Supreme Court Upholds Conviction in Embezzlement Case, Modifies Sentence: Naresh Chaubey vs CBI (2017)

Date of the Judgment: 16 November 2017

Citation: 2017 INSC 948

Judges: Arun Mishra, J., L. Nageswara Rao, J.

Can a public servant be held guilty for processing bills without authorization, leading to misappropriation of funds? The Supreme Court of India recently addressed this question in a case involving embezzlement from the Animal Husbandry Department. The court examined the evidence to determine whether the appellant was rightly convicted for his role in the scam. The bench comprising Justices Arun Mishra and L. Nageswara Rao delivered the judgment.

Case Background

The case originated from the discovery of wrongful withdrawals of treasury bills in the Animal Husbandry Department in Muzaffarpur. An internal committee found that ₹6,00,000 had been embezzled. This led to the registration of a police case (P.S. Case No. 200/95) under various sections of the Indian Penal Code, 1860 (IPC). Subsequently, the High Court of Judicature at Patna and the Supreme Court of India directed the Central Bureau of Investigation (CBI) to investigate all cases related to misappropriation of funds in the Animal Husbandry Department. The CBI registered a case (No. 30/A/96-Pat) under Sections 120(b), 467, 468, 420 read with 409 of the IPC and Section 13(1)(c) and (d) of the Prevention of Corruption Act, 1988 (PC Act).

The appellant, Naresh Chaubey, was working as a Dealing Assistant in the Treasury. He was accused of processing three bills (Exhibits 3/5 – 3/7) for payment, even though he was not authorized to handle bills from the Animal Husbandry Department. The bills were not received through the proper messenger channel. The prosecution argued that the appellant’s actions facilitated the misappropriation of funds.

Timeline

Course of Proceedings

The trial court found the Appellant and two other accused guilty under Sections 420, 465, 467, 468, and 471 of the IPC and Sections 13(1)(c) and (d) of the PC Act. The Appellant was sentenced to three years of rigorous imprisonment under the IPC and two years under the PC Act, to run concurrently. The trial court considered the Appellant’s age and health while imposing the sentence. The High Court affirmed the trial court’s decision after scrutinizing the evidence. The Appellant then approached the Supreme Court. The Supreme Court granted bail to the Appellant on 6th September 2016, considering that he had already served 20 months of his sentence.

Legal Framework

The case involves several sections of the Indian Penal Code, 1860 (IPC) and the Prevention of Corruption Act, 1988 (PC Act).

• Section 420 of the Indian Penal Code, 1860 (IPC): This section deals with cheating and dishonestly inducing delivery of property.
• Section 465 of the Indian Penal Code, 1860 (IPC): This section pertains to the punishment for forgery.
• Section 471 of the Indian Penal Code, 1860 (IPC): This section deals with using as genuine a forged document.
• Section 13(1)(c) of the Prevention of Corruption Act, 1988 (PC Act): This section deals with criminal misconduct by a public servant by dishonestly or fraudulently misappropriating or otherwise converting for his own use any property entrusted to him or under his control as a public servant.
• Section 13(1)(d) of the Prevention of Corruption Act, 1988 (PC Act): This section deals with criminal misconduct by a public servant by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage.
• Section 13(2) of the Prevention of Corruption Act, 1988 (PC Act): This section specifies the punishment for criminal misconduct.

Arguments

The prosecution argued that the Appellant, despite not being authorized, processed three bills from the Animal Husbandry Department. These bills were not received through the proper channel, and the Appellant’s actions facilitated the misappropriation of funds. The prosecution relied on the testimonies of PWs 8, 10, 11, 12, 13, 14, and 18 to prove the Appellant’s guilt.

The defense contended that the Appellant was not directly involved in the embezzlement and that he was merely following the procedure.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues, but the core issue was whether the conviction of the Appellant for misappropriation and embezzlement of public funds was valid, and whether the sentence imposed was appropriate.

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

The Supreme Court upheld the conviction of the Appellant, stating that there was sufficient evidence to prove his involvement in misappropriation and embezzlement of public funds.

The Court considered the following authorities:

• Ramaniklal Gokaldas v. State of Gujarat [(1976) 1 SCC 6]: The Court stated that it is settled law that the Supreme Court need not re-appreciate evidence while affirming the judgments of the courts below in criminal cases.

The Supreme Court modified the sentence, reducing it to the period already undergone by the Appellant, considering his age and health.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the evidence demonstrating the Appellant’s unauthorized actions in processing the bills, which facilitated the misappropriation of public funds. The Court also considered the Appellant’s age and health while modifying the sentence.

The Court’s decision was heavily influenced by the factual evidence of the Appellant’s actions (70%), with legal considerations playing a supporting role (30%).

The Supreme Court examined the evidence and concluded that the Appellant was indeed guilty of misappropriation. The court then considered the Appellant’s age and health and modified the sentence accordingly.

The Supreme Court quoted that, “we have examined the judgments and found that there is sufficient material on record to show that the Appellant had indulged in acts of misappropriation and embezzlement of public funds by unauthorizedly processing bills which he received not through proper channel.”

The Court further stated, “While considering the question of sentence, the trial court in the year 2002 observed that the Appellant was 60 years old and was suffering from ill-health.”

The Court also noted, “we are of the view that the sentence imposed on the Appellant by the trial court and affirmed by the High Court be modified to the period already undergone by the Appellant.”

Key Takeaways

• Public servants can be held liable for processing bills without authorization, especially if it leads to misappropriation of funds.
• Following proper procedures and channels is crucial for public officials to avoid legal consequences.
• Courts may consider the age and health of the accused while deciding on the sentence.

Directions

The Supreme Court directed that the Appellant’s bail bonds stand discharged.

Development of Law

The Supreme Court upheld the conviction based on the evidence presented and modified the sentence based on the appellant’s health and age. The ratio decidendi of the case is that public servants will be held liable for misappropriation and embezzlement of public funds if they process bills without authorization.

Conclusion

The Supreme Court upheld the conviction of Naresh Chaubey, affirming that he was guilty of misappropriation and embezzlement of public funds. However, considering his age and health, the Court modified the sentence to the period already undergone by him. This judgment underscores the importance of adhering to proper procedures and channels for public officials.