IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.Revision No.143 of 2007 With Cr.Revision No.151 of 2007. Judgment reserved on:10.03.2008. Decided on:March 17, 2008. For title, please see reverse. Coram The Hon’ble Mr.Justice Kuldip Singh, Judge. Whether approved for reporting?1 Yes For the petitioners: Mr Ashutosh Burathoki, Advocate. For the State: Mr A.K.Bansal, Addl.A.G. Kuldip Singh, Judge This judgment shall dispose of Criminal Revision No.143 of 2007 and Criminal Revision No.151 of 2007 both having been filed against the order dated 9.10.2007 read with order dated 29.10.2007 passed by learned Special Judge (Forest), Shimla (for short ‘Special Judge’) in case No.94-S/7 of 2003 titled as State versus Sant Ram etc. In fact, basic order is dated 9.10.2007 and order dated 29.10.2007 is only clarificatory. 2. The facts, in brief, are that on the basis of F.I.R. No.58 of 2000 dated 5.4.2000 registered at Police Station, Shimla East and after completion of investigation challan was filed against one Sant Ram Cashier under Sections 409, 420, 467, 468, 471, 477(A), 120-B Whether the reporters of the local papers may be allowed to see the judgment? Yes …2… IPC, Section 13(1)(a)(c)(d)(i)(ii)(iii) and 13 (2) of the Prevention of Corruption Act, 1988 (for short ‘Act’). On 27.6.2005, learned Special Judge framed charge against Sant Ram under Sections 409, 420, 467, 468, 471, 120-B IPC, Section 13(1)(c), 13(1)(d)(i)(ii) and 13 (2) of the Act. Thereafter, statements of some prosecution witnesses were recorded. On 3.12.2005 the learned Special Judge has observed that some bank officials as well as treasury officers / officials have connived with accused Sant Ram in misappropriation of the Government amount in question. The public prosecutor was directed to submit his report regarding the role played by different bank officials in the commission of crime. It was further observed that prima facie Ghanshyam Singh Bali, the then Treasury Officer, Ravinder Singh Sisodia, Senior Assistant, Chandu Lal, Senior Assistant, Durga Singh Clerk, Kirpa Ram, Junior Assistant, Tilak Raj, Junior Assistant have connived with accused Sant Ram in misappropriation of the Government amount but they have not been made accused in the case. The cognizance against these persons cannot be taken under Section 13 of the Act but cognizance can be taken under Sections 409, 420, 467, 468, 471 and 120-B IPC. The learned Special Judge ordered notice to said persons to show cause why cognizance be not taken against them for the commission of offence. 3. The prosecution acted on the basis of order dated 3.12.2005 and filed supplementary challan under Section 173 Cr.P.C. in F.I.R. No.58/2000 against five persons including S.P.Goyal, Miss Priti and Lalit Mohan. In the supplementary challan, the prosecution …3… imputed impropriety on the part of S.P.Goyal, Miss Priti and Lalit Mohan as well as against other bank officials for allegedly conniving with accused Sant Ram for making payments to him regarding bill Nos.114, 116, 126, 128, 150, 151, 156. 4. In the supplementary challan allegations against S.P.Goyal are that he remained posted as officer in State Bank of Patiala Branch, Shimla-2 during the year 2000. He dealt fake bills No.126, 128, 150 and 151 in the bank submitted by accused Sant Ram on different dates. The authority in favour of accused Sant Ram regarding drafts application forms were of forged signatures of DDO. S.P. Goyal, Lalit Mohan and Ms.Priti Clerks passed bills total amounting to Rs.10,44,157 without checking and verifying the signatures of DDO on drafts application forms and without DDO’s authority letter. S.P.Goyal with the connivance of accused Sant Ram and other concerned officials of the bank made payments and issued drafts without verifying the genuineness of drafts application forms which caused pecuniary loss to the State Government to the tune of Rs.10,44,157 and pecuniary gain to the firm / person who were not entitled to get the amount by abusing their position as public servant. Thus, S.P.Goyal has committed offence under Sections 420, 467, 468, 471, 120-B IPC and 13(1)(a)(c)(d)(i)(ii) & 13(2) of the Act. 5. The allegations against Ms.Priti are that she remained posted as Clerk in State Bank of Patiala Branch, Shimla-2 during the year 2000. She dealt fake bills No.114, 116, 150 and 156 total amounting to Rs.10,40,882 initially in the bank which were submitted by accused Sant Ram on different dates. Ms.Priti submitted these …4… bills to Passing Officer to pass the bills without checking and verifying the genuineness of signatures of DDO. No authority letter was even produced for withdrawal of bill No.150 and authority regarding bill Nos.114, 116 and 156 were under forged signatures of DDO. Thus, Ms.Priti with the connivance of cashier Sant Ram and other concerned officials of the bank made the payments and issued drafts without even getting the authority letter of DDO which caused pecuniary loss to the State Government to the tune of Rs.10,40,882 and pecuniary gain to the firm / person who were not entitled to get the amount by abusing their position as public servant. Thus, she has committed offence under Sections 420, 467, 468, 471, 120-B IPC and 13(1)(a)(c)(d)(ii) & 13(2) of the Act. 6. The allegations against Lalit Mohan are that he remained posted as Clerk in State Bank of Patiala Branch, Shimla-2 during the year 2000. He dealt fake bills No.126, 128, 151 total amounting to Rs.9,84,577 initially in the bank which were submitted by accused Sant Ram on different dates. Lalit Mohan submitted these bills to Passing Officer to pass the bills without checking and verifying the genuineness of signatures of DDO. No authority letter was even produced for withdrawal of bill No.151 and authority regarding bill Nos.126, 128 were of forged signatures of DDO. Thus, Lalit Mohan with the connivance of cashier Sant Ram and other concerned officials of the bank made the payments and issued drafts without even getting the authority letter of DDO which caused pecuniary loss to the State Government to the tune of Rs.9,84,577 and pecuniary gain to the firm / person who were not entitled to get …5… the amount by abusing their position as public servant. Thus, he has committed offence under Sections 420, 467, 468, 471, 120-B IPC and 13(1)(a)(c)(d)(ii) & 13(2) of the Act. 7. The learned Special Judge on 9.10.2007 has held that S.P.Goyal, Priti and Lalit Mohan had made payments to accused Sant Ram on drafts application forms without DDO’s authority while making payments of bills No.150 and 151 and ordered that there is sufficient material on record to presume that these persons connived with accused Sant Ram for the commission of offence under Sections 409, 420 read with Sections 13(1)(c), 13(1)(d)(i)(ii) and 13(2) of the Act read with Section 120-B IPC and they be charged accordingly. 8. The order dated 9.10.2007 and order dated 29.10.2007 have been assailed in both the revisions on the grounds that the challan in F.I.R. No.58/2007 was filed in the year 2001. The petitioners were not impleaded as accused in the challan. It has been submitted that the learned Special Judge could resort to Section 319 Cr.P.C. for proceeding against the petitioners if required, but nothing appeared in the evidence against the petitioners which justifies the impleadment of petitioners as accused in the case. The supplementary challan was filed against the petitioners after order dated 3.12.2005 of learned Special Judge and six years after the F.I.R. It has been submitted that vide order dated 3.12.2005 the learned Special Judge has observed regarding the role of bank officials but it was never ordered that supplementary challan be filed against the bank officials. In the supplementary challan also, no case has been made out against the petitioners regarding cheating, breach …6… of trust and of misconduct under the Act. The bills which were paid had the clearance of Treasury Officer. The bills No.150 and 151 were also passed and sanctioned by Treasury Officer. No offence under Sections 409, 420 IPC has been made out. These bills contain the endorsement / written acknowledgement of Sant Ram accused that the amount has been received as per authority letter. There is nothing to suggest that the petitioners have indulged into any act of using any forged documents as genuine document. It is not the case of the prosecution that Treasury Officer has not sanctioned / authenticated the bills No.150 and 151. There is no prima facie material on record to justify the prosecution of the petitioners under Sections 409, 420 read with Sections 13(1)(c), 13(1)(d)(i)(ii) and 13(2) of the Act read with Section 120-B IPC. The petitioners have performed their duties as per Treasury Rules with specific reference to Rule 4.156 and Rule 4.157. It has been provided in the said rules that bank will be responsible only for strict adherence of these orders and for obtaining upon the bill proper discharge from the payee. The discharge must be in addition to the signatures on the bill. The bills No.150 and 151 have been duly approved by the Treasury Officer. On the basis of material on record no criminal case is made out against the petitioners. The payments of bills No.150 and 151 have been made by the cashier of the bank who is supposed to make the payment only after fulfilling all codal formalities, but the cashier of the bank has not been impleaded as an accused. The proceedings against the Treasury Officer have already been dropped by the learned Special Judge vide order dated …7… 21.6.2007 and he has been discharged. The petitioners have acted as per the directions of the Treasury Officer who passed the bills, therefore, there is no justification of proceedings against the petitioners. There is no sanction under Section 19 of the Act for the prosecution of the petitioners, therefore, in absence of sanction to prosecute the petitioners their prosecution under the Act is illegal. In case accused Sant Ram, authorized messenger, by forging documents and playing fraud with the bank has received some payments then bank officials cannot be prosecuted under Sections 409, 420 read with Sections 13(1)(c), 13(1)(d)(i)(ii) and 13(2) of the Act read with Section 120-B IPC. The payments of bills No.150 and 151 have been received by authorized representative of the DDO and the payment was recommended by the Treasury Officer. 9. I have heard Mr.Ashutosh Burathoki, learned counsel for the petitioners in both the revisions and Mr.A.K.Bansal, learned Additional Advocate General for the State and gone through the record. Mr.Burathoki has reiterated grounds of revision while learned Additional Advocate General has supported the impugned order. He has submitted that at the time of framing of charge only prima facie material is to be seen and not the defence of the accused. He has submitted that learned Special Judge has come to the conclusion of framing of charge against the petitioners and a detailed and speaking order has been passed to this effect. This Court in revision will not go into minute details. He has submitted that no fault can be found with the order of framing of charge against the petitioners. …8… 10. The allegations against the petitioners are with respect to bills No.150 and 151. There is no allegation that the amounts of bills No.150 and 151 were withdrawn by the petitioners. There is no material on record to show that petitioners connived with accused Sant Ram and forged the documents for making payments. There is no allegation that the petitioners had the knowledge of the fact that the documents prepared by Sant Ram were forged. At its best, the prosecution case against the petitioners is that they were not cautious enough while processing bills No.150 and 151 for making payments to Sant Ram. In other words, they were negligent in processing the bills. The negligence on the part of the petitioners is not sufficient to put them on trial for the offence under Sections 409, 420 read with Sections 13(1)(c), 13(1)(d)(i)(ii) and 13(2) of the Act read with Section 120-B IPC. In L.Chandraiah versus State of A.P. and another, 2004 Cri.L.J. 365, the Supreme Court in Para-10 has held as follows:- “In the absence of any evidence to show that A-3 was acting in conspiracy with A-1 and A-2 or that A-1 and A-2 had knowledge of the fact that A-3 had fraudulently and dishonestly prepared forged vouchers on the basis of which the amounts were sought to be withdrawn, the offences under Sections 467, 471 or 409 IPC are not proved against the appellants. Consequently, the offence under the provisions of the Prevention of Corruption Act is also not made out.” The Supreme Court in that case has also held that even though it could be said that the appellants / accused acted in a negligent manner and if they had taken due care they would have detected the fraud, but that by itself would not constitute an offence under Section 409 IPC. In the case in hand, there is no allegation that the petitioners forged documents for the purpose of cheating and they have used the forged documents …9… fraudulently or dishonestly and there were reasons to believe that those documents were forged. At the most, the petitioners acted negligently while processing bills. Therefore, no case under Section 409 IPC is made out against petitioners. 11. The cheating has been defined in Section 415 IPC, according to which, whoever, while deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to “cheat”. The ingredients of cheating and prima facie commission of offence under Section 420 IPC against the petitioners have not been established from the material on record. Simply because petitioners have processed the documents for releasing the payments to accused Sant Ram, even though those documents were forged, does not mean that the petitioners have committed offence under Section 420 IPC. The negligently handling of bills No.150 and 151 by petitioners at the time of processing in itself is not connivance of petitioners with Sant Ram accused for making payments of bills No.150 and 151. Thus, prima facie offence under Section 120-B IPC has not been established against the petitioners. The learned Special Judge vide order dated 21.6.2007 has discharged the Treasury officials under Sections 420, 409, 467, 468, 471 and 120-B IPC. It has not been pointed out whether the order dated 21.6.2007 has …10… been assailed or not. The prosecution case is that the bills were passed by the Treasury officials and only then the payments were made by the bank. The role played by the petitioners is only of the processing of the bills and not the preparation of the bills. At this stage reference to HP Treasury Rules and Subsidiary Treasury Rules (for short ‘the Rules’) is relevant. Chapter 4 Section 1 D of the rules is with regard to the procedure of treasuries of which the business is conducted by the bank. Rule 4.156 is as follows:- “Bills for pay and allowances of gazetted Government servants and establishments and contingent expenses will be presented to the Treasury Officer in the first instance for examination. The Treasury Officer, if he approves and passes the charge, will enface on the bill an order to pay a specified amount, which order will be recorded in a register of payment orders issued, kept at the treasury for the purpose and will be numbered, dated and signed. The bill will then be returned to the presenter to be taken to the bank for payment in accordance with the Treasury Officer’s order. The bank will be responsible only for strict adherence to this order and for obtaining upon the bill a proper discharge from the payee. This discharge must be in addition to the signature at foot of the bill.” The perusal of rule 4.156 would show that bank will be responsible only for strict adherence to this order and for obtaining upon the bill a proper discharge from the payee. The discharge must be in addition …11… to the signatures at foot of the bill. The relevant part of Rule 4.157 is as follows:- “There is no objection to the drawer of a bill endorsing it for payment to a messenger and when a bill is so endorsed the bank will be responsible for seeing that the endorsement is signed by the drawer of the bill and for taking the acknowledgement of the messenger in token of payment to him. A mere second signature of the Drawing Officer is not sufficient nor is the endorsement “received payment through so and so” in order. The Drawing Officer must in such cases specially endorse an order on the bill to pay to a specified person as “pay to so and so”. In such a case when the payment is made to the person specified in the endorsement the signature of the Government servant is a good discharge and the Government are protected. The bank would also be protected if it pays the money to the person specified in the endorsement and takes his signature in token of payment.” The combined reading of Rule 4.156 and Rule 4.157 as far as bank is concerned would show that the bank is to adhere to the order of the Treasury Officer and money is to be paid to the person specified in the endorsement after taking his signatures in token of payment. In the present case, the Treasury officials ordered the payment of the bills. The petitioners processed the bills for payment as ordered by the Treasury officer / officials. J.K.Dutta, Chief Manager, State Bank of Patiala, East Shimla in his statement under Section 161 Cr.P.C. …12… has stated that bills No.150, 151 and 156 amounting to Rs.3,49,486 were encashed and four bills No.114, 116, 126 and 128 were made RTR. All these bills were paid in accordance with the order / direction of capital treasury. In other words, payment of bills No.150, 151 was ordered by the capital treasury and they were accordingly paid by the bank. The petitioners had only processed the bills, therefore, they cannot be blamed for payment as the said bills were directed for payment by the capital treasury. J.K.Dutta has also stated that in the year 2000 bills were passed, out of them three bills were encashed. He could find out the authority with regard to the bill No.156 and not with regard to other two bills despite search. The learned Special Judge in the order dated 29.10.2007 has observed that the bills No.150, 151 have been paid without DDO’s authority letter. The prosecution is relying on negative evidence for absence of authority letter with regard to bills No.150 and 151. The Cashier of the bank has made the payment to the person who actually received the payment and the bank cashier would not make the payment unless authority letter is there. At this stage even if it is assumed that there was no authority letter for making payment of bills No.150 and 151 and these were processed by the petitioners in absence of authority letters that will not bring the act of the petitioners for having committed an offence for which they have been ordered to be charged by way of impugned orders. The absence of authority letter in support of bills No.150 and 151 in the bank record is very weak piece of evidence to assume that the petitioners have committed offence for which they have been ordered to be charged. …13… 12. The petitioners are bank employees of State Bank of Patiala. It is not in dispute that bank employees are public servants under the Act. In I.D.Sharma versus State of H.P., 1991 (1) Sim.L.C. 342, a learned Single Judge of this Court has held that employees of State Bank of India are public servants. It is also not in dispute that no prosecution sanction has been taken by prosecution under the Act for prosecuting the petitioners. The learned counsel for the petitioners has submitted that on this ground alone, the prosecution of the petitioners, cognizance taken by the learned Special Judge and order of framing of the charge by learned Special Judge against the petitioners are bad in law and not sustainable. He has submitted that Special Judge while trying an offence under the Act cannot summon another person and proceed against him. The Act is a special statute and existence of sanction is sine qua non for taking cognizance of offence under the Act. He has submitted that in the present case, the learned Special Judge has taken cognizance against Sant Ram accused and during the trial of Sant Ram cognizance against the petitioners cannot be taken under the Act unless sanction has been taken by the prosecution from the competent authority for prosecuting the petitioners. The learned counsel has submitted that learned Special Judge has erred in ordering framing of the charge against the petitioners under Section 13 of the Act. In P.V.Narasimha Rao versus State (CBI/SPE), (1998) 4 SCC 626, in Para-95 of the judgment it has been held that when there is an authority to remove a public servant and to grant sanction for his prosecution under Section 19(1) of the Act the requirement of sanction precludes a Court from …14… taking cognizance of the offences mentioned in Section 19(1) against him in absence of sanction, but if there is no authority competent to remove a public servant and to grant sanction for his prosecution under Section 19(1) there is no limitation on the power of the Court to take cognizance under Section 19(1) of the Act. In the present case, it is not the case of the prosecution that there is no competent authority to remove the petitioners who are public servants. Therefore, cognizance cannot be taken against the petitioners under Section 13 of the Act in absence of sanction under the Act. In Parkash Singh Badal and another versus State of Punjab and others, (2007) 1 SCC 1, in Para-29 the Hon’ble Supreme Court has held that mere error, omission or irregularity in sanction is not considered fatal unless it has resulted in failure of justice or has been occasioned thereby. The purpose of the sanction is to apprise the competent authority with the factual matrix of the case and to take decision whether in the facts and circumstances of the case an employee is to be prosecuted or not. The purpose is to avoid malicious, false and vexatious prosecution of the employee. In the case in hand, the prosecution has not given an opportunity to the competent authority of the petitioners to apply mind whether petitioners are to be prosecuted or not. The petitioners are being prosecuted in absence of sanction of the competent authority. They have objected to their prosecution in absence of sanction to prosecute them by the competent authority. When law directs that an act is to be done in a particular manner then that is to be done in that manner only and not otherwise. Therefore, prejudice and failure of …15… justice to the petitioners is obvious when they are being prosecuted in absence of sanction by the competent authority. What would have happened if the prosecution had applied for obtaining sanction to prosecute the petitioners to their competent authority and the competent authority had refused to give sanction to prosecute the petitioners. Therefore, it cannot be said that no prejudice or failure of justice has been caused to the petitioners when they are being prosecuted in absence of the prosecution sanction. It has been submitted by learned Additional Advocate General that effect of absence of sanction is to be seen at the time of final judgment and not at an intermediate stage i.e. the framing of charge, for this purpose he has relied P.K. Pradhan