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CASE NO.: Appeal (crl.)  1262 of 1998

PETITIONER: N. Bhargavan Pillai (dead) by Lrs.and Anr.

RESPONDENT: State of Kerala

DATE OF JUDGMENT: 20/04/2004

BENCH: DORAISWAMY RAJU & ARIJIT PASAYAT.

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT,J

       N. Bhargavan Pillai (hereinafter referred to as  ’accused’) as appellant questioned correctness of the  judgment rendered by learned Single Judge of the Kerala  High court upholding his conviction under Section 5(2)  of the Prevention of Corruption Act, 1947 (in short the  ’Act’) and Section 409 of the Indian Penal Code, 1860  (in short the ’IPC’). For the offence under the Act, he  was sentenced to undergo rigorous imprisonment for two  years and to pay a fine of Rs.1,00,000/- with a default  stipulation of 6 months imprisonment and sentence of  one year for the offence under the IPC.  Since he died  during pendency of the appeal, his legal  representatives sought for impletion and have been  impleaded.   

       Accusations which led to trial of the accused are  essentially as follows:

       The accused was employed in the Civil Supplies  Department in the rank of Assistant Taluk Supply  Officer. He was working as Junior Manager on deputation  in the Kerala State Civil Supplies Corporation (in  short the ’Corporation’), at Kowdiar. While he was  functioning as such, by Ex.P-19 order dated 14.4.1983  of the Regional Manager, of the Corporation,  Thiruvananthapuram, he was appointed as Unit Manager of  the Corporation, Unit Punalur. Pursuant to the orders  he took charge as Unit Manager in the Punalur Unit. His  5 years deputation to the Corporation was to be  completed on 30.6.1986. But, instead of relieving him,  the Corporation had requested the Civil Supplies  Department to extend his term of deputation by one year  stating that certain liabilities were outstanding. But  later, the request for extension of deputation was  limited upto 30.11.1986 by Ext.P-38 letter dated  4.11.1986 from the Managing Director of the Corporation  to the Director of Civil Supplies, Board of Revenue. By  the same letter, the Regional Manager of the  Corporation, was directed to relieve the accused to his  parent department on 30.11.1986 itself. Pursuant to the  direction, the Regional Manager issued Ext.P-20 order  dated 29.11.1986 relieving the accused effective from  the afternoon of 29.11.1986. However, the accused did  not hand over charge on 29.11.1986. He did not attend

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the office after 27.11.1986, but applied for leave. As  he did not attend the office on 29.11.1986, the  Regional Manager by Ext. P-22 dated 1.12.1986 permitted  Natarajan Asari (PW-3), the Senior Assistant in the  Punalur depot to assume charge effective from that  date. Accordingly, PW-3 assumed charge of the depot and  this was reported by the Regional Manager to the  Managing Director of the Corporation by Ext. P-23 dated  4.12.1986. The stock of the Punalur Depot were partly  stored in the Warehousing Corporation godown at Punalur  and partly in the godown attached to the office,  referred to by the witnesses as self-godown. Though PW- 3 assumed charge, the accused had not handed over the  keys of the godown or verified the stock. Thereafter  the accused reported in the depot on 13.12.1986 and in  the presence of the then Assistant Manager (Accounts)  (PW-2) in the Regional Office of the Corporation,  brought the keys and opened the godown. He also  undertook in writing by Ext.P-24 to hand over charge on  the 13th, 15th and 16th December, 1986. In the  presence of the accused the items found in the godown  were verified. Only the stock of 21.875 quintals of  M.P. boiled rice and 84 kg. Of tamarind were found in  the self-godown. A stock statement was also obtained  from the State Warehousing Corporation. The Managing  Director of the Corporation directed a special audit to  be conducted by PW-1 who was then working as an  Assistant Manager in the Internal Audit Wing of the  Corporation on deputation from the Accountant General’s  Office. Accordingly, PW-1 conducted a special audit and  Ext.P-1 was prepared.

       The stock in the State Warehousing Corporation  godown as also the self-godown were verified as on  31.3.1986. As per Ext.P-2 stock verification report,  there was an actual stock of 37.8 quintals of Palmolein  and 44 quintals of free sale sugar. Subsequent to  1.4.1986, 100 quintals of paper boiled rice were  transferred from the Warehousing Corporation Depot to  the self-godown, and 23.65 quintals were returned from  the Onam markets in Punalur. Thus, the physical stock  should have been 123.65 quintals of boiled rice. But  the actual stock found was 21.65 quintals. Thus, there  was a shortage of 102 quintals. Similarly, a total  quantity of 72 quintals of Palmolein had been  transferred from the State Warehousing Corporation  godown to the self-godown as per Exts. P9 and P11 goods  transfer orders and Exts. P10 and P12 good transfer  notes signed by the accused. But, there was no stock of  palmolein. There was a stock of 46 quintals of free  sale sugar as on 1.4.1986. Out of this 5 quintals had  been transferred to the Maveli Store, Punalur as per a  consignment note dated 31.10.1986. The stock register  showed a closing balance of 30 quintals, but no stock  was available in the godown. PW-1 assessed the total  value of shortage of rice at Rs.33,150/- that of  palmolein at Rs.1,08,000/- and sugar at Rs.22,620/-. He  also reported that the accused had withdrawn loading  and transporting charges for these articles as per  Exts. P13 and P14 series vouchers. No irregularity was  found in the transactions under Imprest, or in the  accounts regarding sales and remittance. There was  excess stock in the Warehousing Corporation godown as  the ration dealers had not lifted and that was tallied  by 31.12.1986 also. By Ext. P-1, PW-1 fixed accused’s

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liability including infructuous expenses on  transporting and cost of missing empty barrels at  Rs.1,70,640/-. On 29.12.1986 the accused undertook to  remit Rs.1,63,770/- being the value of the shortage of  72 quintals of palmolein, 102 quintals of rice and 39  quintals of sugar and in part payment, deposited  Rs.50,000/- in the Punalur Depot on that day. By Ext.  P-17 he undertook to deposit half the amount by  2.1.1987 and the balance by 31st March next year.  Thereafter the matter was reported to the Board of  Revenue and the accused was suspended from service by  Ext.P-37 order of the Board of Revenue, dated  31.1.1987. The Managing Director of the Corporation  wrote to the Director of Vigilance (Investigation)  along with a copy of Ext.P-1 report. The Director of  Vigilance (Investigation) sanctioned registration of a  case. On the basis of the direction the then Deputy  Superintendent of Police, Vigilance, Kollam (PW-10)  registered a case as per Ext.P-39. He entrusted the  investigation to Inspector of the Kollam Vigilance  Unit-I (PW-11), who conducted the investigation and  sent a report to his higher authorities. In the  meantime, the accused retired from service on  28.2.1992. Since he had retired from service sanction  for prosecution became unnecessary. The case was  transferred to the newly established Pathanamthitta  Vigilance Unit. PW-12, the Deputy Superintendent of  Police, Vigilance, Pathanamthitta Unit who was put in  charge of this case also verified the records and filed  the charge sheet.  

       Before the trial Court accused pleaded innocence.  Twelve witnesses were examined and 47 documents were  exhibited for the prosecution to further its case.  Though the accused did not examine any witness,  documents were marked as Exts. D-1 to D-5. The trial  Court on consideration of materials held the accused  guilty and convicted him as afore-noted. The High Court  in appeal confirmed the conviction, and sentence.  

       In support of the appeal, Mr. C.N. Sree Kumar,  learned counsel submitted that in the absence of a  sanction for the prosecution in terms of Section 19 of  the Act and Section 197 of the Code of Criminal  Procedure, 1973 (in short the ’Code’) the whole  proceeding was non est and the trial was vitiated.  Additionally, it was submitted that the prosecution has  not established any mis-appropriation and/or mens rea  of the alleged crime and, therefore, both the trial  Court and the High Court have acted contrary to law. It  was further submitted that both the trial Court and the  High Court proceeded on mere surmises and conjectures  to hold that the accused had committed mis- appropriation. The essential ingredients necessary to  prove the accusations under Section 409 IPC are  squarely absent. Additionally, it was submitted that  both the trial Court and the High court have attached  undue importance to the fact that the accused-appellant  had agreed to pay the differential amount. Reliance was  placed on a decision of this Court in Jiwan Dass v.  State of Haryana (1999 (2) SCC 530) to contend that  even if the accused had agreed to pay the amount that  was not material while considering the issue whether  the ingredients have been established by the  prosecution. It is a case where the sanction which was

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sought for was refused. The prosecution has acted  unfairly in taking advantage of the position that after  retirement sanction is not necessary under the Act. In  any event, in respect of a retired employee sanction is  necessary in terms of Section 197 of the Code. Effort  has been made to overreach and circumvent law after  retirement and such arbitrary action should not be  countenanced. Finally, it was submitted that taking  note of the small amount involved and the fact that the  accused has already deposited the amount the benefit  available under the Probation of Offenders Act, 1958  (in short the ’Probation Act’) can be extended. Strong  reliance is placed on a decision of this Court in Bore  Gowda v. State of Karnataka (2000 (10) SCC 260). It is  pointed out that though accused has died during  pendency of appeal his legal representatives have been  impleaded and benefit available under Section 12 of the  Probation Act should not be denied to them.  

       In response, Mr. Ramesh Babu learned counsel for  the respondent-State submitted that the Courts below  have acted in accordance with law keeping in view the  correct principles and the factual scenario. Mis- appropriation is no part of an employee’s official duty  and, therefore, the question of any sanction under  Section 197 of the Code does not arise. In any event,  initially, the sanction was not accorded because the  accused had retired and had agreed to pay the amount  but that was not the final decision. In a case  involving corruption it would be against public  interest not to proceed against the accused who is  guilty of mis-appopriating huge amount of stock meant  for the people. The Probation Act has no application to  the cases covered under the Act.

When the newly-worded Section 197 appeared in the  Code with the words "when any person who is or was a  public servant" (as against the truncated expression in  the corresponding provision of the old Code of Criminal  Procedure, 1898), a contention was raised before this  Court in Kalicharan Mahapatra v. State of Orissa (1998  (6) SCC 411) that the legal position must be treated as  changed even in regard to offences under the Old Act  and New Act also. The said contention was, however,  repelled by this Court wherein a two-Judge Bench has  held thus :  "A public servant who committed an  offence mentioned in the Act, while he  was a public servant, can be prosecuted  with the sanction contemplated in  Section 19 of the Act if he continues  to be a public servant when the court  takes cognizance of the offence. But if  he ceases to be a public servant by  that time, the court can take  cognizance of the offence without any  such sanction."

        The correct legal position, therefore, is that an  accused facing prosecution for offences under the Old  Act or New Act cannot claim any immunity on the ground  of want of sanction, if he ceased to be a public  servant on the date when the court took cognizance of  the said offences. But the position is different in

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cases where Section 197 of the Code has application.  

       Section 197(1) provides that when any person who  is or was a public servant was not removable from his  office save by or with the sanction of the Government  is accused of any offence alleged to have been  committed by him while acting or purporting to act in  the discharge of his official duty, no Court shall take  cognizance of such offence except with the previous  sanction (a) in the case of a person who is employed  or, as the case may be, was at the time of commission  of the alleged offence employed, in connection with the  affairs of the Union, of the Central Government and (b)  in the case of a person who is employed or, as the case  may be, was at the time of commission of the alleged  offence employed, in connection with the affairs of a  State, of the State Government.  

       We may mention that the Law Commission in its  41st Report in paragraph 15.123 while dealing with  Section 197, as it then stood, observed "it appears to  us that protection under the section is needed as much  after retirement of the public servant as before  retirement. The protection afforded by the section  would be rendered illusory if it were open to a private  person harbouring a grievance to wait until the public  servant ceased to hold his official position, and then  to lodge a complaint. The ultimate justification for  the protection conferred by Section 197 is the public  interest in seeing that official acts do not lead to  needless or vexatious prosecution. It should be left to  the Government to determine from that point of view the  question of the expediency of prosecuting any public  servant". It was in pursuance of this observation that  the expression ’was’ come to be employed after the  expression ’is’ to make the sanction applicable even in  cases where a retired public servant is sought to be  prosecuted.  

Above position was highlighted in R. Balakrishna  Pillai v. State of Kerala (AIR 1996 SC 901).  

       As noted in State of M.P. v. M.P. Gupta (JT 2003  (10) SC 32), sanction under Section 197 of the Code is  not a condition precedent for an offence under Section  409 IPC.

         It is fairly well settled position in law that  actual mode of entrustment or mis-appropriation is not  to be proved by the prosecution. Once entrustment is  proved, it is for the accused to prove as to how the  property entrusted was dealt with. In Jiwan Dass’s case  (supra) the factual position was entirely different. It  was held that the undertaking given in that case could  not be held to be confession or admission. In the  present case, the factual scenario as noticed by the  trial Court and the High Court is different. It was not  only on the basis of the undertaking that the  conviction was recorded, but the other evidence on  record also unerringly proved entrustment. Therefore,  it was for the accused to prove as to how the property  entrusted with him was dealt with. No material was  placed in that regard. Therefore, the Courts below  correctly held entrustment to have been proved. The

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concurrent findings of fact recorded by the Courts  below relating to entrustment and mis-appropriation in  our view are well merited and fully justified on the  basis of evidence on record and do not suffer from any  perversity or patent error of law to warrant  interference.  

       Coming to the plea relating to benefits under the  Probation Act, it is to be noted that Section 18 of the  said Act clearly rules out application of the Probation  Act to a case covered under Section 5(2) of the Act.  Therefore, there is no substance in the accused- appellant’s plea relating to grant of benefit under the  Probation Act. The decision in Bore Gowda’s case  (supra) does not even indicate that Section 18 of the  Probation Act was taken note of. In view of the  specific statutory bar the view, if any, expressed  without analysing the statutory provision cannot in our  view be treated as a binding precedent and at the most  is to be considered as having been rendered per  incuriam. Looked at from any angle, the appeal is sans  merit and deserves dismissal which we direct.