Supreme Court overturns High Court order on Sanction under Prevention of Corruption Act: CBI vs. B.A. Srinivasan (2019) INSC 123

Introduction

Date of the Judgment: December 5, 2019
Citation: 2019 INSC 123
Judges: Uday Umesh Lalit, J., Indu Malhotra, J., Krishna Murari, J.

Does a retired public servant continue to receive the same legal protections against prosecution as they did while in office? The Supreme Court of India recently addressed this critical question in a case concerning alleged corruption by a former bank official. The core issue revolved around whether prior sanction is required to prosecute a retired public servant under the Prevention of Corruption Act, 1988. The Supreme Court overturned the High Court’s decision, clarifying that no such sanction is needed after retirement. The judgment was delivered by a three-judge bench comprising Justices Uday Umesh Lalit, Indu Malhotra, and Krishna Murari, with Justice Uday Umesh Lalit authoring the opinion.

Case Background

The case originated from a complaint against B.A. Srinivasan, who retired as Assistant General Manager of Vijaya Bank on October 31, 2012. An FIR was filed on October 28, 2013, alleging that Srinivasan, while in office, had entered into a criminal conspiracy to defraud the bank. It was alleged that he sanctioned loans to M/s. Nikhara Electronics and Allied Technics based on fabricated documents, violating bank rules and causing financial loss to the bank. The charges included offences under Sections 419, 420, 467, 468, 471 read with Section 120B of the Indian Penal Code, 1860, and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act, 1988. Specifically, it was alleged that Srinivasan:

• Sanctioned loans without proper due diligence.
• Accepted fabricated documents, including a forged agreement and inflated financial statements.
• Ignored the fact that the property offered as collateral was occupied by tenants.
• Failed to obtain a mandatory legal audit report before sanctioning the loans.

The prosecution argued that Srinivasan’s actions facilitated the diversion of loan funds, causing wrongful loss to Vijaya Bank.

Timeline:

Course of Proceedings

After the charge-sheet was filed, the Additional City Civil and Sessions Judge and Principal Special Judge for CBI cases, Bangalore, rejected B.A. Srinivasan’s application for discharge, observing that there was sufficient material to frame charges against him. The court noted that Srinivasan had deliberately violated bank rules and entered into a criminal conspiracy. Aggrieved, Srinivasan filed a Criminal Revision Petition in the High Court of Karnataka at Bangalore. The High Court allowed the petition, setting aside the trial court’s order and discharging Srinivasan. The High Court held that while the materials on record were sufficient to frame charges, sanction under Section 197 of the Code of Criminal Procedure, 1973, was necessary for prosecuting a public servant, even after retirement. The High Court reasoned that the protection available to a public servant while in service should also be available after retirement.

Legal Framework

The case involves the interpretation of several key legal provisions:

• Section 419 of the Indian Penal Code, 1860 (IPC): Deals with punishment for cheating by personation.
• Section 420 of the IPC: Addresses cheating and dishonestly inducing delivery of property.
• Section 467 of the IPC: Covers forgery of valuable security, will, etc.
• Section 468 of the IPC: Deals with forgery for the purpose of cheating.
• Section 471 of the IPC: Addresses using as genuine a forged document.
• Section 120B of the IPC: Defines criminal conspiracy.
• Section 13(1)(d) of the Prevention of Corruption Act, 1988: Defines criminal misconduct by a public servant.
• Section 13(2) of the Prevention of Corruption Act, 1988: Prescribes punishment for criminal misconduct.
• Section 19 of the Prevention of Corruption Act, 1988: Requires prior sanction to prosecute a public servant for offences under the Act.
• Section 197 of the Code of Criminal Procedure, 1973 (CrPC): Requires prior sanction to prosecute a public servant for acts done while acting or purporting to act in the discharge of official duty.

The core issue revolves around whether the requirement of sanction under Section 19 of the Prevention of Corruption Act, 1988, and Section 197 of the CrPC applies to a retired public servant. The Supreme Court examined these provisions in light of previous judgments.

Arguments

Appellant’s Arguments (CBI):

• Mrs. Sonia Mathur, learned Senior Advocate, argued that the protection under Section 19 of the Prevention of Corruption Act, 1988, is available only to a public servant while in employment. Once the public servant retires, no sanction is required for prosecution under the Act.
• Regarding Section 197 of the CrPC, it was submitted that the protection applies only when the act is integrally connected with the official duties of the public servant. If the office is used as a cloak for unlawful activities, the protection is not available.
• The decision in N.K. Ganguly vs. Central Bureau of Investigation, New Delhi was distinguished based on its specific facts.

Respondent’s Arguments (B.A. Srinivasan):

• Mrs. V. Mohana, learned Senior Advocate, contended that the allegations against Srinivasan were, at best, administrative lapses and lacked criminal intent.
• It was argued that the protection available to a public servant while in service should also be available after retirement.
• Reliance was placed on the decisions in Kalicharan Mahapatra vs. State of Orissa, R. Balakrishna Pillai vs. State of Kerala, State of Punjab vs. Labh Singh, and N.K. Ganguly vs. CBI, New Delhi.

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether sanction under Section 19 of the Prevention of Corruption Act, 1988, is required to prosecute a public servant after retirement.
2. Whether the acts alleged against the respondent were done while acting or purporting to act in the discharge of their official duty, thus requiring sanction under Section 197 of the Code of Criminal Procedure, 1973.

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

• S.A. Venkataraman vs. The State [1958] SCR 1037 (Supreme Court of India): Held that sanction under the Prevention of Corruption Act, 1947, is not required for a public servant who has retired. The court stated, “…if an offence under s. 161 of the Indian Penal Code was committed by a public servant, but, at the time a court was asked to take cognizance of the offence, that person had ceased to be a public servant one of the two requirements to make s. 6 of the Act applicable would be lacking and a previous sanction would be unnecessary.”
• Labh Singh (2014) 16 SCC 807 (Supreme Court of India): Reiterated that no sanction is required under Section 19 of the Prevention of Corruption Act if the public servant has retired.
• C.R. Bansi v. State of Maharashtra (1970) 3 SCC 537 (Supreme Court of India): Adopted the view taken in S.A. Venkataraman.
• Kalicharan Mahapatra v. State of Orissa AIR 1998 SC 2595 (Supreme Court of India): Also adopted the view taken in S.A. Venkataraman.
• K. Veeraswami v. Union of India (1991) 3 SCC 655 (Supreme Court of India): Constitution Bench decision which adopted the view taken in S.A. Venkataraman.
• Inspector of Police and another vs. Battenapatla Venkata Ratnam and another (2015) 13 SCC 87 (Supreme Court of India): Clarified the scope of Section 197 of the CrPC, stating that protection is not available when the office is used as a cloak for unlawful gains.
• Shambhoo Nath Misra v. State of U.P. (1997) 5 SCC 326 (Supreme Court of India): Held that fabricating records or misappropriating funds is not part of a public servant’s official duty.
• Parkash Singh Badal v. State of Punjab (2007) 1 SCC 1 (Supreme Court of India): Held that criminal acts done for personal benefit are not protected under the doctrine of State immunity.
• Rajib Ranjan v. R. Vijaykumar (2015) 1 SCC 513 (Supreme Court of India): Stated that if a public servant enters into a criminal conspiracy or indulges in criminal misconduct, it is not considered an act in discharge of official duties.
• P.K. Pradhan vs. State of Sikkim represented by the Central Bureau of Investigation (2001) 6 SCC 704 (Supreme Court of India): Held that the question of sanction under Section 197 of the Code can be raised at any stage of the proceedings.
• N.K. Ganguly vs. CBI, New Delhi (2016) 2 SCC 143 (Supreme Court of India): Distinguished based on the specific facts of that case.
• Rishipal Singh vs. State of Uttar Pradesh and another (2014) 7 SCC 215 (Supreme Court of India): Dealt with the parameters for quashing a prosecution under Section 482 of the CrPC.
• Anil Kumar Bose vs. State of Bihar (1974) 4 SCC 616 (Supreme Court of India): Pertained to a case after a full-fledged trial, where mens rea was considered essential for Section 420 IPC.

Legal Provisions Considered by the Court:

• Section 19 of the Prevention of Corruption Act, 1988: The court clarified that this section does not apply to retired public servants.
• Section 197 of the Code of Criminal Procedure, 1973: The court clarified that this section applies to acts done while acting or purporting to act in the discharge of official duty, and not to acts done using the office as a cloak for unlawful gains.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court relied on S.A. Venkataraman vs. The State [1958] SCR 1037 to reiterate that sanction under Section 19 of the Prevention of Corruption Act is not required for a public servant who has demitted office.
• The Court followed the principles laid down in Labh Singh (2014) 16 SCC 807, C.R. Bansi v. State of Maharashtra (1970) 3 SCC 537, Kalicharan Mahapatra v. State of Orissa AIR 1998 SC 2595, and K. Veeraswami v. Union of India (1991) 3 SCC 655, which consistently held that no sanction is needed under Section 19 of the Act for retired public servants.
• The Court also relied on Inspector of Police and another vs. Battenapatla Venkata Ratnam and another (2015) 13 SCC 87, Shambhoo Nath Misra v. State of U.P. (1997) 5 SCC 326, Parkash Singh Badal v. State of Punjab (2007) 1 SCC 1, and Rajib Ranjan v. R. Vijaykumar (2015) 1 SCC 513 to clarify that the protection under Section 197 of the CrPC is not available when the acts are not integrally connected to official duties.
• The Court distinguished the case of N.K. Ganguly vs. CBI, New Delhi (2016) 2 SCC 143 based on its specific facts.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the established legal position that the protection under Section 19 of the Prevention of Corruption Act, 1988, is not available to a public servant after retirement. The court emphasized that the purpose of sanction is to protect public servants from frivolous prosecutions while they are in service. This protection does not extend to retired officials. Additionally, the court found that the acts alleged against the respondent were not integrally connected to his official duty but were rather a misuse of his position for personal gain. This distinction was crucial in determining that no sanction under Section 197 of the CrPC was required.

Logical Reasoning:

The Supreme Court rejected the High Court’s view that the protection available to a public servant while in service should also be available after retirement. The court emphasized that such an interpretation is inconsistent with the established law. The court’s reasoning was based on the plain language of Section 19 of the Prevention of Corruption Act and the consistent interpretation of this section by the Supreme Court in various precedents. The court also clarified that the protection under Section 197 of the CrPC is not available when the acts are not integrally connected to official duties but are done using the office as a cloak for unlawful gains. The court cited several precedents to support this view.

The court’s reasoning was based on the following points:

• The plain language of Section 19 of the Prevention of Corruption Act does not extend the protection to retired public servants.
• The purpose of sanction is to protect public servants from frivolous prosecutions while they are in service, which does not apply to retired officials.
• The acts alleged against the respondent were not integrally connected to his official duty but were rather a misuse of his position for personal gain.

The Court quoted from the judgment in S.A. Venkataraman vs. The State:

“…if an offence under s. 161 of the Indian Penal Code was committed by a public servant, but, at the time a court was asked to take cognizance of the offence, that person had ceased to be a public servant one of the two requirements to make s. 6 of the Act applicable would be lacking and a previous sanction would be unnecessary.”

The Court also quoted from the judgment in Inspector of Police and another vs. Battenapatla Venkata Ratnam and another:

“…even while discharging his official duties, if a public servant enters into a criminal conspiracy or indulges in criminal misconduct, such misdemeanour on his part is not to be treated as an act in discharge of his official duties and, therefore, provisions of Section 197 of the Code will not be attracted.”

The Court further quoted from the judgment in P.K. Pradhan vs. State of Sikkim:

“…for claiming protection under Section 197 of the Code, it has to be shown by the accused that there is reasonable connection between the act complained of and the discharge of official duty…If the case as put forward by the prosecution fails or the defence establishes that the act purported to be done is in discharge of duty, the proceedings will have to be dropped.”

Key Takeaways

• No Sanction Required for Retired Public Servants: The judgment clarifies that no prior sanction is needed to prosecute a retired public servant under the Prevention of Corruption Act, 1988.
• Scope of Section 197 CrPC: The protection under Section 197 of the CrPC is limited to acts done in the discharge of official duty and does not extend to acts done using the office as a cloak for unlawful gains.
• Implications for Future Cases: This judgment sets a clear precedent that will impact future cases involving corruption charges against retired public servants. It ensures that such individuals are not shielded from prosecution due to the absence of sanction.
• Focus on Actual Misconduct: The court’s emphasis on the distinction between administrative lapses and criminal misconduct underscores the need to scrutinize the actual nature of the alleged offences.

Directions

The Supreme Court directed the Respondent No.1 (B.A. Srinivasan) to appear before the Special Court on December 11, 2019, and instructed the Special Court to proceed with the matter in accordance with the law.

Specific Amendments Analysis

(No specific amendments were discussed in the judgment)

Development of Law

The ratio decidendi of this case is that a retired public servant does not require sanction under Section 19 of the Prevention of Corruption Act, 1988, for prosecution of offences under the Act. Additionally, the protection under Section 197 of the Code of Criminal Procedure, 1973, is not available when the acts are not integrally connected to official duties but are done using the office as a cloak for unlawful gains. This judgment reaffirms the established legal position and clarifies the scope of these provisions, ensuring that retired public servants are not immune from prosecution for acts of corruption.

Conclusion

The Supreme Court’s judgment in Station House Officer, CBI/ACB/Bangalore vs. B.A. Srinivasan clarifies that retired public servants are not protected by the sanction requirements under Section 19 of the Prevention of Corruption Act, 1988. The court overturned the High Court’s decision, holding that no sanction is required for prosecuting a retired public servant under the Act. The court also clarified that the protection under Section 197 of the CrPC is not available when the acts are not integrally connected to official duties but are done using the office as a cloak for unlawful gains. This judgment reinforces the principle that public servants are accountable for their actions, even after retirement, and ensures that they cannot evade prosecution for corruption.

Category

• Prevention of Corruption Act, 1988
  • Section 19, Prevention of Corruption Act, 1988
• Code of Criminal Procedure, 1973
  • Section 197, Code of Criminal Procedure, 1973
• Criminal Law
  • Corruption
  • Sanction for Prosecution
  • Criminal Conspiracy

FAQ

Q: Does a retired public servant need prior sanction to be prosecuted for corruption?
A: No, according to the Supreme Court, a retired public servant does not need prior sanction under Section 19 of the Prevention of Corruption Act, 1988, to be prosecuted for corruption. This protection is only for serving public servants.

Q: What is the significance of Section 197 of the Code of Criminal Procedure, 1973, in this context? A: Section 197 of the CrPC requires prior sanction to prosecute a public servant for acts done while acting or purporting to act in the discharge of official duty. However, the Supreme Court clarified that this protection does not apply when the acts are not integrally connected to official duties but are done using the office as a cloak for unlawful gains.

Q: What was the main legal issue in this case?
A: The main legal issue was whether prior sanction under Section 19 of the Prevention of Corruption Act, 1988, is required to prosecute a retired public servant for offences under the Act.

Q: What was the decision of the High Court of Karnataka?
A: The High Court of Karnataka allowed B.A. Srinivasan’s Criminal Revision Petition and discharged him, holding that sanction under Section 197 of the Code of Criminal Procedure, 1973, was necessary for prosecuting a public servant, even after retirement.

Q: What did the Supreme Court decide?
A: The Supreme Court overturned the High Court’s decision, clarifying that no sanction is needed to prosecute a retired public servant under the Prevention of Corruption Act, 1988. The court also clarified that the protection under Section 197 of the CrPC is not available when the acts are not integrally connected to official duties but are done using the office as a cloak for unlawful gains.

Q: What is the ratio decidendi of this case?
A: The ratio decidendi is that a retired public servant does not require sanction under Section 19 of the Prevention of Corruption Act, 1988, for prosecution of offences under the Act. Additionally, the protection under Section 197 of the Code of Criminal Procedure, 1973, is not available when the acts are not integrally connected to official duties but are done using the office as a cloak for unlawful gains.