Supreme Court clarifies the powers of High Courts in Prevention of Corruption Act cases: Asian Resurfacing of Road Agency Pvt. Ltd. vs. Central Bureau of Investigation (28 March 2018)

Case Background

The case originated from a First Information Report (F.I.R.) dated 7th March 2001, filed by the Municipal Corporation of Delhi (MCD) against Asian Resurfacing of Road Agency Pvt. Ltd. and certain MCD officers. The FIR alleged that the company caused wrongful loss to the MCD by using fake invoices of oil companies related to the transportation of bitumen for road works in Delhi during 1997 and 1998.

Following an investigation, the Central Bureau of Investigation (CBI) filed a charge sheet on 28th November 2002 before the Special Judge, CBI, New Delhi. The appellants then sought discharge from the charges, which was rejected by the Special Judge on 1st February 2007, who found a prima facie case against the accused and directed framing of charges.

The appellants challenged this order before the Delhi High Court by filing a Criminal Revision Petition, which was later converted into a Writ Petition (Criminal). A Single Judge of the High Court, noting conflicting views on the maintainability of such petitions, referred the matter to a Division Bench.

Timeline

Course of Proceedings

The Special Judge, CBI, directed the framing of charges against the appellants after considering the material before the Court, holding that there was a prima facie case. The appellants then filed a Criminal Revision Petition before the Delhi High Court, challenging the order of framing of charges. This revision petition was later converted into a Writ Petition (Criminal).

A Single Judge of the Delhi High Court, noting conflicting views in earlier decisions of the same court, referred the following question of law to a Division Bench:

“Whether an order on charge framed by a Special Judge under the provisions of Prevention of Corruption Act, being an interlocutory order, and when no revision against the order or a petition under Section 482 of Cr.P.C. lies, can be assailed under Article 226/227 of the Constitution of India, whether or not the offences committed include the offences under Indian Penal Code apart from offences under Prevention of Corruption Act?”

The Division Bench of the High Court reframed the questions as follows:

• (a) Whether an order framing charge under the 1988 Act would be treated as an interlocutory order thereby barring the exercise of revisional power of this Court?
• (b) Whether the language employed in Section 19 of the 1988 Act which bars the revision would also bar the exercise of power under Section 482 of the Cr.P.C. for all purposes?
• (c) Whether the order framing charge can be assailed under Article 227 of the Constitution of India?

Legal Framework

The judgment primarily revolves around the interpretation of Section 19(3) of the Prevention of Corruption Act, 1988 (the PC Act), which deals with restrictions on the powers of courts in cases under this Act.

Section 19(3) of the PC Act states:

“(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973—
(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, 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.”

The Supreme Court also considered Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.), which deals with the inherent powers of the High Court, and Articles 226 and 227 of the Constitution of India, which provide for the High Court’s writ jurisdiction and power of superintendence over subordinate courts, respectively.

The Court also referred to Section 22 of the PC Act which states that the provisions of the Code of Criminal Procedure, 1973, shall in their application to any proceeding in relation to an offence punishable under this Act have effect as if certain modifications are made to the Code.

Arguments

The appellants argued that the High Court erred in holding that an order framing charge is an interlocutory order. They contended that since the High Court has held that petitions under Section 482 Cr.P.C. and Article 227 of the Constitution are maintainable, there should be no prohibition against the High Court’s interference or its power to grant stay, despite the restrictions under Section 19(3)(c) of the PC Act.

The CBI, on the other hand, supported the High Court’s view, arguing that the restrictions under Section 19(3)(c) should be strictly adhered to in order to ensure speedy trials in corruption cases.

The core of the argument revolved around the interpretation of the phrase “on any other ground” in Section 19(3)(c) of the PC Act. The appellants contended that this phrase should be read in conjunction with the preceding clause (b), which deals with errors in sanction, and therefore the phrase “on any other ground” should be limited to grounds related to sanction. The CBI argued that the phrase “on any other ground” should be interpreted broadly to include any ground other than those covered by clause (b), thereby imposing a complete bar on stay of proceedings in corruption cases.

The appellants further argued that the High Court’s constitutional powers under Articles 226 and 227 cannot be restricted by a statutory provision like Section 19(3)(c) of the PC Act.

The CBI submitted that the legislative intent behind Section 19(3)(c) is to prevent delays in corruption cases, and therefore, the High Court should exercise its powers under Section 482 Cr.P.C. and Articles 226 and 227 sparingly and only in exceptional circumstances.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issues:

1. Whether an order framing charge under the Prevention of Corruption Act, 1988, is an interlocutory order?
2. Whether the bar on revision under Section 19(3)(c) of the PC Act also restricts the exercise of inherent powers under Section 482 of the Cr.P.C.?
3. Whether the High Court can entertain a challenge to an order framing charge under Article 227 of the Constitution of India?
4. Whether the High Court has the power to grant a stay of proceedings in corruption cases given the restrictions under Section 19(3)(c) of the PC Act?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered various judgments and legal provisions in its analysis. These authorities are categorized below:

Cases

Legal Provisions

Judgment

The Supreme Court held that an order framing charge is neither purely an interlocutory order nor a final order. The Court clarified that the High Court’s jurisdiction to entertain a challenge against an order framing charge is not barred, irrespective of whether the petition is filed under Section 397 or 482 of the Cr.P.C. or Article 227 of the Constitution. However, the Court emphasized that this jurisdiction must be exercised sparingly and consistent with the legislative policy of ensuring expeditious disposal of trials.

The Court further held that the phrase “on any other ground” in Section 19(3)(c) of the PC Act refers to any ground other than those related to errors in sanction, thereby imposing a general bar on stay of proceedings in corruption cases. The Court also held that the inherent powers of the High Court under Section 482 of the Cr.P.C. are not limited by Section 19(3)(c) of the PC Act, as the non-obstante clause in Section 19(3) applies only to the Code of Criminal Procedure.

The Supreme Court emphasized that the High Court’s power to interfere with an order framing charge and to grant stay should be exercised only in exceptional circumstances, such as to correct a patent error of jurisdiction. The Court also directed that if a stay is granted, the matter should be decided on a day-to-day basis and the stay should not operate for an unduly long period.

The Supreme Court also directed that in all pending cases where stay against proceedings of a civil or criminal trial is operating, the same will come to an end on expiry of six months from the date of the judgment, unless in an exceptional case by a speaking order such stay is extended.

The Court overruled the judgment in Satya Narayan Sharma v. State of Rajasthan, (2001) 8 SCC 607, to the extent it held that Section 482 Cr.P.C. cannot be used to stay trials under the PC Act.

The following table shows how the authorities were viewed by the Court:

What weighed in the mind of the Court?

The Supreme Court’s decision was driven by several key considerations:

• Expeditious Disposal of Corruption Cases: The Court emphasized the need for speedy trials in corruption cases, recognizing the deleterious effect of delays on the administration of justice and the faith in the rule of law.
• Balancing Individual Rights and Societal Interest: The Court sought to strike a balance between the rights of the accused and the interest of society in ensuring that corruption cases are dealt with effectively and efficiently.
• Inherent Powers of the High Court: The Court acknowledged the inherent powers of the High Court to do justice, but also stressed the need to exercise these powers judiciously and sparingly.
• Legislative Intent: The Court considered the legislative intent behind the Prevention of Corruption Act, which is to ensure that corruption cases are not unduly delayed.
• Constitutional Mandate: The Court also recognized the constitutional mandate for speedy justice and the need to protect the basic structure of the Constitution.

The Court’s reasoning was influenced by a combination of legal principles, practical considerations, and a concern for the overall integrity of the justice system. The Court recognized that while the High Court has the power to interfere in certain cases, this power should not be used to frustrate the legislative intent of ensuring speedy trials in corruption cases.

The Supreme Court’s logical reasoning for resolving the issue can be represented as follows:

Key Takeaways

• Order Framing Charge: An order framing charge is not purely an interlocutory order but an intermediate order.
• High Court’s Jurisdiction: The High Court’s jurisdiction to entertain challenges against an order framing charge is not barred, but it must be exercised sparingly.
• Inherent Powers: The inherent powers of the High Court under Section 482 of the Cr.P.C. are not limited by Section 19(3)(c) of the PC Act, but must be exercised judiciously.
• Stay of Proceedings: The High Court can grant a stay of proceedings only in exceptional circumstances, with a speaking order, and for a limited time.
• Expeditious Trials: The judgment emphasizes the need for speedy trials in corruption cases and directs that stay orders should not be used to unduly delay proceedings.
• Time Limit for Stay: Stay orders in pending cases will lapse after six months unless extended by a speaking order, and the same will apply to future stay orders.

Directions

The Supreme Court directed that in all pending cases where a stay against proceedings of a civil or criminal trial is operating, the stay will automatically lapse after six months from the date of the judgment, unless extended by a speaking order. The same rule applies to future stay orders. The trial courts were directed to resume proceedings after the expiry of the stay period, unless an order extending the stay is produced.

The High Courts were also directed to issue instructions to this effect and monitor the same so that civil or criminal proceedings do not remain pending for an unduly long period at the trial stage.

Development of Law

The Supreme Court clarified that the order framing charge is not purely an interlocutory order and can be interfered with by the High Court in exceptional cases. The Court also clarified that the inherent powers of the High Court under Section 482 of the Cr.P.C. are not limited by Section 19(3)(c) of the PC Act, but must be exercised judiciously. The judgment overruled the position of law as laid down in Satya Narayan Sharma v. State of Rajasthan, (2001) 8 SCC 607, to the extent it held that Section 482 Cr.P.C. cannot be used to stay trials under the PC Act.

The ratio decidendi of the case is that while the High Courts have the power to interfere with orders framing charges in corruption cases, this power must be exercised sparingly and in exceptional circumstances to ensure that trials are not unduly delayed.

Conclusion

The Supreme Court’s judgment in Asian Resurfacing of Road Agency Pvt. Ltd. vs. Central Bureau of Investigation provides a significant clarification on the powers of the High Courts in dealing with challenges to orders framing charges in corruption cases. The judgment balances the need to ensure a fair trial with the imperative of preventing undue delays in corruption cases, setting clear guidelines for the exercise of the High Court’s powers. The judgment also emphasizes the need for speedy trials and sets a time limit for stay orders in all pending cases.