Supreme Court Upholds Attachment of Properties in Fodder Scam Cases Despite Accused’s Death: Ravi Sinha & Ors. vs. The State of Jharkhand (2017)

Date of the Judgment: October 5, 2017
Citation: (2017) INSC 870
Judges: A.K. Sikri, J. and Ashok Bhushan, J.
Can the attachment of properties under the Criminal Law (Amendment) Ordinance, 1944, continue after the death of the primary accused? The Supreme Court of India recently addressed this question in a series of appeals related to the infamous fodder scam. The core issue was whether the death of a key accused should lead to the release of attached properties, especially when other family members are also implicated in the same scam. The judgment was delivered by a two-judge bench comprising Justice A.K. Sikri and Justice Ashok Bhushan, with the opinion authored by Justice Ashok Bhushan.

Case Background

The case originates from a massive scam involving the defalcation of public funds in the Animal Husbandry Department of the State of Bihar (now Jharkhand) between 1990 and 1994. The scam involved the use of fake allotment letters for the purchase of medicines, with suppliers showing fake supplies and misappropriating the funds. The Central Bureau of Investigation (CBI) registered several criminal cases under various sections of the Indian Penal Code, 1860 and the Prevention of Corruption Act, 1988.

Dr. S.B. Sinha, a public servant, was implicated in 41 criminal cases. His family members, including his son Ravi Sinha, were also accused of involvement. The State of Bihar filed an application under Section 3 of the Criminal Law (Amendment) Ordinance, 1944, to attach properties believed to have been acquired through the scam. The Judicial Commissioner, Ranchi, ordered an ad-interim attachment of these properties.

After Dr. S.B. Sinha’s death, the CBI requested that the attachment be made absolute. The Judicial Commissioner ordered the attachment to be absolute, which was challenged in the High Court. The High Court dismissed the appeals, leading to the present appeals before the Supreme Court.

In a related matter, Vijay Kumar Mallick and his family were also accused of similar fraudulent activities. The State of Bihar filed an application to attach their properties. The Judicial Commissioner ordered an ad-interim attachment, which was later made absolute. These orders were also challenged in the High Court, which dismissed the appeals, leading to further appeals before the Supreme Court.

Timeline

Course of Proceedings

The Judicial Commissioner, Ranchi, initially ordered ad-interim attachment of properties based on applications filed by the State of Bihar. These orders were challenged by the accused parties. In the case of Vijay Kumar Mallick, the Jharkhand High Court set aside the initial orders and remanded the matter back to the Judicial Commissioner. The Judicial Commissioner then passed fresh orders making the attachment absolute.

The appellants filed criminal appeals against the orders of the Judicial Commissioner in the Jharkhand High Court. The High Court dismissed these appeals, upholding the attachment orders. This led to the filing of the present criminal appeals before the Supreme Court.

Legal Framework

The case primarily revolves around the Criminal Law (Amendment) Ordinance, 1944. Key provisions include:

• Section 3: This section allows the State Government to apply for the attachment of properties believed to be procured through scheduled offenses. It states, “3. Application for attachment of property. (1) Where the State Government has reason to believe that any person has committed any scheduled offence, the State Government may, whether or not the prosecution for such offence has been instituted, authorise the making of an application to the District Judge within the local limits of whose jurisdiction the said person ordinarily resides or carries on business, for the attachment, under this Ordinance, of the money or other property which the State Government believes the said person to have procured by means of the offence.”
• Section 12: This section mandates that if a court convicts an accused in a case where property has been attached, it must record a finding on the amount or value of property procured through the offense. It states, “12. Criminal Courts to evaluate property procured by scheduled offences. (1) Where before judgment is pronounced in any criminal trial for a scheduled offence it is represented to the Court that an order of attachment of property has been passed under this Ordinance in connection with such offence, the Court shall, if it is Convicting the accused, record a finding as to the amount of money or value of other property procured by the accused by means of the offence.”
• Section 13: This section deals with the disposal of attached property upon the termination of criminal proceedings. It states, “13. Disposal of attached property upon termination of criminal proceedings. (1) Upon the termination of any criminal proceedings for any scheduled offence in respect of which any order of attachment of property has been made under this Ordinance or security given in lieu thereof, the agent of the [State Government or, as the case may be, the Central Government] shall, without delay inform the District Judge, and shall where criminal proceedings have been taken in any Court, furnish the District Judge with a copy of the judgment or order of the trying Court and with copies of the judgments or orders, if any, of the appellate or revisional Courts thereon.”

The ordinance aims to prevent the disposal of ill-gotten wealth acquired through criminal activities by allowing the attachment of properties and their subsequent forfeiture to the government.

Arguments

Appellants’ Arguments (Ravi Sinha & Ors.):

• The death of Dr. S.B. Sinha, the main accused, should have led to the withdrawal of the attachment order, as criminal proceedings against him had abated.
• The appellants were merely name lenders, and only Ravi Sinha was involved in the fodder scam. The attachment should have been limited to Dr. S.B. Sinha’s properties.
• The amount alleged to be misappropriated by Ravi Sinha was secured by deposits made before the trial court.
• Since the CBI did not seek orders under Section 12 of the Criminal Law (Amendment) Ordinance, 1944, at the stage of conviction, it cannot do so now.

Appellants’ Arguments (Sandeep Malik & Kamal Malik):

• The trial court and High Court failed to consider material evidence like Income Tax Returns, Wealth Tax Returns, Electricity Receipts, and Bank Drafts, which established their independent sources of income.
• The property at Kashmere Gate was acquired in 1955, long before the alleged scam, and should not have been attached.

State of Jharkhand’s Arguments:

• The attachment order was lawful and necessary due to the large-scale fraud and conspiracy.
• Ravi Sinha was convicted in one case and facing trial in another, justifying the continuation of the attachment.
• The attachment of properties was not limited to the specific amount misappropriated, but to secure the larger conspiracy.
• Proceedings under Section 12 and 13 are independent, and the absence of an order under Section 12 at the time of conviction does not preclude action under Section 13.
• The properties were purchased out of ill-gotten money by Vijay Kumar Mallick in his name and in names of his relatives.
• The power to attach property is not confined to properties acquired by ill-gotten money but to secure the property misappropriated.

The innovativeness of the arguments lies in the appellants’ attempt to use the death of the primary accused to argue for the release of attached properties and also the argument that the attachment should be limited to the properties of the main accused.

Submissions

Issues Framed by the Supreme Court

The Supreme Court considered the following key issues:

1. Whether the attachment of properties should be withdrawn after the death of the main accused, Dr. S.B. Sinha.
2. Whether the properties of the appellants, who were allegedly name lenders, could be attached.
3. Whether the failure to invoke Section 12 of the Criminal Law (Amendment) Ordinance, 1944, at the time of conviction precludes further action under Section 13.
4. Whether the properties of Sandeep Malik and Kamal Malik were legitimately acquired.

Treatment of the Issue by the Court

Authorities

Cases:

• State of Bihar & Anr. Vs. Ranchi Zila Samta Party & Anr., (1996) 3 SCC 682 – Supreme Court of India: This case was cited to show that the investigation was entrusted to the CBI due to large-scale defalcation of public funds.
• U. Subhadramma & Ors. Vs. State of Andhra Pradesh, (2016) 7 SCC 797 – Supreme Court of India: This case was cited by the appellants to argue that attachment proceedings cannot be initiated after the death of the accused. However, the court distinguished this case from the present one.
• State of Jharkhand Vs. Laloo Prasad Yadav, (2017) 8 SCC 1 – Supreme Court of India: This case was referred to by the Attorney General to support the argument that the accused are part of a larger conspiracy.

Legal Provisions:

• Section 3, Criminal Law (Amendment) Ordinance, 1944: This section allows the State Government to apply for attachment of properties believed to be procured through scheduled offenses.
• Section 12, Criminal Law (Amendment) Ordinance, 1944: This section mandates that if a court convicts an accused in a case where property has been attached, it must record a finding on the amount or value of property procured through the offense.
• Section 13, Criminal Law (Amendment) Ordinance, 1944: This section deals with the disposal of attached property upon the termination of criminal proceedings.
• Section 2(2), Criminal Law (Amendment) Ordinance, 1944: This section defines the termination of criminal proceedings.

Authorities Considered by the Court

Judgment

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

How each authority was viewed by the Court?

• State of Bihar & Anr. Vs. Ranchi Zila Samta Party & Anr., (1996) 3 SCC 682: The court used this case to establish the background of the case and the involvement of CBI.
• U. Subhadramma & Ors. Vs. State of Andhra Pradesh, (2016) 7 SCC 797: The court distinguished this case, stating that it did not apply to the present case as the attachment was made before the death of the accused and one of the legal heirs was also facing criminal proceedings.
• State of Jharkhand Vs. Laloo Prasad Yadav, (2017) 8 SCC 1: The court referred to this case to support the argument that the accused were part of a larger conspiracy.
• Sections 3, 12, and 13 of the Criminal Law (Amendment) Ordinance, 1944: The court interpreted these sections to clarify the process of attachment, recording of findings, and disposal of attached properties.

The Supreme Court dismissed all the appeals, upholding the orders of the High Court and the Judicial Commissioner. The court reasoned that the death of Dr. S.B. Sinha did not nullify the attachment of properties, especially since his son, Ravi Sinha, was also involved in the scam and had been convicted in one case. The court also clarified that the failure to invoke Section 12 at the time of conviction did not preclude action under Section 13.

The court emphasized that the properties were attached as part of a larger conspiracy to defraud the government and that the appellants failed to prove that the properties were acquired through legitimate means.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The involvement of Ravi Sinha, son of Dr. S.B. Sinha, in the same fodder scam, and his conviction in one of the cases.
• The fact that the properties were already under attachment before the death of Dr. S.B. Sinha and had come into the hands of Ravi Sinha as a legal representative.
• The larger conspiracy to defraud the government, which justified the attachment of properties beyond the specific amount misappropriated by individual accused.
• The appellants’ failure to provide sufficient evidence that the properties were acquired through legitimate means.
• The independent nature of proceedings under Sections 12 and 13 of the Criminal Law (Amendment) Ordinance, 1944.

Fact:Law Ratio

The court’s reasoning emphasized the factual aspects of the case, such as the involvement of family members and the evidence of the larger conspiracy, while also considering the legal provisions of the Criminal Law (Amendment) Ordinance, 1944.

“There cannot be any dispute to the proposition that no proceedings under Ordinance, 1944 can be undertaken against the accused after his death and the prosecution cannot continue after the death of an accused.”

“In the present case, there is one fact, which makes the present case different from the case of U. Subhadramma & Ors. Vs. State of Andhra Pradesh, (supra), i.e. in the present case, Ravi Sinha, the son of Dr. S.B. Sinha was himself accused in large number of cases.”

“Section 13 gives ample power to deal with attached properties after termination of criminal proceedings.”

Logical Reasoning

Key Takeaways

• Attachment proceedings under the Criminal Law (Amendment) Ordinance, 1944, can continue even after the death of the primary accused if other family members are also implicated in the same offense.
• The attachment of properties is not limited to the specific amount misappropriated but can extend to other properties of the accused to secure the larger conspiracy.
• It is crucial for individuals to provide sufficient evidence of legitimate income to avoid attachment of their properties in cases of financial crimes.
• The failure to invoke Section 12 at the time of conviction does not preclude action under Section 13 of the Criminal Law (Amendment) Ordinance, 1944.

Directions

No specific directions were given by the Supreme Court in this judgment.

Development of Law

The ratio decidendi of this case is that the attachment of properties under the Criminal Law (Amendment) Ordinance, 1944, can continue even after the death of the primary accused if other family members are also implicated in the same offense, especially if they are legal heirs and have been convicted in the same scam. This judgment clarifies the interpretation of Sections 12 and 13 of the Ordinance, emphasizing that they are independent provisions and that action can be taken under Section 13 even if Section 12 was not invoked at the time of conviction. There is no change in the previous positions of law, but the judgment clarifies the application of the law under the specific facts of this case.

Conclusion

The Supreme Court dismissed all the appeals, upholding the attachment of properties in the fodder scam cases. The court clarified that the death of the primary accused does not automatically lead to the release of attached properties, especially when other family members are also implicated. The judgment also emphasized the independent nature of Sections 12 and 13 of the Criminal Law (Amendment) Ordinance, 1944.