Date of the Judgment: 07 January 2020
Citation: (2020) INSC 12
Judges: Sanjay Kishan Kaul, J., K.M. Joseph, J.
Can a public servant be discharged at the initial stage of a criminal trial if there is a grave suspicion of wrongdoing? The Supreme Court addressed this question in a case involving allegations of illegal mining. The Court examined whether the High Court was correct in overturning the Magistrate’s order to discharge the accused, a Director of Mines and Geology. This judgment, delivered by a two-judge bench comprising Justices Sanjay Kishan Kaul and K.M. Joseph, with Justice K.M. Joseph authoring the opinion, delves into the nuances of evidence required to frame charges in corruption cases.

Case Background

The case revolves around M/s Associated Mineral Company (AMC), a partnership firm engaged in mining. The appellant, M.E. Shivalingamurthy, was the Director of Mines and Geology in Karnataka at the time of the alleged offenses. The Central Bureau of Investigation (CBI) filed a charge-sheet against him and several others, alleging a criminal conspiracy to illegally mine and transport mineral ore, causing losses to the Government of Karnataka. The charges against the appellant stem from his actions related to the issuance of Mineral Dispatch Permits (MDPs) to AMC after a change in its partnership structure. The appellant is alleged to have abused his official position by directing the issuance of MDPs without obtaining the required prior approval from the State Government as mandated by the Mines and Minerals (Development and Regulation) Act, 1957 and Mineral Concession Rules, 1960.

Timeline

Date Event
1966 Mining Lease No. 625 executed between the Governor and AMC.
30.06.1983 AMC reconstituted, Shri L. Lingaraju inducted as partner.
13.02.1984 AMC reconstituted, Shri B. Ananda joined as partner, Shri J. Lingaraju retired.
13.02.1982 Smt. B. Vasanthi joined in place of Shri J. Vamadevappa who retired from the firm.
13.06.1986 Shri B. Vasudev entered the firm as a partner and Smt. B. Vasanthi retired from the firm.
10.06.1990 Shri Mohammed Kasim joined the firm and Shri B. Ananda retired from the firm.
01.09.2009 First and second accused inducted as partners in AMC.
26.12.2009 Letter sent by partners of AMC to the Director of Mines and Geology regarding change in partnership.
04.01.2010 Appellant directs issuance of MDPs to AMC.
29.03.2011 Supreme Court orders investigation into illegalities of Mining Lease No. 2434 of AMC.
08.10.2015 Trial Court discharges the second accused and the appellant.

Course of Proceedings

The Trial Court discharged the appellant and the second accused, finding insufficient evidence to frame charges. However, the High Court of Karnataka overturned this decision, holding that there was enough incriminating material to proceed with the trial. The High Court noted that the appellant, as a responsible officer, had consciously violated statutory provisions by directing the issuance of MDPs without obtaining the necessary legal opinion, despite the office noting that the matter required legal opinion. The High Court found that the Trial Court had overstepped its jurisdiction by sifting and weighing the evidence at the stage of framing charges.

Legal Framework

The case primarily involves the interpretation of the following:

  • Section 120B, 420, 379, 409, 447, 468, 471, 477A of the Indian Penal Code, 1860 (IPC): These sections deal with criminal conspiracy, cheating, theft, criminal breach of trust, trespass, forgery, and falsification of accounts.
  • Sections 13(2) and 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act, 1988: These sections relate to criminal misconduct by a public servant.
  • Mines and Minerals (Development and Regulation) Act, 1957 (the Act): This Act regulates the mining sector in India.
  • Mineral Concession Rules, 1960 (the Rules): These rules provide the procedure for granting and regulating mining leases.
  • Rule 37 of the Mineral Concession Rules, 1960: “Transfer of lease: – (1) The lessee shall not, without the previous consent in writing of the State Government and in the case of mining lease in respect of any mineral specified in Part ‘A’ and Part ‘B’ of the First Schedule to the Act, without the previous approval of the Central Government : – (a) assign, sublet, mortgage, or in any other manner, transfer the mining lease, or any right, title or interest therein, or (b) enter into or make any bonafide arrangement, contract, or understanding whereby the lessee will or may be directly or indirectly financed to a substantial extent by, or under which the lessee’s operations or undertakings will or may be substantially controlled by, any person or body of persons other than the lessee:” This rule mandates that a mining lease cannot be transferred without prior government approval.

The legal framework is designed to prevent illegal mining and ensure that mining operations are conducted transparently and legally. The Constitution of India mandates that natural resources are to be used for the benefit of the people and not for the benefit of a few individuals. The provisions of the Mines and Minerals (Development and Regulation) Act, 1957 and Mineral Concession Rules, 1960 are in consonance with the constitutional mandate.

Arguments

Appellant’s Submissions:

  • The appellant argued that he acted in good faith and followed the established practice of the department.
  • He contended that the reconstitution of the firm did not require prior approval under Rule 37 of the Rules, as the mining lease remained with the firm, not the individual partners.
  • The appellant stated that he had consulted the Deputy Director (Legal) who had verbally advised that the permits could be issued in the name of the company.
  • He relied on Section 27 of the Act, which protects acts done in good faith.
  • The appellant argued that the charge-sheet and allegations revolve around Section 420 of the IPC, and there was no evidence of criminal conspiracy.
  • The appellant argued that the High Court erred in holding that the Trial Court had transgressed its jurisdiction by sifting and weighing the evidence at the stage of framing charges
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Respondent’s Submissions:

  • The CBI argued that the appellant had violated Rule 37 of the Rules by directing the issuance of MDPs without prior government approval.
  • The CBI contended that the Deputy Director (Legal) denied advising the appellant, contradicting the appellant’s claim.
  • The CBI asserted that there was enough incriminating evidence to establish a criminal conspiracy.
  • The CBI argued that the High Court was right in holding that there was grave suspicion against the appellant.
Main Submission Sub-Submissions (Appellant) Sub-Submissions (Respondent)
Whether the Appellant violated Rule 37 of the Mineral Concession Rules, 1960?
  • Reconstitution of firm does not require prior approval under Rule 37 as lease remains with the firm.
  • He acted in good faith and followed established departmental practice.
  • Appellant violated Rule 37 by directing issuance of MDPs without prior government approval.
  • Deputy Director (Legal) denied advising the appellant.
Whether there was a criminal conspiracy?
  • No evidence of criminal conspiracy.
  • Charge-sheet and allegations revolve around Section 420 of the IPC.
  • Incriminating evidence to establish criminal conspiracy.
Whether the Trial Court erred in discharging the Appellant?
  • Trial Court rightly discharged the appellant.
  • High Court was right in holding that the Trial Court had transgressed its jurisdiction.
  • There was grave suspicion against the appellant.

Innovativeness of the argument: The appellant’s argument that the reconstitution of the firm did not require prior approval under Rule 37 of the Rules, as the mining lease remained with the firm, not the individual partners, was innovative, as it challenged the conventional interpretation of the rule.

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

  1. Whether the High Court was correct in setting aside the order of the Magistrate discharging the appellant?

Treatment of the Issue by the Court

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

Issue Court’s Decision Brief Reasons
Whether the High Court was correct in setting aside the order of the Magistrate discharging the appellant? Upheld the High Court’s decision. The Supreme Court held that at the stage of framing charges, the defence of the accused cannot be looked into. The Court found that there was grave suspicion against the appellant based on the prosecution’s evidence. The Court held that the appellant’s version that he had consulted the Deputy Director (Legal) and acted on his advice, and that the practice of the department was to not seek prior approval in cases of reconstitution of the firm, were matters of defence which could not be considered at the stage of framing of charges.

Authorities

The Supreme Court considered the following authorities:

Authority Court How the Authority was Considered
Sree Ramakrishna Mining Company v. Commissioner of Income-Tax, Mysore [1966 SCC Online Kar 73 / ILR 1966 Mys. 1945] High Court of Mysore The Trial Court relied on this case to support the argument that reconstitution of a firm does not amount to transfer of a lease. The Supreme Court distinguished this case, noting that the provision under consideration in that case was different from Rule 37 of the Mineral Concession Rules, 1960.
P. Vijayan v. State of Kerala [(2010) 2 SCC 398] Supreme Court of India This case was cited to lay down the principles for discharge under Section 227 of the Cr.PC.
State of J & K v. Sudershan Chakkar [AIR 1995 SC 1954] Supreme Court of India This case was cited to emphasize that the defence of the accused is not to be looked into at the stage of discharge.
State of Orissa v. Debendra Nath Padhi [AIR 2005 SC 359] Supreme Court of India This case was cited to emphasize that at the stage of framing of the charge, the submission of the accused is to be confined to the material produced by the Police.

The Supreme Court also considered the following legal provisions:

  • Section 27 of the Mines and Minerals (Development and Regulation) Act, 1957: This section provides protection for acts done in good faith under the Act.
  • Section 227 of the Code of Criminal Procedure, 1973 (Cr.PC): This section deals with the discharge of an accused person.
  • Rule 62 of the Mineral Concession Rules, 1960: This rule deals with the intimation of reconstitution of a firm to the Department of Geology.

Judgment

Submission of the Parties How the Court Treated the Submission
Appellant’s submission that he acted in good faith and followed departmental practice. The Court held that the defence of the accused is not to be looked into at the stage of discharge. The Court noted that the appellant’s claim that he acted in good faith and followed departmental practice were matters of defence which could not be considered at the stage of framing of charges.
Appellant’s submission that he consulted the Deputy Director (Legal). The Court noted that the Deputy Director (Legal) had denied giving any such opinion. The Court held that this contradiction was a matter of grave suspicion against the appellant. The Court held that the appellant’s version that he had consulted the Deputy Director (Legal) and acted on his advice, was a matter of defence which could not be considered at the stage of framing of charges.
Appellant’s submission that the reconstitution of the firm did not require prior approval under Rule 37. The Court distinguished the case of Sree Ramakrishna Mining Company (supra) and held that Rule 37 of the Mineral Concession Rules, 1960 required prior approval. The Court held that the appellant’s submission that the reconstitution of the firm did not require prior approval was a matter of defence which could not be considered at the stage of framing of charges.
Respondent’s submission that the appellant violated Rule 37 of the Mineral Concession Rules, 1960. The Court upheld the High Court’s decision that there was grave suspicion against the appellant for violating Rule 37 of the Mineral Concession Rules, 1960.
Respondent’s submission that there was enough incriminating evidence to establish a criminal conspiracy. The Court did not go into the merits of the evidence on the issue of criminal conspiracy. The Court held that there was grave suspicion against the appellant and that the High Court was right in setting aside the order of the Magistrate discharging the appellant.
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How each authority was viewed by the Court?

  • Sree Ramakrishna Mining Company v. Commissioner of Income-Tax, Mysore [1966 SCC Online Kar 73 / ILR 1966 Mys. 1945]: The Court distinguished this case, noting that the provision under consideration in that case was different from Rule 37 of the Mineral Concession Rules, 1960.
  • P. Vijayan v. State of Kerala [(2010) 2 SCC 398]: The Court relied on this case to lay down the principles for discharge under Section 227 of the Cr.PC.
  • State of J & K v. Sudershan Chakkar [AIR 1995 SC 1954]: The Court relied on this case to emphasize that the defence of the accused is not to be looked into at the stage of discharge.
  • State of Orissa v. Debendra Nath Padhi [AIR 2005 SC 359]: The Court relied on this case to emphasize that at the stage of framing of the charge, the submission of the accused is to be confined to the material produced by the Police.

What weighed in the mind of the Court?

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

  • The Court emphasized that at the stage of framing charges, the defence of the accused cannot be considered.
  • The Court found that there was a grave suspicion against the appellant based on the prosecution’s evidence, particularly the contradiction between the appellant’s claim of having consulted the Deputy Director (Legal) and the Deputy Director’s denial.
  • The Court noted that the appellant had not obtained prior approval from the State Government as required under Rule 37 of the Mineral Concession Rules, 1960.
  • The Court held that the Trial Court had erred in considering the defence of the accused at the stage of framing charges.
Sentiment Percentage
Emphasis on not considering the defence of the accused at the stage of framing charges 30%
Grave suspicion against the appellant due to contradiction between appellant’s claim and Deputy Director (Legal)’s denial 40%
Violation of Rule 37 of the Mineral Concession Rules, 1960 20%
Trial Court’s error in considering defence at the stage of framing charges 10%
Ratio Percentage
Fact 30%
Law 70%

The Supreme Court’s decision was more influenced by legal considerations (70%) than factual aspects of the case (30%). The Court focused on the legal principles governing the framing of charges and the interpretation of Rule 37 of the Mineral Concession Rules, 1960.

Logical Reasoning

Letter from AMC partners seeking MDPs

↓

Subordinates recommend legal opinion

↓

Appellant claims to have consulted Deputy Director (Legal)

↓

Deputy Director (Legal) denies giving opinion

↓

Appellant directs issue of MDPs without prior government approval

↓

Grave suspicion of violation of Rule 37

↓

High Court was correct in setting aside the order of the Magistrate discharging the appellant

The Court considered the appellant’s argument that he had acted in good faith and on the advice of the Deputy Director (Legal). However, the Court rejected this argument, noting that the Deputy Director (Legal) had denied giving any such opinion. The Court also noted that the appellant had not obtained prior approval from the State Government as required under Rule 37 of the Mineral Concession Rules, 1960. The Court emphasized that at the stage of framing charges, the defence of the accused cannot be considered. The Court held that there was grave suspicion against the appellant and that the High Court was right in setting aside the order of the Magistrate discharging the appellant.

The majority opinion did not discuss any alternative interpretations. The Court’s decision was based on the principle that at the stage of framing charges, the court is not to consider the defence of the accused, but only the materials produced by the prosecution. The Court found that the prosecution’s evidence was sufficient to raise a grave suspicion against the appellant.

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The Supreme Court upheld the High Court’s decision, stating that the High Court was correct in setting aside the order of the Magistrate discharging the appellant. The Court held that there was grave suspicion against the appellant and that the matter should proceed to trial. The Court emphasized that the observations made were only for the purpose of deciding the application under Section 227 of the Cr.PC and were not to trammel the Court.

“The Trial Judge is not a mere Post Office to frame the charge at the instance of the prosecution.”

“If the evidence, which the Prosecutor proposes to adduce to prove the guilt of the accused, even if fully accepted before it is challenged in cross-examination or rebutted by the defence evidence, if any, “cannot show that the accused committed offence, then, there will be no sufficient ground for proceeding with the trial”.”

“The defence of the accused is not to be looked into at the stage when the accused seeks to be discharged under Section 227 of the Cr.PC.”

There were no dissenting opinions in this case.

Key Takeaways

  • At the stage of framing charges, the court must only consider the evidence presented by the prosecution and not the defense of the accused.
  • A grave suspicion based on prosecution evidence is sufficient to frame charges against an accused.
  • Public servants are expected to adhere strictly to statutory provisions and cannot rely on past practices or verbal advice to justify violations.
  • The interpretation of Rule 37 of the Mineral Concession Rules, 1960, requires prior approval from the State Government for any transfer of mining lease, even in the case of reconstitution of a firm.

Directions

No specific directions were given by the Supreme Court in this case, other than the order to proceed with the trial.

Development of Law

The ratio decidendi of this case is that at the stage of framing charges, the court must only consider the evidence presented by the prosecution and not the defence of the accused. The Court also clarified the interpretation of Rule 37 of the Mineral Concession Rules, 1960, holding that prior approval from the State Government is required for any transfer of mining lease, even in the case of reconstitution of a firm. This judgment reinforces the principle that public servants must adhere strictly to statutory provisions and cannot rely on past practices or verbal advice to justify violations.

Conclusion

The Supreme Court upheld the High Court’s decision to set aside the Magistrate’s order discharging the appellant. The Court emphasized that at the stage of framing charges, the defense of the accused cannot be considered and that the prosecution’s evidence was sufficient to raise a grave suspicion against the appellant. The Court’s decision reinforces the importance of adhering to statutory provisions and the need for public servants to act with utmost integrity.

Category

Parent Category: Criminal Law

  • Child Category: Prevention of Corruption Act, 1988
  • Child Category: Indian Penal Code, 1860
  • Child Category: Code of Criminal Procedure, 1973
  • Child Category: Mines and Minerals (Development and Regulation) Act, 1957
  • Child Category: Mineral Concession Rules, 1960

Parent Category: Prevention of Corruption Act, 1988

  • Child Category: Section 13(2), Prevention of Corruption Act, 1988
  • Child Category: Section 13(1)(c), Prevention of Corruption Act, 1988
  • Child Category: Section 13(1)(d), Prevention of Corruption Act, 1988

Parent Category: Indian Penal Code, 1860

  • Child Category: Section 120B, Indian Penal Code, 1860
  • Child Category: Section 420, Indian Penal Code, 1860
  • Child Category: Section 379, Indian Penal Code, 1860
  • Child Category: Section 409, Indian Penal Code, 1860
  • Child Category: Section 447, Indian Penal Code, 1860
  • Child Category: Section 468, Indian Penal Code, 1860
  • Child Category: Section 471, Indian Penal Code, 1860
  • Child Category: Section 477A, Indian Penal Code, 1860

Parent Category: Code of Criminal Procedure, 1973

  • Child Category: Section 227, Code of Criminal Procedure, 1973

Parent Category: Mines and Minerals (Development and Regulation) Act, 1957

  • Child Category: Section 27, Mines and Minerals (Development and Regulation) Act, 1957

Parent Category: Mineral Concession Rules, 1960

  • Child Category: Rule 37, Mineral Concession Rules, 1960
  • Child Category: Rule 62, Mineral Concession Rules, 1960

FAQ

Q: What is the main issue in this case?

A: The main issue is whether the High Court was correct in setting aside the order of the Magistrate discharging the appellant, a Director of Mines and Geology, in a case involving allegations of illegal mining.

Q: What is Rule 37 of the Mineral Concession Rules, 1960?

A: Rule 37 states that a mining lease cannot be transferred without the prior consent of the State Government. This includes any changes in the partnership of a firm holding a mining lease.

Q: What did the Supreme Court decide about the stage of framing charges?

A: The Supreme Court held that at the stage of framing charges, the court should only consider the evidence presented by the prosecution and not the defense of the accused.

Q: What is the significance of this judgment for public servants?

A: This judgment emphasizes that public servants must strictly adhere to statutory provisions and cannot rely on past practices or verbal advice to justify violations. They must act with utmost integrity and transparency.

Q: What does this mean for future cases?

A: This judgment clarifies that at the stage of framing charges, the court is not to consider the defence of the accused, but only the materials produced by the prosecution. This will have implications for future cases involving discharge applications under Section 227 of the Cr.PC.

Source: M.E. Shivalingamurthy vs. Central Bureau of Investigation