Supreme Court Upholds CBI Investigation Despite Lack of Prior State Consent in Corruption Case

Introduction

Date of the Judgment: 17 November 2020
Citation: 2020 INSC 832
Judges: A.M. Khanwilkar, J., B. R. Gavai, J.
Can a CBI investigation into corruption charges be valid if the State Government’s prior consent was not obtained, especially when public servants of the State are involved? The Supreme Court addressed this critical question, examining the balance between federal investigative powers and State autonomy. This judgment clarifies the circumstances under which the CBI can investigate corruption cases within a State, particularly when state government employees are implicated. The bench comprised Justices A.M. Khanwilkar and B. R. Gavai, with the majority opinion authored by Justice B. R. Gavai.

Case Background

The case originated from a Fuel Supply Agreement (FSA) between Coal India Limited and M/s Fertico Marketing and Investment Pvt. Ltd. On 18th October 2007, Coal India Limited introduced a policy requiring FSAs between coal companies and purchasers. On 30th April 2008, an FSA was entered into between the appellants and Coal India Limited. A joint surprise raid by the CBI on 25th March 2011, at the factory premises of Fertico Marketing and Investment Private Limited revealed that coal purchased under the FSA was being sold in the black market. This activity, allegedly done in collusion with unknown government officials, led to a loss of Rs. 36.28 crore to the Central Government. Consequently, on 13th April 2011, the CBI registered an FIR against Mr. Anil Kumar Agarwal, Director of Fertico, and unknown officials of the District Industries Centre (DIC), Chandauli, and Northern Coalfields Limited, Singrauli, for offences under Section 120B and 420 of the Indian Penal Code (IPC) and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.

During the investigation, it was discovered that two DIC officials, Ram Ji Singh (General Manager) and Yogendra Nath Pandey (Assistant Manager), were also involved in the conspiracy. These officials had allegedly abused their positions by sending false reports about the working conditions of the accused companies, which led to the supply of coal at subsidized rates, causing financial loss to the government. The competent authority granted sanction to prosecute these two public servants on 31st May 2012, under Section 19 of the PC Act. A charge-sheet was filed on the same day against the appellants under Section 120B read with Section 420, Sections 467, 468, and 471 of the IPC.

Timeline

Course of Proceedings

Various petitioners approached the High Court under Section 482 of the Criminal Procedure Code (Cr.P.C.), seeking to quash the charge-sheet and related proceedings. The High Court, on 24th February 2015, framed four questions for determination:

• Whether the CBI investigation was illegal due to non-compliance with Section 6 of the Delhi Special Police Establishment Act, 1946 (DSPE Act)?
• Whether the case was predominantly civil in nature, based on a breach of contract (FSA), thus warranting the quashing of criminal prosecutions?
• Whether the CBI failed to follow the doctrine of parity in filing criminal prosecutions?
• Whether a charge of criminal conspiracy under Section 120B of the IPC could be made out in the absence of officers/officials of Northern Coalfields Limited (NCL)?

The Single Judge disagreed with an earlier view of the High Court and found that the CBI investigation was conducted without the prior permission of the Government of Uttar Pradesh, violating Section 6 of the DSPE Act. The judge referred questions 1 and 2 to a Division Bench due to the disagreement and the lack of binding precedent on the issue. The Division Bench, on 6th July 2015, clarified that the Government Order dated 15.6.1989 permitted the investigation, and it was not a case of suo moto jurisdiction by the CBI. The second question was left unanswered. The matter was then referred back to the Single Judge, who directed the State Government to file an affidavit. After several affidavits, the State Government clarified that the notification dated 15th June 1989, accorded consent to the DSPE’s jurisdiction for corruption offences, with the rider that prior permission was required for public servants under the State Government’s control. The Single Judge, in the impugned order, found that the post-facto consent was sufficient for the CBI investigation and dismissed all petitions.

Legal Framework

The core of the legal framework in this case lies in the interpretation of Sections 5 and 6 of the Delhi Special Police Establishment Act, 1946 (DSPE Act), and the notification issued by the Government of Uttar Pradesh. Section 5 of the DSPE Act allows the Central Government to extend the powers and jurisdiction of the DSPE to any area in a State. However, Section 6 of the DSPE Act stipulates that:

“Nothing contained in section 5 shall be deemed to enable any member of the Delhi Special Police Establishment to exercise powers and jurisdiction in any area in a State, not being a Union territory or railway area], without the consent of the Government of that State.”

This provision ensures that the federal investigative agency cannot operate within a state without the state’s consent, reflecting the federal structure of the Indian Constitution. The Government of Uttar Pradesh issued a notification on 15th June 1989, which stated:

“In pursuance of the Provisions of Section 6 of the Delhi Special Police Establishment Act, 1946 ( 25 of 1946) the Governor of the State of Uttar Pradesh is pleased to accord consent to the extension of powers and jurisdiction of the members of the Delhi Special Police establishment in whole of the State of Uttar Pradesh, for investigation of offences punishable under the Prevention of Corruption Act, 1988 (49 of 1988), and attempts, abetments and conspiracies in relation to all or any of the offence or offences mentioned above and any other offence or offences committed in the course of the transaction and arising out of the same facts, subject however to the condition that no such investigation shall be taken up in cases relating to the public servants, under the control of the State Government except with the prior permission of the State Government.”

This notification grants general consent for CBI investigations into corruption offences in Uttar Pradesh but requires prior permission for investigations involving public servants under the State Government’s control.

Arguments

Appellants’ Arguments:

• Shri Mukul Rohatgi, learned Senior Counsel, argued that the CBI lacked the power to investigate without the State Government’s consent under Section 6 of the DSPE Act. He emphasized that this consent is mandatory and that failure to obtain it before registering the FIR vitiates the entire investigation.
• He contended that the appellants, private individuals, were charged under the Prevention of Corruption Act, which requires a meeting of minds between public servants and private individuals for a conspiracy charge under Section 120B of the IPC to stand. He argued that an FIR could not be registered without valid consent under Section 6 of the DSPE Act.
• Mr. Ajit Kumar Sinha, learned Senior Counsel, representing the public servants, argued that the CBI could not exercise jurisdiction without valid consent and that post-facto sanction would not cure the defect of not obtaining prior consent.

Respondents’ Arguments:

• Shri S.V. Raju, learned Additional Solicitor General, argued that prior consent under Section 6 of the DSPE Act is directory, not mandatory. He submitted that unless the appellants could demonstrate prejudice or a miscarriage of justice due to the procedural irregularity, the investigation should not be invalidated.
• He argued that the notification dated 15th June 1989, granted general consent to investigate matters arising out of the PC Act, except those involving public servants under the State Government’s control. He also submitted that the post-facto consent granted on 7th September 2018, cured any defect.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in the judgment. However, the core issue that the court addressed was:

• Whether the CBI investigation was valid in the absence of prior consent from the State Government under Section 6 of the DSPE Act, particularly concerning public servants under the control of the State Government.
• The court also considered whether post-facto consent could cure the defect of not obtaining prior consent.

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:

Judgment

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

How each authority was viewed by the Court?

The Court relied on H.N. Rishbud and Inder Singh v. The State of Delhi [1955] 1 SCR 1150* to establish that procedural irregularities in an investigation do not invalidate the trial unless there is a miscarriage of justice. This principle was central to the decision that the lack of prior consent did not invalidate the investigation. The Court also cited State of Karnataka v. Kuppuswamy Gownder and Others (1987) 2 SCC 74* to support the view that procedural irregularities, if not causing prejudice, do not affect the validity of the trial. Further, Union of India v. Prakash P. Hinduja and Another (2003) 6 SCC 195* was used to reinforce that even if the CBI had committed an error or irregularity in submitting the charge-sheet without the approval of CVC, the cognizance taken by the learned Special Judge on the basis of such a charge-sheet, would not be set aside. The Court distinguished Ms. Mayawati v. Union of India and Others (2012) 8 SCC 106*, noting that it did not apply to the facts of the present case. The Court also referred to Kanwal Tanuj v. State of Bihar and Others 2020 SCC OnLine SC 395* to reinforce the principle that a general consent by a State under Section 6 of the DSPE Act is sufficient for the CBI to proceed with the investigation.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that procedural irregularities during an investigation do not invalidate the trial unless they cause a miscarriage of justice. The Court emphasized that the State of Uttar Pradesh had granted general consent for CBI investigations under the Prevention of Corruption Act, 1988, and that the post-facto consent for the public servants was sufficient to cure any defect. The Court also considered the fact that no prejudice was shown to have been caused to the accused due to the lack of prior consent.

“Fact:Law” Ratio

The Court’s emphasis was more on legal principles and precedents rather than the specific factual details of the case. The Court focused on the interpretation of Section 6 of the DSPE Act, the State’s notification, and the legal precedents related to the effect of procedural irregularities on the validity of an investigation.

The court’s reasoning was based on the interpretation of Section 6 of the DSPE Act, the notification issued by the State of Uttar Pradesh, and the legal precedents that suggested that procedural irregularities do not invalidate an investigation unless there is a miscarriage of justice. The Court did not consider any alternative interpretations that would have invalidated the investigation. The decision was reached by applying the principles of statutory interpretation and the precedents set by previous cases.

The Court observed that, “It could thus be seen, that this Court has held, that the cognizance and the trial cannot be set aside unless the illegality in the investigation can be shown to have brought about miscarriage of justice. It has been held, that the illegality may have a bearing on the question of prejudice or miscarriage of justice but the invalidity of the investigation has no relation to the competence of the court.”

The court also noted, “It is provided that a finding or sentence passed by a court of competent jurisdiction could not be set aside merely on the ground of irregularity if no prejudice is caused to the accused.”

The court further stated, “This being the legal position, even assuming for the sake of argument that the CBI committed an error or irregularity in submitting the charge sheet without the approval of CVC, the cognizance taken by the learned Special Judge on the basis of such a charge sheet could not be set aside nor could further proceedings in pursuance thereof be quashed.”

There was no dissenting opinion in this case.

Key Takeaways

• The Supreme Court clarified that the prior consent of the State Government under Section 6 of the DSPE Act is not mandatory for the CBI to investigate private individuals in corruption cases if the State has granted general consent.
• Post-facto consent from the State Government for investigating public servants under its control is sufficient to cure the defect of not obtaining prior consent, provided no prejudice or miscarriage of justice is demonstrated.
• Procedural irregularities in an investigation do not invalidate the trial unless they cause a miscarriage of justice.
• This judgment reinforces the balance between federal investigative powers and State autonomy, ensuring that the CBI can investigate corruption cases effectively while respecting the federal structure of the Constitution.
• The judgment may lead to more streamlined investigations by the CBI in cases where general consent is in place, reducing delays and procedural hurdles.

Directions

The Supreme Court remitted the matter back to the learned Single Judge of the High Court to decide question Nos. 2, 3, and 4, which were initially framed by the High Court but not addressed in the impugned order. The Supreme Court clarified that it had not considered the merits of the matter and kept all questions available to both parties open.

Specific Amendments Analysis

There was no specific amendment discussed in the judgment.

Development of Law

The ratio decidendi of this case is that a general consent given by a State government under Section 6 of the DSPE Act is sufficient for the CBI to investigate private individuals for offences under the Prevention of Corruption Act. Additionally, post-facto consent for public servants is sufficient to cure the defect of not obtaining prior consent, unless prejudice or miscarriage of justice is demonstrated. This judgment reinforces the principle that procedural irregularities in an investigation do not invalidate the trial unless they cause a miscarriage of justice. The Supreme Court has not changed its previous position of law, but has reinforced its earlier position.

Conclusion

The Supreme Court upheld the CBI investigation, ruling that the general consent provided by the State of Uttar Pradesh was sufficient for investigating private individuals under the Prevention of Corruption Act. The Court also held that the post-facto consent for public servants was adequate, as no prejudice or miscarriage of justice was proven. The judgment reinforces the principle that procedural irregularities do not invalidate an investigation unless they cause a miscarriage of justice, thereby clarifying the extent of CBI’s investigative powers within states.