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CASE NO.: Appeal (crl.)  215 of 2004

PETITIONER: State of Goa                                                                                   

RESPONDENT: Babu Thomas                                                                     

DATE OF JUDGMENT: 29/09/2005

BENCH: H.K. SEMA & G.P.MATHUR

JUDGMENT: J U D G M E N T                                  

H.K.SEMA,J

       The challenge in this appeal, filed by the State of Goa, by special  leave is to the order of the High Court of Bombay at Goa, Panaji dated  19.9.2002 in Crl. Misc. application No. 99 of 2002.  Briefly stated, the facts  are as follows:         The respondent, herein, was employed as Joint Manager in Goa  Shipyard Limited, a Govt. of India Undertaking under the Ministry of  Defence in 1994.  At the relevant time, he was officiating as Manager  (Personnel & Administration).  He was arrested by CID, Anti Corruption  Bureau of Goa Police on the charge that he demanded and accepted illegal  gratification from one Mr. M. Channaiah - the complainant, an Attorney of  M/s. Tirumala Services in order to show favour for settlement of wages,  bills/arrears, certification of pending bills and to show favour in the day-to- day affairs concerning the said contractor.  It was further alleged that the  respondent, on various occasions, demanded and accepted from the  complainant a sum of Rs. 3,68,000/- as illegal gratification/reward for  showing favour to the complainant in exercise of his official functions  concerning the said contract.  On the basis of the aforesaid allegations, an  investigation was conducted.  After completion of the investigation, the  charge-sheet was filed under Sections 7 and 13 of the Prevention of  Corruption Act, 1988 (hereinafter as ‘the Act’) and Sections 161 and 165 of  the I.P.C. before the court of the Special Judge, N.A. Britto, appointed under  Section 3 of the Act. The charges framed by the Special Judge against the respondent are as  follows:  "That you on or about the 14th day of September, 1994, you  being a public servant, namely Manager (Personnel and  Administration) in Goa Shipyard Ltd., Vasco-da-Gama, which  is a Public Sector Undertaking, demanded and accepted illegal  gratification, other than legal remuneration of Rs. 20,000/- from  the complainant Shri M. Channaih, Attorney of M/s. Tirumalla  Services, who were given a contract of sweeping, labour supply  and security etc. in Goa Shipyard, in order to show favours for  the settlement of wage bills/arrears, to certify pending bills as  well as to show favours in various day to day affairs concerning  the said contract, and thereby, you committed an offence  punishable under Section 7 of the Prevention of Corruption Act,  1988.   

Secondly, prior to the said date and place, you abused your  position as a public servant and obtained for yourself large  sums of money from the said M. Channaih to certify that the  contract work was completed/performed satisfactorily, and  thereby, you committed an offence punishable under Section

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13(1)(d)(ii) of the said Prevention of Corruption Act, 1988 and  within the cognizance of this Court."

       Alongwith the charge-sheet, the prosecution had also filed a sanction  order dated 2.1.95 issued under the signatures of the Company Secretary.  In  the said sanction order itself, it is noticed in paragraph 1 that the Chairman  and the Managing Director of the Company is the appointing authority of the  respondent.  It is also noticed in paragraph 2 of the said sanction order that  under the Goa Shipyard Officer’s Conduct, Disciplines and Appeal Rules,  1979 (hereinafter ‘the Rules’), the services of the respondent could be  terminated after obtaining the approval of the Board of Directors/Company.   In paragraph 3 of the said sanction order it is noticed that the sanction  required under Section 19 of the Act was granted.           It is undisputed that the sanction for prosecution of the respondent  was granted by the Company Secretary under Section 19 of the Act.  It is  also undisputed that the authority competent to remove the respondent from  the post, he was holding, was the Board of Directors.  It is also undisputed  that the sanction order does not refer to any order/resolution of the Board of  Directors of the Company pursuant to which Company Secretary was  authorized by the Board of Directors to convey the sanction order having  passed by the Board of Directors.  Pursuant to the sanction order dated  2.1.95, cognizance was taken on 29.5.95.           In the interregnum, the respondent was dismissed from service w.e.f.  21.1.97.  We are told, at the Bar, that the termination order was set aside by  the High Court and an S.L.P. is pending before this Court.  Another sanction  order dated 7.9.97 came to be issued by the Chairman and Managing  Director of Goa Shipyard Company Ltd. (the sanction order referred to in  various documents submitted alongwith the charge).  The sanction order  further states that the order was passed in exercise of the powers vested and  on behalf of the Board of Directors, sanction was accorded to prosecute the  respondent under the Act.  The sanction order also states that the sanction  was accorded retrospectively w.e.f. 14.9.94.           Admittedly, the second sanction order dated 7.9.97 was granted  retrospectively w.e.f. 14.9.94 after the cognizance was taken on 29.5.95.  It  is also undisputed that though the sanction order was issued under the  signatures of the Chairman and Managing Director, the same has not  referred to any resolution of the Board of Directors passed in this regard  pursuant to which the Chairman and Managing Director issued sanction  order.  

Section 19 of the Act of 1988 reads:

"19. Previous sanction necessary for prosecution. \026 (1) No Court  shall take cognizance of an offence punishable under sections 7, 10,  11, 13 and 15 alleged to have been committed by a public servant,  except with the previous sanction, -

(a)     \005\005\005\005\005 (b)      \005\005\005\005.. (c)      in the case of any other person, of the authority  competent to remove him from his office."

The Goa Shipyard Officer’s Conduct, Disciplines and Appeal Rules  1979 provide that the authority competent to appoint and to remove the  respondent from his office is the Board of Directors.   Learned counsel for  the appellant does not dispute any of the aforesaid mentioned facts, as  adumbrated above.   In the present case, the appellant does not dispute that the sanction  order dated 2.1.95 was issued under the signatures of the Company  Secretary.  There was no reference to the decision/resolution being passed  by the Board of Directors pursuant to which the sanction order was issued  under the signatures of the Company Secretary.  It is also not disputed that

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the second sanction order dated 7.9.97 issued by the Chairman and  Managing Director of the Company also did not refer to any  resolution/decision taken by the Board collectively pursuant to which the  second sanction order was issued.  In the facts and circumstances, as  adumbrated above, the view taken by the High Court cannot be said to be  unjustified.   

Learned counsel for the appellant, however referred to sub-section 3  of Section 19 of the Act.  Sub-section 3 of Section 19 reads as under:         "(3) Notwithstanding anything contained in the Code of  Criminal Procedure, 1973 (2 of 1974), -          (a)     no finding, sentence or order passed by a special  Judge shall be reversed or altered by a Court in  appeal, confirmation or revision on the ground of the  absence of, or any error, omission or irregularity in,  the sanction required under sub-section (1), unless in  the opinion of that Court, a failure of justice has in  fact been occasioned thereby;

(b)     no Court shall stay the proceedings under this Act on  the ground of any error, omission or irregularity in the  sanction granted by the authority, unless it is satisfied  that such error, omission or irregularity has resulted in  a failure of justice;

(c)     no Court shall stay the proceedings under this Act on  any other ground and no Court shall exercise the  powers of revision in relation to any interlocutory  order passed in any inquiry, trial, appeal or other  proceedings."

Referring to the aforesaid provisions, it is contended by learned  counsel for the appellant that the Court should not, in appeal, reverse or alter  any finding, sentence or order passed by a special Judge on the ground of the  absence of any error, omission or irregularity in, the sanction required under  sub-section (1), unless the Court finds a failure of justice has in fact been  occasioned thereby.  In this connection, a reference was made to the decision  of this Court rendered in the case of State By Police Inspector v. T.  Venkatesh Murthy  (2004) 7 SCC 763.  Reference was also made to the  decision of this Court in the case of Shri Durga Dass v. State of Himachal  Pradesh (1973) 2 SCC 213 where this Court has taken the view that the  Court should not interfere in the finding or sentence or order passed by a  special Judge and reverse or alter the same on the ground of the absence of,  or any error, omission or irregularity in, the sanction required under sub- section (1), unless the Court finds that a failure of justice has in fact been  occasioned thereby.  According to the counsel for the appellant no failure of  justice has occasioned merely because there was an error, omission or  irregularity in the sanction required because evidence is yet to start and in  that view the High Court has not considered this aspect of the matter and it is  a fit case to intervene by this Court.  We are unable to accept this contention  of the counsel.  The present is not the case where there has been mere  irregularity, error or omission in the order of sanction as required under sub- section (1) of Section 19 of the Act.  It goes to the root of the prosecution  case.  Sub-section (1) of Section 19 clearly prohibits that the Court shall not  take cognizance of an offence punishable under sections 7, 10, 11, 13 and 15  alleged to have been committed by a public servant, except with the previous  sanction as stated in clauses (a), (b) and (c).   As already noticed, the sanction order is not a mere irregularity, error  or omission.  The first sanction order dated 2.1.95 was issued by an authority  that was not a competent authority to have issued such order under the  Rules.  The second sanction order dated 7.9.97 was also issued by an  authority, which was not competent to issue the same under the relevant  rules, apart from the fact that the same was issued retrospectively w.e.f.  14.9.94, which is bad.  The cognizance was taken by the Special Judge on

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29.5.95. Therefore, when the Special Judge took cognizance on 29.5.95,  there was no sanction order under the law authorising him to take  cognizance.  This is a fundamental error which invalidates the cognizance as  without jurisdiction. This being the law, we are unable to sustain the submission of learned  counsel for the appellant.   Having regard to the gravity of the allegations levelled against the  respondent, we permit the competent authority to issue a fresh sanction order  by an authority competent under the Rules and proceed afresh against the  respondent from the stage of taking cognizance of the offence and in  accordance with law.     The appeal stands disposed of in the above terms.