TaxTMI 
TaxTMI 
2013 (11) TMI 1754
X X X X Extracts X X X X
X X X X Extracts X X X X
....ular 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 placed necessary documents for the perusal of the Additional Director....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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's report to the sanctioning authority for obtaining the sanction for prosecution. Even if any off....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity 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 after having full knowledge of the material facts of the case. Grant of sanction is not a mere formality. Therefore, the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../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 sanction had been granted in accordance with law. 9. In view of the above, we do not find force in the submissions advanced by Shri Vishwanathan, learned ASG that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o 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 complete records required to be considered for sanction on application of mind to the relevant material on record and thereby quashed the sanction. 13. In view thereof, the CBI-A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....des 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 of Criminal Procedure with regard to the said allegations and circumstances of the case, is satisfied that Shri Ashok Kumar Aggarwal should be prosecuted in the competent Court of Law for the abovementio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urpose 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 finding in terms of Clause (b) of Sub-section (3) and Sub-section (4) of Section 19 of the Act, that non-production of the relevant material before the sanctioning authority at the time of grant of sanction "has not resulted in a failure of justice". 31. Under these circums....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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 Procedure, 1973.... Hence none of the provisions in the Code could be invoked for circumventing any one of the bans enumerated in the Sub-section. 22. The letter dated 17.5.2005 written by the Addl. DIT (Vigilance) to DIG, CBI makes it clear that the documents relied upon were voluminous and therefore, were not enclosed with the SP's report. It further revealed that an order was passe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....missible 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 prosecution may also come up from the accused. Such requests should not generally be entertained except in very exceptional cases where, for instance, attention is drawn to certain fresh, established or accepted facts which might alter the whole aspect of the case. In such cases also the administrative Ministry concerned should consult the Ministry of Law and accept their advice. 27. The Respondent had given a representation on 13.3.200....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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. Since the relied upon documents are very large in quantity, they are not being enclosed. The Investigating Officer of this case Shri V.K. Pandey, will show the documents and also explain the evidence as and when required. Further List of witnesses and List of documents will be provided, if necessary. (Emphasis added) Thus, it is evident that even on the date the draft sanction was sent, the investigation was not complete. 33. It appears from the facts and figur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 record reveals that VIP reference was made by the Ministry of Finance to the Law Ministry in respect of the case against the Respondent as the matter had been agitated by one Hon'ble Member of the Parliament and the Law Ministry gave its opinion. The salient features thereof are that the sanction had been accorded without considering and examining the relevant material as the same had not been sent by the CBI and even thereafter despite being requested by the Vigilance Department of CBDT, the Vig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 documents, whereas the list attached to the SP's report only mention 282 documents. Thus, 938 documents were withheld from the sanctioning authority including documents consisting of income tax record of the Petitioner. The Apex Court has held in DSP Chennai v. K. Inbasagaran (2006) 1 SCC 420 that: Income tax return and assessment orders are relevant in a case of disproportionate assets. Paragraph 24 mentioning relevant part of sanction order has already been quoted hereinabove. 42. Thus, it becomes crystal clear that the statements of 28 w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 question of validity of sanction open for consideration by the trial court and giving liberty to the Appellant to raise the issue concerning validity of sanction order in the course of trial. Such course is in accord with the decision of this Court in Parkash Singh Badal... 47. Undoubtedly, the stage of examining the validity of sanction is during the trial and we do not propose to say that the validity should be examined during the stage of inquiry or at pretrial stage. 48. However, in the instant case, the fact-situation warrant a different course altogether as the impugned order had already b....