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12 Jun

Balancing Act: Supreme Court’s Judicious Intervention in FCRA Investigation.

Blog, Supreme court # Supreme court of India, #CBI, #special leave petition, Contempt petition, Foreign Contribution (Regulation) Act 2010, Prime Legal

Case No.: 105 of 2024 (Contempt Petition) with SLP(CRL.) D. NO. 4235 OF 2021.
Date: April 5, 2024.
Court: Supreme Court of India.
Quorum: Hon’ble J. Vikram Nath, J. Prashant Kumar Mishra.

Facts of case:
This case arises from an FIR (No. 22 of 2016) lodged by the respondent against Operation Mobilization India & Others, the petitioners, under Sections 409, 420, 477(A), and Section 37 of the Foreign Contribution (Regulation) Act 2010. The Economic Offences Wing (CID), Telangana State, took up the investigation into alleged criminal breach of trust, cheating, falsification of accounts, and violations of the FCRA by the petitioners. The challenge to the FIR was rejected by the Supreme Court in a case in 2017, and the investigation was directed to be concluded promptly. However, there was only a slow progress, leading the informant to file another petition. The Supreme Court observed that if the petitioner had any grievance with the progress, they must approach the appropriate forum, including the High Court.
In 2019, the respondent filed a writ petition before the High Court, seeking directions for the investigation to be conducted by the CBI. The CBI, filed a counter affidavit declining any role in the investigation, citing reasons mentioned in the matter. On November 2020, after more than four years of the FIR registration, the CID Telangana State froze the accounts of petitioners, which included Operation Mobilization India, involved in running educational institutions and healthcare centres across India. The petition approached the High Court challenging the freezing of their accounts, but the High Court rejected it. Aggrieved by the High Court’s order, the petitioners filed a Special Leave Petition before the Supreme Court, seeking the relief against the freezing of accounts, which was required for the operations and payment of salaries and expenses.

Legal issues:
1. Whether the CID Telangana State is authorized to investigate cases under the FCRA involving an amount of more than Rs. 1 crore?
2. Whether the order freezing the accounts of the petitioners should be stayed to allow them to pay salaries and institutional expenses?

Legal provisions:
1. Indian Penal Code,1860
• Section 409 – Criminal breach of trust by a public servant.
• Section 420 – Cheating and dishonestly inducing delivery of property.
• Section 477A – Falsification of accounts.

2. Section 37 of the Foreign Contribution (Regulation) Act, 2010 which prescribes the punishment for contravention of any provision of the Act.

Contentions of petitioners:
The learned counsel for the petitioner mainly contented that the CID-TS lacked the authority to investigate cases under the FCRA when the amount involved exceeded Rs. 1 crore. They relied on the notification issued by the Ministry of Home Affairs, which designated the CBI as the competent authority to conduct investigation in FCRA cases involving amounts above Rs. 1 crore as per as their claim. The petitioners challenged the CID-TS’s order on November 2020, which froze their accounts. They contended that this action hampered their ability to carry out essential operations, including paying salaries to employees and meeting expenses in educational institutions and healthcare centres across 18 states in India. The petitioners argued that there was inordinate delay and lack of progress in the investigation and these were unjustified. The petitioners stated that they were willing to maintain a proper and complete statements of accounts for their institutional and salary expenses, get them audited by Chartered Accountants, and provide regular quarterly statements to the investigating agency or the Trial Court. This demonstrated their commitment to transparency and accountability in the use of funds. The petitioners sought interim relief from the Supreme Court by requesting a stay on the order freezing their accounts. They argued that this would enable them to continue their operations, particularly the payment of salaries and meeting institutions expenses, without disrupting he educational and healthcare services they provided to thousands of beneficiaries across the country.

Contentions of respondents:
The learned counsel for the respondents argued that the respondent through its letter to the Ministry of Home Affairs, expressed doubts about the jurisdiction of the CID-TS to investigate cases under the FCRA involving amounts more than Rs. 1 crore. This was written after the Supreme Court issued notice in the present case, indicating the state’s uncertainty about its investigative authority in such matters. In the same letter, the State of Telangana sought clarification and directions from the Ministry of Home Affairs on whether to permit the CID-TS to continue the investigation to the CBI. While the respondent admitted that petitioner ran numerous educational institutions and healthcare centres across the country, necessitating the availability of funds, they insisted on strict compliance with accounting practices. The respondents contended that the petitioners should maintain proper and complete statements of accounts, duly audited by CAs and make them available to the investigating agency regularly.
The respondents raised questions about the petitioners’ conduct and alleged violations of the FCRA and other provisions of the IPC. They argued that the freezing of accounts was a justified measure in light of the alleged offenses and the need to preserve evidence and prevent further misappropriation of funds. They challenged the claims of petitioner regarding the maintenance of accounts and the use of funds solely for institutional and salary expenses pointing towards potential misuse of funds or diversion of resources, necessitating a thorough investigation of the accounts. The respondents insisted on the continuation of the investigation should proceed unhindered, subject to the Court’s directions on maintaining audited accounts and providing regular statements.

Analysis of the Judgement:
The Supreme Court took note of the respondent’s admission, through its letter to the Ministry of Home Affairs, expressing doubts about the CID-TS’s authority to investigate cases under the FCRA involving amounts exceeding Rs. 1 crore. This letter raised question about the jurisdiction and competence of the state agency to handle such high – value FCRA cases. The Court recognised the need to find a balance between allowing the investigation to proceed and ensuring that the petitioner’s essential operations were not disrupted. This consideration arose from the contention by petitioner that the freezing of accounts has interfered their ability to pay salaries and meet expenses. The court granted interim relief by staying the order freezing the accounts insofar as salary and institutional expenses are concerned. This enabled the petitioners to continue their operations and uphold the public interest in maintaining the functioning of institutions and facilities. However, the court imposed conditions to ensure accountability in the use of fund by petitioners. It directed them to maintain proper and complete statements of accounts from institutional and salary expenses from the frozen accounts, get these accounts audited by charters accountants, and provide quarterly statements to the concerned authorities. The order aimed to ensure smooth functioning of 103 educational institutions and dozens of primary healthcare centres run by the petitioners. The Court allowed the pending proceedings before other forums to continue in accordance with the law, where parties could raise their contentions. It clarified that it had not made any observations on the merits of the case and the order was passed only to ensure the functioning of centres by recognising the public interest behind them.

Conclusion
The decision in this case demonstrates a judicious approach in addressing the concerns of both parties while prioritizing the functioning of the petitioners’ centres. It ensures the accountability and transparency in the use of funds. The judgement also highlights the need for clarity on investigative authority in FCRA cases involving large sums of money. Overall, the judgement strikes a balance between public interest and preserving the rights of all parties involved in the petition.

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Judgement reviewed by Maria Therese Syriac.

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25 Mar

Delhi Excise Policy Case: AAP Leaders involvement in Liquor Scam

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Articles #AAP leaders, #arrest, #BRS leader Kavitha, #CBI, #delhi, #Delhi Excise Policy, #Delhi HC, #ED, #Kejiriwal, #Money Laundering, #scam, #Sisodia

Introduction

The controversial Delhi Excise Policy 2021-22 was introduced on November 17, 2021 with an aim to revolutionize the liquor retail landscape in the capital. Its objectives were to maximize revenue for the state, combat liquor mafia and black marketing, improve the consumer experience and ensure equitable distribution of liquor vends. It marked the withdrawal of the government from the business of selling liquor and allowed only private operators to run the liquor shops. The government also made the rules flexible for licensees, such as allowing them to offer discounts and set their own prices instead of selling on MRP fixed by the government. These reforms increased the Government’s revenue by 27 percent, generating around Rs. 8900 crore.

Under the new policy, the city was divided into 32 zones inviting firms to bid on the zones. Instead of individual licences, bidding was done zone-by-zone. Each municipal ward would have 2-3 vends. Also, licenses for 849 retail vends were issued through open bidding by the Excise department as opposed to 475 liquors shops run by the four government agencies, and 389 by the private operators under the old liquor policy.

For the first time, shops were allowed to offer discounts to retail customers, which attracted crowds and reduced the number of dry days from 21 to 3. The new policy also had a provision for home delivery of liquor. It even proposed lowering the drinking age from 25 to 21. It also suggested the opening of shops till 3 am. However, these were not implemented.

However, after a series of vehement opposition and allegations of procedural irregularities the Government of Delhi withdrew the policy on August 1st, 2022 and reverted to the old excise regime.

Report of Chief Secretary

The Chief Secretary found procedural lapses and irregularities in the new policy and submitted a report on the same to the Lieutenant Governor and Chief Minister of Delhi. According to the report, Manish Sisodia, Head of the Excise Department was accused of making changes to the excise policy without the approval of the L-G, such as allowing a waiver of Rs 144.36 crore on the tendered licence fee. Further, the arbitrary and unilateral decisions taken by then Minister resulted in financial losses to the exchequer, estimated at more than Rs 580 crore.

The law governing this subject states that if any changes are made to a policy that has already been implemented, the excise department needs to place them before the cabinet, and forward it to the L-G for final approval. However, the changes made by the Deputy CM did not comply with these mandates. Therefore, the policy implemented without the approval of the cabinet and L-G was illegal, and violative of the Delhi Excise Rules, 2010 and the Transaction of Business Rules, 1993.

Timeline of Events leading to the Arrest of AAP leaders

July 8, 2022: Chief Secretary submits report to L-G office alleging procedural lapses in excise policy implementation. L-G writes to MHA recommending CBI inquiry in matter.

July 30: Sisodia says Government to revert to old excise policy

Aug 6: L-G nod to suspend ex-excise commissioner, IAS officer Arava Gopi Krishna, Dy Commissioner Anand Tiwari

Aug 17: CBI files FIR

Aug 19: CBI Raids Deputy Chief Minister Manish Sisodia and Others on Delhi LG’s Recommendation, followed by Enforcement Directorate’s money laundering probe on liquor policy.

Sept 28 : CBI arrests Vijay Nair, the Aam Aadmi Party’s Chief of Communications.

Oct 10: CBI arrests Abhishek Boinpally

Nov 14: ED arrests Boinpally and Nair

Nov 24: CBI files Cargesheet; names 7

November 26: ED files first prosecution complaint/ chargesheet. Alleges excise policy “formulated with deliberate loopholes”, which “promoted cartel formations through back door” to benefit AAP leaders

January 6, 2023: ED files second prosecution com- plaint/supplementary chargesheet claiming CM allegedly spoke to one of main accused, Sameer Mahendru, asked him to continue working with co-accused Nair who he referred to as “his boy”.

January 14: CBI visits Sisodia’s office. He calls it “raid”, CBI denies

February 19: Sisodia says CBI called him for questioning again. Seeks week’s time

February 26: Sisodia arrested

March 2023: The Enforcement Directorate detains Manish Sisodia, the former deputy chief minister of Delhi.

October: AAP Leader Sanjay Singh is arrested by the Enforcement Directorate, and the first summons is issued to Delhi CM Arvind Kejriwal in connection with the liquor policy fraud.

November 2023: On November 2, Kejriwal flies to Singrauli, Madhya Pradesh, to address a political rally instead of responding to the ED’s first summons.

December 2023: Kejriwal ignores the second summons, saying it is ‘illegal and politically motivated’. The ED sends Kejriwal a third summons to appear for questioning on January 3.

January 2024: Kejriwal misses the third summons for alleged conspiracy by the Central government. In the same month, the ED issues a fourth summons to the Aam Aadmi Party (AAP) convenor, asking him to appear for questioning on January 18. Kejriwal responds to the Enforcement Directorate’s summons to him, asking the agency why notices were issued. The ED follows up by issuing its fifth summons.

February 2024: For the fifth time, Kejriwal ignores the Enforcement Directorate’s summons. An ED court filing from February said that the AAP politician was not following the summons. Kejriwal was granted a one-day reprieve from making a personal appearance by a Delhi court in February.

March 2024: In response to two allegations from the ED against Kejriwal for allegedly ignoring its summonses in the case, a sessions judge grants him bail.

Chief Minister Arvind Kejriwal files a petition with the Delhi High Court challenging ED summonses. He informed the Delhi High Court that he will not appear before the Enforcement Directorate due to a “clear intent” to arrest him during the upcoming elections.

The Delhi High Court refused to provide Kejriwal any protection from coercive action. Consequently, Kejriwal petitioned before the Supreme Court for protection against any coercive action by the ED.

Therefore, on account of ignoring nine summonses issued by the agency for questioning, the ED arrests Delhi Chief Minister Arvind Kejriwal.

Matter referred to CBI

The report of the Chief Secretary was referred to the CBI, which subsequently, led to the arrest of the then Delhi Deputy CM Manish Sisodia. 14 members belonging to AAP party were also made accused in its FIR.

Enforcement Directorate role in the case

Two cases, one by CBI and one on alleged money laundering being investigated by ED, have been registered in relation to the excise policy. The ED told the court that the alleged proceeds of crime amounted to more than Rs 292 crore, and that it was necessary to establish the modus operandi.

Manish Sisodia arrested in February 2023

AAP leader Sisodia has been under judicial custody since February 26 last year, after he was arrested by the CBI, which is also probing the “procedural lapses” in the policy execution. Sisodia is alleged to have “destroyed evidence” by changing his phone frequently, and the profit margin for wholesalers has been changed from 5 per cent to 12 per cent, among other accusations.

The case investigation began two months after Delhi LG VK Saxena assumed office in May 2022. He recommended a CBI probe into the malafide activities around the repealed policy.

BRS leader K Kavitha arrested on March 15

The Bharat Rashtra Samithi (BRS) leader K Kavitha also approached the Supreme Court over a plea against her arrest in the same probe. However, the court refused to take up her petition and asked her to approach the trial court first. Kavitha is alleged to have “plotted” with Kejriwal and jailed former Delhi deputy CM Manish Sisodia to get “favours” in excise policy. The agency claims that she is linked to a “south group” which paid about Rs 100 crore to AAP for skewing the policy in their favour.

Kejriwal arrested on March 21^st 2023

The Chief Minister filed a challenged his arrest before the Supreme Court. But, when the Court directed to try the case first before the lower courts in the similar matter involving Kavitha, the Minister withdrew his suit and contested before the High Court. A fresh plea in HC against ED, has been filed seeking protection from any coercive action by the ED.

References

20 Feb

Sec 6A Of The Delhi Special Police Establishment Act Cannot Be Applied Retrospectively: Supreme Court

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Blog, blog #amendment, #CBI, #Constitution, #dpse, #retrospective, #SupremeCourt, #violative

Case title: CBI Vs R.R Kishore

Case no.: Criminal Appeal No.377 Of 2007

Decided on: 11.09.2023

Quorum: Hon’ble Justice Sanjay Kishan Koul, Hon’ble Justice Sanjiv Khanna, Hon’ble Justice Abhay S. Oka, Hon’ble Justice Vikram Nath, Hon’ble Justice J.K Maheshwari.

Hon’ble Justices stated that “once a law is declared to be unconstitutional, being violative of Part-III of the Constitution, then it would be held to be void ab initio, still born, unenforceable and non est in view of Article 13(2) of the Constitution and its interpretation by authoritative pronouncements. Thus, the declaration made by the Constitution Bench in the case of Subramanian Swamy will have retrospective operation. Section 6A of the DSPE Act is held to be not in force from the date of its insertion i.e. 11.09.2003.”

BRIEF FACTS:

The story begins with the CBI registering an FIR against a Radiologist for offences under the Prevention of Corruption Act, 1988. Later they laid a trap and the radiologist is said to have accepted a bribe. A charge sheet was filed and before the Special Judge and the Radiologist filed a discharge petition. The main contention in that petition was that the trap which was a part of the enquiry/investigation had been laid without the previous approval of the Central Government as provided under Section 6A of the Delhi Special Police Establishment Act, 1946. Though the Special Judge rejected this discharge plea, the High Court of Delhi allowed his revision petition and held that the CBI acted in contravention of Section 6A DSPE Act. Against this judgment, the CBI approached the Apex Court.

During the pendency of this appeal, the constitution bench judgment Subramanian Swamy vs. Director, Central Bureau of Investigation was delivered, which held that Section 6A(1) of the DSPE Act was held to be invalid.

So when the appeal came up before the bench again, the CBI contended that Section 6A(1) has been declared to be unconstitutional, the judgment of the High Court deserves to be set aside and the prosecution should be allowed to continue with the proceedings from the stage of rejection of discharge application. In other words, the CBI contended that the Constitution bench judgment striking down Section 6A would have retrospective effect. On the other hand, the accused contended that this judgment could not have any retrospective operation. The court has placed this case before the constitutional bench to decide the matter at hand.

COURT ANALYSIS AND JUDGEMENT:

Taking into account the nuance of Article 13(2), the court ruled that the State is prohibited from making any law that takes away or limits the rights conferred by Part-III, and that any law made in violation of this clause is void to the extent of the violation. Article 13(2) prohibits the making of any law, so it would apply to laws enacted after the Constitution’s inception, such as the case at hand. In this case, it has been determined that Section 6A of the DSPE Act violates Article 14 of Part III of the Constitution, rendering it void.

The court additionally clarified how the word “void” must be construed. It noted that “void” has been interpreted in a number of judgements of this Court from 1951 to the present, and has been given various names such as ‘non est’, ‘void ab initio’, ‘still born’, and ‘unenforceable’.

The court stated that once a statute is deemed unconstitutional for violating Part III of the Constitution, it is void ab initio, still born, unenforceable, and non-existent under Article 13(2) of the Constitution.

Hence, the appeal of CBI is allowed and set aside the order of high court.

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Written by – Surya Venkata Sujith

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26 Jan

JUDICIAL REVIEW: COURTS CANNOT DELVE INTO THE MATTERS OF INSTITUTION’S REGULATORY FRAMEWORKS

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blog, Blog #Adani, #CBI, #Hinderburg, #judgment, #law, #Regulations, #SEBI, #SupremeCourt

Case title: Vishal Tiwari vs Union of India & Ors.

Case no.: Writ Petition (C) no. 162 of 2023

Decided on: 03.01.2024

Quorum: Hon’ble Chief Justice of India Dr. D.Y Chandrachud, Hon’ble Justice J.B Pardiwala, Hon’ble Justice Manoj Misra.

FACTS OF THE CASE:

In February 2023, a batch of writ petitions filed before this Court under Article 32 of the Constitution raised concerns about the decline in investor wealth and market volatility caused by a drop in the Adani Group of Companies’ share prices.

Hindenburg Research, a “activist short seller,” allegedly caused the situation by publishing a report on the Adani group’s financial transactions on January 24, 2023. The report alleged, that the Adani group manipulated share prices and failed to disclose transactions with related parties and other relevant information in violation of SEBI regulations and securities legislation.

In WP (C) No.162 of 2023 the petitioner seeks the constitution of a committee monitored by a retired judge of this Court to investigate the Hindenburg Report.

In WP (C) No.201 of 2023, the petitioner claims that the Adani group has “surreptitiously controlled more than 75% of the shares of publicly listed Adani group companies, thereby manipulating the price of its shares in the market,” in violation of Rule 19A of the Securities Contracts (Regulation) Rules, 1957. The petitioner requests that the CBI or a Special Investigation Team conduct a court-monitored investigation into the fraud allegations and the alleged involvement of high-ranking officials of public sector banks and lending organisations.

In WP(Crl.) No. 57 of 2023, the petitioner requests that competent investigative agencies to (i) look into Adani Group transactions under the supervision of a sitting judge of this Court, and (ii) look into the involvement of the State Bank of India and the Life Insurance Corporation of India in these transactions.

In order to safeguard Indian investors from market volatility, the court stated that it was necessary to review and strengthen the financial sector’s current regulatory framework. This Court requested comments from the Solicitor General regarding the suggested formation of an Expert Committee for that reason.

The Court noted that SEBI had already taken over the investigation into the Adani group and ordered SEBI to proceed with the investigation, wrap it up in two months, and submit a status report to the Court.

Additionally, the court mandated the creation of an expert committee. This Court made it clear that SEBI and the Expert Committee would cooperate with one another. To put it another way, the SEBI investigation would continue unabated despite the Committee’s appointment. It is required of the Expert Committee to provide this Court with its report in a period of two months.

After that this Court received the Expert Committee’s report. The Court issued an order on May 17, 2023, granting SEBI an extension until August 14, 2023, for the submission of its investigation status report. Informing this Court of the progress of their twenty-four investigations, SEBI filed an interlocutory application on August 14, 2023. In addition, SEBI filed a status report describing the twenty-four investigations on August 25, 2023. SEBI has responded to the Expert Committee’s report, as has the petitioners’ legal representative.

LEGAL PROVISIONS:

The case is based on the Rule 19A of the Securities Contracts (Regulation) Rules 1957 which mandates a minimum of 25% public shareholding. The petitioners contended that By secretly controlling more than 75% of the shares of publicly listed Adani group companies, thereby manipulating the price of its shares in the market,” the Adani group is in violation of Rule 19A of the Securities Contracts (Regulation) Rules, 1957.

ISSUES RAISED:

Whether it is possible to seek judicial review of SEBI’s regulatory framework?

Whether the court has the power to transfer the investigation from SEBI to another agency or a SIT?

PETITIONERS CONTENTION:

Mr. Prashant Bhushan, appearing on behalf of the petitioner, broadly pressed his case for the following two requests: first, to establish a SIT to oversee the SEBI investigation into the Adani group and to have all such investigations court-monitored; and second, to direct SEBI to revoke certain amendments to the SEBI (Foreign Portfolio Investments) Regulations, 2014 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The investments by FPIs violate Rule 19A of the Securities Contracts (Regulations) Rules, 1957 which requires a minimum 25% public shareholding in all public-listed companies.

SEBI’sinabilitytoestablishaprimafaciecaseofregulatorynon-compliance and legal violations by the Adani group promoters despite starting an investigation in November 2020, appears to be prima facie self-inflicted. The unprecedented rise in the price of the Adani scrips occurred between January 2021 and December 2022, over a period when the Adani group was already under SEBI investigation.

They alleged that SEBI has wilfully delayed submitting its status report on the Adani group investigation within the time frame specified by this Court.

RESPONDENTS CONTENTION:

The respondents contended that SEBI has completed 22 of the 24 investigations it is currently conducting. In these investigations, enforcement actions/quasi-judicial proceedings would be initiated, where applicable. The delay by SEBI in filing the report is only ten days, which is unintentional and not wilful, given that twenty-four investigations were to be conducted.

They submitted that initially, the FPI Regulations permitted “opaque structures” under certain conditions, including the obligation to disclose beneficial owner information if requested. The subsequent amendment mandated the upfront disclosure of beneficial owners by FPIs. This rendered the disclosure clause redundant, resulting in its omission in 2019. The amendments tightened the regulatory framework by mandating disclosure requirements and eliminating the requirement to disclose only when requested.

COURT ANALYSIS AND JUDGMENNT

The court on judicial review held that the courts do not and cannot act as appellate authorities determining the correctness, suitability, and appropriateness of a policy, nor are courts advisors to expert regulatory agencies on policy matters that they have the authority to formulate. When examining a policy formulated by a specialised regulator, the scope of judicial review is to determine whether it (i) violates citizens’ fundamental rights; (ii) is contrary to Constitutional provisions; (iii) contradicts a statutory provision; or (iv) is manifestly arbitrary. Judicial review focuses on the policy’s legality, rather than its wisdom or soundness.

It held that the statutory regulator should not intervene in the policies that result from technical questions, especially in the fields of economics and finance, when experts in the field have voiced their opinions and the regulator has taken due consideration. As a regulatory, adjudicatory, and prosecutorial body, SEBI’s wide-ranging powers, expertise, and strong information-gathering system give its decisions a great degree of credibility. As such, this Court must be aware of the public interest guiding SEBI’s operations and refrain from imposing its own judgement on SEBI’s decisions.

The court on transfer of investigation has held that the authority to create a SIT or transfer an investigation from a recognised agency to the CBI. These kinds of authority ought to be applied rarely and only in dire situations. Generally speaking, the court will not substitute the authority vested with the investigative power unless it is demonstrated that the authority vested with the investigative power acted blatantly, intentionally, and wilfully ignorant of the facts. In the absence of the authority to transfer, the court may not use such powers unless there is a strong case showing that justice will likely be compromised.

The court also said that the petitioner must provide compelling evidence that the investigating agency was biased or that the investigation was inadequate. Only very rare and extraordinary situations may warrant the transfer of an investigation to an agency like the CBI. Furthermore, since the only thing that can be pleaded for is that the offence be thoroughly investigated, no one can demand that the offence be looked into by a particular agency.

Written by – Surya Venkata Sujith

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20 Jul

The confiscation order be modified, instead of ordering forfeiture of all the property opines Madras High Court.

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blog, Blog #CBI, #confiscation, #forfeiture, #Justice G. Jayachandran, #MadrasHighCourt

TITLE: D. Balasankaralingam Vs. State by Inspector of Police, CBI.

Decided On: July 17, 2023.

Crl.A.No.3 of 2009 and Crl.MP.No.660 of 2022.

CORAM: Hon’ble Mr. Justice G.Jayachandran.

Introduction:

Criminal Appeal has been filed under section 374 (2) of Criminal Procedure Code, against the judgment of the learned Additional Special Judge for CBI Cases, Chennai in CC.No.38 of 1999 dated 30.12.2008 convicting the Accused No.1/Appellant herein for the offence under Section 13(2) r/w 13(1)(d) of P.C.Act 1988 and sentencing him to undergo five years R.I and to pay a fine of Rs.1,00,000/- and in default of payment of fine to undergo imprisonment for a period of one year and convicting Accused No.2/Appellant herein for the offence under Section 109 IPC r/w Section 13(2) r/w Section 13(1)(e) of P.C.Act 1988 and sentencing to undergo a period of 3 years and a fine of Rs.10,000/- in default to undergo imprisonment for a period of three months.

Facts:

The appellants Balasankaralingam and Jayalakshmi are husband and wife. The first appellant Balasankaralingam is a public servant who joined the Customs Department as Preventive Officer in the year 1977. While he was serving as Superintendent (Preventive) of Customs prosecuted for possession of assets disproportionate to the known source of income.His wife Jayalakshmi was prosecuted for abetting him to commit the said offence. The Criminal law was set into motion after the residential premises of the first appellant Balasankaralingam was searched on 19.02.1997. During the search, liquid cash of Rs.8,81,540/- was recovered from his residence. Search of two bank lockers operated in the name of his wife Jayalakshmi/ the second accused/second appellant led to further recovery of Rs.5,25,000/- and Rs.25,00,000/- respectively. The search also led to recovery of cash bills, invoices, share certificates, FD receipts, sale deeds, LIC Policies, UTI Units and other incriminating materials. The investigation had brought to light that Balasankaralingam who joined service on 08.12.1977 was terminated from service on 08.01.1980 pursuant to departmental enquiry. Later, he was reinstated in service as Preventive Officer on 15.12.1987 based on the orders passed by Central Administrative Tribunal. He was promoted as Superintendent with effect from 09.11.1994. He was not in service for substantial period of time and he had no other income other than his salary. While so, the investigation has unravelled, he and his family members were maintaining several bank accounts and lockers. He had invested in movables and immovables for which, the sources are unknown. Most of the properties were acquired after the accused got reinstated in service. Taking the period from 15.12.1987 to 20.02.1997 as check period, the prosecution has collected materials which prima facie satisfied that the accused has acquired assets value of Rs.1,10,50,128.22/- disproportionate to his known source of income. Final report filed with details of assets held at the beginning of the check period and assets acquired during the check period, the assets held at the end of check period. The trial court directed to confiscate the assets worth about Rs.1,05,74,000/- acquired. disproportionate to the known source of income. Aggrieved by the conviction and sentence, the appellants have preferred the criminal appeal under Section 374 of Cr.P.C before this Court.

Legal Analysis and Decision:

The value of the asset acquired by the accused in his name and his family members names is almost double the estimated savings from the known source of income. While so, except some minor error in assessment which has no bearing in the decision, this Court finds the trial court judgment has appreciated the law as well as the fact. For the contention of the learned Senior counsel for the appellants that the change in the law after 2018 though it is captioned as amendment it is only a substitution to the old provision of law under the Prevention of Corruption Act governing disproportionate of asset, this Court finds that even such liberal interpretation is given to the provision of law, it will not be of any use for the appellants herein. The law expects satisfactory explanation for the source of income, in this case, that is missing. The claim and attempt made by the appellants to project the explanations through their witnesses and documents in fact had exposed suppression of their income from other sources. After the search and recovery of huge currency, an attempt make believe story of prior sale agreements and suits for enforcement of the sale agreements been created. The trial Court has rightly held that these documents are ante dated. After close scrutiny one document namely the agreement with JKK Rangammal Charitable Trust where the accused has probalized that they have entered into an agreement and received sale consideration 12 lakhs for other transactions the view of the trial Court is confirmed. Therefore, the Court ever after, due credit for that receipt of Rs.12,00,000/- as income during the check period, find a vast difference between their known source of income and the value of assets which they have invested is very huge and the disproportionality is shocking event if it is estimated moderately. Therefore, this Court confirms the judgment of the trial court. Accordingly, the order of conviction passed in C.C.No.3 of 2009 is confirmed. The Criminal Appeal No.3 of 2009 is dismissed. Taking note of the age of the appellants, this Court grants 30 days time for them to surrender, failing which, the respondent police shall secure them and commit to prison to undergo the remaining period of sentence.

Conclusion:

Taking note of the fact that, out of 12 properties listed for confiscation three have locked in litigation and third party right has come into force due to court intervention and therefore, this Court is of the opinion the confiscation order be modified, instead of ordering forfeiture of all the property. As far as the order of confiscation, the same is modified to the effect that in lieu of forfeiture, the appellants jointly and severally shall pay a sum of Rs.25,00,000/- which shall be around 50% of the value assessed as disproportionate to the known source of income.

JUDGEMENT REVIEWED BY JANGAM SHASHIDHAR.

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