Supreme Court quashes criminal proceedings against Himachal Pradesh Cricket Association: HPCA vs. State of Himachal Pradesh (2018)

Introduction

Date of the Judgment: November 2, 2018

Citation: (2018) INSC 961

Judges: A.K. Sikri, J. and Ashok Bhushan, J.

Can a cricket association be subjected to criminal proceedings for converting from a society to a company? The Supreme Court of India recently addressed this question, along with allegations of land lease irregularities, in a case involving the Himachal Pradesh Cricket Association (HPCA). The Court examined whether the criminal charges against HPCA and its members were justified or a result of political vendetta. The judgment was delivered by a two-judge bench comprising Justice A.K. Sikri and Justice Ashok Bhushan, with Justice A.K. Sikri authoring the opinion.

Case Background

The Himachal Pradesh Cricket Association (HPCA), initially registered as a society in 1990, sought land to build a world-class cricket stadium. In 2002, the HPCA was granted a lease for land in Dharamshala by the Himachal Pradesh government. The lease was executed between the HPCA and the Director of Himachal Pradesh Youth Services and Sports Department. The HPCA constructed the stadium. In 2005, the HPCA incorporated a not-for-profit company, initially named Himalayan Players Cricket Association, which was later renamed Himachal Pradesh Cricket Association.

Following an inspection by the International Cricket Council (ICC), the HPCA decided to construct a club house and a hotel on the leased land. In 2008, the HPCA requested additional land for these purposes. The Gram Panchayat issued a no-objection certificate, and the government approved the lease of additional land in 2009. A club house was constructed, and a supplementary lease was executed in 2012 to allow commercial activities, including a hotel named “The Pavilion.”

In 2011, the Board of Control for Cricket in India (BCCI) permitted the HPCA to convert from a society to a not-for-profit company. The HPCA completed this conversion in 2012. Following a change in the state’s political leadership, the new government initiated investigations, leading to the registration of two FIRs against the HPCA and its office bearers.

Timeline:

Course of Proceedings

The HPCA filed petitions before the High Court of Himachal Pradesh under Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) to quash the two FIRs. The High Court dismissed these petitions on April 25, 2014. The High Court observed that the material collected during investigation disclosed that 18 persons were prima facie involved in the commission of offences. The High Court brushed aside the argument of the appellants that it was a case of vengeance, political vendetta and mala fide. The High Court also observed that allegations of mala fide based on the facts after lodging of the FIR are of no consequence and cannot be the basis for quashing the proceedings.

Following the dismissal, the HPCA appealed to the Supreme Court. During the pendency of these proceedings, investigation was completed and chargesheets were filed in the Court of Special Judge. The HPCA also filed a Writ Petition (Criminal) No. 135 of 2017 in the Supreme Court seeking quashing of these chargesheets. Both the appeal and writ petition were heard together.

Legal Framework

The case involves several key legal provisions:

• Indian Penal Code, 1860 (IPC): Sections 406 (criminal breach of trust), 420 (cheating), 120B (criminal conspiracy), and 447 (criminal trespass) were invoked.
• Prevention of Corruption Act, 1988 (PC Act): Section 13(2) was applied, which deals with criminal misconduct by a public servant.
• Prevention of Damage to Public Property Act, 1984: Section 3 was invoked, which deals with mischief causing damage to public property.
• Companies Act, 1956: Section 25 relates to the registration of not-for-profit companies.
• Code of Criminal Procedure, 1973 (Cr.P.C.): Section 482 deals with the inherent powers of the High Court to prevent abuse of the process of law.
• H.P. Lease Rules, 1993: Rule 8(1) and its proviso, which provide for the lease amount to be paid and the power of the State Government to reduce the amount for special reasons in deserving cases.

The legal framework also includes the constitutional provisions relating to the powers of the Supreme Court under Article 32, 136 and 142 to do complete justice in a cause or matter pending before it.

Arguments

Appellants’ Arguments:

• The prosecution is a result of political vendetta, stemming from the change in government and a ‘Congress Chargesheet’ that made allegations against the appellants.
• The main government functionaries involved in granting the leases were not prosecuted, indicating a mala fide intent to target the HPCA.
• The conversion of the HPCA from a society to a company was done with the permission of the BCCI and in accordance with the law, and cannot be construed as a crime.
• The leases were validly granted under the H.P. Lease Rules, 1993, with the government having the power to reduce lease amounts in deserving cases. The lease of land for the cricket stadium at a token rate of Re.1/- per month was a well thought out administrative decision by the State Government in the interest of the State.
• The investigation was personally monitored by the then Chief Minister, indicating a biased process.
• The matter was, at best, a civil dispute and was wrongly given a criminal cloak to harass the appellants.
• The High Court failed to consider the principle of Actus Reus Non Facit Reum Nisi Mens Sit Rea (there can be no crime without a guilty mind).

Respondents’ Arguments:

• The Special Leave Petition was infructuous as chargesheets were filed and cognizance was taken by the Special Court.
• The FIRs were registered after a preliminary inquiry by the Anti-Corruption Bureau (ACB) and were not a result of political vendetta.
• The final report and cognizance order revealed a clear case of cheating, fraud, criminal breach of trust, and loss to the state exchequer.
• The allegations of mala fide against respondent No. 2 were frivolous, and the High Court rightly found no merit therein.
• The State Government’s decision to withdraw the case was not permissible as no fresh grounds had emerged.
• The matter was not merely a civil case, and the authorities had rightly registered the FIR and filed criminal proceedings.

Submissions Table:

Issues Framed by the Supreme Court

The Supreme Court framed the following issues:

1. Whether the criminal proceedings initiated against the appellants were justified.
2. Whether the High Court was correct in dismissing the petitions under Section 482 of Cr.P.C.
3. Whether the filing of chargesheets and cognizance order would render the appeals infructuous.
4. Whether the conversion of the HPCA from a society to a company constituted a criminal offense.
5. Whether the leases granted to the HPCA were valid and legal.
6. Whether the allegations of mala fide against respondent No. 2 were sufficient to quash the FIR.
7. Whether the matter was a civil dispute and wrongly given a criminal cloak.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court considered the following authorities:

Cases:

• State of Bihar & Anr. v. P.P. Sharma & Anr. [1992 Supp (1) SCC 222] (Supreme Court of India): Referred to by the High Court regarding allegations of mala fide after lodging of FIR.
• Union of India & Ors. v. Sushil Kumar Modi & Ors. [(1997) 4 SCC 770] (Supreme Court of India): Cited regarding the independence of the police from the executive.
• Commissioner of Income Tax, Mumbai v. Texspin Engg. and Mfg. Works, Mumbai [(2003) 263 ITR 345] (Bombay High Court): Discussed the effect of statutory conversion from a firm to a company.
• Commissioner of Income Tax (Central), Ludhiana v. M/s. Rita Mechanical Works, Ludhiana [(2012) 344 ITR 544] (Punjab & Haryana High Court): Discussed the effect of statutory conversion from a firm to a company.
• Delhi Judicial Service Association, Tis Hazari Court, Delhi v. State of Gujarat & Ors. [(1991) 4 SCC 406] (Supreme Court of India): Cited regarding the inherent power of the Supreme Court to quash proceedings.
• Monica Kumar & Anr. v. State of Uttar Pradesh & Ors. [(2008) 8 SCC 781] (Supreme Court of India): Cited regarding the inherent power of the Supreme Court to quash proceedings.
• C.K. Jaffer Sharief v. State [(2013) 1 SCC 205] (Supreme Court of India): Cited regarding the principle of Actus Reus Non Facit Reum Nisi Mens Sit Rea.
• R. Balakrishna Pillai v. State of Kerala [(2003) 9 SCC 700] (Supreme Court of India): Cited regarding the principle of Actus Reus Non Facit Reum Nisi Mens Sit Rea.
• State of Haryana & Ors. v. Bhajan Lal & Ors. [1992 Supp. (1) SCC 335] (Supreme Court of India): Cited regarding the inherent powers of the High Court under Section 482 of Cr.P.C.
• Vineet Kumar & Ors. v. State of Uttar Pradesh & Anr. [(2017) 13 SCC 369] (Supreme Court of India): Cited regarding the inherent powers of the High Court under Section 482 of Cr.P.C.
• Lalita Kumari v. Government of Uttar Pradesh & Ors. [(2014) 2 SCC 1] (Supreme Court of India): Cited regarding preliminary inquiry before registering an FIR.
• Indian Oil Corporation v. NEPC India Ltd. & Ors. [(2006) 6 SCC 736] (Supreme Court of India): Cited regarding principles for quashing complaints under Section 482 of Cr.P.C.
• State of A.P. v. Golconda Linga Swamy and Anr. [(2004) 6 SCC 522] (Supreme Court of India): Referred to by the respondents regarding the effect of filing of chargesheet on the plea of mala fide.
• Umesh Kumar v. State of Andhra Pradesh & Anr. [(2013) 10 SCC 591] (Supreme Court of India): Referred to by the respondents regarding the effect of filing of chargesheet on the plea of mala fide.
• State of Tamil Nadu & Ors. v. K. Shyam Sunder & Ors. [(2011) 8 SCC 737] (Supreme Court of India): Cited regarding the impermissibility of withdrawing criminal cases without fresh grounds.
• Andhra Pradesh Dairy Development Corporation Federation v. B. Narasimha Reddy & Ors. [(2011) 9 SCC 286] (Supreme Court of India): Cited regarding the impermissibility of withdrawing criminal cases without fresh grounds.
• State of Himachal Pradesh v. Nishant Sareen [(2010) 14 SCC 527] (Supreme Court of India): Cited regarding the impermissibility of withdrawing criminal cases without fresh grounds.
• Ujjam Bai v. State of U.P. [(1963) 1 SCR 778] (Supreme Court of India): Cited by the respondents regarding the maintainability of writ petition under Article 32.
• Naresh Shridhar Mirajkar & Ors. v. State of Maharashtra & Anr. [AIR 1967 SC 1] (Supreme Court of India): Cited by the respondents regarding the maintainability of writ petition under Article 32.
• Northern Corporation v. Union of India & Ors. [(1990) 4 SCC 239] (Supreme Court of India): Cited by the respondents regarding the maintainability of writ petition under Article 32.
• State of Karnataka v. M. Devendrappa [(2002) 3 SCC 89] (Supreme Court of India): Cited regarding the ambit of Section 482 CrPC.

Legal Provisions:

• Section 406, Indian Penal Code, 1860: Criminal breach of trust.
• Section 420, Indian Penal Code, 1860: Cheating.
• Section 120B, Indian Penal Code, 1860: Criminal conspiracy.
• Section 447, Indian Penal Code, 1860: Criminal trespass.
• Section 13(2), Prevention of Corruption Act, 1988: Criminal misconduct by a public servant.
• Section 3, Prevention of Damage to Public Property Act, 1984: Mischief causing damage to public property.
• Section 25, Companies Act, 1956: Registration of not-for-profit companies.
• Section 482, Code of Criminal Procedure, 1973: Inherent powers of the High Court.
• Rule 8(1), H.P. Lease Rules, 1993: Lease amount to be paid and the power of the State Government to reduce the amount for special reasons in deserving cases.

Authority Table:

Judgment

The Supreme Court allowed the appeals and quashed the criminal proceedings against the HPCA and its members. The Court held that the High Court had erred in dismissing the petitions filed under Section 482 of Cr.P.C. The Supreme Court observed that no criminal case was made out against the appellants and the prosecution was a result of political vendetta. The Court also noted that the conversion of the HPCA from a society to a company was done with the permission of the BCCI and in accordance with the law, and cannot be construed as a crime. The Court further observed that the leases were validly granted under the H.P. Lease Rules, 1993, and the government had the power to reduce lease amounts in deserving cases. The Court held that the matter was, at best, a civil dispute and was wrongly given a criminal cloak to harass the appellants.

The Supreme Court concluded that the High Court did not adequately consider the material facts and failed to examine that no criminal case was made out. The Court held that the appeals were not infructuous and that the order of cognizance would be vitiated if the FIR was quashed. The Court also observed that the allegations of mala fide against respondent No. 2 were not considered as it found that no criminal case was made out.

Key Points of the Judgment:

• Criminal proceedings against the HPCA and its members were quashed.
• The High Court’s dismissal of petitions under Section 482 of Cr.P.C. was overturned.
• The conversion of HPCA from a society to a company was not a criminal offense.
• The leases granted to HPCA were deemed valid.
• The matter was considered a civil dispute, not a criminal one.
• The prosecution was deemed to be a result of political vendetta.

Analysis

The Supreme Court’s judgment in the HPCA case is significant for several reasons. Firstly, it underscores the importance of due process and fair investigation in criminal matters. The Court’s observation that the prosecution was a result of political vendetta highlights the need for impartiality in the legal system. Secondly, the judgment clarifies that the conversion of a society to a company, when done in accordance with the law, cannot be construed as a criminal offense. This provides clarity on corporate law matters. Thirdly, the Court’s emphasis on the principle of Actus Reus Non Facit Reum Nisi Mens Sit Rea reinforces the need for criminal intent in establishing a crime. Lastly, the judgment emphasizes the inherent powers of the High Court and the Supreme Court to prevent abuse of the process of law.

The case also highlights the importance of considering all relevant facts and circumstances before initiating criminal proceedings. The Court’s finding that the matter was a civil dispute wrongly given a criminal cloak serves as a caution against the misuse of criminal law for political or personal vendettas. The decision serves as a check on the abuse of power and ensures that criminal law is not used as a tool for harassment. The Supreme Court’s intervention in this case highlights its role as a guardian of justice and the rule of law.

Implications:

• Reinforces the principle that criminal law should not be used for political vendettas.
• Clarifies that lawful corporate conversions are not criminal offenses.
• Emphasizes the importance of criminal intent in establishing a crime.
• Highlights the powers of the High Court and Supreme Court to prevent abuse of the process of law.
• Serves as a check on the abuse of power and ensures fair legal processes.

Flowchart of the Case