TaxTMI 
TaxTMI 
2013 (11) TMI 1754
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....ter conclusion of the preliminary enquiry, a regular case was registered on 7.12.1999 as FIR No. S19/E0006/99 in respect of the same to the tune of Rs. 40,42,23,478/-. B. During the course of investigation, it came to light that disproportionate assets were only to the tune of Rs. 12,04,46,936/-, which was 7615.45 times of his known sources of income. It further surfaced that the Respondent was involved in money laundering; and for channelising his ill-gotten wealth, had established a number of companies wherein his family members were the founding directors. C. The CBI sent a letter to the Ministry of Finance dated 24.5.2002 for accord of sanction for prosecution of the Respondent. The same was accompanied by the Superintendent of Police's (hereinafter referred to as the 'SP') report of 163 pages containing a detailed gist of the relevant statements and documents including the information on income tax returns etc. D. The Central Vigilance Commission after examining the said case advised the Ministry of Finance to grant sanction for prosecution. The Investigating Officer visited the Directorate of Income Tax (Vigilance) in September 2002 and ....
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....g the trial. Therefore, the High Court committed an error in setting aside the order of the learned Special Judge and remanding the matter and also to examine, if necessary, the sanctioning authority i.e. the then Hon'ble Finance Minister at a pre-charge stage. Thus, the appeal deserves to be allowed. 4. Per contra, Shri Ram Jethmalani, learned senior Counsel appearing for the Respondent has opposed the appeal contending that the court is not permitted to take cognizance in the absence of valid sanction granted by the competent authority in accordance with law. In the instant case, the relevant material including the statement of the witnesses recorded by the investigating officer Under Section 161 Code of Criminal Procedure and a large amount of documentary evidence collected during the investigation were not placed before the Hon'ble Minister when the sanction was granted. The sanctioning authority did not examine the relevant documents which had been of an impeccable character before granting the sanction. Statement of 13 witnesses had been recorded between 10.5.2002 and 16.10.2002 out of which the statement of 10 witnesses had been recorded only after sending the SP&....
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.... was actually left out of consideration could be examined only at the stage of trial when the sanctioning authority comes forward as a prosecution witness to support the sanction order if challenged during the trial. As that stage was not reached the prosecution could not have been quashed at the very inception on the supposition that all relevant documents were not considered by the sanctioning authority while granting the impugned sanction. (Emphasis added) 7. The prosecution has to satisfy the court that at the time of sending the matter for grant of sanction by the competent authority, adequate material for such grant was made available to the said authority. This may also be evident from the sanction order, in case it is extremely comprehensive, as all the facts and circumstances of the case may be spelt out in the sanction order. However, in every individual case, the court has to find out whether there has been an application of mind on the part of the sanctioning authority concerned on the material placed before it. It is so necessary for the reason that there is an obligation on the sanctioning authority to discharge its duty to give or withhold sanction only a....
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....ts of witnesses, recovery memos, draft charge sheet and all other relevant material. The record so sent should also contain the material/document, if any, which may tilt the balance in favour of the accused and on the basis of which, the competent authority may refuse sanction. (b) The authority itself has to do complete and conscious scrutiny of the whole record so produced by the prosecution independently applying its mind and taking into consideration all the relevant facts before grant of sanction while discharging its duty to give or withhold the sanction. (c) The power to grant sanction is to be exercised strictly keeping in mind the public interest and the protection available to the accused against whom the sanction is sought. (d) The order of sanction should make it evident that the authority had been aware of all relevant facts/materials and had applied its mind to all the relevant material. (e) In every individual case, the prosecution has to establish and satisfy the court by leading evidence that the entire relevant facts had been placed before the sanctioning authority and the authority had applied its mind on the same and that the ....
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....e accused is able to show that there has been serious prejudice caused to him with respect to either of these aspects, and that the same has defeated the rights available to him under legal jurisprudence, the accused can seek relief from the Court. (Vide: Nageshwar Sh. Krishna Ghobe v. State of Maharashtra AIR 1973 SC 165; Shamnsaheb M. Multtani v. State of Karnataka AIR 2001 SC 921; State by Police Inspector v. T. Venkatesh Murthy AIR 2004 SC 5117; Rafiq Ahmed @ Rafi v. State of U.P. AIR 2011 SC 3114; Rattiram and Ors. v. State of M.P. through Inspector of Police AIR 2012 SC 1485; Bhimanna v. State of Karnataka AIR 2012 SC 3026; Darbara Singh v. State of Punjab AIR 2013 SC 840; and Union of India and Ors. v. Ex-GNR Ajeet Singh (2013) 4 SCC 186). 12. Be that as it may, in State of T.N. v. M.M. Rajendran (1998) 9 SCC 268, this Court dealt with a case under the provisions of Act 1988, wherein the prosecuting agency had submitted a very detailed report before the Asanctioning Authority and on consideration of the same, the competent authority had accorded the sanction. This Court found that though the report was a detailed one, however, such report could not be held to be the compl....
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....iplinary action taken against the officials concerned. 15. Thus from the above, it is evident that the CBI manual, being based on statutory provisions of the Code of Criminal Procedure, provides for guidelines which require strict compliance. More so, in view of the fact that the ratio of judgment of this Court in M.M. Rajendran (Supra) has been incorporated in the CBI manual, the CBI manual itself is the best authority to determine the issue at hand. The court has to read the relevant provisions of the CBI manual alone and no judgment of this Court can be a better guiding factor under such a scenario. 16. The sanction order runs into 27 pages. The relevant part thereof reads as under: And whereas the Central Government, after fully and carefully considering the material placed before him and taking into account the available evidence, including the case diaries and documents collected, by the investigating officer during the course of investigation and statements of witnesses including the statements of witnesses recorded by the investigation officer Under Section 161 Code of Criminal Procedure and statements recorded before Magistrates under Under Section 164 Code ....
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....e it evident that the learned Counsel appearing on behalf of the CBI had conceded before the court that only SP's report alongwith list of evidence (oral) and list of evidence (documentary) were sent to the sanctioning authority for the purpose of according sanction. c) The statement of witnesses and other relevant documents were not sent to the sanctioning authority as per the own case of CBI. d) The observation in the sanction order dated 26.11.2002 that "the case diaries and documents collected by the investigating officers during the course of investigation, statements of witnesses Under Section 161 Code of Criminal Procedure and Under Section 164 Code of Criminal Procedure were considered by the sanctioning authority" is factually incorrect. e) The aforesaid facts make it clear that the sanctioning authority had not considered the entire material available with the investigating agency. 19. The High Court further held: 30. In the present case, Petitioner has raised objections to the validity of sanction at the very initial stage, i.e. even before arguments on charge could be advanced. However, the trial court has not recorded any find....
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....the fact whether the objection could and should have been raised at any earlier stage in the proceedings. Explanation.--For the purposes of this section,-- (a) error includes competency of the authority to grant sanction; (b) a sanction required for prosecution includes reference to any requirement that the prosecution shall be at the instance of a specified authority or with the sanction of a specified person or any requirement of a similar nature. Sub-section (4) thereof clearly provides that the question of validity of sanction could be raised at an earlier stage of proceedings. 21. This Court considered the aforesaid statutory provisions in Satya Narayan Sharma v. State of Rajasthan AIR 2001 SC 2856 and held as under: 3. The prohibition is couched in a language admitting of no exception whatsoever, which is clear from the provision itself. The prohibition is incorporated in Sub-section (3) of Section 19 of the Act. The Sub-section consists of three clauses. For all the three clauses the controlling non obstante words are set out in the commencing portion as: 19. (3) Notwithstanding anything contained in the Code of Criminal Proced....
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....eveal that it had examined any witness to the effect that the relevant documents had been produced before the sanctioning authority or the authority had asked for a document and the same had been shown to him. 26. In the counter affidavit it has been stated by the Respondent that there is no evidence on record to indicate that all material records had been separately examined by the Vigilance Wing of the department as permissible under Chapter VII of the Vigilance Manual. Clause 18 of the Manual enables the accused to make a representation to withdraw the prosecution. The relevant part thereof reads as under: 18.1. Once a case has been put in a court, it should be allowed to take its normal course. Proposal for withdrawal of prosecution may however, be initiated by the S.P.E. on legal consideration. In such cases the S.P.E. will forward its recommendations to the Department of Personnel and Training in cases in which sanction for prosecution was accorded by that Ministry and to the administrative Ministry concerned in other cases. The authority concerned will in all such cases consult the Ministry of Law and accept their advice. 18.2. Requests for withdrawal of....
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....t income tax records which were in the CBI custody to enable compliance of the directions received from the Revenue Secretary. In case it was not possible to provide the original records as above, authenticated copies thereof be given, treating it to be a matter of utmost urgency. 31. The DIG, CBI vide its letter dated 5.6.2004 informed Shri B.P.S. Bisht that it was not possible to send the record. The matter was pending consideration in the trial court and as such was sub-judice. 32. The covering letter of the draft sanction dated 24.5.2007 does not make it clear as to what had been sent to the sanctioning authority. It reveals that alongwith the draft sanction order, a list of witnesses and list of documents had been sent. The relevant part thereof reads as under: The SP's report sent herewith may please be treated as a secret document and no reference to it may be made in the sanction order when issued. In case the Ministry/Department, due to some reasons wants to depart from the material placed on record for issuing sanction, the matter may please be discussed with the undersigned so that the sanction for prosecution so accorded not found wanting legally. ....
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....s from the date of this order and shall file a status report in the court on 5th September, 2006. 35. Another Writ Petition (Crl.) No. 738 of 2001 was filed by Shish Ram Saini, Chartered Accountant against the CBI and its officers making allegations against them that he had been harassed by the CBI's officers as he was employed as an Accountant in the firms and companies of Respondent herein. The court held that the authorities had proceeded with high-handedness and found substance in the allegations made by the Petitioner therein. The order runs as under: 31. In view of the above discussion and in the result, the present petition is partly allowed and the Special Cell of Delhi Police is directed to register a case on the basis of allegations contained in the complaint dated 5.7.2001 lodged by the Petitioner with police station Lodhi Colony and those contained in the present petition. The investigation shall be conducted by an officer not below the rank of Assistant Commissioner of Police in the said Cell independently and uninfluenced by the findings and observations contained in the report of enquiry dated 26.4.2005 conducted by the Joint Director, CBI. 36. The....
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....nt is a draft order, whereafter sanctioning by the Minister in normally a routine acceptance of that draft. What was considered by me was only that which was sent or recommended to me. 5. If the obligation was to consider more than which was sent, then that has not been done, therefore, unwittingly prejudice might have been caused and justice miscarried. I leave it to the Court to decide the matter. 41. The aforesaid affidavit, whatever may be its evidentiary value and without going into technicalities such as the issue of whether it is admissible in evidence or not or whether it may be considered at a later stage, one thing is clear that it is in consonance and confirmation of the findings recorded by the High Court in paragraphs 8 and 24 of the impugned judgment. Paragraph 8 of the judgment reads as under: 8. Further, it is contended that the charge sheet relies upon 366 witnesses, whereas the list annexed to the SP's report mention only 278 witnesses. 88 witnesses were not even mentioned in the list and the statement of not even a single witness, out of 366 witnesses was sent to the sanctioning authority. Moreover, the charge sheet refers to 1220 documen....
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....mphasis added) (See also: Teri Oat Estates (P) Ltd. v. UT, Chandigarh and Ors. (2004) 2 SCC 130, Manish God v. Rohini Goel AIR 2010 SC 1099, and State of Uttar Pradesh v. Sanjay Kumar (2012) 8 SCC 537). 45. This Court passed the interim order in contravention of the provisions of Section 19 of the Act 1988. Though the Appellant claims that it did not ask for such order, the court itself granted the stay. Even the Respondent never applied for vacating the said interim order. In such a fact-situation, it is not desirable to make any comment on the issue. 46. The most relevant issue involved herein is as at what stage the validity of sanction order can be raised. The issue is no more res-integra. In Dinesh Kumar v. Chairman Airport Authority of India and Anr. AIR 2012 SC 858, this Court dealt with an issue and placing reliance upon the judgment in Parkash Singh Badal and Anr. v. State of Punjab and Ors. AIR 2007 SC 1274, came to the conclusion as under: 13. In our view, having regard to the facts of the present case, now since cognizance has already been taken against the Appellant by the trial Judge, the High Court cannot be said to have erred in leaving the questio....