TaxTMI 
TaxTMI 
2021 (10) TMI 45
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....ise Management Trust (hereinafter referred to as "Trust") since its inception. He is an accomplished academician who is associated with four Australian Universities as an Adjunct Professor and his current legal status is that of an Australian citizen. The day-to-day affairs of Centurion Institute of Technology are managed by a Management Committee constituted by the Trust under its "First Statute of the Centurion University of Technology and Management, Orissa" dated 19th October, 2011. The said statute delineates the function of various persons holding different positions in the University. 3. Learned Counsel for the Petitioner Shri Aditya Kumar Mohapatra has contended that the present Petitioner is not a member of the Management Committee and as such he exercises no active or direct control over the day-to-day affairs or management of the Institute. It is submitted that it is for the said reason a Chief Financial Officer (in short "CFO") namely, one Himansu Sekhar Kabi and one Chief Executive Officer (in short "CEO") namely Vineet Chhatwal were appointed by the University in the Management Committee, who looked after the financial and administrative work pertaining to the Univ....
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....University. (iii) He can call for any paper or information relating to the affairs of the University. On the basis of the information so received, if he is satisfied that any order, proceeding, or decision taken by any authority of the University is not in conformity with the Act, Statutes, he may place such order, proceeding, or decision before the Board of Governor for review of such order proceeding or decision in conformity with the provision of the Act, or the Statutes. Decision of the Board shall be final." 6. It has been submitted that the Trustees have always placed the highest degree of trust in their CEO and CFO for efficient running of the Trust and its constituent Institutes. Betraying such trust, around the beginning of January, the CEO and CFO conspired to abuse the trust and free rein given to them to further their own illegal gain and purely for personal benefits. It is submitted that a vital and telling indicator of the same is the email dated 23.01.2020 wherein the CEO in a sternly worded email instructed the subordinates in the Accounts Department of the Institute that all payment advices be sent only to the CFO and that nobody should directly forward....
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....that prima facie case against this Petitioner for the offences for which the case has been registered stands. He submitted that the accused-Ashutosh Padhy being an employee of the University under the instructions from the Petitioner, in order to settle the GST issues, was there as the bribe giver. He further submitted that, at the spot, the conversation of this Petitioner with accused-Ashutosh Padhy implicates the Petitioner. He submitted that as per the source of information, accused-A.B. Kar, Superintendent, the leader of the team had given an information to the concerned accounts section of the Institute about the violation with respect to GST Laws and during audit verification, he had pointed out all those for which there was a move from the Institute for resolution of the issues, so that huge demand towards GST and penalty would be avoided and for that the bribe was demanded and accused-Ashutosh Padhy was present at the spot as the giver of the said bribe under the instruction of this Petitioner-Trustee. He thus submitted that a prima facie case against the petitioner is made out and no interference in the present case is warranted. 10. Heard learned Counsel for the partie....
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....O who had defalcated large sums of money from the University accounts allegedly in connivance with the CEO, the Trust engaged one M/s. Daspattnaik & Co, Chartered Accountants to conduct an investigative special audit of the accounts of the Trust to uncover the same. It is stated that during the investigation it was observed that the CFO had made dubious payments to the tune of Rs. 57,75,398/- to M/s Shree Ventures. The emails received requisitioning release of funds to deserving suppliers/service providers were tampered to insert the name of M/s Shree Ventures, with whom no contract existed in the first place. The laid down procedure for online fund transfer was not observed since no such documentation was made available to verify as to who had requisitioned the fund and who had verified the details. Furthermore, it has also surfaced during the investigation that the CFO had made another payment to the tune of Rs. 23,10,000/- to M/s. Sai Sanu Enterprises without any supporting authorizations from an appropriate authority and beyond his financial delegation. Similar to the previous modus operandi, the emails receiving requisitioning release of funds to deserving suppliers/service pr....
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.... Commissionerate, Bhubaneswar and officials of said Centurion Institute of Technology, Jatani, Odisha for alleged offences u/s 120-B IPC, Sections 7-A, 8 & 9 of the Prevention of Corruption Act, 1988 vide FIR No.RC-10(A)/2020- (RC0152020A0010), dated 29.12.2020. 15. It is further contended by the learned Counsel for the Petitioner that a plain reading of the aforementioned Sections carves out an offence only when a 'person' or 'persons' associated with such commercial organisation" gives or promises to give any undue advantage to a public servant. In the instant case, no offence can be said to be made out against the Petitioner as he had not even the slightest inkling of the events that were unfolding in India. The Petitioner put blind faith in his CEO and CFO and presumed that they would heed his advice and clear all the statutory dues with the Authorities upon receipt of the final amount that was due. The Petitioner had no knowledge that his trusted men were planning to use any underhanded or backdoor methods to settle the dues payable. 16. Before adverting to the facts of the case, it is apposite to refer first to the law applicable to the present case. The scope of exerci....
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....nst the Petitioner exists. 17. It is a settled principle that the power to interdict a proceeding either at the threshold or an intermediate stage of the trial is a power which inheres in a High Court, under Section 482 of the Cr.P.C., on the broad principle that in the event the allegations made in the FIR or the charge-sheet, as may be, prima facie do not disclose a triable offence, there can be no reason as to why the accused should be made to suffer the agony of a legal proceeding that more often than not gets protracted. A prosecution which is bound to become lame or a sham ought to be interdicted in the interest of justice lest the continuance thereof will amount to an abuse of the process of the law. 18. In the case of Bhajanlal (supra), the Hon'ble Apex Court has held that an FIR can be quashed at the initial stage where the allegations made, even if taken at their face value and accepted in its entirety, do not prima facie constitute any offence or make out a case against the accused. It has further been held that where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wre....
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....ther, reliance has been placed on C. M. Girish Babu's case (supra) in the case of V. Sejappa v. State (2016) 12 SCC 150: (2017) 3 SCC (Cri) 699. While dealing with a similar "trap case" the Hon'ble Apex Court has held that mere receipt of amount by the accused is not sufficient to fasten the guilt to the accused, in the absence of any evidence with regard to demand and acceptance of the amount as illegal gratification. The Hon'ble Court held therein as under; ""20. In State of Kerala v. C.P. Rao [State of Kerala v. C.P. Rao, (2011) 6 SCC 450 : (2011) 2 SCC (Cri) 1010 : (2011) 2 SCC (L&S) 714], it was held that mere recovery of tainted money is not sufficient to convict the accused and there has to be corroboration of the testimony of the complainant regarding the demand of bribe. 21. While dealing with the contention that it is not enough that some currency notes were handed over to the public servant to make it illegal gratification and that the prosecution has a further duty to prove that what was paid was an illegal gratification, reference can be made to the following observation in Mukut Bihari v. State of Rajasthan [Mukut Bihari v. State of Rajasthan, (2012)....
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.... recovery of currency notes cannot constitute the offence under Section 7 unless it is proved beyond all reasonable doubt that the accused voluntarily accepted the money knowing it to be a bribe. The above position has been succinctly laid down in several judgments of this Court. By way of illustration reference may be made to the decision in C.M. Sharma v. State of A.P. [(2010) 15 SCC 1 : (2013) 2 SCC (Cri) 89] and C.M. Girish Babu v. CBI [(2009) 3 SCC 779 : (2009) 2 SCC (Cri) 1] ." Further, it was held that; ".......9. Insofar as the presumption permissible to be drawn under Section 20 of the Act is concerned, such presumption can only be in respect of the offence under Section 7 and not the offences under Sections 13(1)(d)(i) and (ii) of the Act. In any event, it is only on proof of acceptance of illegal gratification that presumption can be drawn under Section 20 of the Act that such gratification was received for doing or forbearing to do any official act. Proof of acceptance of illegal gratification can follow only if there is proof of demand. As the same is lacking in the present case the primary facts on the basis of which the legal presumption under Section 20 ....
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....5] made it clear that the prosecution has to prove the charge beyond reasonable doubt like any other criminal offence and the accused should be considered innocent till it is proved to the contrary by proper proof of demand and acceptance of illegal gratification, which is the vital ingredient to secure the conviction in a bribery case. In view of the aforesaid settled principles of law, we find it difficult to take a view different from the one taken by the High Court."" 24. Thus, the entire conspectus of the body of case law on the subject makes it unambiguously clear that the condition precedent demand of the bribe amount in question must be established. There is no automatic or default presumption in law that the alleged recovery made from an accused is in furtherance of the design towards advancing or palming off a bribe. 25. Insofar as the question of a person being held guilty of the offence under Section 13 of the Act, it is necessary that the prosecution must prove that the public servant was acting with the dishonest intention. The Hon'ble Supreme Court has held in a number of cases that in cases where it is shown that a public servant has acted rashly and negligent....
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....been, no question of obtaining any pecuniary advantage by any corrupt or illegal means or by abuse of the position of the appellant as a public servant can arise. As a Minister it was for the appellant to decide on the number and identity of the officials and supporting staff who should accompany him to London if it was anticipated that he would be required to perform his official duties while in London. If in the process, the rules or norms applicable were violated or the decision taken shows an extravagant display of redundance it is the conduct and action of the appellant which may have been improper or contrary to departmental norms. But to say that the same was actuated by a dishonest intention to obtain an undue pecuniary advantage will not be correct. That dishonest intention is the gist of the offence under Section 13(1)(d) is implicit in the words used i.e. corrupt or illegal means and abuse of position as a public servant. A similar view has also been expressed by this Court in M. Narayanan Nambiar v. State of Kerala [AIR 1963 SC 1116 : (1963) 2 Cri LJ 186 : 1963 Supp (2) SCR 724] while considering the provisions of Section 5 of the 1947 Act. 18. If the totality ....
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....ccused vis-à-vis the standard of burden of proof on the prosecution would differ. Before, however, the accused is called upon to explain as to how the amount in question was found in his possession, the foundational facts must be established by the prosecution. Even while invoking the provisions of Section 20 of the Act, the court is required to consider the explanation offered by the accused, if any, only on the touchstone of preponderance of probability and not on the touchstone of proof beyond all reasonable doubt." 28. The Apex Court in Satvir Singh v. State of Delhi (2014) 13 SCC 143 : (2014) 5 SCC (Cri) 619, relying upon its earlier decision in K.S. Panduranga v. State of Karnataka (2013) 3 SCC 721 : (2013) 2 SCC (Cri) 257 : (2013) 1 SCC (L&S) 791, has held that the demand and acceptance of the amount of illegal gratification by the accused is a condition precedent to constitute an offence, the relevant paragraph in this regard from the abovesaid decision is extracted hereunder: "39. Keeping in view that the demand and acceptance of the amount as illegal gratification is a condition precedent for constituting an offence under the Act, it is to be note....
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....as an illegal gratification." The abovesaid paragraph from the abovementioned case would go to show that there must be clinching evidence coupled with the tacit approval of the accused that money was paid as a bribe for the commission or omission of an act. In the aforesaid case, it was held that as the contents of the bag were not within the knowledge of the accused, therefore, the relevant aspect of the case that the appellant has accepted the illegal gratification as required under Section 7 of the Act is not proved by the prosecution by adducing cogent evidence in this regard. 31. In fact, the principle of presumption has been lucidly enunciated in the case of State of A.P. v. C. Uma Maheswara Rao (2004) 4 SCC 399 : 2004 SCC (Cri) 1276, wherein the Hon'ble Supreme Court has held that; "12. Before proceeding further, we may point out that the expressions "may presume" and "shall presume" are defined in Section 4 of the Indian Evidence Act, 1872 (in short "the Evidence Act"). The presumptions falling under the former category are compendiously known as "factual presumptions" or "discretionary presumptions" and those falling under the latter as "legal presumptions" ....
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....t from another, the court is only applying a process of intelligent reasoning which the mind of a prudent man would do under similar circumstances. Presumption is not the final conclusion to be drawn from other facts. But it could as well be final if it remains undisturbed later. Presumption in law of evidence is a rule indicating the stage of shifting the burden of proof. From a certain fact or facts the court can draw an inference and that would remain until such inference is either disproved or dispelled. 17. For the purpose of reaching one conclusion the court can rely on a factual presumption. Unless the presumption is disproved or dispelled or rebutted the court can treat the presumption as tantamounting to proof. However, as a caution of prudence we have to observe that it may be unsafe to use that presumption to draw yet another discretionary presumption unless there is a statutory compulsion. This Court has indicated so in Suresh Budharmal Kalani v. State of Maharashtra [(1998) 7 SCC 337 : 1998 SCC (Cri) 1625] : (SCC p. 339, para 5) "A presumption can be drawn only from facts - and not from other presumptions - by a process of probable and logical reasoni....
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....r to cause harm, or where the allegations are absurd and inherently improbable. (iii) The power to quash shall not, however, be used to stifle or scuttle a legitimate prosecution. The power should be used sparingly and with abundant caution. (iv) The complaint is not required to verbatim reproduce the legal ingredients of the offence alleged. If the necessary factual foundation is laid in the complaint, merely on the ground that a few ingredients have not been stated in detail, the proceedings should not be quashed. Quashing of the complaint is warranted only where the complaint is so bereft of even the basic facts which are absolutely necessary for making out the offence. (v) A given set of facts may make out: (a) purely a civil wrong; or (b) purely a criminal offence; or (c) a civil wrong as also a criminal offence. A commercial transaction or a contractual dispute, apart from furnishing a cause of action for seeking remedy in civil law, may also involve a criminal offence. As the nature and scope of a civil proceeding are different from a criminal proceeding, the mere fact that the complaint relates to a commercial transactio....
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.... has to be borne in mind that although it is not a case of interception of telephonic communication per se, however, the prosecution seeks to rely on the fact that there was allegedly a telephonic call that took place between the Accountant Ashutosh Padhy and the Petitioner herein. The said Telephonic conversation can not be the basis for implicating the present petitioner. 35. With the above legal position in mind, the controversy at hand may now be adverted to. The learned counsel for the petitioner has taken me through the "First Statute" of the Centurion University of Technology and Management dated 19.10.2011. A bare perusal of the same reveals that the trust had in fact set up a detailed mechanism under the said statute to administer and govern the affairs of the University and the Institutes thereunder. The same delineates various functions and duties that ascribed to different persons thereunder. Insofar as the duties and responsibilities of the founding trustees are concerned, it is seen that their role under the very statute under which it functions purely advisory in nature and there is not even the remotest indication that the trustees exercise an active/day to day c....
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....the contrary, the CFO in his own statement under Section 161 of the Cr.P.C has himself admitted that he and the GST consultant had all along been corresponding with the GST officials/accused persons. This very fact veritably points to the fact that the day-to-day and active control over the audit process was exercised by the CFO and that at no stage had the name of the trustees or the present petitioner come up. 37. The allegation that has been made by the CFO which is in tandem with the prosecution's version is that it was in fact the trustee/the present petitioner who was keen to pay a bribe and that it was the petitioner who had instructed the Accountant to go to the alleged spot of recovery to handover the bribe amount. This allegation apart, there is no other allegation which can connect the present petitioner to the present prosecution, save and except, a telephone call that had been made through WhatsApp by the Accountant to the petitioner while the Accountant was in the custody of the opposite party which will be dealt with herein separately. It is also pertinent to note that the Institute/University has, in fact, lodged an FIR on 8.01.2021 against the CFO namely Mr. Him....
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.... the same is rather vague in its finding. In fact, without adverting to details, it is sufficient to state that the prosecution in its examination has relied upon five sample exhibits all of which have returned with a definite inconclusive finding. Thus, the main contention regarding the alleged phone call made by the accused Accountant to the present Petitioner is weak link in the present case to entangle the petitioner herein under the sealed cover mechanism. 39. Another telling aspect of the matter is that the CEO's statement under Section 161 of the Cr.P.C. further belies the prosecution story. He states that the GST affairs were entirely the responsibility of the CFO and he had nothing to do with the audit whatsoever. He also states that the Accountant does not work for the University and he has never met him. He also states that certain suspicious transactions authorized by the CFO were discovered on 18.12.2020 by the Deputy Registrar (Finance) which were then reported to the trustees. However, the trustees conveyed their faith in the CFO and in the meantime asked the CEO to conduct an internal audit in the matter. He further reveals that pursuant to this unsavoury episode....
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....as an act of wreaking vengeance upon him since he had unearthed the illegalities committed by the CEO and the CFO and had insisted their removal. 41. The contention of the petitioner that the Audit process is still ongoing which finds credence from the letter dated 10.05.2021 where large number of documents have been requisitioned for the various assessment years namely 2016-17, 2017-18 and 2018-19, which clearly indicates that the audit process is far from over. The learned counsel for the petitioner has also apprised that the Coordinate Bench of this Court has been pleased to enlarge the present petitioner on anticipatory bail vide order dated 04.03.2021 in ABLPL No.1132 of 2021 and appreciated the fact that the prosecution's version was inherently improbable. 42. The email dated 23.01.2020 also buttresses the submissions made by the Petitioner. The said email reveals that the mail by the CEO to the Accounts Department had a very clear instruction that if they bypass the CFO then the consequence will follow. The said e-mail also contained instruction that no payment request should go to the founders/trustees without the CFO's clearance. The said email is a pointer to the in....