When Cognizance is taken by Special Court under the PC Act, the Approver is not required to be examined as a witness by the Magistrate - Supreme Court

When Cognizance is taken by Special Court under the PC Act, the Approver is not required to be examined as a witness by the Magistrate – Supreme Court

When the Special Court chooses to take cognizance directly under Section 5(2) of the Prevention of Corruption Act, the Supreme Court has held that the issue of the Approver being examined as a witness in the Court of the Magistrate, as required by Section 306 (4)(a) of the Code of Criminal Procedure, does not arise.

Section 306(4) CrC requires that anybody who accepts a tender of pardon be called as a witness in both the Court of the Magistrate taking cognizance and the subsequent trial. In instances falling under Section 307 CrPC, which authorises the Court to which the matter is committed for trial to give pardon, the condition of Section 306(4)(a) CrPC is eased. The Supreme Court underlined that if the Special Judge immediately takes notice of the offence, Section 306 of the Code is bypassed and Section 307 of the Code becomes relevant.

A Bench comprised of Justices V. Ramasubramanian and Pankaj Mithal rendered the decision in a case involving charges of criminal conspiracy to defraud BHEL. The Supreme Court acquitted the defendants after being convicted by the Special Court for CBI and having their appeals dismissed by the Madras High Court.


Factual Background

Seven people were accused with violating Section 120B read with Sections 420, 468, Section 471 read with Section 468 and Section 193 of the Indian Penal Code, as well as Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act. Four of the accused were BHEL Trichy personnel, while the other three worked for private companies.

The prosecution claimed that the defendants participated in a criminal conspiracy to defraud BHEL out of a contract to build desalination facilities. According to the conspiracy, one of the defendants, the then-Executive Director of BHEL (ED), urged the DGM to go for restricted tenders, bypassing the practice of pre-qualifying potential tenderers before calling bids. For inviting restricted offers, the ED dictated the names of four fictitious businesses, including M/s. Entoma Hydro Systems. As a result, the DGM offered the names of five firms, including the four fictitious firms and two companies. Eventually, the tender committee, which included the DGM and two of the accused, processed the names of the businesses and recommended that the contract be awarded to Entoma even though the firm lacked the necessary experience. The Committee also suggested that interest-free mobilisation be sanctioned as a breach of current practice. The business received an interest-free mobilisation advance of IN 4.32 crores. A portion of the advance was transferred to a sibling company.

The Special Court acquitted one individual and convicted four others; two of the accused died during the course of the trial. The convicted people filed four appeals with the Madras High Court. These appeals were ultimately denied. Four criminal appeals were filed by the convicted individuals to the Supreme Court. One of the convicted people died while the appeal was pending.


Analysis by the Supreme Court

Four people were charged in the FIR. One of them (DGM) had become an Approver. He made a confession statement before the Magistrate under Section 164 of the CrPC, on the basis of which the prosecution filed a plea for pardon under Section 306 of the CrPC before the Chief Judicial Magistrate. The issue was adjourned when the Approver was brought before the Additional Chief Judicial Magistrate, who advised him of the implications of his actions. On the following hearing day, the confession statement was read to him, and the Approver was questioned if he made the statement freely. Following his yes response, the Additional Chief Judicial Magistrate awarded the Approver pardon, and he was regarded as a prosecution witness before the Special Court. One of the defendants challenged the procedure for granting a pardon in the current case before the Supreme Court. It was argued that the Approver should be cross-examined twice, first as a court witness before committal and again as a prosecution witness at trial, as required by Section 306(4)(a) CrPC. It was also stated that if the Magistrate who issues the pardon fails to call him as a witness as soon as the pardon is accepted by the Approver, the Approver’s evidence is likely to be disregarded. It was further argued that in instances falling under Section 307 CrPC, which authorizes the Court to which the matter is committed for trial to give pardon, the requirement of Section 306(4)(a) CrPC is waived. However, Section 307 CrPC would not apply in this case since the matter was not committed to the Special Court by the Additional Chief Judicial Magistrate.

In this respect, the Court looked at Sections 306, 307 of the CrPC and Section 5 of the Prevention of Corruption Act. It was noticed that Section 306(1) splits a criminal case into three stages: a. investigation, b. inquiry, and c. crime trial. At any of these three stages, a Chief Judicial Magistrate or Metropolitan Magistrate has the authority to grant pardon. However, the Magistrate of the First Class might grant a pardon in two stages: inquiry or criminal trial. It was observed that Section 306(4) requires that anybody receiving a tender of pardon be called as a witness in both the Court of the Magistrate taking cognizance and the subsequent trial. Furthermore, unless they are already on bail, the individual accepting a tender of pardon must be kept in jail until the conclusion of the trial.Section 307 CrPC gives the Court to which the case is committed for trial the authority to grant a pardon. The power must be used at any point after the matter has been committed but before judgement is rendered.

Section 5 of the Prevention of Corruption Act authorizes the Special Judge to take cognizance of a crime without committing the offender to them for trial. The Court stated that, in addition to trying the accused individual, it is required under the CrPC to follow the procedure specified by the CrPC for the trial of warrant proceedings by Magistrates. It further noted that the rule makes no mention of the point at which the Special Judge can award a pardon.

Referring to the Supreme Court’s decision in CBI v. V. Arul Kumar, the Court stated that it had accepted that in circumstances where cognizance is taken immediately by the Special Judge under Section 5(1) of the Prevention of Corruption Act, Section 306 CrPC is bypassed. It said that the purpose of questioning the Approver twice is to ensure that the accused is aware of the evidence against him, even at the preliminary stage, so that they can cross-examine the Approver during the trial.

The Court noted that the said object was met in the present case because the Approver’s confession statement before the Metropolitan Magistrate was enclosed to the charge sheet, the Approver was examined and cross-examined, and the Metropolitan Magistrate and the Additional Chief Judicial Magistrate were both examined as prosecution witnesses. As a result, the Court decided that there was no breach of CrPC Section 306(4).


Prior Sanction

The Court remarked that because four of the accused were public workers, prior sanction should have been obtained to prosecute them under Section 197(1) of the CrPC and Section 19(1) of the Prevention of Corruption Act. Until the 2018 Amendment to the Prevention of Corruption Act, a person ‘who is employed’ was required to obtain prior sanction. Following the change, prior penalty became mandatory even for those who “were employed at the time of the offence.” Because one of the defendants retired in 1997, no prior sanction was necessary to charge him. However, Section 197 of the CrC requires prior authorization for ‘any person who is’ or ‘any person who was’ employed. To prosecute the accused people who were employed by BHEL at the time the Special Court took cognizance of the offence, the investigative agency should have obtained prior authorization under the Prevention of Corruption Act. Despite the agency’s request for the penalty, BHEL’s management declined to issue it twice.

The Court noted that the investigative agency did not seek prior sanction for the ED under Section 197(1) of the Code. According to Section 197(1), a prevision sanction is only required when the infraction is allegedly committed “while acting or purporting to act in the discharge of his official duty.” After reviewing a slew of decisions, the Court concluded that in order to determine whether the ED was acting in the course of his official duties, it was sufficient to assess what he might cover under the existing policy. Even if the claimed act lacks bona fides but is covered by current policy, it would be considered an act in the execution of his official job. As a result, Section 197(1) of the CrPC should be invoked. Given the existence of the Works Policy, which covers the ED’s act, the Special Court and the High Court should have applied their minds and found in favour of the ED on the matter of prior sanction. “If, according to the Management of the Company, the very same act of the co-conspirators fell within the realm of commercial wisdom,” the Apex Court observed, “it is inconceivable that the act of A-1 (ED), as part of the criminal conspiracy, fell outside the discharge of his public duty, so as to disentitle him to protection under Section 197(1) of the Code.”


Case Details

  1. Srinivasulu v. State of Rep. by the Inspector of Police 2023 LiveLaw SC 485 | Criminal Appeal No.

2417 of 2010| 15th June, 2023| Justice V. Ramasubramanian and Justice Pankaj Mithal



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