A.F.R.
Court No. - 1
Case :- APPLICATION U/S 482 No. -38676 of 2018 Applicant :- Nirmal Sinha Opposite Party :- State of U.P. And 2 Others Counsel for Applicant :- Dileep Kumar, Vinay Saran Counsel for Opposite Party :- G.A., Gyan Prakash Hon'ble Ramesh Sinha,J.
Hon'ble Dinesh Kumar Singh-I,J.
(Delivered by Hon'ble Dinesh Kumar Singh-I, J.)
1. Learned counsel for the appellant has filed a supplementary affidavit today in Court, which is taken on record.
2. Heard Sri Vinay Saran, learned counsel for the applicant, Sri Gyan Prakash, learned counsel for the C.B.I. and Sri J.P. Tripathi, learned A.G.A. for the State and perused the record.
3. This application under section 482 Cr.P.C. has been filed for quashing the charge-sheet dated 29.12.2017 as well as order taking cognizance dated 01.09.2018 and the entire proceedings of Special Case No.9 of 2018 (C.B.I. vs. Shailesh J. Bhatt and others) arising out of RC No.219-2016 (E) 0007, under sections 120B r/w 420 IPC and 13(2) r/w 13(1) (d) of Prevention of Corruption Act , Police Station CBI/EO-1/New Delhi, pending in the Court of Special Judge, Anti Corruption Court, CBI, Ghaziabad.
4. It is revealed from the perusal of record that an F.I.R. was registered being RC 2192016 E0007 at PS CPI/EO–I, New Delhi on 28/04/2016 under sections 120–B read with 420, 467, 468 and 471 IPC along with Section 13 (2) read with 13 (1) (d) of PC Act, 1988 by Director Finance, Handicrafts and Handlooms Exports Corporation of India Ltd. (in short as HHEC) against the applicant /Kaushlesh Kumar Sinha and others in which, it was alleged that HHEC was doing business of importing bullion on behalf of local buyers either on consignment basis/letter of credit basis or spot basis and that during the course of its business it was dealing with one Suresh Gadecha, who was representing M/s. Aaryavart Impex Pvt. Ltd. and M/s. Satlon Investment Ltd. since 2002–03. In the year 2007 Mr. Gadecha introduced a company called M/s. Aaryavart Commodities Pvt. Ltd. (in short ACPL) which company entered into an agreement for import of bullion on consignment basis for sale or outright loan basis vide agreement dated 24th of April, 2007. On behalf of ACPL Shri Shailesh J Bhatt signed an agreement and gave a separate undertaking. The terms of the said agreement envisaged purchase of consignment on loan basis and delivery of bullion were to be made on loan basis only after payment of 105% to 110% of bullion so imported and price was to be paid on provisional sale. The ACPL gave an undertaking to the effect that it would keep HHEC indemnified for the loss in transaction carried out by HHEC on behalf of ACPL. Both ACPL and HHEC entered into agreement dated 24th of April 2007, 20th June 2007 and 14th of August 2013 etc relating to import of bullion as well as export of jewellery. The purchases of bullion by ACPL were made on the basis of provisional price of gold prevailing in international market on the date of taking delivery of gold and the price of dollar was also provisional and the final price of gold used to be fixed by the ACPL with foreign supplier on a later date and the said practice was also followed in fixation of price of dollar and final payment used to be made on the basis of final price of gold as well as dollar from time to time on the basis of final price fixed by ACPL through its Director and representatives. During the course of business transaction with HHEC, ACPL fixed the price of 200 Kg gold, that is, 100 Kg gold bar and 100 Kg gold guineas after depositing custom duty in the month of October 2008. ACPL, however lifted only 51 Kg of gold due to sudden fall in price of gold and saw delivery of the remaining gold on the basis of deferred payment backed by security in the form of jewellery and post dated cheques. Having regard to the fact that report at that point of time indicated further fall in the price of gold, the proposal of ACPL was accepted and delivery of gold was given to ACPL against the post dated cheques and on the basis of jewellery given by ACPL with valuation report. As HHEC permitted the lifting of the gold up to 90% of the value of jewellery provided by ACPL along with valuation report of Government approved valuer. The details of the post dated cheques have been mentioned in the complaint in tabular form. The ACPL handed over 14 boxes of jewellery along with valuation reports of Hera Lal Gordhandas Zaveri showing the valuation of jewellery handed over to HHEC to be Rs. 9.40 crores , details of which are mentioned in the complaint in tabular form. Out of the said, one jewellery box vide invoice no. 04/08 – 09 dated 12/11/2008 amounting to Rs. 44 lakhs had been received back by ACPL on 23/07/2012 and the balance invoice no. 05/08-09 to 11/08 – 09 comprising 13 boxes of jewelleries were kept in vault of G4S Cash Services (India) Private Ltd at Ahmedabad which were transferred to Delhi in October 2013. At that time also the jewelleries had been valued by the Government approved valuer. The officials of HHEC believed the representation made by the Director of ACPL and its representatives with regard to security and value of jewellery given by ACPL. The HHEC on 2/3 – 07 – 2015 came to know that jewellery given by ACPL was fake and that they had cheated and defrauded HHEC. On 24th of March 2009 it was pointed out by HHEC to ACPL that the payments had not been made and huge outstanding amount to the extent of 8.9 crores was pending against ACPL. Sri S J Bhatt, the authorised signatory of ACPL vide letter dated 06/04/2009 sought to safeguard the outstanding dues of Rs. 20.10 crore by showing that Rs. 6.73 crore was adjustable against provisional credit balance subject to reconciliation, Rs. 1.6 crores interest on FDR, Rs. 9.14 crores towards jewellery as per valuation by valuer and assured HHEC that it would clear the outstanding amount gradually. Thereafter HHEC and ACPL entered into various correspondence to clear the outstanding amount and ACPL and its directors and representatives assured from time to time that they would clear the outstanding amount. When the outstanding amount could not be cleared, it was decided by HHEC to auction the jewellery and recover the amount due from ACPL to HHEC. The jewellery boxes were valued on 27 – 28 September, 2013 by Government approved valuer to the tune of Rs. 17.36 crores. HHEC in the month of November 2014 decided to e-auction the jewellery and for this purpose they engaged the services of MSTC – a public sector undertaking of Government of India. Thereafter, Shri Kamal Narain Kapoor, a Government approved valuer valued the jewellery in the month of February – March 2015 and valued the jewellery to the extent of Rs. 8.24 crores only. Upon obtaining legal advice it was decided to get the jewellery valued from the Government approved valuer who was empanelled with the income tax authorities. Accordingly evaluation of the jewellery was carried out by the Government approved valuer Shri Pankaj Jain who in his report dated 2 – 3 July, 2015 valued 11 boxes of jewellery and found that out of 11 boxes two boxes contained a studded jewellery having value of Rs. 1.1 crore and in respect of rest of boxes it was valued nil. Therefore it was clear from the narration of the facts stated above that the ACPL and its directors and representatives who had always interacted with the officials of HHEC, had made false representation regarding value of jewellery and payment of outstanding amount and committed the offence of fraud and indulged in criminal activities and thereby caused huge loss to the public sector undertaking HHEC. The HHEC had entered into various transaction with ACPL only on the basis of representation regarding purity of gold and valuation made by ACPL and its representatives. The offence of cheating had been committed not only by ACPL, its directors & representatives but also by Government approved valuer who thrice give incorrect valuation report and were part of criminal conspiracy of cheating and defrauding the HHEC. The intention of cheating was there right from the beginning as the HHEC discovered that jewelleries were fake.
5. After the investigation by C.B.I./opposite party, charge sheet has been submitted against the applicant as well as many other accused and as regards the present accused-applicant, the investigation revealed that Sri Nirmal Sinha in pursuance of criminal conspiracy mentioned that M/s. ACPL had proposed to provide jewellery for approximate value of Rs. 200,00,000/- as collateral security, besides immovable property as collateral security for the post dated cheques. The jewellery was to be returned/exported on receipt of deposit of title deed for immovable security to be furnished as collateral security. Apart from other things, he recommended the aforesaid to minimize the exposure and crystallized the payment in view of virtual non supply of metal even on consignment basis as well as suspension of supplies against SBLCs in view of global credit crisis/slow down. The investigation further revealed that the accused-applicant, the then Director Finance, with dishonest intention, in furtherance of criminal conspiracy recommended the proposal to release gold against PDCs duly secured by jewellery, whereas being Director Finance, he knew that there was no such clause in the agreement dated 24.4.2007. Since he was holding senior position in the organization it must have been in his knowledge that he and CMD did not have any such power as per prevailing delegation of powers at that time. There was no circular/guideline in this regard, therefore the criminal conspiracy with co-accused persons did not bring these things in his note with dishonest intention. Thus, he misused his position in favour of M/s. Aaryavart Commodities Pvt. Ltd.
6. Contention of the learned counsel for the applicant is also that the incident is alleged to have taken place between the year 2007 and 2015 while F.I.R. has been lodged on 28.4.2016 in which the applicant has not been named rather he is a de-facto complainant. He is wholly innocent and has been falsely implicated with ulterior purposes. He joined HHEC in the year 1998 as company's Secretary and thereafter he was promoted as Deputy General Manager in that company and in the year 2004, he became its General Manager and later on in 2007, he was appointed as Director Finance. Further it is contended that an agreement was executed in the year 2007 between the HHEC and M/s. Aaryavart Commodities Private Ltd. (to be referred in short as ACPL) for import of Bullion on consignment basis for sale on outright or loan basis which was signed by co-accused Harish Kumar, the then Finance Manager and not by the applicant. In the year 2008, the said company failed to lift the gold lying with HHEC against its indent by making payment and gave proposal to secure the value by submitting genuine jewellery of equivalent value along with PDCs as collateral security. Further in the year 2008-09, M/s. ACPL dishonestly supplied fake jewellery at HHEC, Ahmadabad and the said accused- company further submitted fake valuation report to HHEC, wherein applicant was posted but the applicant had never any knowledge that the jewellery was fake. When in the year 2013, M/s. ACPL failed to lift the gold lying with HHEC against its indent, it was decided by HHEC to get the valuation done afresh of the jewellery supplied by ACPL and to auction it to recover the dues. When the evaluation was carried out by local office of HHEC, the jewellery was found to be genuine. The applicant was posted at New Delhi and was not present physically in Ahmadabad, hence there was no occasion for him to know that the jewellery was fake. In the year 2013, the said jewellery contained 13 boxes as supplied by the ACPL and they were gradually shifted from Ahmadabad for safe custody in vault at New Delhi. Once, the same was shifted it was decided to be e-auctioned. In the year 2015, the valuation of the Jewellery was carried out in Delhi but its purity was found to be low. It has come during investigation that HHEC asked the ACPL to join the valuation process but the same was refused. On 2.3.2015, 3.3.2015, 4.3.2015, the valuation process took place and the jewellery was found to be of very low purety. On 16.6.2015, it was decided by HHEC to repeat the valuation and it was found that the jewellery contained in the 11 boxes, out of 13 was fake having nil value. Thereafter on 28.4.2016, it was decided and approved by the applicant to lodge a complaint with CBI against the ACPL and others involved in cheating HHEC by submitting fake jewellery as collateral security. Subsequently, CBI registered the present case against the accused- M/s. ACPL Company as well as others under aforementioned Sections and on 29.12.2017, charge sheet was submitted. It is further contended that the court at Ghaziabad had no territorial jurisdiction because the fake jewellery was supplied at Ahmadabad while the complaint was filed at New Delhi, but surprisingly the applicant has also been arrayed as an accused in the said charge sheet. Further it is mentioned that the summoning order has been passed on 1.9.2018 after the commencement of the Prevention of Corruption Amendment Act, 2018, hence the impugned order was supposed to be passed in pursuance of the said Amending Act, wherein a new provision has been introduced u/s 19(a), which states that no court can take cognizance of offence committed by a retired public servant without valid sanction for prosecution u/s 19 of the said Act. It is admitted position that the prosecution had not obtained sanction which was sin qua non for prosecution u/s 420 IPC which remained un-fulfilled from the very inception because there was no iota of material even remotely to suggest that the applicant had conspired with accused- company and took decision to release gold towards submission of fake jewellery as security. The dishonored cheques also go to show that the accused-company (ACPL) had dishonest intention to cheat HHEC. The Horilal Gordhandas, Zaveri, in connivance with the accused-company and its Director, submitted false report with respect to the purity of the jewellery but surprisingly he has not been made accused by the opposite party. Further it is argued that the applicant had forwarded the file to CMD- HHEC with remarks against the accused company for not releasing gold as dues were existing and that the gold could be released only upon necessary payment by the accused company. The HHEC does not suffer any loss, hence, it was prayed that the impugned order be quashed.
7. It is further contended that in paragraph 34 of the charge sheet, the investigating Officer has made wrong assertion and has imported a wholely mis-conceived malicious intention on the part of the applicant without there being any evidence on record that HHEC entered into the agreement dated 24.4.2007 with ACPL because of dishonest intention of the then Director Finance(applicant). The aforesaid agreement was entered into for import of bullion in complete compliance with the scheme of PSU namely HHEC. There was no evidence to show that there was any deviation/change/self procedure applied or adopted by any official of HHEC. It is further mentioned that in any agreement generally, no procedure for recovery of debts and dues is laid down and the same is always done according to the practices of trade. During the course of commercial transaction, in case of any debtor like ACPL in the present case, steps are taken by the officials to recover the dues and the present action of proposal to release gold against payment by PDCs (post dated cheques) earned legal tender duly secured by genuine jewellery with the intention of not only to get the payment against the release of gold but also in the nature of additional protection in regard to the old dues, was resorted to. It was the Directors routine job well within his power as provided under Article 68 of the Articles of Assosication (AOA) of HHEC, the relevant extract of which has been annexed as Annexure S.A.-
1 to the supplementary affidavit. The two functional Director (Director Finance and Chairman Managing Director) on the Board of four members had taken together majority decision as is provided in Article 76 of AOA, which clearly provides that Chairman will have a casting vote. Further it is submitted that no loss had been caused to HHEC by the applicant by any of his action at any point of time. In fact it was the direction of the applicant himself, as is mentioned in paragraph no. 101, 102 and 103 of the charge sheet and it was the applicant because of whose direct actions, an amount of Rs. 8,08,05,043/- was recovered from the M/s. ACPL, coupled with genuine jewellery kept in box no. 58703 and 58704 collectively amounting to worth Rs. 1,101,86,558, total of which comes to an amount of Rs. 9,09,91,601/- This shows bona fide of the applicant. Further it was submitted that the applicant was never directly in-charge of nor responsible for either valuation/vaulting of the jewellery or for checking the genuineness of the jewellery. Even the balance sheet after being reviewed by C. &A.G. was also placed before members of HHEC in its annual general meeting for further approval by the members and even after that, the printed balance sheet was placed before the parliament. Reliance is placed by the learned counsel for the applicant on Srayala Corporation Pvt. Ltd. Vs. Director of Enforcement, New Delhi 1969(2) SCC 412, wherein in paragraph no. 13 of the judgment, Hon'ble Apex Court’s view taken in the said case, has been quoted which was in line with general principle enunciated by the Hon'ble Apex Court in case, of S. Krishnan Vs. State of Madrass, 1951 (SCR) 621, relating to temporary enactments, which is as follows:-
“ The general rule in regard to a temporary statute is that in the absence of special provision to the contrary proceedings, which are being taken against a person under it, will ipso facto terminate as soon as statute expires”.
8. In view of above, it was argued that prosecution was liable to be quashed u/s 13(1)(d) and 13(2) of the P.C. Act, and Section 120-B read with Section 420 IPC against the applicant.
9. On the other hand the learned counsel for the CBI vehemently opposed the quashing of the charge- sheet stating that the charge- sheet was submitted in accordance with law after thorough investigation and on the basis of evidence the investigating agency has clearly found the role of the applicant in commission of this offence. It was further argued that there was no such clause in the agreement dated 24/04/2007 which authorised the applicant being Director, Finance to recommend the proposal to release gold against PDCs duly secured by jewellery and that it could not be concluded that he did not have knowledge of the same and that he did not have any such power as per prevailing delegation of powers at that time. Therefore he was fully complicit in commission of this offence. With regard to seeking prior sanction to prosecute under PC Act as per the amended Section 19 of the PC Act it was argued that the offence under IPC is also alleged to have been committed by the applicant which would also require prior sanction under sections 197 Cr. P.C. provided the alleged wrong act was found to have been committed during performance of official duties. Therefore the proceedings in the present case could not be quashed because it would have to be seen on the basis of evidence adduced from the side of prosecution as to whether the wrong committed by the applicant had any nexus with performance of his official duty. Primafacie it would never fall in his official duty to transgress the limits of his jurisdiction.
10. After having heard both the sides and having perused the entire record as well as the case laws relied upon by the learned counsel for the applicant we are of the view that the impugned order dated 01/09/2018, whereby cognizance has been taken against the applicant as well as other co-accused under the afore- mentioned sections, does not suffer from any wrong. As per the facts which have emerged it transpires that the applicant was Director Finance of HHEC, a public sector undertaking which had entered into an agreement with M/s. ACPL for purchasing bullion. As a measure of security the ACPL had handed over 14 boxes of jewellery as collateral, apart from already existing collateral which was in the form of post-dated cheques. The jewellery that was handed over by ACPL had valuation report procured from the Government approved valuer which stood approx. at Rs. 9.4 crores. In the year 2009, ACPL was ordered by HHEC to either pay the amount of the bullion imported on its behalf, which amounted to 8.9 crores, as HHEC would have no option but to auction the jewellery that was furnished by ACPL as collateral security. When the ACPL failed to pay the debt, jewellery had to be auctioned and at that time it was again got valued and it was found to be of much lesser value because of the jewellery being found fake. In view of these facts, it could not be said that the applicant, despite being Director of Finance of HHEC would not know that the jewellery which was given as collateral security was improper. He cannot be allowed to take shield that its valuation had been done by a Government approved valuer and in this backdrop the possibility could not be ruled out of his involvement in the alleged offence. Further his contention that the decision of permitting purchase of bullion against the post dated cheques was approved by him only with a view to salvaging the company from out of economic slump and to keep it moving is also a matter which can be adjudicated only after full trial after evidence has been adduced by the prosecution and defence side and the same has been cross-examined. At the preliminary stage of filing of charge- sheet it would be improper to nib the prosecution into bud.
11. Now we would like to consider as to whether the cognizance taken by the trial court is defective on account of non-obtaining of prosecution sanction under the amended Section 19 of the Prevention of Corruption Act as it is stated in Para 37 of the affidavit that as on date, as per Section 19 of the PC Act there is requirement that even against retired public servant sanction, to prosecute him for an offence under Section 13 (1) (d)/13 (2) of the PC Act, is required because the amendment was brought about without any saving and repealing clause/sunset clause. The embargo of giving a retrospective effect to the statute arises only when it takes away any vested right of a person, but such is not the case in the present matter. There was nothing to show that the applicant was Director Finance at the relevant time or had in any manner conspired with co-accused for any such offence.
12. To deal this point, it would be pertinent to reproduce here for the sake of convenience as to what was the earlier wordings of the PC Act and what were the changes made therein so as to understand as to what amendment has actually been made and whether the same is effective retrospectively or prospectively and why.
(a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, of that Government;
(b) in the case of a person who is employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, of that Government;
(c) in the case of any other person, of the authority competent to remove him from his office.
(2) Where for any reason whatsoever any doubt arises as to whether the previous sanction as required under sub-Section (1) should be given by the Central Government or the State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed.
(3) Notwithstanding anything contained in the code of Criminal Procedure, 1973,-
(a) in the case of a person who is employed, or as the case may be, was at the time of commission of the alleged offence employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government, of that Government;
(b) in the case of a person who is employed, or as the case may be, was at the time of commission of the alleged offence employed in connection with the affairs of a State and is not removable from his office save by or with the sanction of the State Government, of that Government;
(c) in the case of any other person, of the authority competent to remove him from his office.
(i) such person has filed a complaint in a competent court about the alleged offences for which the public servant is sought to be prosecuted; and
(ii) the court has not dismissed the
(b) no court shall stay the proceedings under this Act on the ground of any error, omission or irregularity in the sanction granted by the authority, unless it is satisfied that such error, omission or irregularity has resulted in a failure of justice;
(c) no court shall stay the proceedings under this Act on any other ground and no court shall exercise the powers of revision in relation to any interlocutory order passed in any inquiry, trial, appeal or other proceedings. (4) In determining under sub-section (3) whether the absence of, or any error, omission or irregularity in, such sanction has occasioned or resulted in a failure of justice the court shall have regard to the fact whether the objection could and should have been raised at any earlier stage in the proceedings. Explanation.-For the purposes of this section,-
(a) error includes competency of the authority to grant sanction;
(b) a sanction required for prosecution includes reference to any requirement that the prosecution shall be at the instance of a specified authority or with the sanction of a specified person or any requirement of a similar nature. “
(a) who has ceased to hold the office during which the offence is alleged to have been committed; or
(b) who has ceased to hold the office during which the offence is alleged to have been committed and is holding an office other than the office during which the offence is alleged to have been committed.”
Government or the State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public servant from his office at the time when the offence was alleged to have been committed.
(3) Notwithstanding anything contained in the code of Criminal Procedure, 1973,-
(a) no finding, sentence or order passed by a special Judge shall be reversed or altered by a Court in appeal, confirmation or revision on the ground of the absence of, or any error, omission or irregularity in, the sanction required under sub-section (1), unless in the opinion of that court, a failure of justice has in fact been occasioned thereby;
(b) no court shall stay the proceedings under this Act on the ground of any error, omission or irregularity in the sanction granted by the authority, unless it is satisfied that such error, omission or irregularity has resulted in a failure of justice;
(c) no court shall stay the proceedings under this Act on any other ground and no court shall exercise the powers of revision in relation to any interlocutory order passed in any inquiry, trial, appeal or other proceedings.
(4) In determining under sub-section (3) whether the absence of, or any error, omission or irregularity in, such sanction has occasioned or resulted in a failure of justice the court shall have regard to the fact whether the objection could and should have been raised at any earlier stage in the proceedings.
Explanation.-For the purposes of this section,-
(a) error includes competency of the authority to grant sanction;
(b) a sanction required for prosecution includes reference to any requirement that the prosecution shall be at the instance of a specified authority or with the sanction of a specified person or any requirement of a similar nature. “
13. It appears from the above amended provision that now the Government servant who, till now, after retirement could have been proceeded against in a criminal prosecution for an offence under the Prevention of Corruption Act without any sanction to prosecute him by the competent authority, for an offence which is alleged to have been committed by him during the course of his employment, has now been extended protection to the extent that even if he has retired, the sanction from competent authority would be required for his criminal prosecution. Therefore it would appear that the protection which was not provided under sections 19 of the PC Act to a retired Government servant, would now be there just like he would have the protection under sections 197 Cr. P.C. for criminal prosecution for committing an offence under any other sections of IPC. We find that in prosecution of a Government servant for an offence under IPC which he committed during the performance of his official duty Section 197 Cr. P.C. gives a protection from being prosecuted unless sanction has been obtained from the competent authority to prosecute him but if the offence is found to have been committed by such a Government servant not during course of his official duty, he stands deprived of such protection. We are not inclined to consider here as to whether the amended provision of Section 19 of the PC Act would be applicable in the present case or not because it involves offences under IPC also. Therefore in any way the proceedings in totality may not be dropped even if the amended provision of Section 19 is found applicable.
14. Now we would like to discuss as to whether the applicant may get any benefit by relying upon M/s. Rayala Corp (P) Ltd and M. R. Pratap vs Director of Enforcement, New Delhi, 1969 (2) Supreme Court Cases 412. In this case The Director of Enforcement filed complaint in the court against the appellants for contravention of the provisions of sections 4 (1), 5 (1) (e) and 9 of Foreign Exchange Regulation Act, 1947, punishable under Section 23 (1) (b) of the Act, without taking adjudicating proceedings under Section 23 – D (1) Proviso. The complaint also charged them with violation of rule 132 – A (2) of the Defence of India Rules, 1962, although that rule was omitted from rules then. It was contended that Section 23 (1) (b) of the Act was ultra vires Article 14 of the Constitution as it provided for the punishment heavier and severer than the punishment provided for the same act under Section 23 (1) (a) of the Act, that the complaint was not filed properly in accordance with Section 23 – D (1) of the Act, that prosecution under Rule 132 – A of the Defence of India Rules, 1962, could not be instituted when by its omission it ceased to exist then. It was held by the Hon’ble Apex court that firstly, Section 23 (1) and Section 230 (1) must be read together, so that procedure laid down in Section 230 (1) is to be followed in all cases in which proceedings are intended to be taken under Section 23 (1). The effect of this interpretation is that, whether there is any contravention of any Section or rule mentioned in Section 23 (1), the Director of Enforcement must first proceed under the principal clause of sections 230 (1) and initiate proceedings for adjudication of penalty. He cannot, at that stage, at his discretion, choose to file a complaint in a court for prosecution for the offence under Section 23 (1) (b). He can only file a complaint by acting in accordance with the proviso to Section 230 (1) which clearly lays down that the complaint is only to be filed in those cases where, at any stage of the enquiry, Director of Enforcement comes to the opinion that, having regard to the circumstances of the case, a penalty which he is empowered to impose would not be adequate. The choice of the proceeding is not entirely left to the discretion of the Director, but the criterion for making the choice is laid down in the proviso to Section 230 (1). It is by resorting to the proviso only that he can raise the accused in greater jeopardy of being liable to a more severer punishment under Section 23 (1) (b) of the Act. Secondly, the enquiry in this case under Section 23 – D (1) had been instituted by the issue of show cause notice but on the record it does not appear that, even after issue of that notice, any such material came before the Director of Enforcement which would be relevant for forming an opinion that the penalty which he was empowered to impose for the alleged contravention was inadequate. He appears to have formed a primafacie opinion that a complaint should be made against him in court. Thus as a complaint was filed without satisfying the requirements and conditions of the proviso to Section 23 – D (1) it was invalid and proceedings taken in pursuance of it must be quashed. Lastly, it was held that the language contained in clause 2 of the Defence of India (Amendment) Rules, 1962, can only afford protection to action already taken while the rule was in force, but can not justify initiation of a new proceeding which will not be anything done or omitted to be done under the rule but a new act of initiating a proceeding after the rule had ceased to exist. The complaint made for the offence under rule 132 – A (4) of the D.I.Rs, after 1st April, 1965, when the rule was omitted, was invalid. Further it is held that Section 6 of the General Clauses Act, 1897, cannot obviously apply on the omission of rule 132 – A of the D I Rs for the two obvious reasons that Section 6 only applies to repeals and not to omissions, and applies when the provisions of the General Clauses Act are applied to the repeal. When Section 4 (1) of the Act was amended, the legislature did not make any provision that an offence previously committed under Rule 132 – A of the D I Rs would continue to remain punishable as an offence of contravention of Section 4 (1) of the Act, nor was any provision made permitting operation of Rule 132 – A itself so as to permit institution of prosecutions in respect of such offences. Therefore, the present complaint was incompetent even in respect of the offence under Rule 132 – A (4).
15. Therefore, it becomes clear from the above citation that in this case the complaint filed by the Director of Enforcement was found defective on two counts that is because it did not satisfy the requirements of the conditions of the proviso to Section 23 – D (1), there being no material for the Director of Enforcement to arrive on a conclusion that the penalty which he was empowered to impose for the alleged contravention was inadequate, hence in his opinion complaint was required to be filed in court, and secondly clause 2 of the Defence of India (Amendment) Rules, 1965 omitted rule 132 – A from Defence of India Rules, 1962 and its language showed that protection could only be given to actions already taken while the rule was in force, but could not justify initiation of a new proceeding and in this case filing of complaint was a new proceeding, therefore the complaint was quashed.
16. We fail to understand as to how the learned counsel for the applicant is trying to apply the above ruling in the present situation because in the present case the protection is being sought to be given to the applicant of the amended Section 19 of PC Act which says now that if any wrong was committed by a Government servant when he was in service punishable under the provisions of the PC Act, he could not be prosecuted for the same even after he retires from service unless sanction to prosecute him has been obtained from the competent authority and that since the said amendment has come into force with effect from 26 July, 2018 while in the present case the cognizance has been taken by the learned trial court on 01/09/2018, the proceedings against the appellant need to be quashed due to lack of prosecution sanction. No such circumstances were there in the case of Srayala Corp Private Limited. It appears that the learned counsel wants to take the line of argument that such protection ought to be given to the applicant retrospectively on the basis of general interpretation in respect of beneficial legislation that if any benefit is permitted by subsequent legislation to an accused, even if the same was not admissible to him when the offence was committed by him, the court may grant benefit of such legislation to the accused. In the case on hand we are not inclined to extend any benefit to the applicant accused because it is not a case involving only an offence under Prevention of Corruption Act, but it also involves several offences under IPC as well.
17. The other ruling relied upon by the learned counsel for the applicant is a judgment dated February 23, 2018 passed by the Hon’ble Apex court in criminal appeal no. 321 of 2018, Pankaj Jain vs Union of India and Another, in which after the detailed discussion the Hon’ble Apex court held that the accused appellant was not entitled to submit bail bonds under sections 88 of Cr. P.C. because he was not a free man as NBW and proceedings under Section 82 and 83 Cr. P.C. had already been initiated against him. Further it was held that the word ‘may’ used in Section 88 confers a discretion on the court whether to accept a bond from an accused appearing in the court or not and that in the said case it was held that both the Special Judge, CBI as well as High Court had given cogent reasons for not exercising power under section 88 Cr. P.C.. This case appears to have been relied upon by the learned counsel for the applicant only with a view to evading arrest and avoid getting himself bailed out. As per provisions of law in a situation as obtaining in present case, the proper course would be for the applicant to appear before court and seek bail and if at all he prefers to move an application under Section 88 Cr. P.C., it would be open for the court to pass a suitable order in its discretion keeping in view the gravity of offence, and his voluntarily surrendering before court, but this court would not like to pass any direction in regard to accepting the bonds under sections 88 Cr. P.C..
18. Suffice it to say here that this court has already passed a detailed order dated 20/10/2018 earlier in 482 proceedings no. being 37911 of 2018 Kaushlesh Kumar Sinha vs CBI in which the same cognizance order dated 01/09/2018 was challenged by a co-accused and a long discussion was made upon applicability of the provisions of Section 197 Cr. P.C. and in situation of the said case it was opined that as the case involved offences under sections of IPC also, it would be appropriate for the trial court to decide after evidence as to whether the wrong which is alleged to have been committed by the applicant was actually committed in the course of performance of his official duty or not, because if the same was found to have been committed during the course of performance of his official duty, he would get protection under Section 197 of the Cr. P.C. and would not be prosecuted till sanction to prosecute him had been obtained from the competent authority and accordingly the said application was dismissed.
19. In the present case, the case of the applicant is no different from the case of the co-accused Kamlesh Kumar Sinha because as per prosecution’s allegation in pursuance of criminal conspiracy, the applicant being Director Finance, with dishonest intention recommended proposal to release gold against posted dated cheques duly secured by jewellery, though he knew that there was no such clause in the agreement dated 24/04/2007, thus he misused his position in favour of M/s. ACPL. We do not find any infirmity in the impugned order. Therefore we are not inclined to interfere in the present matter under inherent jurisdiction of this court, accordingly the present application deserves to be dismissed.
20. This application is dismissed.
(Dinesh Kumar Singh-I, J.) (Ramesh Sinha, J.) Order Date: 30.10.2018 JK Yadav