retired in the year 1994 and it is only in 1997, the Chief Minister appears to have passed the impugned order. The appellant assailed the legality of the aforesaid order in the High Court, but the High Court having not interfered, he has approached this Cou....
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....on the earlier two occasions when the refusal was made. 33.We have also perused the file handed over by the learned counsel for respondents 1 and 2. On a reference to the letter relied upon by the learned Judge dated 03.09.2009, extracted above, it is seen that the Central Vigilance Commission has called for a meeting in the Chamber of the Central Vigilance Commission to resolve the difference of opinion for sanctioning of prosecution by the CBI against the appellant. The letter shows that during the said joint meeting of the Bank, CBI and CVC, the Additional Secretary, CVC has advised the Bank, being the Sanctioning Authority, to the effect that the bank has lost substantial amount by One Time Settlement and the Packing Credit Limit has been given by the appellant without proper verification of the borrower's status and that the appellant blindly accepted the valuation of nearly Rs. 1.31 Crores, while the property was registered with the Sub-Registrar for a sum of Rs. 2.55 lacs, nine months prior to the date of valuation. The following points which have been insisted by the CVC to the Bank as seen in the letter dated 03.09.2009 are once again extracted hereunder with the ri....