REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.                  OF 2009 [Arising out of SLP (Crl.) No. 4130 of 2006]

State of Madhya Pradesh …Appellant

Versus

Sheetla Sahai & Ors. …Respondents

J U D G M E N T  

S.B. SINHA, J :   

1. Leave granted.

2. Appellant  is  before  us  being  aggrieved  by  and  dissatisfied  with  a  

judgment and order dated 12.01.2006 passed by a learned Single Judge of  

the Madhya Pradesh High Court allowing the criminal revision applications  

filed by the respondents herein arising out of the orders dated 21.12.1998

and 13.05.1997 passed by the Special Judge, Bhopal in  Special Case No. 6  

of 1997.

3.  The  respondents  herein  were  proceeded  against  for  commission  of  

offences  under  Section  13(1)(d)(2)(ii-iii)  read  with  Section  13(2)  of  the  

Prevention of Corruption Act, 1988 (for short “the Act”) and Section 120B  

of the Indian Penal Code, 1860.

4. Before proceeding further, we may notice the positions held by the  

respondents herein.  Respondent No. 1 Sheetla Sahai was Minister for Water  

Resources  of  the  State  of  Madhya  Pradesh.  Respondent  No.  2  D.V.S.R.  

Sarma and the respondent No. 7 S.W. Mohgoankar were the Secretary to the  

Government of Madhya Pradesh.  Respondent No. 3 P.V. Srinivasaiyah was  

the Engineer-in-Chief and the respondent No. 4 A.S. Laxminarsimhaiya was  

the Deputy Secretary in the Government of Madhya Pradesh.  Respondent  

No. 5 V.R.B. Gopal and the respondent No. 6 M.N. Nadkarni were the Chief  

Engineers, Hasdeo Bango Project.  Respondent No. 11 R.P. Khare was the  

Secretary, Control Board for Major Projects.  

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5. Appellant under the aegies of the World Bank undertook construction  

of  the  Hasdeo  Bango  Masonry  dam  project.   For  the  aforementioned  

purpose,  the  respondent  Nos.  8,  9  and  10  herein,  viz.,M/s  Progressive  

Constructions Pvt.  Ltd.,  M/s Prasad & Company, M/s SEW Construction  

Co. (hereinafter referred to as “the contractors”) were awarded contracts in  

terms whereof they were required to excavate stones etc. from Therma Pahar  

Quarry, which was situate at only 12 kms. away from the site, for use of the  

stone to be extracted therefrom for construction of masonry spillway.

6. One of the terms of the said contract is as under:

“…The tenderer  should satisfy himself  regarding  availability of the required quality and quantity of  the  materials,  if  any  quarry  is  changed  for  any  reason whatsoever,  no claim shall  be entertained  on this account.”

In  addition  to  the  guidelines,  a  plan  was  also  supplied  to  the  

contractors containing the following note:

“the contractor shall  extract materials  from  the  approved  sources  and  quarry  areas  to  be  designated  by  the  engineer-in-charge  for  their  particular  contract  group.   They  shall  have  no  claim for any material collected elsewhere without  

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having obtained the prior approval in writing of the  engineer  in  charge.   Such material  shall  become  the property of the department unless approval to  use  the  same  is  subsequently  accorded  by  the  engineer-in-charge,  in  which  case,  however,  the  contractor shall not be entitled for any extra rate or  lead.”

7. However,  on  the  premise  that  whereas  eight  lakh  cubic  meters  of  

stones of the requisite specification were required for masonry work, only  

one lakh cubic meter stone was available from the Therma Pahar Quarry,  

permission was sought for by the contractors to excavate stones, rubbles and  

other materials from a quarry known as Katghora Quarry which was situated  

at a distance of 22 kms. from the dam.

8. The  question  was  considered  by  the  concerned  engineers.   The  

District Mining Officer and the Additional Collector Korba, having regard to  

the fact  that  the mining leases in respect  of the said quarries  were to be  

granted, asked them not to do so as the stones in the hillocks of villages  

Katghora, Hunkra and Maheshpur were found to be suitable for the masonry  

work of the dam, as would appear from a letter dated 14.07.1983 issued by  

the Executive Engineer to the Additional Collector, Korba.

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9. The Superintending  Engineer,  respondent  No.  7  herein  also  by  his  

letter  dated 28.07.1983 addressed to Shri  R.C. Gupta, the then Executive  

Engineer stated:

“I  am  informed  that  Rampura  quarry  near  Katghora  on Kathora  Ambikapur road,  may also  yield  good  masonary  stones.   You  may  also  explore  this  possibility  and  let  me  know  if  the  stones were got tested.  If not, the samples from  this quarry may also be tested.  Case could also be  moved to obtain lease for this quarry.”

10. A request  was also made to the Mining Officer  of  Bilaspur  to the  

same effect  by Shri  R.C.  Gupta,  the then Executive Engineer  by a letter  

dated 16.10.1983, stating:

“…Adequate  quantity  of  rubble  is  not  available  from  Therma  quarries  of  Forest  Department  acquired  for  this  purpose  and  Geologist,  Geological  Survey  of  India  had  intimated  that  about  one  lakh  cum.  of  rubble  can  only  be  extracted from Therma quarries.   For completion  of this major dam about ten lakh cum. rubble &  metal are needed.  Out of which 1 lakh cum. can  be extracted from Therma quarry, about three lakh  cum. can be used out of the stone received from  excavation of foundation of dam, remaining 6 (six)  lakh cum. is required from adjacent stone quarries  like Katghora, Hukra & Maheshpur.  Hence, I have  requested in my letter cited above (copy enclosed)  

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to  additional  Collector,  Korba,  to  reserve  rubble  quarries in the surroundings of the above villages  so that rubble from these quarries can be extracted  for completion of the Bango Dam in time.

Now I  understand that  you have  proposed  the  above  quarries  for  auction  on  20th  &  21st  Oct.’83.   I  request  to  delete  the  rubble  quarries  situated in the surrounding of Katghora, Hukra &  Maheshpur  from  the  purview  of  auction  and  transfer to Irrigation Department.  Depending upon  the  quantity  of  rubble  required  by  each  agency  executed masonry works at Bango Dam, allotment  of individual quarries will be made by us after the  agencies deposit the royalty charges which will be  refundable to them after awarding the certificate of  utilizing  the  material  in  bonafide  Government  works.

Till  the formalities are over for transfer of  the  above  quarries  to  Irrigation  Department,  I  request  to delete the following quarries from the  purview of auction.

S.No. Name  of  Village

PC No. Name  of  material

Khasra No. Area

1. Hukra 47 Stone 347/1 17.396  Hec.

2. Maheshpur 31-A Stone 1/1-K 30.425  Hec.”

11. The Additional Collector (Mining Section), Korba in response thereto  

by a letter dated 22.11.1983 addressed to the Executive Engineer reserved  

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the aforementioned quarries for extraction of stones departmentally, subject  

to the conditions mentioned therein.

12. Yet  again,  the  Executive  Engineer  by  a  letter  dated  05.12.1984  

addressed  to  the  Superintending  Engineer  brought  to  his  notice  that  

alternative  sites  for  quarrying  operations  for  extraction  of  stones  were  

necessary, inter alia, stating:

“2. The  quarrying  operations  for  extraction  of  stones was started in the real sense during 82-83  working season, i.e., prior to the area was ready for  starting  the  masonry.   The  contractors  after  the  start  of  quarry  operations,  repeatedly  wrote,  regarding the non availability of sufficient stones  of requisite quality.  They had also brought out that  the yield of even this small quantity of stone was  very  much  less.   In  consultations  with  the  department  and the  resident  geologist,  they  have  opened more number of quarry faces, but this did  not result yields.  This office has also carried out  case  studies  which  has  established  the  yield  of  useful  stone  to  be  very  much  less.   The  details  enclosed  at  Annexure  A.   Even  the  quantum of  stone  available  is  less,  when  compared  to  the  requirement.

3. It  was reported that the quantum of useful  rubble available in the entire Therma Pahad Hills  is  to the tune of one lakh cum. against  the total  requirement  of  8  lakh  cum.  for  the  entire  dam.  This was based on the detailed investigations and  

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report  of  the  Resident  Geologist.   Even  this  quantity  can  be  extracted  with  much  difficulty.  Therma  Pahad  Quarry  on  the  visual  appearance  and the random bore holes, initially appeared to be  good.   As  such  this  was  declared  as  quarry  for  masonry stone and accordingly estimates prepared  and  designated  as  the  specified  quarry  in  the  quarry  map enclosed along with  the  agreements.  The  contractors  naturally  could  not  have  investigated  the  quarry  by  actual  opening/  operation, and have inspected the quarry with the  data  available  to  them.   Therefore  neither  department nor the contractor could have foreseen  the non availability of useful stone in the required  quantity from the designated quarry.”

It was requested:

“It is therefore requested that the sanction may be  obtained  for  payment  of  additional  leads  and  communicated.   However,  the  payment  towards  additional wasteful expenditure incurred in therma  quarries as claimed by contractors is recommended  for rejection.”

13. The Superintending Engineer brought the same to the notice of the  

Chief Engineer by a letter dated 18.12.1984 stating that there had always  

been a controversy regarding the use of those stones as rubble in masonry  

dam. A question was also raised as to whether the department would permit  

additional payment due to change in the quarry.  If such a step is not taken,  

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the contractor may put an end to the contract and, thus, inter alia requested  

that payment of additional leads from Katghora quarry may be allowed.   

14. It appears that even the Central Water Commission of the Government  

of India by a letter dated 04.05.1984 informed the Chief Engineer of the  

project to the following effect:

“Please refer to your letter on the above mentioned  subject.   You  have  proposed  to  use  stone  from  Therma Pahar  quarry  for  the  construction  of  the  dam.  Though the stone from this quarry has been  approved as Granite, the Compressive strength of  the stone from this quarry varies from 289 kg/cm  to 373 kg/cm, which is very low.  It is necessary  that  the  reasons  for  such  low  strength  for  the  Granite are investigated before deciding to use the  same for the construction of the dam.”

15. By a letter  dated 7.06.1983, the Executive Engineer of the Quality  

Control Division brought the following to the notice of the Superintending  

Engineer of the Quality Control Department:

“Thus, it is noticed the mica existing in the rocks  under  question  varies  from  7%  to  11%.   No  mention of the permissible percentage of mica is  given in IS codes or other books.  Only Hand book  on civil  engineering by PN Khanna,  reveals  that  

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2% of mica is permissible.  In view of the above it  is submitted that the pigmetite band stones are not  fit  for  use  in  masonry  dam from quality  control  unit Machadoli’s point of view.  This is, however,  continuously used in masonry on dam blocks 16,  17, 18, 19, 25, 26, 27, 28, 29, 35, 37 in which work  continuously in progress.  If the higher authority  deems it fit, that use of pigmetite is to be continued  by overruling the opinion of the undersigned clear  written instructions  may kindly be issued to  this  office  for  guiding  the  A.R.Os.   Quality  Control  deployed on Quality control work of masonry dam.  Early reply is solicited.”

16. In view of the aforementioned development, the Chief Engineer of the  

Project  brought  the  same  to  the  notice  of  the  Secretary  of  the  Major,  

Medium  and  Minor  Irrigation  Department,  Bhopal  by  a  letter  dated  

11.01.1985 inter alia making the following recommendations:

“(i) Permitting the Chief Engineer for declaring  Katghora  quarry  as  an  additional  quarry  for  balance  quantity  of  rubble  quarry  for  rubble  for  masonry dam other than one lakh cubic meter of  rubble, as assessed by the geologist to be extracted  by the contractors from Therma Pahad quarry as  far as possible in the contracts mentioned in this  letter. (ii) To allow payment of additional leads from  Katghora quarry for cum of masonry at the rates  detailed in table at para 5.3 above.”

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Along with the said letter, various other documents were enclosed as  

specified therein including a letter dated 4.05.1990, wherein it was inter alia  

stated:

“10. In  view  of  the  above,  the  Chief  Engineer  submitted  proposals  on  4.07.85  for  Government  Orders.  According to the above proposals sanction  to pay extra lead amounting to Rs. 1,23,23,767/-  has been sought.  This amount is about 3% of the  total amount of contract of Rs. 41.77 crores.  The  Chief Engineer had also sought the opinion of the  World  Bank,  and  the  World  Bank  gave  a  suggestion to deal the issue with in the contractual  provisions.  Similar problem has been raised by the  contractors  in  Bansagar  Project  also,  and  the  Executive Committee had recommended approval  of lead payment.

11. According  to  the  Chief  Engineer’s  report,  the  Executive  Engineers  had  reported  that  only  30% to 35% useful stones can be extracted which  was  not  economical.   This  project  is  under  construction with the World Bank assistance, will  have to be completed on time, to supply water to  the National Thermal Power Corporation, and also  to  the  M.P.E.B.  Power  Station.   In  view of  this  stones  have  been  brought  from Katghora  quarry  situated  at  22  Km.  where  sufficient  quality  of  stones are available. In case, due to above reasons had the Agreements  drawn been cancelled and new tenders recalled the  cost would have been more.  Further, precious time  would have been lost in this process which would  have  affected  the  works  and  it  would  not  be  

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possible  to  supply  water  to  N.T.P.C.  and  M.P.E.B.”

17. In  a  letter  dated  14.02.1985  addressed  to  the  Chief  Engineer,  the  

World Bank stated:

“We  note  you  have  referred  the  matter  to  the  Secretary,  Irrigation  Department,  Bhopal  for  decision.  We suggest that the matter be resolved  within contractual limits.”

18. Pursuant thereto and in furtherance thereof, even the Progress Review  

Committee observed in its note dated 14.05.1985 as follows:

“27. Chief Engineer (HBP) explained his proposal  submitted  through  his  memo  No.  1916/HB/84  dated  29/3/85.   He  gave  the  background  of  the  change  of  quarry,  in  view  of  unexpectedly  low  yield  of  useful  stone  from  the  Therma  Pahad  quarry,  approved  in  the  technically  sanctioned,  sanctioned  estimate  and  also  on  which  basis  tenders  had  been  invited  and  contractors’  rates  accepted.   He  informed  the  Committee  that  the  total  extra  commitment  for  the  various  contracts  worked out to Rs. 1.23 crores – approximately 3%  of the total contract value.

28. Financial  Adviser  observed that  he had no  offered any comments on the merit of the case, as  

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then  appeared  to  him  essentially  a  claim  case.  PRC does not deal such claim cases.

29. The  Committee  observed  that  the  World  Bank too vide their letter of 14/2/85 had suggested  that  the  matter  be  resolved  within  contractual  limits.

30. In view of the above, the Committee did not  examine  the  proposal  of  Chief  Engineer  and  refrained from giving any comments in the matter  at this stage.”

19. However, the contractors invoked the arbitration agreement contained  

in the said contract in the year 1987 and an ad hoc settlement was proposed.

20. The matter was placed before the Financial Adviser.  The Financial  

Adviser in his note dated 4.01.1991 to the Secretary, while stating that the  

Financial  Adviser  functions  as  a  consultant  offering  comments  on  cases  

referred to him in the light of his background, experience and expertise and  

going by the facts placed before him which may not be treated as a substitute  

for  vetting by the Finance Department  wherever  such vetting is  required  

under  the  rules  of  governmental  business,  inter  alia  made  the  following  

comments:

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“…However, since the whole contract action was  based  on  the  presumption  that  the  required  quantity  of  material  of  required  specification  would be available from a quarry with in 12 KM of  the work site, it can be reasonable assumed that the  contractors  have  quoted  their  rates  on  this  assumption.  The departmental estimates were also  based  on  this  assumption.   Since,  later  on,  this  assumption was found to be invalid and majority  of the material had to be obtained from a quarry  with an average lead of 22 KM from the work site  as against 12 KM in respect of the contemplated  quarry, the contractors have a reasonable case for  additional payment on account of extra lead of the  material brought by them from this second quarry.  Thus,  their  claim  is  based  on  consideration  of  equity rather than there of law.”

In regard thereto, the Financial Adviser opined:

“4. Since the  proposed settlement  will  amount  to extra-contractual payment, it has to be ensured  that  the  proposed settlement  is  acceptable  to  the  contractors  concerned.   In  other  words,  the  settlement  has  to  be  a  negotiated  settlement  and  should not leave room for further disputes with the  various  contractors.   Since  the  purpose  of  the  whole exercise is to avoid arbitration it could even  be ascertained if there are any other disputed issues  in these contracts.  If an overall settlement of all  the  disputes  could  be  attempted  and  a  sort  of  package deal is evolved in respect of each contract  so  that  the  contracts  are  finalized  once  for  all  leaving no scope for arbitration on the other hand  

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if the contractors intend to take resort to arbitration  for  other  issues,  this  issue  could  also  go  in  for  arbitration.   A  package  approach  would  allow  negotiation in a spirit or give and take for an over- all settlement of all disputes.”

21. The  then  Secretary  (Irrigation)  Shri  M.S.  Billore  constituted  a  

committee  comprising  of  the  Engineer-in-Chief  P.V.  Srinivasaiyah,  the  

Chief Engineer,  the Financial  Adviser,  Secretary (Control Board) and the  

Deputy Secretary, some of whom are Accused Nos. 3, 4,5 and 11.

22. The  said  Committee  submitted  a  report  in  respect  whereof  the  

Secretary made a note that the same be critically examined.

The  Officer  on  Special  Duty  noticed  the  recommendations  of  the  

Committee, which are as under:

“(i) As  the  quarry  has  been  changed  by  the  Department  due  to  Technical  reasons  the  contractors cannot be held responsible. (ii) When  the  Department  itself  did  not  know  about the quarry’s unsuitability it will be unfair to  expect  the  contractors  to  bring  stones  from  the  changed quarry at the same rates. (iii) Payment  to  the  extent  of  actual  quantity  brought from the quarries be made.”

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The  proposals  of  the  Chief  Engineer,  the  quantities  under  each  

agreement, the rate and the amount were also noticed. It was proposed:

“Therefore, it is proposed to approve payment for  actual  quantity  and  the  Chief  Engineer  may  be  informed to take undertakings from the contractors  before making the payment.”

The  Financial  Adviser  was  asked  to  examine  the  said  proposal  in  

details.  Some discussions apparently were held and it was found necessary  

to obtain the following information before taking decision at the government  

level:

“1. After the inspection of the Geologists how  much  quantity  has  been  brought  from  Therma  Pahad by each contractor. 2. How much quantity has been brought from  Katghora quarry. 3. How the records are kept by the Department  about the quantity of stones brought from different  quarries.”

A draft letter was also prepared.

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23. On or about 6.04.1991, one Shri Uday Shinde in his note stated that  

the Chief Engineer had not sent any detail in regard to Block 31-38 as in the  

agreement only Therma Pahar quarry had been shown for the balance work  

and as the original file was sent to the Hon’ble Minister, it was not possible  

to deal with the case.  The file was re-submitted and the amount payable to  

the  contractor  for  additional  lead  was  again  put  up  for  administrative  

approval.   Yet  again,  the  Engineering  in-Chief  Committee  was  asked  to  

examine the matter.   

24. In a note to the Secretary dated 27.04.1991, the salient  features in  

respect of the aforementioned matter were placed again to which Shri M.S.  

Billore by his note dated 1.05.1991 opined :

“Since  government  decision  has  already  been  informed  to  the  Chief  Engineer,  Hasdeo  Bango  Project  through  government  letter  No:  9/CP/B/31/89/319, Bhopal dated 28.2.89.  Hence,  any action at government level is not pending in  this case and Chief Engineer to take action in this  case as per government order.”

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25. Allegedly,  the  respondent  No.  1  who  was  Minister  at  the  relevant  

point  of  time sat  over the file  for a period of about six months.   He on  

4.11.1991 noted:

“I have studied the case.  Whenever any opinion  has been sought by the Secretary, from whichever  authority,  they  gave  their  opinion  as  per  their  wisdom.   Every  time  the  Secretary  has  been  seeking the opinion from one after another officer.  In  this  process  he  spent  a  period  of  one  year  between 3.5.90 to 1.5.91.  In accepting the opinion  or recommending any action, it was expected from  the  Secretary  to  take  into  consideration  the  fact  that  the  opinions  had  been  given  as  per  their  wisdom.  Therefore, question does not arise to take  any action against the subordinate officers.

No basis appears for the Secretary to take a totally  different  view  than  the  unanimous  opinions.  Therefore,  it  is necessary to investigate the basis  on which the Secretary Shri Billore had rendered  his opinion.

The  new  Secretary  to  study  the  case  and  give  opinion.”

26. Pursuant thereto or in furtherance thereof, the respondent No. 2 Shri  

D.V.S.R.  Sarma  submitted  a  report  upon  constitution  of  a  Committee,  

stating:

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“(i) Due to technical reasons, the department has  changed the quarry.  Therefore, its liability should  not be upon the contractors.

(ii) When  the  Department  had  not  any  knowledge about the quarry, and to expect this that  even  under  the  changed  quarry  the  contractor  should fetch/ transport the stones at the same rate,  is also not proper.

(iii) Where & Where (sic) and for that much of  the  quantities,  the  materials  have  been  brought  from  a  quarry  at  more  distance,  it  is  proper  to  make  payment  for  that  much  excess  distance.”

27. The respondent No.1 approved the said note of the respondent No. 2  

on or about 20.01.1992 whereupon the amount in question was sanctioned.

28. Thereafter,  the  accounts  were  audited  and  one  Shri  G.K.  Shukla,  

Deputy Accountant General reported:

“a) The  clause  of  the  agreement  noted  above  and the quarry chart clearly bring out that in the  event of change of quarry on whatever reasons no  claim  will  be  entertained  and  contractor  should  before  quoting  rates,  visit  the  quarry  site  and  satisfy  himself  regarding  quantity  and quality  of  the material available.  Thus, the sanction appears  a  negotiated  settlement  beyond  the  contractual  provisions,  for  which  concurrence  of  Finance  Department ought to have been obtained.

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b) The  PRC  considered  this  as  a  claim  case  which was to be decided by Arbitrator under M.P.  Adhikaran Adhiniyan, 1983.

c) The  Member,  World  Bank  suggested  to  resolve the matter within the contractual limits.

d) The Secretary Irrigation had earlier rejected  the case as it was not admissible.

e) The  rates  quoted  by  the  contractors  were  inclusive  of  all  lead  and  lift,  being  item  rate  tender.”

The Auditor General of India also took note of the said report, stating:

“Therefore, in spite of the report of the Geologist  that  the  good  quality  of  stone  was  available  in  sufficient  quantities  in  the  upper  portion  of  the  quarry  situated  in  the  hill  mentioned  in  the  agreement  and  in  spite  of  there  being  specific  provision  in  the  agreements  that  no  additional  payment  would  be  acceptable  in  the  event  of  change in leads or change in quarry, the payments  made  to  the  contractors  were  irregular  and  resultantly  made  additional  gains  of  Rs.  102.46  lacs to them.”

29. Pursuant thereto or in furtherance thereof, a complaint was lodged.  

The  matter  was  investigated  by  the  Special  Police  Establishment.   They  

collected all the materials and filed a chargesheet in the Court of learned  

20

Special Judge on 27.03.1997.  The case was registered as Special Case No. 6  

of 1997.   

30. By  an  order  dated  13.05.1997,  the  learned  Special  Judge  took  

cognizance of the case, opining:

(i) As  none  of  the  accused  is  a  public  servant,  no  sanction  was  

required to be obtained in terms of Section 19 of the Act.

(ii) Criminal  misconduct  relating  to  corrupt  practice  under  Section  

13(1)(d)(ii-iii) of the Act has nothing to do with normal activity  

and work under government duty of any public servant at any time.

31. In the year 1997, the respondent Nos. 1 and 2 had filed a revision  

application before the High Court.   

32. The Special Judge framed charges against the respondents on or about  

29.07.1999; a sample copy whereof reads as under:

“You  were  working  as  Minister  In-charge,  Ministry  of  Water  Resources,  Government  of  Madhya  Pradesh  from  June  1990  to  September  

21

1992.   On  the  recommendatory  note  of  Shri  D.V.S.R. Sharma ignoring the letter dated 14.02.85  of the Finance Branch of World Bank and earlier  decision  dated  18.02.85  according  to  which  the  case  of  extra  lead  was  to  be  decided  within  the  ambit of the contract in respect of payment of extra  lead  to  the  concerned  Tender  Contractors  for  transportation of stones used in construction work  of  masonry  non-flow  dam  upstream  in  Hasdeo  Bango  Project.   You  in  conspiracy  with  the  employees  and  Tender  Contractors  accorded  administrative sanction and payment of one crore  two lac forty six thousand two hundred rupees was  made  to  the  Contractors  towards  extra  lead.  Hence,  you  while  holding  the  post  of  public  servant misusing the position of the post provided  financial benefit to the Tender Contractors without  public interest.

Your above act being offence under Section  13(1)(D)(ii-iii), the Prevention of Corruption Act,  1988  is  punishable  under  Section  13(2)  the  Prevention  of  Corruption  Act,  1988.   In  the  alternative,  you in  criminal  conspiracy  with  Shri  D.V.S.R.  Sharma,  Secretary,  working  in  the  Ministry  of  Water  Resources,  Government  of  Madhya  Pradesh  and  other  employees  and  contractors  acted  as  mentioned  above,  which  is  punishable under Section 13(1)(D)(ii and iii) read  with  Section  120B  IPC,  which  is  within  the  jurisdiction of this Court.

Hence, I hereby direct that you will be tried  for the offence mentioned above by this Court.”

22

33. Aggrieved by and dissatisfied therewith, the respondents filed revision  

applications before the High Court, which by reason of the impugned order  

have been allowed.  The State is, thus, before us.

34. Mr. K.T.S. Tulsi, learned senior counsel appearing on behalf of the  

appellant, in support of the appeal, inter alia would submit:

(i) The High Court committed a serious error in opining that an order  

of  sanction  in  terms  of  Section  197  of  the  Code  of  Criminal  

Procedure  was  required to  be  obtained  despite  the  fact  that  the  

respondent Nos. 1 to 7 were no longer holders of public office(s).   

(ii) While exercising its revisional jurisdiction, the High Court  could  

not enter into the question of appreciation of evidence as also the  

probative value of the materials brought on record, contrary to the  

tests  laid  down  by  this  Court  in  Soma  Chakravarty v.  State  

Through CBI [(2007) 5 SCC 403] as the tests for framing of charge  

are different from the tests for recording a judgment of acquittal  

against  an  accused  insofar  as  whereas  in  the  former,  strong  

suspicion  would  be  sufficient,  in  the  latter  proof  beyond  any  

reasonable doubt is necessary.

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(iii) The prosecution agency being a special agency constituted under  

the  Madhya  Pradesh  Special  Police  Establishment  Act,  which  

functions under the jurisdiction of the Lokayukata, only because all  

materials have been made part of the chargesheet, the same could  

not have been relied upon by the High Court as the only materials  

upon which the prosecution would rely upon for proving its case  

would be the terms of the contract, the note sheets, the letters dated  

4.08.1983,  11.08.1983,  16.08.1983,  17.08.1983,  10.07.1984,  

14.11.1984 and 2.03.1988, in terms whereof the contractors were  

categorically informed that they would not be entitled to any extra  

amount towards additional lead or otherwise.

(iv) The  World  Bank  having  opined  that  stones  from  alternative  

sources may be obtained within the budgeted amount,  the extra  

amount could not have been sanctioned by the respondents.

(v) By reason of the acts of the respondents, the State has suffered a  

loss to the extent of Rs. 1.02 crores and in that view of the matter,  

the High Court should not have passed the impugned order.

(vi) As  none  of  the  accused  is  a  public  servant,  the  question  of  

obtaining sanction in terms of Section 19 of the Act did not arise.

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(vii) Criminal  misconduct  relating  to  corrupt  practices  under  Section  

13(1)(d)(ii-iii)  of  the  Act  cannot  be  mingled  with  the  normal  

activity and duties of the public servant at any time, and, thus, no  

order of sanction was required to be obtained even under Section  

197 of the Code of Criminal Procedure, 1973.

(viii) The  Indian  Institute  of  Technology  having  tested  the  rocks  

excavated from Therma Pahar Quarry and having opined that they  

can safely be used for rubble masonry as well as for coarse and  

fine  aggregate,  any  opinion  rendered  contrary  thereto  or  

inconsistent therewith should have been ignored.

35. Mr.  U.U.  Lalit  and  Mr.  Vivek  Tankha,  learned  senior  counsel  

appearing on behalf of the respondents, on the other hand, urged :

(i) The court at the stage of framing of charge and consequently the  

High Court in exercise of its jurisdiction under Sections 397 and  

401 of the Code of Criminal Procedure were entitled to consider  

the  entire  materials  on  record  for  the  purpose  of  arriving  at  a  

finding  as  to  whether  the  contents  thereof,  even  if  taken  to  be  

25

correct in their entirety, constituted a prima facie case against the  

accused or not.

(ii) It would not be correct to contend that although all the documents  

collected  during  investigation  form  part  of  the  final  report  

submitted by the Special  Police Establishment  in  terms of  Sub-

section (5) of Section 173 of the Code of Criminal Procedure, for  

the purpose of framing of charge or otherwise the prosecution can  

rely only on a few of them so as to make a distinction between the  

documents which are in favour of the prosecution and those which  

are in favour of the accused.   

(iii) The materials brought on record clearly show that the concerned  

authorities  found  it  necessary  to  explore  the  possibility  of  

procuring stones of requisite quality from other sources as they had  

proceeded on a wrong premise that stone of requisite quality to the  

extent of 8 lakh cubic meters would be available in the quarry in  

question.

(iv) Although the contract could be considered to show that no claim  

for any material collected elsewhere, without obtaining the prior  

approval  of  the  Engineer  Incharge,  as  was  contended  by  the  

prosecution, was admissible, on a close reading of the terms of the  

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contract it would appear that a contingency of this nature, viz., that  

the  parties  entered  into  a  contract  on  a  mistaken  fact  was  not  

contemplated  as  the  contractors  cannot  be  asked  to  take  upon  

themselves the financial burden in respect of matter for which they  

were not responsible.   

(v) A decision having been taken by the highest  authority  not  only  

upon taking into consideration the opinion of all concerned, viz.,  

from Executive  Engineer  to  the  Minister  concerned  but  also  in  

view of the opinion of the Government of India and on the basis of  

two reports of the Committee, viz.,  reports by respondent No. 2  

D.V.S.R.  Sarma  Committee  and  respondent  No.  3  P.V.  

Srinivasaiyah  Committee,  no  interference  with  the  impugned  

judgment is warranted.

(vi) The documents relied upon by the prosecution, even if given face  

value  and  taken  to  be  correct  in  their  entirety,  do  not  disclose  

commission of any offence under the Prevention of Corruption Act  

as  no  allegation  had been  made  as  regards  misuse  or  abuse  of  

office.

(vii) The State having acted within its jurisdiction in taking a decision  

in regard to making of extra payment by way of novation of the  

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original contract, no exception thereto can be taken as the situation  

was unforeseen.  Even the arbitral tribunal having passed an award  

in favour of the contractor which is in consonance with a decision  

of  this  Court  in  K.N.  Sathyapalan  (Dead)  by  LRs. v.  State  of  

Kerala & Anr. [(2006) 12 SCALE 654], the respondents cannot be  

said to have committed any offence.   

(viii) In any view of the matter, no evidence has been brought on record  

to show that any conspiracy was entered into by the respondents  

inter se.

(ix) Assuming that the respondents have arrived at a wrong conclusion,  

the  same would only constitute  an error  of  judgment and not  a  

criminal misconduct.   

(x) The malafide attitude on the part  of the State  would be evident  

from the fact that the respondents herein who were members of the  

Committee have also been roped in although they had made fair,  

proper  and  impartial  recommendations  which  could  have  been  

accepted or rejected.  Even the respondent No. 1 in his note dated  

4.11.1991 did not issue any direction to make payment but merely  

asked the respondent No. 2 to have a re-look at the entire matter as  

prior to the purported opinion of Mr. Billore, as contained in his  

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note dated 1.05.1991 he had opined otherwise, viz., not in the tune  

of the recommendations made by the Quality Control Department,  

i.e., in favour of the contractors.

(xi) There is nothing on record to show that the respondent Nos. 1 to 7  

herein have done any act which was beyond their official duty and  

hence, the impugned judgment is unassailable.

36. The question  raised  before  us  is  required  to  be determined  on the  

backdrop  of  factual  matrix  involved  herein.   We  have  taken  into  

consideration  in  details  the  background  materials  only  with  a  view  to  

consider as to whether the High Court was right in opining that no case for  

framing of charges against the respondents was made out.   

The fact that the State entered into contracts with the respondent Nos.  

8, 9 and 10 is not in dispute.  The basic terms of the contract, which we have  

taken note of, are also not in dispute.  What is in dispute is the interpretation  

and application thereof.

37. The contract contained an arbitration clause.  The respondents herein  

invoked the said arbitration agreement, as noticed hereinbefore, as far back  

29

in the year 1987.  Indisputably, an award had been made in their favour on  

the  basis  of  a  settlement  arrived at  by and between the parties.   Such a  

settlement was arrived at on the basis of the stand taken by the authorities of  

the State of Madhya Pradesh upon entering into detailed deliberations.

38. The  learned  counsel  for  the  parties  took  us  through  the  entire  

agreement  to  raise  rival  contentions  as  to  whether  despite  the  apparent  

rigours  contained  therein,  the  contractors  could  have  been  paid  any  

additional amount towards extra lead.

39. We think a construction of the terms of contract in the light of the  

factual matrix of the matter to which we have adverted to heretobefore, as  

has  been  argued  by  the  respondents,  is  possible.   It  is,  however,  not  

necessary for us to delve deep into the matter inasmuch as we are concerned  

only with the question as to whether the materials brought on record form  

sufficient basis for framing of charges under Section 13(1)(d)(ii-iii) of the  

Act read with Section 13(2) thereof read with Section 120B of the Indian  

Penal Code or not.

30

40. At the outset, however, we must place on record that construction of  

the  dam over  river  Hasdeo  Bango  became  necessary  for  the  purpose  of  

supply of water to the National Thermal Power Corporation.  It was a World  

Bank project.  The project was required to be completed within a time frame.  

Stones required to be used for the construction of the dam, as of necessity,  

were required to be of sufficient strength.  The opinion of the Indian Institute  

of Technology, referred to by Mr. Tulsi, is not on record.  Correspondences  

as also the opinion of the Central Water Commission, Government of India,  

however,  point out  that  stones of requisite  strength were not  available at  

Therma Pahar Quarry.  The quantum of stone required was eight lakh cubic  

meters and only one lakh cubic metres was available thereat.  The balance  

seven lakh cubic meters of stone was, thus, required to be obtained from the  

quarries situated at villages villages Katghora, Hunkra and Maheshpur.

41. Stone is a minor mineral within the meaning of the provisions of the  

Mines and Minerals (Regulation and Development) Act, 1957 and the Minor  

Mineral Concession Rules framed by the State.  Lease and/ or licence for  

extraction thereof is to be granted by the Collector.  Although the Mines  

Department of the State intended to grant ‘Quarry lease’ in favour of others  

31

having  regard  to  the  requirements  of  the  State,  the  said  quarries  were  

reserved, subject to certain conditions.

42. The respondent Nos. 8 to 10, in view of the provisions of the Mines  

and  Mineral  (Regulation  and  Development)  Act,  1957  and  the  Madhya  

Pradesh  Minor  Mineral  Concession  Rules  could  not  have  on  their  own  

undertaken mining operation for the purpose of extracting the said minor  

mineral.  They could have done so only on a licence granted in their favour  

by the Collector/State.  However, as the hillocks of the villages in question  

were reserved for departmental use, only by reason thereof the contractors  

could carry on mining operation thereat and not otherwise.  It was, therefore,  

a conscious decision on the part of the competent authorities of the State.

43. The contract itself suggests that there was a possibility of dispute in  

regard  to  allocation  of  the  parts  of  the  quarries.   A  dispute  resolution  

mechanism  by  creating  a  forum  viz.  the  Office  of  the  Superintending  

Engineer was created.  

44. The  intra-departmental  and  inter-departmental  correspondences  and  

notesheets to which we have adverted to heretobefore clearly go to show that  

32

the  authorities  incharge  of  construction  of  the  dam  were  aware  of  the  

difficulties which were being faced by the contractors.  Their apprehension  

was that in the event the contractors were not permitted to mine stones from  

Katghora  Quarry  and other  Quarries,  they  may leave  the  job as  a  result  

whereof the entire project might come to a stand-still.

45. The representations made by the contractors for the aforementioned  

purpose, even if to be ignored, the intra-departmental and inter-departmental  

correspondences cannot be.  They clearly point out a clear picture as regards  

necessity  for  explaining  the  possibilities  of  extracting  stones  from some  

other mines for being used in the construction of dam.

46. We would proceed on the basis that two divergent opinions on the  

construction of the contract in the light of the stand taken by the World Bank  

as also the earlier decision taken by the State was possible.  That, however,  

would not mean that a fresh decision could not have been taken keeping in  

view the exigencies of the situation.  A decision to that effect was not taken  

only by one officer or one authority.  Each one of the authorities was ad  

idem in  their  view in  the  decision  making  process.   Even  the  Financial  

Adviser who was an independent person and who had nothing to do with the  

33

implementation  of  the  project  made  recommendations  in  favour  of  the  

contractors stating that if not in law but in equity they were entitled to the  

additional amount.

47. From the  materials  available  on  record,  it  is  crystal  clear  that  the  

decision taken was a collective one.  The decision was required to be taken  

in the exigency of the situation.  It may be an error of judgment but then no  

material has been brought on record to show that they did so for causing any  

wrongful gain to themselves or to a third party or for causing wrongful loss  

to the State

48. Section 13 of the Act provides for criminal misconduct by a public  

servant.  Such an offence of criminal misconduct by a public servant can be  

said to have been committed if in terms of Section 13(1)(d)(ii-iii) a public  

servant abuses its position and obtains for himself or for any other person  

any valuable  thing  or  pecuniary  advantage;  or  while  holding  office  as  a  

public  servant,  obtains  for  any  person  any  valuable  thing  or  pecuniary  

advantage  without  any  public  interest.   Sub-section  (2)  of  Section  13  

provides that any public servant who commits criminal misconduct shall be  

34

punishable with imprisonment for a term which shall be not less than one  

year but which may extend to seven years and shall also be liable to fine.

49. Criminal conspiracy has been defined in Section 120A of the Indian  

Penal Code, 1860 to mean:

“When two or more persons agree to do, or cause  to be done,--

(1) an illegal act, or

(2)  an act  which  is  not  illegal  by  illegal  means,  such  an  agreement  is  designated  a  criminal  conspiracy:

Provided that no agreement except an agreement to  commit  an  offence  shall  amount  to  a  criminal  conspiracy unless some act besides the agreement  is done by one or more parties to such agreement  in pursuance thereof.

Explanation.--It  is  immaterial  whether  the  illegal  act is the ultimate object of such agreement, or is  merely incidental to that object.”  

Section 120B of the Indian Penal Code provides for punishment for  

criminal conspiracy.

35

50. Criminal  conspiracy  is  an  independent  offence.   It  is  punishable  

separately.  Prosecution, therefore, for the purpose of bringing the charge of  

criminal  conspiracy  read  with  the  aforementioned  provisions  of  the  

Prevention  of  Corruption  Act  was  required  to  establish  the  offence  by  

applying the same legal principles which are otherwise applicable for the  

purpose of bringing a criminal misconduct on the part of an accused.

51. A criminal conspiracy must be put to action inasmuch as so long a  

crime is generated in the mind of an accused, it does not become punishable.  

What is necessary is not thoughts, which may even be criminal in character,  

often  involuntary,  but  offence  would  be  said  to  have  been  committed  

thereunder  only when that  take concrete shape of  an agreement  to do or  

cause to be done an illegal act or an act which although not illegal by illegal  

means and then if nothing further is done the agreement would give rise to a  

criminal conspiracy.   

Its ingredients are

(i) an agreement between two or more persons;

36

(ii) an agreement must relate to doing or causing to be done either (a)  

an illegal act; (b) an act which is not illegal in itself but is done by  

illegal means.

What is, therefore, necessary is to show meeting of minds of two or  

more persons for doing or causing to be done an illegal act or an act by  

illegal means.

52. While saying so, we are not oblivious of the fact that often conspiracy  

is  hatched  in  secrecy  and for  proving  the  said  offence  substantial  direct  

evidence  may  not  be  possible  to  be  obtained.   An  offence  of  criminal  

conspiracy can also be proved by circumstantial evidence.

In  Kehar Singh and Ors. v.  State (Delhi Administration), [1988 (3)  

SCC 609 at 731], this Court has quoted the following passage from  Russell   

on Crimes (12th Edn. Vol 1):

“The gist of the offence of conspiracy then lies, not  in doing the act, or effecting the purpose for which  the conspiracy is formed, nor in attempting to do  them, nor in inciting others to do them, but in the  forming of the scheme or agreement between the  parties.  Agreement is essential.  Mere knowledge,  

37

or  even  discussion,  of  the  plan  is  not,  per  se  enough”

In State (NCT) of Delhi v. Navjot Sandhu @ Afsan Guru [(2005) 11  

SCC 600], this Court stated the law, thus:

“101. One more principle which deserves notice is  that  the  cumulative  effect  of  the  proved  circumstances  should  be  taken  into  account  in  determining  the  guilt  of  the  accused  rather  than  adopting  an  isolated  approach  to  each  of  the  circumstances.  Of  course,  each  one  of  the  circumstances should be proved beyond reasonable  doubt.  Lastly,  in  regard  to  the  appreciation  of  evidence relating to the conspiracy, the Court must  take  care  to  see  that  the  acts  or  conduct  of  the  parties must be conscious and clear enough to infer  their concurrence as to the common design and its  execution.”  

We may also notice that in Ram Narayan Popli v. CBI [(2003) 3 SCC  

641], it was held:  

“…Law making conspiracy a crime is designed to  curb immoderate  power  to  do mischief  which is  gained  by  a  combination  of  the  means.  The  encouragement and support which co-conspirators  give to one another rendering enterprises possible  which, if left to individual effort, would have been  impossible,  furnish  the  ground  for  visiting  

38

conspirators  and  abettors  with  condign  punishment…”

In Yogesh @ Sachin Jagdish Joshi v. State of Maharashtra [(2008) 6  

SCALE 469], this Court opined:

“23. Thus, it is manifest that the meeting of minds  of two or more persons for doing an illegal act or  an  act  by  illegal  means  is  sine  qua  non  of  the  criminal conspiracy but it may not be possible to  prove the agreement between them by direct proof.  Nevertheless,  existence  of  the  conspiracy and its  objective  can  be  inferred  from  the  surrounding  circumstances and the conduct of the accused. But  the incriminating circumstances must form a chain  of events from which a conclusion about the guilt  of the accused could be drawn. It  is  well  settled  that  an  offence  of  conspiracy  is  a  substantive  offence and renders the mere agreement to commit  an offence punishable even if an offence does not  take place pursuant to the illegal agreement.”

Ex facie,  there  is  no  material  to  show that  a  conspiracy  had been  

hatched by the respondents.

53. Mr. Tulsi would suggest that the very fact that the respondent No. 1  

being a Minister kept the file with him for a period of six months so as to see  

that the then Secretary Mr. M.S. Billore retires so as to enable him to obtain  

39

opinion of another officer would prima facie establish that he intended to  

cause pecuniary gain to the respondent Nos. 8, 9 and 10.

We  have  noticed  hereinbefore  that  the  Minister  in  his  note  dated  

4.11.1991  did  not  make  any  recommendation.   He  merely  lamented  the  

manner  in  which  the  former  Secretary  Mr.  M.S.  Billore  acted  as  prior  

thereto, the said authority himself for all intent and purport had accepted the  

recommendations  of  the  authorities  incharge  of  construction  of  the  dam  

including the Chief Engineer.  He constituted a committee.  He obtained the  

opinion  of  the  Financial  Adviser.   If  upon  consideration  of  the  entire  

materials  on  record,  independent  opinion  had  been  rendered  and  

recommendations were made, it is difficult to comprehend as to how that by  

itself would constitute a criminal misconduct or leads to the conclusion of  

hatching  any  criminal  conspiracy.   Recommendations  made  by  the  

Committee or the opinion rendered by an independent officer like Financial  

Adviser need not be acted upon.  It was for the State to take a decision.  

Such  a  decision  was  required  to  be  taken  on  the  basis  of  the  materials  

available.

40

In  Inspector Prem Chand v.  Govt. of N.C.T. of Delhi & Ors. [2007  

AIR SCW 2532], this Court observed:

“In  State of Punjab and Ors. vs.  Ram Singh Ex.  Constable [1992 (4) SCC 54], it was stated:  

“Misconduct  has  been  defined  in  Black's  Law Dictionary, Sixth Edition at page 999, thus:

'A  transgression  of  some  established  and  definite  rule  of  action,  a  forbidden  act,  a  dereliction from duty, unlawful behaviour,  wilful  in  character,  improper  or  wrong  behaviour,  its  synonyms  are  misdemeanor,  misdeed,  misbehavior,  delinquency,  impropriety,  mismanagement,  offense,  but  not  negligence  or  carelessness.'

Misconduct in office has been defined as:  

“Any unlawful behaviour by a public officer  in  relation  to  the  duties  of  his  office,  willful  in  character.  Term embraces acts which the  officer  holder  had  no  right  to  perform,  acts  performed  improperly,  and  failure  to  act  in  the  face  of  an  affirmative duty to act.”

In  P.  Ramanatha  Aiyar's  Law Lexicon,  3rd  edition,  at  page 3027, the term  'misconduct'  has  been defined as under:

“The term ‘misconduct’ implies, a wrongful  intention, and not a mere error of judgment.  

Misconduct is not necessarily the same thing  as conduct involving moral turpitude.  

41

The  word  ‘misconduct’  is  a  relative  term,  and  has  to  be  construed  with  reference  to  the  subject  matter  and the  context  wherein  the  term  occurs,  having regard to the scope of the Act or  statute  which  is  being  construed.  Misconduct  literally  means  wrong  conduct  or  improper  conduct.”  

[See also  Bharat  Petroleum Corpn.  Ltd. vs.  T.K.  Raju, [2006 (3) SCC 143].”

54. Even under the Act, an offence cannot be said to have been committed  

only because the public servant has obtained either for himself or for any  

other  person  any  pecuniary  advantage.   He  must  do  so  by  abusing  his  

position as public servant or holding office as a public servant.  In the latter  

category of cases, absence of any public interest is a sine qua non.  The  

materials brought on record do not suggest in any manner whatsoever that  

the respondent Nos. 1 to 7 either had abused their position or had obtained  

pecuniary advantage for the respondent Nos. 8, 9 and 10, which was without  

any public interest.

55. Whether,  on the one hand, the dam should be constructed within a  

time frame fixed by the World Bank is a public interest or whether sticking  

to the terms of the contract which may lead to abandonment of work by the  

contractors would be a public interest is a matter over which a decision was  

42

required to be taken, particularly when the authorities proceeded on the basis  

that  they had made advertisements  and called for the tender  on a wrong  

premise,  viz., the stones available in the quarry in question for supply of  

requisite quality of stone was not in requisite quantity.   

56. It  is  also  interesting  to  notice  that  the  prosecution  had  proceeded  

against  the  officials  in  a  pick  and  choose  manner.   We  may  notice  the  

following  statements  made  in  the  counter-affidavit  which  had  not  been  

denied or disputed to show that not only those accused who were in office  

for a very short time but also those who had retired long back before the file  

was moved for the purpose of obtaining clearance for payment of additional  

amount from the government,  viz.,  M.N. Nadkarni who worked as Chief  

Engineer till 24.03.1987 and S.W. Mohogaonkar, Superintending Engineer  

who worked till 19.06.1989 have been made accused but, on the other hand,  

those who were one way or the other connected with the decision, viz., Shri  

J.R. Malhotra and Mr. R.D. Nanhoria have not been proceeded at all.  We  

fail to understand on what basis such a discrimination was made.

57. In  Soma Chakravarty (supra),  whereupon  strong reliance  has  been  

placed by Mr. Tulsi, this Court opined:

43

“23. In a case of this nature, the learned Special  Judge  also  should  have  considered  the  question  having regard to the “doctrine of parity” in mind.  An  accused  similarly  situated  has  not  been  proceeded against only because, the departmental  proceedings  ended  in  his  favour.  Whether  an  accused before him although stands on a similar  footing despite he having not been departmentally  proceeded  against  or  had  not  been  completely  exonerated  also  required  to  be  considered.  If  exoneration  in  a  departmental  proceeding  is  the  basis for not framing a charge against an accused  person  who  is  said  to  be  similarly  situated,  the  question  which  requires  a  further  consideration  was  as  to  whether  the  applicant  before  it  was  similarly  situated  or  not  and/or  whether  the  exonerated officer in the departmental proceeding  also  faced same charges  including the  charge of  being a party to the larger conspiracy.”

58. There cannot be any doubt whatsoever that the tests for the purpose of  

framing of charge and the one for recording a judgment of conviction are  

different.   

A  distinction  must  be  borne  in  mind  that  whereas  at  the  time  of  

framing of the charge, the court may take into consideration the fact as to  

whether the accused might have committed the offence or not; at the time of  

44

recording a  judgment  of  conviction,  the  prosecution  is  required  to  prove  

beyond reasonable doubt that the accused has committed the offence.   

59. In this case,  the probative value of the materials  on record has not  

been gone into.  The materials brought on record have been accepted as true  

at this stage.  It is true that at this stage even a defence of an accused cannot  

be considered.  But, we are unable to persuade ourselves to agree with the  

submission  of  Mr.  Tulsi  that  where  the  entire  materials  collected  during  

investigation have been placed before the court as part of the chargesheet,  

the  court  at  the  time  of  framing of  the  charge  could only  look to  those  

materials whereupon the prosecution intended to rely upon and ignore the  

others which are in favour of the accused.  The question as to whether the  

court should proceed on the basis as to whether the materials brought on  

record  even if  given face  value  and taken  to  be  correct  in  their  entirety  

disclose commission of an offence or not must be determined having regard  

to the entirety of materials brought on record by the prosecution and not on a  

part of it.  If such a construction is made, Sub-section (5) of Section 173 of  

the Code of Criminal Procedure shall become meaningless.   

45

The prosecution, having regard to the right of an accused to have a  

fair investigation, fair inquiry and fair trial as adumbrated under Article 21  

of  the  Constitution  of  India,  cannot  at  any  stage  be  deprived  of  taking  

advantage of the materials which the prosecution itself has placed on record.  

If  upon perusal  of  the  entire  materials  on record,  the  court  arrives  at  an  

opinion that two views are possible, charges can be framed, but if only one  

and one view is possible to be taken, the court shall not put the accused to  

harassment by asking him to face a trial.

{See  State  of  Maharashtra  and  Others  v.  Som Nath  Thapa  and  Others  

[(1996) 4 SCC 659]}.

60. This leaves us with the question as to whether an order of sanction  

was required to be obtained.  There exists a distinction between a sanction  

for prosecution under Section 19 of the Act and Section 197 of the Code of  

Criminal  Procedure.   Whereas  in  terms  of  Section  19,  it  would  not  be  

necessary to obtain  sanction in  respect  of  those who had ceased to be a  

public  servant,  Section  197  of  the  Code  of  Criminal  Procedure  requires  

sanction both for those who were or are public servants.   

46

61. Strong reliance has been placed by Mr. Tulsi on a judgment of this  

Court in Centre for Public Interest Litigation and Another v. Union of India  

and Another [(2005) 8 SCC 202].  In that case, it was held:

“9. The protection given under Section 197 is to  protect  responsible  public  servants  against  the  institution  of  possibly  vexatious  criminal  proceedings  for  offences  alleged  to  have  been  committed  by  them  while  they  are  acting  or  purporting to act as public servants. The policy of  the legislature is to afford adequate protection to  public  servants  to  ensure  that  they  are  not  prosecuted  for  anything  done  by  them  in  the  discharge  of  their  official  duties  without  reasonable  cause,  and  if  sanction  is  granted,  to  confer  on  the  Government,  if  they  choose  to  exercise  it,  complete  control  of  the  prosecution.  This protection has certain limits and is available  only  when  the  alleged  act  done  by  the  public  servant is reasonably connected with the discharge  of his official duty and is not merely a cloak for  doing the objectionable act. If in doing his official  duty, he acted in excess of his duty, but there is a  reasonable  connection  between  the  act  and  the  performance of  the  official  duty,  the  excess  will  not  be  a  sufficient  ground to  deprive  the  public  servant from the protection. The question is not as  to the nature of the offence such as whether the  alleged offence contained an element  necessarily  dependent  upon  the  offender  being  a  public  servant, but whether it was committed by a public  servant acting or purporting to act as such in the  discharge of his official  capacity.  Before Section  197  can  be  invoked,  it  must  be  shown that  the  official  concerned  was  accused  of  an  offence  alleged  to  have  been  committed  by  him  while  

47

acting or purporting to act in the discharge of his  official  duties.  It  is  not  the  duty  which  requires  examination  so  much  as  the  act,  because  the  official act can be performed both in the discharge  of the official duty as well as in dereliction of it.  The act must fall within the scope and range of the  official duties of the public servant concerned. It is  the quality of the act which is important and the  protection of this section is available if the act falls  within  the  scope  and  range  of  his  official  duty.  There  cannot  be any universal  rule  to  determine  whether there is a reasonable connection between  the act done and the official duty, nor is it possible  to lay down any such rule. One safe and sure test  in this regard would be to consider if the omission  or  neglect  on  the  part  of  the  public  servant  to  commit  the  act  complained  of  could  have  made  him answerable for a charge of dereliction of his  official duty. If the answer to this question is in the  affirmative,  it  may  be  said  that  such  act  was  committed by the public servant while acting in the  discharge of his official duty and there was every  connection  with  the  act  complained  of  and  the  official  duty  of  the  public  servant.  This  aspect  makes it clear that the concept of Section 197 does  not get immediately attracted on institution of the  complaint case.

10. Use of the expression “official  duty” implies  that the act or omission must have been done by  the public servant in the course of his service and  that it should have been in discharge of his duty.  The section does not extend its protective cover to  every act or omission done by a public servant in  service but restricts its scope of operation to only  those acts or omissions which are done by a public  servant in discharge of official duty.

48

11. If on facts,  therefore,  it  is prima facie found  that the act or omission for which the accused was  charged had reasonable connection with discharge  of his duty then it must be held to be official to  which  applicability  of  Section  197  of  the  Code  cannot be disputed.”

62. Were the respondent Nos. 1 to 7 required to act in the matter as a part  

of official duty?   

Indisputably,  they  were  required  to  do  so.   Be  he  an  Executive  

Engineer,  Superintending  Engineer,  Chief  Engineer,  Engineer-in-Chief,  

Secretary or  Deputy Secretary,  matters  were placed before them by their  

subordinate officers.  They were required to take action thereupon.  They  

were  required  to  apply  their  own  mind.   A  decision  on  their  part  was  

required  to  be  taken  so  as  to  enable  them  to  oversee  supervision  and  

completion  of  a  government  project.   The  Minister  having regard  to  the  

provisions  of  the  Rules  of  Executive  Business  was  required  to  take  a  

decision for and on behalf of the State.  Some of the respondents, as noticed  

hereinbefore,  were required to render their individual opinion required by  

their superiors.  They were members of the Committee constituted by the  

authorities,  viz.,  the  Minister  or  the Secretary.   At  that  stage,  it  was not  

possible for them to refuse to be a Member of the Committee and/ or not to  

49

render  any opinion at  all  when they  were  asked  to  perform their  duties.  

They were required to do the same and, thus,  there cannot be any doubt  

whatsoever that each one of the respondent Nos. 1 to 7 was performing his  

official duties.

63. For the purpose of attracting the provisions of Section 197 of the Code  

of Criminal Procedure, it is not necessary that they must act in their official  

capacity  but  even where  a public  servant  purports  to act  in their  official  

capacity, the same would attract the provisions of Section 197 of the Code of  

Criminal Procedure.   It  was so held by this  Court in  Sankaran Moitra v.  

Sadhna Das and Another [(2006) 4 SCC 584].

The question came up for consideration before this Court in Matajog  

Dobey v. H.C. Bhari [AIR 1956 SC 44 : 1955 (2) SCR 925] wherein it was  

held:

“17. Slightly differing tests have been laid down in  the  decided cases  to  ascertain  the  scope and the  meaning of the relevant words occurring in Section  197 of the Code; “any offence alleged to have been  committed by him while acting or purporting to act  in  the  discharge  of  his  official  duty”.  But  the  difference is only in language and not in substance.  The offence alleged to have been committed must  

50

have something to do, or must be related in some  manner  with  the  discharge  of  official  duty.  No  question of sanction can arise under Section 197,  unless the act complained of is an offence; the only  point to determine is whether it was committed in  the  discharge  of  official  duty.  There  must  be  a  reasonable  connection  between  the  act  and  the  official  duty.  It  does  not  matter  even  if  the  act  exceeds what is strictly necessary for the discharge  of  the duty,  as  this  question will  arise  only at  a  later stage when the trial proceeds on the merits.  What we must find out is whether the act and the  official  duty  are  so  inter-related  that  one  can  postulate  reasonably  that  it  was  done  by  the  accused  in  the  performance  of  the  official  duty,  though  possibly  in  excess  of  the  needs  and  requirements of the situation. In Hori Barn Singh  v. Crown Sulaiman, J. observes: “The section cannot be confined to only such acts  as  are  done  by  a  public  servant  directly  in  pursuance of his public office, though in excess of  the  duty  or  under  a  mistaken  belief  as  to  the  existence of such duty. Nor is it necessary to go to  the  length of  saying that  the  act  constituting the  offence should be so inseparably connected with  the official duty as to form part and parcel of the  same transaction.” The  interpretation  that  found  favour  with  Varadachariar, J. in the same case is stated by him  in these terms at p. 187: “There must be something  in the nature of the act complained of that attaches  it to the official character of the person doing it.”  In affirming this view, the Judicial Committee of  the Privy Council observe in Gill case: “A public  servant can only be said to act or purport to act in  the discharge of his official duty, if his act is such  as to lie within the scope of his official  duty …  The test may well be whether the public servant, if  challenged,  can  reasonably  claim  that,  what  he  

51

does,  he does in virtue of his office.” Hori  Ram  case is referred to with approval in the later case of  Lieutenant  Hector  Thomas  Huntley  v.  King- Emperor  but  the  test  laid  down  that  it  must  be  established  that  the  act  complained  of  was  an  official act appears to us unduly to narrow down  the scope of the protection afforded by Section 197  of  the  Criminal  Procedure  Code  as  defined  and  understood  in  the  earlier  case.  The  decision  in  Meads v. King  does not carry us any further; it  adopts the reasoning in Gill’s case.”

The said principle has been reiterated by this Court in B. Saha v. M.S.  

Kochar [(1979) 4 SCC 177] in the following terms:

“17. The words “any offence alleged to have been  committed by him while acting or purporting to act  in the discharge of his official duty” employed in  Section  197(1)  of  the  Code,  are  capable  of  a  narrow as well  as  a  wide interpretation.  If  these  words are construed too narrowly, the section will  be rendered altogether sterile, for, “it is no part of  an official  duty to commit an offence, and never  can be”. In the wider sense, these words will take  under  their  umbrella  every  act  constituting  an  offence,  committed  in  the  course  of  the  same  transaction in which the official duty is performed  or purports to be performed. The right approach to  the import of these words lies between these two  extremes. While on the one hand, it  is not every  offence  committed  by  a  public  servant  while  engaged  in  the  performance  of  his  official  duty,  which  is  entitled  to  the  protection  of  Section  197(1), an act constituting an offence, directly and  reasonably  connected  with  his  official  duty  will  

52

require  sanction  for  prosecution  under  the  said  provision.  As pointed  out  by  Ramaswami,  J.,  in  Baijnath v. State of M.P., “it is the quality of the  act that is important, and if it falls within the scope  and  range  of  his  official  duties,  the  protection  contemplated  by  Section  197  of  the  Criminal  Procedure Code will be attracted”. 18. In sum, the sine qua non for the applicability of  this section is that the offence charged, be it one of  commission or omission, must be one which has  been committed by the public servant either in his  official capacity or under colour of the office held  by him.”

[See also R. Balakrishna Pillai v. State of Kerala and Another [(1996)  

1 SCC 478]

In Rakesh Kumar Mishra v. State of Bihar and Others [(2006) 1 SCC  

557], this Court held:

“12.  It  has  been  widened  further  by  extending  protection to even those acts or omissions which  are done in purported exercise of official duty; that  is  under  the  colour  of  office.  Official  duty,  therefore,  implies  that  the  act  or  omission  must  have been done by the public servant in the course  of his service and such act or omission must have  been performed as part of duty which further must  have been official in nature. The section has, thus,  to  be  construed  strictly,  while  determining  its  applicability to any act or omission in the course of  service.  Its  operation  has  to  be  limited  to  those  duties which are discharged in the course of duty.  But once any act or omission has been found to  

53

have been committed  by  a  public  servant  in  the  discharge of his duty then it must be given liberal  and wide construction so far its official nature is  concerned.  For  instance  a  public  servant  is  not  entitled  to  indulge  in  criminal  activities.  To that  extent the section has to be construed narrowly and  in a restricted manner.  But once it  is established  that  an  act  or  omission  was  done  by  the  public  servant while discharging his duty then the scope  of its being official  should be construed so as to  advance the objective of the section in favour of  the public servant. Otherwise the entire purpose of  affording  protection  to  a  public  servant  without  sanction  shall  stand  frustrated.  For  instance  a  police officer in the discharge of duty may have to  use  force  which  may  be  an  offence  for  the  prosecution  of  which  the  sanction  may  be  necessary. But if the same officer commits an act  in the course of service but not in the discharge of  his duty and without any justification therefor then  the  bar  under  Section  197  of  the  Code  is  not  attracted…”

64. Reliance has been placed by Mr.  Tulsi  on  Parkash Singh Badal v.  

State of Punjab and Others [(2007) 1 SCC 1] wherein this Court held:

“38. The question relating to the need of sanction  under Section 197 of the Code is not necessarily to  be considered as soon as the complaint is lodged  and  on  the  allegations  contained  therein.  This  question may arise at any stage of the proceeding.  The question whether sanction is necessary or not  may have to be determined from stage to stage.”

54

In that case, the appellant therein was charged for commission of an  

offence of cheating under Section 420 and Sections 467, 468, 471 and 120B  

of the Indian Penal Code.

In the factual matrix involved therein, it was held:

“29.  The  effect  of  sub-sections  (3)  and  (4)  of  Section  19  of  the  Act  are  of  considerable  significance.  In  sub-section  (3)  the  stress  is  on  “failure of justice” and that too “in the opinion of  the  court”.  In  sub-section  (4),  the  stress  is  on  raising  the  plea  at  the  appropriate  time.  Significantly, the “failure of justice” is relatable to  error,  omission  or  irregularity  in  the  sanction.  Therefore, mere error, omission or irregularity in  sanction is (sic not) considered fatal unless it has  resulted in failure of justice or has been occasioned  thereby. Section 19(1) is a matter of procedure and  does not go to the root of jurisdiction as observed  in  para  95  of  Narasimha  Rao  case.  Sub-section  (3)(c)  of  Section  19  reduces  the  rigour  of  prohibition. In Section 6(2) of the old Act [Section  19(2) of the Act] question relates to doubt about  authority  to  grant  sanction  and  not  whether  sanction is necessary.”

65. In State of  Karantaka v. Ameerjan [(2007) 11 SCC 273], it was held  

that an order of sanction is required to be passed on due application of mind.

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66. Thus, in this case, sanction for prosecution in terms of Section 197 of  

the Code of Criminal Procedure was required to be obtained.

67. For the reasons aforementioned, there is no merit in this appeal which  

is dismissed accordingly.   

………………………….J. [S.B. Sinha]

..…………………………J.     [Cyriac Joseph]

New Delhi; August 04, 2009

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