A. SRINIVASULU v. THE STATE

A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE A-1 for the said offences and sentencing him to imprisonment of varying terms and fines of different amounts are liable to be reversed. [Para 104][65-F-G]

4.4 No Court shall take cognizance of any offence punishable under Section 193 IPC, except on a complaint in writing of that Court or of some other Court to which that Court is subordinate. This bar is found in Section 195(1)(b)(i) of the Code. No complaint was ever made by any Court or by any officer authorized by any Court that A-1 or A-3 or A-4 committed an offence punishable under Section 193 IPC. But unfortunately, the trial court convicted A-1, A-3 and A-4, of the offence under Section 193 without any application of mind and the same has been upheld by the High Court. [Para 108][66-E, F]

4.5 The reading of the trial court and the High Court as though this Committee of which A-3, A-4 and the Approver were a part, was actually a Tender Committee having a larger role to play, is completely misconceived. In fact, the prosecution had to stand or fall on the strength of the testimony of the Approver namely PW-16. Despite the assertion on the part of PW-16 giving a clean chit to A-3 and A-4, the trial court found both of them guilty on a convoluted logic that they were part of a Tender Committee and that “every word and every description in the Tender Committee proceedings had been written by them with a view to cheat PSU” and that “if A-3 and A-4 were innocent they should have questioned and asked for details regarding the contractors.” Such a reasoning given by the trial court and approved by the trial court and approved by the High Court was completely perverse. [Paras 110-112][64-D, E; 68-A, B]

4.6 A-4 had no role in choosing the tenderers, but entered the picture only after the offers were received from the tenderers. Admittedly, A-4 was subordinate to both PW-16 and A-3.The competent authority refused to grant sanction to prosecute A-3 and A-4 for the offences under the PC Act. The trial court and the High Court did not find A-4 as a co-conspirator, which is why he was not held guilty of the offence under Section 120-B IPC. Section 193 IPC had been included completely out of context. The 17 A B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R. conviction of A-4 by the trial court as confirmed by the High Court is wholly unsustainable and is liable to be set aside. [Paras 113- 115][68-C-E]

4.7 Three out of four bank officials examined by the prosecution to show that A-7 applied for demand drafts on behalf of four bogus firms, did not identify A-7 as the person who applied for the demand drafts. They did not also identify the handwriting in Exhibits P-66, P-90 and P- 92 as that of A-7. The only person who stated something in favour of the prosecution was PW-32 and it was in relation to Exhibit P-76. [Para 122][69-H; 70-A]

4.8 There was a colossal failure on the part of the prosecution to establish that Exhibits P-66, P-76, P-90 and P-92 were in the handwritings/signatures of A-7. This is despite the prosecution examining the bank officials as PW-22, PW-32, PW- 40 and PW-41 and the handwriting expert as PW-30. [Para 128][71-A]

4.9 Unfortunately, the trial court adopted a very curious reasoning that since he was a beneficiary of the money diverted to the account of sister concern, he must have had participation and knowledge that the demand drafts were purchased to cheat PSU. Such a reasoning is wholly unacceptable in view of the fact that A-7 was accused of forgery and charged u/s. 468 IPC, in relation to these very same applications for demand drafts. Therefore, it was necessary for the prosecution to prove forgery and also to show that the purpose of such forgery was cheating. Both were absent. The High Court fortunately realised the pitfall in the reasoning of the trial court. But in an over-anxiety to somehow convict A-7, the High Court adopted a very peculiar route, namely that of undertaking the task of comparing the admitted signatures/ handwritings with the disputed ones u/s. 73 of the Evidence Act. [Paras 129, 130][71-B-E]

4.10 There was no signature or writing available before the High Court, which had been admitted or proved to the satisfaction of the Court to have been written or made. The High Court did not also direct A-7 to write any words or figures for the purpose of enabling a comparison. Without following the procedure so 18 A B C D E F G H A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE prescribed in Section 73, the High Court invented a novel procedure, to uphold the conviction handed over by the trial court through a wrong reasoning. Even in the questioning under Section 313 of the Code, no specific question was put to A-7 whether Exhibits P-66, P-76, P-90, P-92 and P- 75 were in his handwritings and whether they contained his signatures. Therefore, what was contained in Exhibit P-75 was not even admitted signatures. In the absence of either admission or proof of the admitted signatures, the High Court could not have resorted to Section 73 of the Evidence Act. In view thereof, the finding recorded by the trial court and the High Court as though A-7 committed forgery and cheating by making applications for the issue of demand drafts in the names of bogus firms is wholly unsustainable. [Paras 132, 135-137][71-F, G; 72-C-E]

4.11 The only connecting link pointed out against A-7 was the transfer of money to the total extent of Rs.1,52,50,000/- to the account of a firm of which he was a partner. This by itself will not constitute any offence. Therefore, the charge that A-7 abetted the commission of the crime by the other accused, should also fail. This is especially so when A-5, whose proprietary concern bagged the contract, not only lost the contract but also allowed the bank guarantee to be invoked by the PSU and in addition, left a huge amount of Rs.2.60 crores still with the PSU. Therefore, the conviction and sentence awarded to A-7 cannot be sustained. [Para 138][72-F-G] Suresh Chandra Bahri vs. State of Bihar 1995 Supp (1) SCC 80:[1994] 1 Suppl. SCR 483 – distinguished. Bangaru Laxman vs. State (through CBI) (2012) 1 SCC 500 : [2011] 13 SCR 268; State through CBI vs. V. Arul Kumar (2016) 11 SCC 733 : [2016] 2 SCR 486; Sardar Iqbal Singh vs. State (Delhi Administration) (1977) 4 SCC 536 : [1978] 2 SCR 174; Yakub Abdul Razak Memon vs. State of Maharashtra (2013) 13 SCC 1 : [2013] 15 SCR 1; Sarwan Singh vs. State of Punjab 1957 SCR 953; Ravinder Singh vs. State of Haryana (1975) 3 SCC 742 : [1975] 3 SCR 453 – relied on. 19 A B C D E F G H 20 A B C D SUPREME COURT REPORTS [2023] 10 S.C.R. Matajog Dobey vs. H.C. Bhari [1955] 2 SCR 925; Dr. Hori Ram Singh vs. The Crown 1939 SCC OnLine FC 2; State of Orissa through Kumar Raghvendra Singh vs. Ganesh Chandra Jew (2004) 8 SCC 40 : [2004] 3 SCR 504; K. Kalimuthu vs. State by DSP (2005) 4 SCC 512 : [2005] 3 SCR 1; Rakesh Kumar Mishra vs. State of Bihar (2006) 1 SCC 557 : [2006] 1 SCR 124; Devinder Singh vs. State of Punjab through CBI (2016) 12 SCC 87 : [2016] 6 SCR 295; D. Devaraja vs. Owais Sabeer Hussain (2020) 7 SCC 695 : [2020] 6 SCR 453; Parkash Singh Badal vs. State of Punjab (2007) 1 SCC 1 : [2006] 10 Suppl. SCR 197; Harshad S. Mehta vs. State of Maharashtra (2001) 8 SCC 257 : [2001] 2 Suppl. SCR 577; State through Central Bureau of Investigation, Chennai vs. V. Arul Kumar (2016) 11 SCC 733 : [2016] 2 SCR 486; A. Devendran vs. State of T.N. (1997) 11 SCC 720 : [1997] 4 Suppl. SCR 591; P.C. Mishra vs. State (CBI) (2014) 14 SCC 629 : [2014] 4 SCR 183; M.O. Shamsudhin vs. State of Kerala (1995) 3 SCC 351 : [1995] 2 SCR 900 – referred to. Case Law Reference E (1955) 2 SCR 925 [2004] 3 SCR 504 [2005] 3 SCR 1 [2006] 1 SCR 124 [2016] 6 SCR 295 [2020] 6 SCR 453 referred referred to referred to referred to referred to relied on [2006] 10 Suppl. SCR 197 referred to [2001] 2 Suppl. SCR 577 referred to [2014] 4 SCR 183 referred to Para 57, 74 [2016] 2 SCR 486 [2011] 13 SCR 268 relied on relied on [1997] 4 Suppl. SCR 591 referred to Para 74 Para 63 Para 67 Para 38 Para 39 Para 40 Para 40 Para 41 Para 42, 43 Para 48 Para 57 F G H A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [1994] 1 Suppl. SCR 483 distinguished [1978] 2 SCR 174 [2013] 15 SCR 1 [1957] SCR 953 [1975] 3 SCR 453 [1995] 2 SCR 900 relied on relied on relied on relied on referred to Para 72 Para 76 Para 76 Para 83 Para 83 Para 84 CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 2417 of 2010. From the Judgment and Order dated 17.09.2010 of the High Court of Madras in CRLA No. 437 of 2006. With Criminal Appeal Nos. 16 of 2011 and 2444 of 2010. Nagamuthu, Mrs. V. Mohana, Huzefa A. Ahmadi, Sr. Advs., Vijay Kumar, B. Ragunath, N. Sridhar, Mrs. N. C. Kavitha, Karthick Subramani, Ms. Ranjeeta Rohatgi, Kaushik Mishra, Ms. Rashmi Singh, Ms. Samten Doma Lachungpa, Nishant Sharm, Rakesh K. Sharma, Advs. for the Appellant. Sanjay Jain, ASG, A K Kaul, Ms. Srishti Mishra, Padmesh Mishra, Ms. Shradha Deshmukh, Madhav Sinhal, Arvind Kumar Sharma, Advs. for the Respondent. The Judgment of the Court was delivered by V. RAMASUBRAMANIAN, J.

1. These three criminal appeals arise out of a common Judgment passed by the Madurai Bench of the Madras High Court confirming the conviction of the appellants herein for various offences under the Indian Penal Code, 18601 and the Prevention of Corruption Act, 19882.

2. We have heard Shri Huzefa A. Ahmadi, Shri S. Nagamuthu, Mrs. V. Mohana, learned senior counsel and Shri S.R. Raghunathan, learned counsel appearing for the appellants and Shri Sanjay Jain, learned ASG assisted by Shri Padmesh Misra, learned Counsel for the Central Bureau of Investigation. 1 For short, “IPC” 2 For short, “PC Act” 21 A B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R.

3. The brief facts leading to the above appeals are as follows: (i) Seven persons, four of whom were officers of BHEL, Trichy (a Public Sector Undertaking), and the remaining three engaged in private enterprise, were charged by the Inspector of Police, SPE/CBI/ACB, Chennai, through a final report dated 16.07.2002, for alleged offences under Section 120B read with Sections 420, 468, Section 471 read with Section 468 and Section 193 IPC and Section 13(2) read with Section 13(1)(d) of the PC Act. Cognizance was taken by the Principal Special Judge for CBI cases, Madurai in CC No.9 of 2002. During the pendency of trial, two of the accused, namely, A-5 and A-6 died. (ii) By a judgment dated 08.09.2006, the Special Court acquitted A-2 and convicted A-1, A-3, A-4 and A-7 for various offences. These four convicted persons filed three appeals in Criminal Appeal (MD) Nos.437, 445 and 469 of 2006, on the file of the Madurai Bench of the Madras High Court. (iii) By a common Judgment dated 17.09.2010, the High Court dismissed the appeals, forcing A-1, A-3, A-4 and A-7 to come up with four criminal appeals, namely, Appeal Nos.2417, 2443 and 2444 of 2010 and 16 of 2011. (iv) However, during the pendency of the above appeals, A-3 (R. Thiagarajan) died and hence Criminal Appeal No.2443 of 2010 filed by him was dismissed as abated. (v) Therefore, what is now before us, are three criminal appeals, namely, Criminal Appeal Nos.2417 and 2444 of 2010 and 16 of 2011 filed respectively by A-1, A-7 and A-4.

4. Since the charges framed against all the appellants were not the same and also since all the appellants herein were not convicted uniformly for all the offences charged against them, we present below in a tabular form, the offences for which charges were framed against each of them, the offences for which each of them was held guilty and the offences for which they were not held guilty. 22 A B C D E F G H A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] 23 A B C D E F G H 24 SUPREME COURT REPORTS [2023] 10 S.C.R. A A7 N.Raghunath, Brother of A-5 and son of A-6 Section 471 read with 468 and 109 read with IPC 13(2) Section read with 13(1)(e) of the PC Act. Not found guilty of the offences Section 120B read with Section 420 and 193 IPC. Section 120B read with 420, 468, 471 read with 468 and IPC 193 Section 13(2) read with 13(1)(d) of the PC Act. In addition, he was charged also under Section 109 IPC.

5. For easy appreciation, the punishments awarded offence-wise to each of the accused, by the Special Court and confirmed by the High Court, are again presented in a tabular column as follows: B C D E F G H A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] 25

6. The background facts leading to the prosecution of the appellants A herein and their eventual conviction, may be summarised as follows:- (i) During the period 1991-92, the Tamil Nadu Water Supply and Drainage Board decided to set up “ROD Plants” (Reverse Osmosis Desalination Plants) to provide potable water to drought-prone areas in Ramnad District of Tamil Nadu. They entrusted the work to BHEL, Tiruchirapalli. (ii) After resorting to limited/restricted tenders, BHEL awarded the contract to one Entoma Hydro Systems. (iii) A Letter of Intent was issued to the said Company on 06.07.1994 and on 02.08.1994, an interest free mobilisation advance to the tune of Rs.4.32 crores was released to M/s Entoma Hydro Systems. (iv) But subsequently, the contract was also cancelled on 04.10.1996; the bank guarantee furnished by the Contractor was invoked on 27.09.1996; and a payment of Rs.4,84,13,581/- was realised by BHEL. (v) (vi) Thereafter, on 31.01.1997, CBI registered a First Information Report in Crime No. RC 8(A) of 97 against four individuals, three of whom were officials of BHEL and the fourth, the contractor. It was alleged in the First Information Report that the three officials of BHEL and the contractor entered into a criminal conspiracy to cheat BHEL and caused loss to BHEL to the tune of Rs.4.32 crores by awarding the contract to the aforesaid concern. The FIR was for offences under Section 120B read with 420, Section 420 IPC and Section 13(2) read with Section 13(1)(d) of PC Act. In November 1998, the person first named in the FIR namely K.Bhaskar Rao, DGM, was arrested and released on bail by CBI itself. Thereafter, he gave a confession before the XVIII Metropolitan Magistrate, Chennai under Section 164 of the Code of Criminal Procedure. After the confession so made, CBI moved an application in Criminal Miscellaneous Petition No.562 of 2000 under Section 306 of the Code, before the Chief Judicial Magistrate, Madurai B C D E F G H 26 A B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R. for the grant of pardon to K.Bhaskar Rao. The petition was made over to the Additional Chief Judicial Magistrate, Madurai, who passed an order dated 18.07.2000 granting pardon to Bhaskar Rao. (vii) Thereafter, CBI requested the Chairman, BHEL to grant sanction to prosecute the other two officials named in the FIR, for the offences under the PC Act. But by letter dated 02.05.2001, the Chairman, BHEL refused to grant the permission to prosecute those two officers named in the FIR for the offences under the PC Act. (viii) After completion of investigation, CBI filed a final report on 16.07.2002 against seven accused namely, (i) A Srinivasulu, formerly Executive Director, BHEL; (ii) R. Krishna Rao, Retired General Manager, BHEL; (iii) R. Thyagarajan, Assistant General Manager (Finance), BHEL; (iv) K. Chandrasekaran, Deputy General Manager, BHEL; (v) Mohan Ramnath Proprietor, Entoma Hydro Systems; (vi) NRN Ayyar; and (vii) N. Raghunath. The final report was filed directly before the Principal Special Court for CBI Cases, Madurai. (ix) In the final report, the prosecution charged:- (cid:1) A-1 to A-7 for the offences under Section 120B read with Sections 420, 468, Section 471 read with Section 468, Section 193 IPC and Section 13(2) read with Section 13(1)(d) of the PC Act. (cid:1) A-1 and A-2 for offences under Section 13(2) read with Section 13(1)(d) of the PC Act, 1988 and Section 109 IPC read with Sections 420, 468, Section 471 read with Section 468 and Section 193 IPC. (cid:1) A-3 and A-4 for offences under Section 109 IPC read with Sections 420, 468, Section 471 read with Section 468 and Section 193 IPC. (cid:1) A-5, A-6 and A-7 for offences under Sections 420, 468, Section 471 read with Section 468, Section 193 IPC and Section 109 IPC read with Section 13(1)(d) of the PC Act. A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] 27 (x) The Special Judge framed the charges on 04.07.2003. A (xi) The prosecution examined 44 witnesses and marked 94 documents. A-5 and A-6 died pending trial and hence the charges against them were abated. (xii) By a judgment dated 08.09.2006, the Principal Special Judge for CBI cases acquitted A-2 but convicted A-1, A-3, A-4 and A-7 for various offences indicated in Column No. 4 of the Table under paragraph 4 above. (xiii) Challenging the conviction and punishment, A-1 filed a separate appeal in Criminal Appeal No.437 of 2006 on the file of the Madurai Bench of the Madras High Court. A-3 and A-4 joined together and filed a common appeal in Criminal Appeal No.469 of 2006. A-7 filed a separate appeal in Criminal Appeal No.445 of 2006. B C (xiv) By a judgment dated 17.09.2010, the Madurai Bench of the Madras High Court dismissed all the three appeals. D (xv) Therefore, A-1, A-3, A-4 and A-7 filed four independent appeals before this Court respectively in Criminal Appeal Nos.2417, 2443 and 2444 of 2010 and 16 of 2011. But A-3, the appellant in Criminal Appeal No.2443 of 2010 died pending appeal and hence his appeal was dismissed as abated. Therefore, we are now left with three appeals filed by A-1, A-4 and A-7 arising out of concurrent judgments of conviction.

7. In brief, the case of the prosecution was that A-1 to A-7 entered into a criminal conspiracy to cheat BHEL in the matter of award of contract for the construction of desalination plants. In pursuance of the said conspiracy, A-1, the then Executive Director of BHEL instructed Bhaskar Rao, the DGM (who turned Approver) to go in for limited/ restricted tenders without following the tender procedure of pre- qualification of prospective tenderers before inviting limited tenders. According to the prosecution, A-1 dictated the names of four bogus firms along with the name of M/s Entoma Hydro Systems represented by its proprietor A-5, for inviting limited tenders. As per the dictates of A-1, the Approver put up a proposal suggesting the names of the five firms (including four bogus firms) together with the names of two companies which were not in the similar line of work. Thereafter, A-2, E F G H 28 A B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R. knowing well that the firms were bogus and were neither pre-qualified nor selected from the approved list of contractors, processed the note submitted by the Approver and sent it to A-1. When tender enquires were made, A-5 responded to the same not only in the name of M/s Entoma Hydro Systems but also on behalf of the four bogus firms. A-7, the brother of A-5 obtained demand drafts for Rs.20,000/- each in the names of the bogus firms by remitting cash into Indian Bank, Royapettah Branch, State Bank of India, Velachery Branch, State Bank of Mysore, T. Nagar Branch and Bank of Madura, Mount Road Branch and also by filling up demand draft applications and signing the same in the names of the bogus firms. Thereafter, the Tender Committee consisting of the Approver, A-3 and A-4 processed the names of all these firms and recommended the award of contract to M/s Entoma Hydro Systems, giving false justifications for recommending them though the said firm did not have necessary experts or technical expertise. The Committee even recommended the sanction of interest free mobilisation advance, in violation of existing practice, to cause pecuniary advantage to A-5. Accordingly, an interest free mobilisation advance of Rs.4.32 crores was paid to A-5’s firm. The amount was deposited in the account of the firm with Indian Bank. From the said account, a sum of Rs.1.52 crores was diverted to a sister concern of A-5, in which A-5, his father (A-6) and his brother (A-7) were partners. By such an action, A-5 to A-7 obtained wrongful gain from BHEL. The Prosecution alleged that by these actions, A-1 to A-7 committed the offences charged against them.

8. As stated in para 6 above, the Prosecution examined 44 witnesses, which included the Approver, who was examined as PW-16. 94 documents were marked as exhibits on the side of the prosecution. One witness was examined on the side of the defence as DW-1 and 6 documents were marked as exhibits Ex. D-1 to D-6.

9. In its judgment dated 08.09.2006, the Special Court brought on record the charges, the evidence and the rival contentions from paragraphs 1 to 60. The actual discussion and analysis by the Court began from paragraph 61.

10. To begin with, the Special Court took up for consideration the contention of the accused that BHEL did not suffer any wrongful loss and that, therefore, the charge under Section 420 IPC does not lie. But this contention of the accused was rejected by the Trial Court on the ground that the entire interest free mobilisation advance of Rs.4.32 crores A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] was deposited in the account of M/s Entoma Hydro Systems with Indian Bank and that out of the same, a sum of Rs.1,52,50,000/- was transferred to a firm by name M/s Insecticides & Allied Chemicals, of which A-5 to A-7 were partners. Therefore, the Special Court came to the conclusion that on the date on which the transfer of money took place, a direct wrongful monetary loss was caused to BHEL and a direct wrongful monetary gain caused to A-5 to A-7. The Special Court also held that after the termination of the contract with M/s Entoma Hydro Systems, BHEL divided the contract into several parts and awarded the contracts to various persons and that, therefore, the money paid to each of such contractors was a wrongful loss to BHEL. Though the Special Court also found that BHEL actually recovered Rs.4.32 crores (by invoking the bank guarantee), the Court concluded that there was no proof to show that money was paid out of the firm M/s Insecticides & Allied Chemicals. Therefore, the Special Court first concluded that BHEL suffered wrongful loss and that therefore, the offence under Section 420 IPC was made out.

11. The Trial Court then took up for consideration, the argument that the confession statement of PW-16 (Approver) marked as Exhibit P-44 had to be rejected, in view of the fact that PW-16 had not stated anything self-incriminating in his confession statement. But this contention advanced on behalf of A-1 was rejected by the Court on the ground that Exhibit P-26 is the chit in which PW-16 admittedly wrote down the names of four bogus firms and the name of M/s Entoma Hydro Systems, as dictated by A-1 and that this was sufficient to show that PW-16 was incriminating himself in the charge of criminal conspiracy with A-1.

12. When it was pointed out that as per the evidence on record, PW-1 was on leave26.11.1992, due to the death of his mother-in-law and that therefore, he could not have had any discussion on that date, the Trial Court turned this very argument against A-1 and held that A-1 should not have approved the Approval Note dated 25.11.1992 marked as Exhibit P-27, if he was on leave and had not carried out a background check.

13. The Trial Court thereafter held that the prosecution had successfully proved that the four other firms whose names were found in the chit Exhibit P-26 were all bogus. This was on the basis of the evidence of PW-2, PW-3, PW-5, PW-6, PW-7, PW-9, PW-10 and PW- 13. 29 A B C D E F G H 30 A B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R.

14. Believing the statement of PW-16 to be true, the Special Court came to the conclusion that A-1 predetermined the award of contract to A-5 and created circumstances and records to show as though proper procedure was followed and that therefore A-1 was guilty of the charges.

15. Coming to the charges against A-2, the Special Court held that the only role played by him was to prepare the Approval Note dated 25.11.1992 and that in view of the overwhelming evidence against A-1, the contract would have, in any case, been awarded to the firm in question. Therefore, the Special Court came to the conclusion (in paragraph 79 of the judgment) that A-2 was merely asked to sign in Exhibit P-27, only to give credibility to the list prepared by A-1 and the Approver acting in conspiracy. After reaching such a finding, the Special Court acquitted A-2 of the charges framed against him.

16. Insofar as A-3 and A-4 are concerned, it was argued that they came into the picture only after 23.12.1992, when the Negotiation Committee comprising of A-3, A-4 and the Approver was formed. But this argument was rejected by the Trial Court by holding that what was constituted was a Tender Committee, as seen from Exhibit P-36 (proceedings of the Committee) and that therefore if they were innocent, they should have questioned and sought details regarding the contractors. Interestingly, the Trial Court after holding in paragraph 79 that the charges against A-2 were not proved, again went back to the question of guilt of A-2, after holding A-3 and A-4 guilty, through a reversal of the logic.

17. Coming to the role played by A-7, the Trial Court held that it was he who purchased the demand drafts in the names of the bogus firms, with a view to cheat BHEL and that he obtained wrongful gain for himself as a partner of the firm Insecticides & Allied Chemicals. On the basis of these findings, the Trial Court convicted the accused for the offences mentioned by us in the table under paragraph 4 and sentenced them to imprisonment and fine indicated in the table under paragraph 5.

18. While dealing with the appeals filed by A-1, A-3, A-4 and A- 7, the High Court divided the same into two categories, the first dealing with the complicity of A-1, A-3 and A-4 and the second dealing with the complicity of A-7. This was perhaps for the reason that A-1, A-3 and A- 4 were Officers of BHEL, while A-7 was a private individual.

19. On the complicity of A-1, A-3 and A-4, the High Court primarily relied upon the evidence of PW-8, the Technical Examiner of the Central A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] Vigilance Commission as well as the evidence of PW-16, the Approver. On the basis of their evidence, supported by documents, the High Court held that the complicity of A-1, A-3 and A-4 was proved. On the question as to whether the action of the accused resulted in monetary loss to BHEL, the High Court held that the subsequent remedial measure taken by BHEL by invoking the bank guarantee and realizing the money, cannot lead to the conclusion that there was no wrongful loss.

20. Insofar as the complicity of A-7 is concerned, the High Court held that the signatures contained in the applications presented to various banks for obtaining demand drafts for procuring the tender document, were obviously that of A-7. In fact, the applications for securing demand drafts were marked as Exhibits P-66, P-76, P-90 and P-92 and these exhibits had been sent to a handwriting expert for his opinion. The handwriting expert was examined as PW-30. His report was marked as Exhibit P-68. The specimen writings and signatures of A-7 were marked as Exhibit P-75 through PW-30.

21. But the High Court found in paragraph 44 of the impugned judgment that the handwriting expert had not furnished any opinion in his report as to the comparison of the writings found in Exhibit P-75 with the demand draft application forms Exhibits P-66, P-76, P-90 and P-92. The High Court also found (in paragraph 49 of the impugned judgment) that the admitted handwritings and the signatures were not compared by the handwriting expert. After recording such a finding, the High Court took upon itself the task of making a comparison by itself, by invoking Section 73 of the Evidence Act. By so invoking Section 73, the High Court came to the conclusion that the signatures found in the demand draft applications were that of A-7 and that the diversion of funds to M/ s. Insecticides & Allied Chemicals is a circumstance which corroborated the same.

22. It was argued before the High Court on behalf of A-3 and A- 4 that BHEL Administration had refused to accord sanction to prosecute them for the offences under the PC Act and that therefore they cannot be held guilty of other offences. But this contention was rejected by the High Court, on the ground that the decision taken by the Management of the Company cannot have a bearing upon the prosecution case.

23. On the basis of the above findings, the High Court dismissed the appeals and confirmed the conviction and sentence awarded by the Trial Court. 31 A B C D E F G H 32 A B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R.

24. Appearing on behalf of A-1, Shri Huzefa Ahmadi, learned senior counsel contended:- (i) (ii) That there was no evidence to connect A-1 with the commission of any of the offences and that none of the charges stood established beyond reasonable doubt; That the substratum of the allegations was based entirely upon the statement of the approver (PW-16), but the same suffers from serious irregularities; (iii) That though no sanction was required to prosecute A-1 for the offences under the PC Act in view of his retirement before the filing of the final report, a previous sanction was necessary under Section 197(1) of the Code, but the same was not obtained; and (iv) That the prosecution failed to establish the necessary ingredient of “obtaining any valuable thing or pecuniary advantage either for himself or for any other person” for holding him guilty of the offences under Section 13(1)(d) of the PC Act.

25. Appearing on behalf of A-4, it was contended by Shri S.R. Raghunathan, learned counsel:- (i) (ii) (iii) (iv) (v) (vi) that A-4 played no role either in the preparation of tender or in choosing the tenderers; that what was constituted on 23.12.1992, after the tenderers were shortlisted, allegedly by PW-16 at the instance of A- 1, was only a Negotiation Committee; that in the said Committee comprising of three members, namely A-3, A-4 and PW-16, he (A-4) was the one who was subordinate to the other two members and hence the logic applied to A-2 should have been extended to him also; that both the Special Court and the High Court overlooked the evidence of PW-14 to the effect that no tender committee was constituted; that no wrongful loss was caused to BHEL; that on the contrary, due to the role played by A-4, a bank guarantee to the tune of Rs.4.84 crores was obtained from Entoma Hydro Systems; A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] 33 (vii) that the bank guarantee was invoked and the entire amount paid by BHEL towards mobilization advance was recovered; A (viii) that as a matter of fact a sum of Rs. 2.60 crores is due and payable by BHEL to Entoma Hydro Systems, after the bank guarantee was invoked and the accounts reconciled; (ix) (x) that despite repeated requests of the CBI, the Management of BHEL refused to give sanction to prosecute A-3 and A- 4, on the ground that they acted in the best commercial interest of the Company; and that once A-4 is not held guilty of the offence under Section 120B, it was not possible to convict him for the other offences, especially in the facts and circumstances of the case.

26. Appearing on behalf of A-7, it was contended by Shri S. Nagamuthu, learned senior counsel:- (i) (ii) (iii) (iv) (v) that the confession statement of PW-16 was recorded by the XVIII Metropolitan Magistrate, Chennai, but pardon was granted by the Additional Chief Judicial Magistrate, Madurai and the final report was filed directly before the Special Court for CBI cases; that since the Additional Chief Judicial Magistrate granted pardon in this case, this case is covered by Sub-section (1) of Section 306 and hence the prosecution ought to have followed the procedure prescribed under Section 306(4)(a) of the Code; that there is no particular reason as to why the petition for pardon was made before the Additional Chief Judicial Magistrate, when the confession statement was recorded by the Metropolitan Magistrate and there is no reason why the prosecution chose to file the final report directly before the Special Court under section 5(1) of the PC Act 1988; that neither the evidence of PW-44 (I.O.) nor the evidence of PW-16 (approver) had anything incriminating A-7; that A-7 has been roped in, merely because of his relationship with A-5 and also on account of a sum of B C D E F G H 34 A B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R. (vi) Rs.1,52,50,000/- being transferred to the firm of which he is a partner, from out of the account of Entoma Hydro Systems; that while the Special Court, without going into the report of the handwriting expert marked as Exhibit P-68 and without putting any question to A-7 under Section 313 of the Code in relation to his specimen signatures marked as Exhibit P-75 came to the conclusion that the applications for demand drafts bore his handwriting and signatures, the High Court rejected the said reasoning but took to the route available under Section 73 of the Indian Evidence Act, 1872. (vii) That the procedure under Section 73 of the Evidence Act is available to a Court only when there are admitted or proved handwritings, which were absent in this case; (viii) That in any case there was no loss caused to BHEL, which is a sine qua non for the offence under the PC Act; and (ix) That by a strange logic A-7 was convicted for the offence under Section 13(1)(e) of the PC Act.

27. Countering the submissions made on behalf of the appellants, it was argued by Shri Padmesh Mishra, learned counsel for the State: (i) that there was cogent evidence, both oral and documentary, to connect all the accused with the offences for which they were found guilty; (ii) that the evidence of the Approver (PW-16) stood corroborated by the testimonies of other witnesses, on all aspects such as the deliberate act of going in for limited tender, predetermining the person in whose favour the contract was to be awarded, sanction of an interest free mobilisation advance far in excess of the normal business norm, diversion of such advance by the contractor to another firm in which he was a partner along with is father and brother and the eventual termination of the contract on account of these malpractices; (iii) that there is no requirement in law that actual loss should have been suffered for an offence under Section 13(1)(d) of the PC Act to be made out; A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] 35 (iv) (v) (vi) (vii) that in any case what was recovered by the invocation of the bank guarantee was the loss suffered in the first instance; A that it is well settled that previous sanction to prosecute under Section 197(1) of the Code is necessary only when the act complained of is in the discharge of official duties; that an offence of cheating cannot by any stretch of imagination be seen as part of official duties; that the power to grant pardon is available concurrently to the Chief Judicial Magistrate/ Metropolitan Magistrate as well as the Court of Session; (viii) that therefore there was nothing wrong in the Additional Chief Judicial Magistrate, Madurai granting pardon; and (ix) that therefore the concurrent judgments of conviction of the appellants do not warrant any interference.

28. We have carefully considered the rival contentions. For the purpose of easy appreciation, we shall divide the discussion and analysis into three parts, the first dealing with the contention revolving around Section 197 of the Code, the second dealing with the correctness of the procedure adopted while granting pardon under Section 306 of the Code and the third revolving around the merits of the case qua culpability of each of the appellants before us. Discussion and Analysis Part-I (Revolving around Section 197 of the Code)

29. There is no dispute about the fact that A-1 to A-4, being officers of a company coming within the description contained in the Twelfth item of Section 21 of the IPC, were ‘public servants’ within the definition of the said expression under Section 21 of the IPC. A-1 to A-4 were also public servants within the meaning of the expression under Section 2(c)(iii) of the PC Act. Therefore, there is a requirement of previous sanction both under Section 197(1) of the Code and under Section 19(1) of the PC Act, for prosecuting A-1 to A-4 for the offences punishable under the IPC and the PC Act.

30. Until the amendment to the PC Act under the Prevention of Corruption (Amendment) Act, 2018 (Act 16 of 2018), with effect from 26.07.2018, the requirement of a previous sanction under Section 19(1)(a) B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R. was confined only to a person “who is employed”. On the contrary, Section 197(1) made the requirement of previous sanction necessary, both in respect of “any person who is” and in respect of “any person who was” employed. By the amendment under Act 16 of 2018, Section 19(1)(a) of the PC Act was suitably amended so that previous sanction became necessary even in respect of a person who “was employed at the time of commission of the offence”.

31. The case on hand arose before the coming into force of the Prevention of Corruption (Amendment) Act, 2018 (Act 16 of 2018). Therefore, no previous sanction under Section 19(1) of the PC Act was necessary insofar as A-1 was concerned, as he had retired by the time a final report was filed. He actually retired on 31.08.1997, after 7 months of registration of the FIR (31.01.1997) and 5 years before the filing of the final report (16.07.2002) and 6 years before the Special Court took cognizance (04.07.2003). But previous sanction under Section 19(1) of the PC Act was required in respect of A-3 and A-4, as they were in service at the time of the Special Court taking cognizance. Therefore, the Agency sought sanction, but the Management of BHEL refused to grant sanction not once but twice, insofar as A-3 and A-4 are concerned.

32. It is by a quirk of fate or the unfortunate circumstances of having been born at a time (and consequently retiring at a particular time) that the benevolence derived by A-3 and A-4 from their employer, was not available to A-1. Had he continued in service, he could not have been prosecuted for the offences punishable under the PC Act, in view of the stand taken by BHEL.

33. It appears that BHEL refused to accord sanction by a letter dated 24.11.2000, providing reasons, but the CVC insisted, vide a letter dated 08.02.2001. In response to the same, a fresh look was taken by the CMD of BHEL. Thereafter, by a decision dated 02.05.2001, he refused to accord sanction on the ground that it will not be in the commercial interest of the Company nor in the public interest of an efficient, quick and disciplined working in PSU.

34. The argument revolving around the necessity for previous sanction under Section 197(1) of the Code, has to be considered keeping in view the above facts. It is true that the refusal to grant sanction for prosecution under the PC Act in respect of A-3 and A-4 may not have a direct bearing upon the prosecution of A-1. But it would certainly provide 36 A B C D E F G H A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] 37 the context in which the culpability of A-1 for the offences both under the IPC and under the PC Act has to be determined. A

35. It is admitted by the respondent-State that no previous sanction under section 197(1) of the Code was sought for prosecuting A-1. The stand of the prosecution is that the previous sanction under Section 197(1) may be necessary only when the offence is allegedly committed “while acting or purporting to act in the discharge of his official duty”. Almost all judicial precedents on Section 197(1) have turned on these words. Therefore, we may now take a quick but brief look at some of the decisions.

36. Dr. Hori Ram Singh vs. The Crown3 is a decision of the Federal Court, cited with approval by this court in several decisions. It arose out of the decision of the Lahore High Court against the decision of the Sessions Court which acquitted the appellant of the charges under Sections 409 and 477A IPC for want of consent of the Governor. Sir S. Varadachariar, with whose opinion Gwyer C.J., concurred, examined the words, “any act done or purporting to be done in the execution of his duty” appearing in Section 270(1) of the Government of India Act, 1935, which required the consent of the Governor. The Federal Court observed at the outset that this question is substantially one of fact, to be determined with reference to the act complained of and the attendant circumstances. The Federal Court then referred by way of analogy to a number of rulings under Section 197 of the Code and held as follows:- “The reported decisions on the application of sec. 197 of the Criminal Procedure Code are not by any means uniform. In most of them, the actual conclusion will probably be found to be unexceptionable, in view of the facts of each ease; but, in some, the test has been laid down in terms which it is difficult to accept as exhaustive or correct. Much the same may be said even of decisions pronounced in England, on the language, of similar statutory provisions (see observations in Booth v. Clive . It does not seem to me necessary to review in detail the decisions given under sec. 197 of the Criminal Procedure Code which may roughly be classified as falling into three groups, so far as they attempted to state something in the nature of a 3 1939 SCC OnLine FC 2 B C D E F G H 38 A B C D E F G H SUPREME COURT REPORTS [2023] 10 S.C.R. test. In one group of cases, it is insisted that there must be something in the nature of the act complained of that attaches it to the official character of the person doing it: cf. In re Sheik Abdul Khadir Saheb ; Kamisetty Raja Rao v. Ramaswamy, AmanatAli v. King-emperor, King- Emperor v. Maung Bo Maung and Gurushidayya Shantivirayya Kulkarni v. King-Emperor. In another group, more stress has been laid on the circumstance that the official character or status of the accused gave him the opportunity to commit the offence. It seems to me that the first is the correct view. In the third group of cases, stress is laid almost exclusively on the fact that it was at a time when the accused was engaged in his official duty that the alleged offence was said to have been committed [see Gangaraju v. Venki , quoting from Mitra’s Commentary on the (criminal Procedure Code). The use of the expression “while acting” etc., in sec. 197 of the Criminal Procedure Code (particularly its introduction by way of amendment in 1923) has been held to lend some support to this view. While I do not wish to ignore the significance of the time factor, it does not seem to me right to make it the test. To take an illustration suggested in the course of the argument, if a medical officer, while on duty in the hospital, is alleged to have committed rape on one of the patients or to have stolen a jewel from the patient’s person, it is difficult to believe that it was the intention of the Legislature that he could not be prosecuted for such offences except with the previous sanction of the Local Government”

37. It is seen from the portion of the decision extracted above that the Federal Court categorised in Dr. Hori Ram Singh (supra), the decisions given under Section 197 of the Code into three groups namely (i)cases where it was held that there must be something in the nature of the act complained of that attaches it to the official character of the person doing it;(ii) cases where more stress has been laid on the circumstance that the official character or status of the accused gave him the opportunity to commit the offence; and (iii) cases where stress is laid almost exclusively on the fact that it was at a time when the accused A. SRINIVASULU v. THE STATE REP. BY THE INSPECTOR OF POLICE [V. RAMASUBRAMANIAN, J.] was engaged in his official duty that the alleged offence was said to have been committed. While preferring the test laid down in the first category of cases, the Federal Court rejected the test given in the third category of cases by providing the illustration of a medical officer committing rape on one of his patients or committing theft of a jewel from the patient’s person.

38. In Matajog Dobey vs. H.C. Bhari4 a ConstitutionBench of this Court was concerned with the interpretation to be given to the words, “any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty” in Section 197 of the Code. After referring to the decision in Dr. Hori Ram Singh, the Constitution Bench summed up the result of the discussion, in paragraph 19 by holding: “There must be a reasonable connection between the act and the discharge of official duty; the act must bear such relation to the duty that the accused could lay a reasonable, but not a pretended or fanciful claim, that he did it in the course of the performance of his duty.”

39. In State of Orissa through Kumar Raghvendra Singh vs. Ganesh Chandra Jew5, a two Member Bench of this Court explained that the protection under Section 197 has certain limits and that it is available only when the alleged act is reasonably connected with the discharge of his official duty and is not merely a cloak for doing the objectionable act. The Court also explained that if in doing his official duty, he acted in excess of his duty, but there is a reasonable connection between the act and the performance of the official duty, the excess will not be a sufficient ground to deprive the public servant of the protection.

40. The above decision in State of Orissa (supra) was followed (incidentally by the very same author) in K. Kalimuthu vs. State by DSP6 and Rakesh Kumar Mishra vs. State of Bihar7.

41. In Devinder Singh vs. State of Punjab through CBI8, this Court took note of almost all the decisions on the point and summarized the principles emerging therefrom, in paragraph 39 as follows: