THE HONOURABLE DR.JUSTICE G.JAYACHANDRAN Criminal Original Petition No.18698 of 2017 S.R.Gnanasekar .. Petitioner Vs Inspector of Police, CBI/EOW/Chennai .. Respondent Prayer:- Criminal Original Petition filed under Section 482 Cr.P.C., to quash the entire proceedings in C.C.No.24 of 2009 on the file of the learned XI Additional Special Judge for CBI cases, Chennai.
For Petitioner : Mr.M.Venkataraman, Senior Counsel for Mr.V.Krishnakumar For Respondent : Mr.K.Srinivasan, Special Public Prosecutor (CBI cases) ORDER The Central Bureau of Investigation had registered a case on 21.04.2008 based on the complaint received from Mr.N.Jeevagan, the General Manager and Chief Vigilance Officer, United Bank of India, http://www.judis.nic.iKn olkata, alleging pursuant to the criminal conspiracy between the partners of M/s.Jailani Steel Traders and some unkown public servants to cheat UCO Bank by producing forged/fabricated documents as collateral security to avail cash credit loan to the tune of Rs.268 lakhs, title documents of property which has already acquired by the Tamil Nadu Housing Board for public purpose and alloted to various third parties, as residential plots, were shown as security and loans were availed.
2. The investigation resulted in final report dated 30.06.2009 against 14 persons charging offences under sections 120B r/w 420, 419,467,468 and 471 IPC, in case of private parties and along with the above sustantive IPC offences also for offences under Section 13 (2) r/w 13(1)(d) of Prevention of Corruption Act, 1988 in case of public servants.
3. The Special Court for CBI cases has taken the case on file and assigned C.C No. 24/2009 and the examination of witnesses is under way. The petitioner herein who is arrayed as 10th accused prays to quash of entire proceedings on the ground that, earlier sanction to prosecute the accused was refused by the competent authority but, after some intervention of unknown force, the sanctioning authority has succumbed to the pressure and accorded sanction without any http://www.judis.nic.inn ew materials to change the earlier refusal order.
4. During the cross examination of PW-1 (the sanctioning authority) he admits that he has not mentioned in his order about the new materials which tilted the earlier opinion refusing to accord sanction. In the chief examination, he has admitted that on the advice from Chief Manager (Vigilance) on 15th June 2009, he accorded sanction to prosecute. He also admits that there was no sanction order as on 04.06.2009. From the letter marked as Ex D-1, it is clear that the Vigilance Department to the General Manager United Bank of India has enclosed a draft sanction order received from the Superintendent of Police, CBI (EOW) Chennai for the sanctioning authority to sign. This is apparently a tactics adopted by the Central Bureau of Investigation to pressurise the sanctioning authority to accord sanction contrary to his earlier order of refusal to sanction.
5. To butress his submission, the Learned Senior Counsel appearing for the petitioner read over the portions of the Ex C-1, the order of PW-1 passed on 12.05.2009 refusing to accord sanction to prosecute the petitioner – Mr.S.R.Gnanasekar. Ex P-1 the sanction order dated 20.06.2009 and the deposition of the sanctioning authority (P.W-1) before the trial Court who was examined as PW-1 by the prosecution and relying upon the following judgments “1) State of HP -vs- Nishant Sareen (Criminal Appeal No.2353 of 2010 dated 09.12.2010);
2) M.S.Vijayakumar -vs- The Chairman and Managing Director, IOB and others (W.A.No.69 of 2010 dated 12.03.2012);
3) Nanjappa -vs- State of Karnataka (Criminal Appeal No.1867 of 2012 dated 24.07.2015)”
submitted that, the sanctioning authority has changed his earlier view without any new materials before him. The sanction order passed without referring to the earlier refusal order clearly indicates non application of mind. The draft sanction order forwarded by the Vigilance Department of United Bank of India to the Sanctioning Authority who has earlier refused to accord sanction goes to show that the CBI had pressurised the sanctioning authority who is supposed to act fair and independent of external influence.
6. Per contra, the learned Special Public Prosecutor (CBI cases) appearing for the respondent submitted that the sanctioning authority (P.W-1) missed certain details found in the materials placed by the investigation agency while declining to accord sanction to prosecute the case as against the petitioner herein. However, he had reviewed his opinion after considering those details. Perusal of the the earlier order, will reveal that the sanctioning authority has not given any clean chit to the petitioner, in fact, he has found the petitioner guilty of lapses like non adherence of Bank circulars and Lending Policy while sanction loan to M/s.Jailanai Traders. However, taking note of the earlier service record of Mr.S.R.Gnanasekar (the petitioner herein) he had presumed that the petitioner has relied upon the search and valuation report of the empanelled lawyer and approved valuer of the Bank and acted in good faith without any malfide intention. Later, when it was pointed out to the sanctioning authority (P.W.-1) that his conclusion Mr.S.R.Gnansekar (the petitioner herein) had no malafide intention is not backed by reasons, the sanctioning authority (P.W-1) has reconsidered his earlier order and had issued fresh order according sanction to prosecute the case against the petitioner herein.
7. The learned Special Public Prosecutor (CBI Cases) relying upon the judgement in Dinesh Kumar -vs- Chairman Airport Authority of India reported in (2012) 1 SCC (Cri) 509) submitted that, once congnizance taken by the competent Court, the question of validity of sanction open for consideration by trial Court and the issue has to be raised only before the trial Court in the course of trial.
8. Ex C-1 is the order refusing sanction for prosecution and Ex P-
1 is the order granting sanction for prosecution. Both the orders were passed by the very same person. In Ex C-1, the competent authority has observed that, “In terms of Bank's Circular No.RBD/09/OM-231/2002 dated 10.9.2002 in respect of United Trade Credit Loans, the Branch Manager shall personally inspect the property and satisfy himself through discrete enquiry that the property is in existence and owned by the borrower or the persons named in the document produced, as the case may be and the valuation is in line with the value indicated by the valuer, considering all aspects of the property. The report of such inspection shall be recorded in the processing sheet. The above guidelines envisaged in the aforementioned circular as well as those envisaged in the Bank's Lending Policy were not complied with by Sri Gnanasekhar at the time of recommending the instant proposal for sanction by the Regional Office. I am of the opinion that Sri Gnanasekhar had relied on the Search & Valuation Report of the empanelled lawyer and approved valuer of the Bank and had acted in good faith.“
9. In the earlier part of the said document, the sanctioning authority (P.W-1) has recorded that, “the Advocate had provided Emcumbrance Certificate only upto the year 1999 and had advised the Bank to collect Encumbrance Certificare from the year 1999 to 2004 and recommended for creation of equitable mortgage over the property by collecting all original documents.” Also he has recorded that, “Sri.Sridharan, the approved Valuer had mentioned in the Valuation Report that though the docuuments shown 2 acres and 2 cents, he could find only 31788 sqft of vacant land and the balance area was encroached by neighbours on the Nothern side.”
10. If really, Mr.S.R.Gnanasekar had relied upon the Advocate opinion and the Valuers Report, he should have obtained Encumberance Certificate for the year 1999 to 2004 before disbursing the loan and he should not have overlooked the remarks made by the approved Valuer regarding the encroachment in the land shown as collateral security.
11. Since, the sanctioning authority (P.W-1) has not applied his mind in respect of these aspects, he had been asked to review his earlier opinion. Accordingly, he has applied his mind on these two aspects and has observed in the subsequent order Ex P-1, 'Whereas it is alleged that Shri S.R.Gnanasekar, without making due diligence, accepted the legal opinion given by Shri P.B.Sampath Kumar on the basis of Encumbrance Certificates till 1999, instead of insisting Shri Sampath Kumar to submit the legal opinion till 2004. It is also alleged that Shri Gnanasekar did not obtain second opinion from another Panel Advocate in respect of the above said property documents although the credit facility was more than Rs.2 crore.'
12. In State of HP -vs- Nishant Sareen and others (cited supra) the Hon'ble Supreme Court, in paragraph No.12, has held as follows:-
http://www.judis.nic.in “12.It is true that the Government in the matter of grant or refusal to grant sanction exercises statutory power and that would not mean that power once exercised cannot be exercised again or at a subsequent stage in the absence of express power of review in no circumstance whatsoever. The power of review, however, is not unbridled or unrestricted. It seems to us sound principle to follow that once the statutory power under Section 19 of the 1988 Act or Section 197 of the Code has been exercised by the Government or the competent authority, as the case may be, it is not permissible for the sanctioning authority to review or reconsider the matter on the same materials again. It is so because unrestricted power of review may not bring finality to such exercise and on change of the Government or change of the person authorised to exercise power of sanction, the matter concerning sanction may be reopened by such authority for the reasons best known to it and a different order may be passed. The opinion on the same materials, thus, may keep on changing and there may not be any end to such statutory exercise. In our opinion, a change of opinion per se on the same materials cannot be a ground for reviewing or reconsidering the earlier order refusing to grant sanction. However, in a case where fresh materials have been collected by the investigating agency subsequent to the earlier order and placed before the sanctioning authority and on that basis, the matter is reconsidered by the sanctioning authority and in light of the fresh materials an opinion is formed that sanction to prosecute the public servant may be granted, there may not be any impediment to adopt such course.”
13. In M.S.vijayakumar case (cited supra), a Division Bench of this Court in paragraph No.35 has held that:-
http://www.judis.nic.in “35.It is unfortunate that in spite of the alleged grave nature of the offences stated to have been committed by the appellant as well as the petitioner, the employer, being the Sanctioning Authority, having taken a lenient view earlier of declining to grant sanction has changed its opinion due to the pressure from the extraneous sources, which is certainly not expected of the Sanctioning Authority in the light of the well settled principles of law. Unfortunately, the learned Judge has not taken note of the said relevant fact, which in our view vitiates the impugned sanction order. It cannot be said that the impugned sanction order has been passed based on the new materials. Even though the learned Judge has referred to the judgment in Ramanad Chaudhary V. State of Bihar and others in (2002) 1 SCC 153 wherein the Hon'ble Supreme Court has reiterated that the Sanctioning Authority has no jurisdiction to review the order and grant sanction on the same materials, she has chosen to come to a conclusion that there are new materials available. On fact, we do not see any new materials which were either placed by the CBI or CVC before the Sanctioning Authority for the purpose of enabling the Sanctioning Authority to come to a different conclusion.”
14. In Nanjappa -vs- State of Karnataka (cited supra), in paragraph No.15, the Hon'ble Supreme Court has held as follows:-
importance of sanction under Section 19 of the Prevention of Corruption is thus much too clear to admit equivocation. The statute forbids taking of cognizance by the Court against a public servant except with the previous sanction of an authority competent to grant such sanction in terms of clauses (a), (b) and (c) to Section 19(1). The question regarding validity of such sanction can be raised at any stage of the proceedings. The competence of the court trying the accused so much depends upon the existence of a valid sanction. In case the sanction is found to be invalid the court can discharge the accused relegating the parties to a stage where the competent authority may grant a fresh sanction for prosecution in accordance with law. If the trial Court proceeds, despite the invalidity attached to the sanction order, the same shall be deemed to be non-est in the eyes of law and shall not forbid a second trial for the same offences, upon grant of a valid sanction for such prosecution.”
15. In Dinesh Kumar v. Airport Authority of India (cited supra), in paragraph Nos.9,10 & 13, the Hon'ble Supreme Court has held as follows:-
the absence of sanction and invalidity of the sanction, this Court in Parkash Singh Badal (2007 (1) SCC 1) expressed in no uncertain terms that the absence of sanction could be raised at the inception and threshold by an aggrieved person. However, where sanction order exists, but its legality and validity is put in question, such issue has to be raised in the course of trial. Of course, in Parkash Singh Badal (2007 (1) SCC 1), this Court referred to invalidity of sanction on account of non- application of mind.
10.In our view, invalidity of sanction where sanction order exists, can be raised on diverse grounds like non-availability of material before the sanctioning authority or bias of the sanctioning authority or the order of sanction having been passed by an authority not authorised or competent to grant such sanction. The above grounds are only illustrative and not exhaustive. All such grounds of invalidity or illegality of sanction would fall in the same category like the ground of invalidity of sanction on account of non-application of mind - a category carved out by this Court in Parkash Singh Badal (2007 (1) SCC 1) , the challenge to which can always be raised in the course of trial.
13. In our view, having regard to the facts of the present case, now since cognizance has already been taken against the appellant by the Trial Judge, the High Court cannot be said to have erred in leaving the question of validity of sanction open for consideration by the Trial Court and giving liberty to the appellant to raise the issue concerning validity of sanction order in the course of trial. Such course is in accord with the decision of this Court in Parkash Singh Badal (2007 (1) SCC 1) and not unjustified.”
16. From the above citations, it could be concluded that, “i) When sanction order is in existence, its validity can be questioned at any stage of the proceedings;
ii) Sanctioning authority has no jurisdiction to review the order and grant sanction on the same materials and
iii) The sanctioning authority can review his earlier order of refusal, if any new materials are placed before him. In such cases, he has to refer about his earlier order declining to grant sanction and the new materials which made him to arrive at a different conclusion.”
17. From the facts and the portions from the two different orders passed by the sanctioning authority (P.W-1), which are extracted above, this Court finds that while passing his earlier order, Ex C-1, P.W.1 has pointed out the lapse of the petitioner in not following the norms and policy of the Bank while granting loan to M/s.Jeeliani Steels. He has held that overlooking the encroachment pointed by valuer and failure to get encumbrance certificate for the period 1999 to 2004 is certainly a lapse. Despite lapses, the sanctioning authority (P.W-1) has concluded that Mr.S.R.Gnanasekar, the petitioner herein had acted in good faith and apparently, it could be ascertained that no malafide intention on his part has transpired. Hence he was not in favour of according sanction to prosecute.
18. This has prompted the Investigating Agency to write back requesting the sanctioning authority to reconsider the decision and accord sanction, since the order does not assign any reason to conclude that there was no malfide intention on the part of Mr.S.R.Gnanasekar. Further, it is also indicated in the said letter that, still the bank decides to decline sanction, the authority may state the reasons for declining to accord sanction for prosecution.
19. In the above context, the competent authority viz., the sanctioning authority (P.W-1) had reconsidered his earlier view and had acccorded sanction. Now, cognizance has already been taken against the petitioner herein and the trial has commenced. The sanctioning authority (P.W-1) has been examined as PW-1. In his deposition, he has given explanation and reasoning for according sanction. Whether he has applied his mind or not while granting sanction is based on the proof of the documents he has relied upon to grant sanction. In his deposition PW-1 has spoken about the new materials which came to his notice after declining to accord sanction. Though the said new material is not mentioned in the sanction order, the credibility of the witness cannot be tested at this stage by the High court. The trial court has to appreciate his evidence and decide whether it inspires the confidence to rely upon. As held by the Apex Court in Dinesh Kumar -vs- Airport Authority, the question of validity of sanction is left open for consideration by the trial Court which, this Court is sure, will be considered by the trial Court at the time of judgment.
20. For the reasons stated above, the Criminal Original Petition is dismissed.
22.09.2017 jbm Index: Yes Speaking Order/non speaking order To
1. The Inspector of Police, CBI/EOW/Chennai.
2. The XI Additional Special Judge for CBI cases, Chennai.
3. The Special Public Prosecutor (CBI cases), High Court, Madras.
G.JAYACHANDRAN.J., jbm Pre Delivery Order made in Crl.O.P.No.18698 of 2017 22.09.2017