IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.R.UDAYABHANU FRIDAY, THE 6TH JULY 2007 / 15TH ASHADHA 1929 Crl.Rev.Pet.No. 430 of 2001(A) CRIME NO. 1/97/SCT OF THE ENQUIRY COMMISSIIONER AND SPECIAL JUDGE, THIRUVANANHAPURAM. REVN. PETITIONER: STATE OF KERALA REPRESENTED BY THE SUPERINTENDENT OF POLICE, VIGILANCE AND ANTI CORRUPTION BUREAU SPECIAL CELL, THIRUVANANTHAPURAM. BY PUBLIC PROSECUTOR MR. RAJENDRA SACHAR MR. R. SATISH MR. P.RAVINDRA BABU, . MR. C.M. KAMMAPPU SRI.P.A.AHAMMED RESPONDENTS: K. KARUNAKARAN, M.P. VYSAK,T.C. NO. 40/1507, JAJGATHY, THIRUVANANTHAPURAM. IS IMPLEADED AS RESPONDENT AS PER ORDER DATE 11-4-2001 IN CRL.R.P. BY ADV. SRI.M.K.SREEGESH ADV. SRI.S.V.BALAKRISHNA IYER (SR.) THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 13-06-2007, THE COURT ON 06-07-2007 PASSED THE FOLLOWING: K.R. UDAYABHANU, J. CRL.R.P.NO. 430 OF 2001 DATED THIS THE 6th July 2007 ORDER The present proceedings is the offshoot of the revision petition filed by the State in this Court disputing the direction of the Special Judge that for proceeding against A1, who was the Chief Minister at the time when the offence was committed, the sanction under Section 19 of the Prevention of Corruption Act of the Speaker of the Lok Sabha is required as he is a sitting Member of Parliament. This Court had allowed the revision petition and A1 had taken it up before the Supreme Court vide Crl.A.No.801/2003. The Supreme Court as per judgment dated 6-12-2006 affirmed the view taken earlier in R.S.Nayak v. A.R.Antulay (1984(2)SCC 183) and reiterated in Prakash Singh Badal v. State of Punjab (2007(1)S.C.C 1)that sanction is not required. The contention raised subsequently by A1 in the above proceedings before the Supreme Court that the prosecution is the outcome of mala fides and that the varying CRL.R.P.NO.430/2001 -2- stands taken by the Government clearly indicated that the appellant/A1 is a victim of political rivalry of leaders of some political parties is the issue directed to be thrashed out by this Court. The situation highlighted by the appellant before the top Court is that the Home Secretary of the State on 24-11-2005 had filed an affidavit to the effect that the State Government wanted to withdraw the prosecution and that subsequently another affidavit has been filed by the successor Government swearing that there is no intention to withdraw the prosecution. Further it is the same person who had been opposing the application to withdraw the prosecution who is the present Chief Minister. Hence, according to the appellant, the contradictory stands taken by the Government is a clear case of political vendetta. Hence, the Supreme Court directed this Court to consider the matter relating to the plea of mala fides for which the parties were permitted to place relevant materials. It was also noted by the Supreme Court that the stand taken in Prakash Singh Badal's case (op.cit) is that even though there is an element of political rivalry, it is ultimately to be seen CRL.R.P.NO.430/2001 -3- whether materials exist to substantiate the allegations and that it is not the credibility of the person who makes the allegations but the existence of materials necessitating investigation which is relevant. 2. Consequent on the direction of the Supreme Court, the first accused and the State have filed affidavit, counter affidavit, reply affidavit and rejoinder affidavit raising and reiterating the respective contentions. 3. The case right now pending against A1 and 7 others in C.C.No.6/20003 in the Court of Enquiry Commissioner and Special Judge is with respect to the offences under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and Section 120B IPC. On the filing of the F.I.R. (V.C.No.1/97) dated 21-3-1997 itself A1 had sought to quash the same vide proceedings initiated before this Court contending that this Court had dismissed earlier private interest litigations seeking to register the crime with respect to the allegations which was the sequal to the report of the Controller and Auditor General of India and hence on the same facts a fresh F.I.R. cannot be registered. CRL.R.P.NO.430/2001 -4- The above proceedings initiated under Section 482 Cr.P.C. was dismissed vide order in Crl.M.C.No.1353/97. The same was taken up before the Supreme Court which affirmed the view of this Court. In the meantime with the permission of the Supreme Court, charge sheet/final report was filed before the Enquiry Commissioner and Special Judge, Thiruvananthapuram on 23-3-2001. It was then that the Special Judge took the view that the sanction of the Lok Sabha Speaker is required to prosecute A1 as he is a Member of the Lok Sabha. It is in the order in Crl. Appeal No. 801/2003 filed by A1 over the decision regarding sanction that the matter has been remitted back by the Supreme Court to this Court to consider the allegation of mala fides. 4. As per the final report in C.C.6/2003 A1, Shri K. Karunakaran, the former Chief Minister of Kerala, A2, Shri. T.H.Musthafa, the then Minister for Food & Civil Supplies of the State of Kerala, A3, Shri. Padmakumar, the then Chief Secretary of the State and A4, Shri. Zacharia Mathew, the then Additional Chief Secretary who was also the Commissioner and Secretary of CRL.R.P.NO.430/2001 -5- Food and Civil Supplies Department as well as the Chairman of the Kerala State Civil Supplies Corporation (hereinafter to be mentioned as K.S.C.S.C) and A5, Shri. Jiji Thomson, the then Managing Director of K.S.C.S.C, A6 and A7, the Directors of M/s. Power & Energy Pvt.Ltd.(hereinafter to be mentioned as M/s. P&E Pvt.Ltd.) and A8, Shri. P.J. Thomas, the then Secretary of Food and Civil Supplies Department of the State were implicated. 5. The prosecution charge is that A1, the Chief Minister of Kerala during the period from 1991-92, A2, the Minister for Food and Civil Supplies during the above period and A3 to A5 and A8 who were the senior I.A.S. officers in the State service during the relevant period and A6 and A7, the Directors of M/s. P&E Pvt.Ltd. based at Singapore who were engaged in the sale and distribution of palmolein entered into a criminal conspiracy during the period from October 1991 to March 1992 at Delhi, Madras, Thiruvananthapuram and Ernakulam and other places for importing palmolein directly to the State of Kerala and in pursuance of the same managed to secure permission of the Government of India, misrepresenting facts to the Prime CRL.R.P.NO.430/2001 -6- Minister of India and the concerned authorities of Government of India at New Delhi that the import of 30,000 M.T.of palmolein in addition to the usual quota was essential for the requirement of the people of Kerala in connection with Dasara and Deepawali festivals of 1991 while in fact the quantity sought was far exceeding the actual requirements; and utilising the machinery of the State Government and the K.S.C.S.C. imported 15,000 M.T.of palmolein during the period February to March 1992 at an exorbitant price of 405 U.S.Dollars (hereinafter to be mentioned as USD) per MT whereas in fact the average price paid by S.T.C. in the preceding 30 days in January 1992 was only 392.25 USD. It is alleged that the agreement was executed even before the permission of the Government of India was received by the State Government and also before any order was issued by the State Government in this regard and also without inviting tenders or specifying the price of palmolein or shipment schedule for import. The import was also in violation of the terms and conditions specified by the Government of India in respect of import and distribution of palmolein. It is CRL.R.P.NO.430/2001 -7- alleged that A1 to A5 and A8,i.e. the then Chief Minister, Minister for Food & Civil Supplies, the then Chief Secretary, the then Additional Chief Secretary who was also the Commissioner & Secretary of Food & Civil Supplies Department as well as Chairman of K.S.C.S.C.,the then M.D.of K.S.C.S.C., and the then Secretary of the Food and Civil supplies Department respectively abused the official positions and authority vested in them as public servants, acted illegally and with dishonest intention to secure pecuniary and other benefits to A6 and A7 to the tune of Rs. 2.32 crores and thereby causing corresponding loss to the Kerala State exchequer and thereby committed the offence of criminal conspiracy, criminal breach of trust and cheating punishable under the Indian Penal Code and P.C.Act. It is also alleged that A1, the then Chief Minister, A3, the then Additional Chief Secretary & A6, a Director of M/s. P& E Pvt.Ltd. held discussions at the instance of A1 at the Kerala House in New Delhi in the first week of October 1991 and in pursuance of the same, A1 sent a letter dated 5-10-1991 to Shri Narasimha Rao, the then Prime Minister of India in this regard and secured CRL.R.P.NO.430/2001 -8- sanction of the Government of India. A2, the then Minister for Food & Civil Supplies, A3, the Chief Secretary and A4, the Additional Chief Secretary by mutual assistance and with the consent of A1, prepared a note and presented the same in the meeting of the Council of Ministers as an urgent item outside Agenda on 17-11-1991. A2, A3, A4 and A8 with the direction and with the connivance of A1 obtained the approval of Council of Ministers headed by A1 suppressing the advantageous offer for import of palmolein at a low rate received by A3 from M/s. Nalin and Sons, DHD and side-tracking the willingness offered by similar company (C.I.Commodities Singapore etc.)having global reputation. The letter sent by A1 dated 5-10-1991 was prepared by A3 as per the instruction of A1, the then Chief Minister and A3, the then Chief Secretary gave direction to A4, the then Additional Chief Secretary-cum-Commissioner and Secretary of Food & Civil Supplies Department to take follow up action on the offer of M/s.P & E Pvt.Ltd. contained in their letter dated 9-11-1991 and also recommended for the decision of the Cabinet for approving the proposal violating the Store CRL.R.P.NO.430/2001 -9- Purchase Rules of the State of Kerala and the conditions laid down by the Government of India in Cricular No. 1 10/91 EOP dated 6-11-1991. A4, without inviting tenders held further discussions with A6 & A7, the Directors of M/s. P & E.Pvt.Ltd. at Madras and in consultation with A8 prepared a detailed proposal incorporating the terms and conditions stipulated by the M/s. P & E Pvt.Ltd. in its offer and forwarded the same to the Government of India for sanction. A4 in pursuance of the earlier discussion, prepared a detailed proposal incorporating the terms and conditions advantageous to A6 and A7 and submitted to A1, A2 and A3 etc. for an urgent decision, fully aware that the sanction of the Government of India was not received by the State Government and also as to the receipt of an advantageous offer from M/s. Nalin and Sons DHD quoting low rate and directed A5, the Managing Director, K.S.C.S.C. to execute an agreement with M/s. P & E Pvt. Ltd. for purchase of 15000 MT of palmolein incorporating the terms and conditions advantageous to M/s. P & E Pvt.Ltd. A5 the then Managing Director of K.S.C.S.C. held discussions with A6 and A7 at Madras CRL.R.P.NO.430/2001 -10- long before M/s. P & E Pvt.Ltd. was chosen as the firm for importing palmolein officially by the State Government and further executed the agreement with M/s. P & E Pvt.Ltd. without obtaining permission of the Board of Directors of K.S.C.S.C. containing terms that are violative of the guidelines issued by the Government of India and incorporating terms favourable to the said company. Further, A5 wilfully abstained from exercising the buyers option in pricing and shipment schedule at the appropriate time which resulted in further loss and detriment to the State and intentionally delayed the fixing of price of palmolein and fixed the same at a belated date i.e. on 24-1-1992 and got ratification of the K.S.C.S.C.Board. A6 and A7, the Directors of M/s. P & E Pvt.Ltd. in pursuance of the criminal conspiracy at New Delhi in the first week of October 1991 forwarded the offer of M/s. P & E Pvt.Ltd. by letter dated 9- 11-1991 to A1 furnishing the drafts of the documents, namely agreement, memorandum of understanding, letter to the Secretary, Department of Civil Supplies, Government of India. A6 and A7 further held negotiations with A5 at Madras on CRL.R.P.NO.430/2001 -11- 22-11-1991 and A7 signed an agreement on behalf of M/s.P & E Pvt.Ltd. with A5 who represented the K.S.C.S.C. and 15000 M.T.of palmolein was imported to the State during February- March 1992 for which price was fixed on 24-1-1992, i.e. after 56 days of the execution of the agreement. A8, the then Secretary to Government of Kerala, Food and Civil Supplies Department held discussions with A4, the then Additional Chief Secretary and drafted a detailed proposal for import of palmolein virtually endorsing the terms and conditions incorporated by the M/s. P & E Pvt.Ltd. in the Memorandum of Understanding and other documents sent by the said firm to A1 along with letter dated 9-11-1991 and also making false statements to persuade the Government of India to accord sanction by Telex message dated 18-11-1991 addressed to the Secretary, Government of India, Ministry of Food and Civil Supplies, Krishi Bhavan, New Delhi followed by confirmatory letter dated 19-11-1991. A8, the then Secretary of Food & Civil Supplies Department further caused obstruction in the matter of offering the remarks by the Finance Department on the draft Government Order dated 2-12- CRL.R.P.NO.430/2001 -12- 1991 by deliberately withholding the draft Government Order and the connected file from the Finance Department and deliberately ignored the provision of Store Purchase Rules, Business Rules and Secretariat Instructions. A4 & A5 entrusted with the dominion over the funds belonging to K.S.C.S.C. in the capacity as public servants dishonestly appropriated the funds in violation of the terms and conditions of Government of India Circular No.110/91/EOP dated 6-11-1991 and the provisions in the Store Purchase Rules of the Government and has intentionally secured unmerited pecuniary advantage to the tune of Rs.2.32 crores for A6 & A7 and thereby committed the offene of criminal misconduct. Thus A1 to A8 have committed the offence of criminal conspiracy under Section 120B IPC and A1 to A4 have committed the offence under Section 13(1)(d) of Prevention of Corruption Act and criminal conspiracy under Section 120B I.P.C. The evidence proposed to be adduced consists of the testimony of 55 witnesses and 138 documents. CRL.R.P.NO.430/2001 -13- 6. Hence the main offence alleged is enabling A6 and A7 to have a pecuniary gain of Rs.2.32 crores which was made possible as purchase price of palmolein was fixed at 405 USD per MT instead of 392.25 USD which represented the procurement price or 30 days the average price of the purchase by STC as per the price clause stipulated in the Government of India guideline contained in Circular No. 110/91/EOP dated 6-11-1991. I find that the above circular contained the stipulation which has to be observed while the State Government is to import palmolein. The same runs as follows: “ The price of imported oil would not be higher than the procurement price of STC or the average price paid by the STC in preceding 30 days”. 7. The crux of the prosecution allegations is the violation of the above price clause and that while the price as per the above clause paid by the STC was 392.25 USD on the date the price was fixed, the K.S.C.S.C fixed the price at 405 USD. 8. It is seen from the correspondence file that the sanction to prosecute the serving I.A.S. officers sought from the CRL.R.P.NO.430/2001 -14- Union Government under Section 19(1)(a) is yet to be obtained. The correspondence in this regard shows that the same was in the midst of clarification sought regarding the temporal connection between the opening of the ESCROW account and the fixing of price. Subsequent to the issuance of the Government Order to withdraw from prosecution, the former Government intimated the same to the Central Government. 9. The respective contentions put forth in the affidavits filed before this Court and in the Supreme court in support of the case of mala fide alleged by A1 regarding the turn round taken by the Government to rescind the withdrawal order and to the contra is to be considered. The main defence advanced by the former Chief Minister (A1) in support of the transaction executed by his Government with M/s. P & E. Pvt.Ltd is that the four States, Tamil Nadu, Kerala, Karnataka and West Bengal entered into agreements with the above company on identical terms. He has also furnished data with respect to the above agreements and import particulars that would show that the State of Karnataka has fixed the price at the same rate as Kerala, CRL.R.P.NO.430/2001 -15- i.e.405 USD per M.T. and West Bengal at 407 USD, i.e. 2 USD higher than that of the State of Kerala whereas the State of Tamil Nadu fixed the price at 392.50 USD. Tamil Nadu fixed the price on 31-12-1991, Karnataka on 1-2-1992, West Bengal on 24-1-1992 and Kerala fixed the rate on 24-1-1992. All those States followed the same pattern of negotiations in the fixing of the price. It is further pointed out that Kerala and West Bengal fixed the price on the same day . It is stressed that the State Government has filed an affidavit on 24-11-2005 conveying the decision to move the Court of Special Judge for withdrawal of the prosecution wherein it is explained that there was no loss to the State or unlawful gain to the accused and that the allegations of criminal conspiracy and other irregularities are not sustainable. It is also noted therein that the States like Tamil Nadu, West Bengal, Karnataka had followed the same price pattern and hence there is no merit in the allegations of corrupt motive in price fixation. The Supreme court had also permitted to initiate the proceedings to withdraw the prosecution, but in the meantime on 18-5-1996 Shri.V.S. Achuthananndan was sworn CRL.R.P.NO.430/2001 -16- in as Chief Minister of Kerala and soon after assuming office he made a public statement that the new Government would proceed with the prosecution of palmolein case. The above statement was made without caring to peruse the records of the case and with a pre-disposed mindset. Following the same, an affidavit was filed by the State before the Supreme Court on 27—7-2006 that the Government intended to continue the prosecution of C.C.No.6/2003. The affidavit is silent about the reasons mentioned in the earlier affidavit proposing to withdraw from the prosecution apart from disassociating from the factual and legal averments made in the earlier affidavit. The State cannot be permitted to change its stand merely because a new political party assumed power. The succeeding Government is duty bound to continue with the execution of the decision taken by the previous Government. 10. A reply affidavit has also been filed before the Supreme court by A1. It is also pointed out that the present Chief Minister is the very same person who had tried to get impleaded in the proceedings before this Court and in the CRL.R.P.NO.430/2001 -17- Supreme court and filed a petition and S.L.P.for the same. According to the deponent, the Government of India Circular dated 6—11-1991 has been complied with as the State had informed the Government of India that the price would not exceed the indicative price of the S.T.C. The same was the pattern followed by the State of Tamil Nadu also. The Tamil Nadu and Karnataka Governments were permitted to import palmolein at a price not exceeding the indicative price on the day they conclude the business. It is pointed out that the agreement in between the K.S.C.S.C and M/s. P & E. Pvt.Ltd. was executed after obtaining the approval from the Government of India on 26-11-1991. It was made clear in the agreement that the contract will be entered into only pursuant to the R.B.I. clearance and opening of ESCROW account. It is pointed out that no transaction of edible oil was possible on the basis of 30 days average price and hence the State of Tamil Nadu submitted its proposal dated 9-11-1991 and the same was approved by the Government of India. It was the agreement entered into by the State of Tamil Nadu that was taken as model agreement for CRL.R.P.NO.430/2001 -18- agreement concluded by other States including the State of Karnataka, State of West Bengal and State of Kerala. The copies of the agreements of the above States have also been produced. It is further asserted that the entire quantity of import was sold out within two months and the same yielded crores of rupees of profit to K.S.C.S.C which would belie the allegations that there is no requirement of import of palmolein. It was in the above circumstances that the State Government decided to withdraw the case. 11. It is further contended in the reply affidavit filed by A1 that it is admitted by the State that the Public prosecutor incharge of the case could not follow the direction to withdraw the prosecution due to the operation of the interim order of stay of further proceedings passed by the Supreme Court. The required permission was accorded by the Supreme Court on 20-4-2006 but the above order was passed after notification of election to the State Assembly; and due to impending elections the application for withdrawal of prosecution could not be filed prior to the State assembly elections. On 18-5-2006, the present CRL.R.P.NO.430/2001 -19- Government headed by Mr.V.S. Achuthanandann assumed power and thereafter issued instructions to the Public Prosecutor not to file application for withdrawal of prosecution. On 20-5-2007, the then Government ordered to cancel the G.O. dated 28—3-2005 and decided to revive the prosecution. The version that the erstwhile Government decided to withdraw from the prosecution without noticing all relevant facts and legal issues is incorrect. It would be evident from the files that there was a detailed examination of the matter before the decision was taken to withdraw from the prosecution and the views of the officials including the Director General of Prosecutions were ascertained. It is further pointed out that on a perusal of the order No.G.O. (Rt)105/05/Vig.dated 28-3-2005 it is evident that each and every allegations were analysed and opinion expressed. The G.O. was passed based on the decision of the Council of Ministers that had the benefit of a note of about 20 pages preferred after a thorough examination. The deponent has prayed that the Government files pertinent to the case be summoned for perusal by the court. It is further pointed out that once the CRL.R.P.NO.430/2001 -20- decision to recommend for withdrawal is taken, it is for the Public Prosecutor to look into the relevant materials and then file the application for withdrawal. Thereafter, it is for the court that is in seisin of the matter to pronounce upon the legality and propriety of the application for withdrawal. Issuance of the G.O. dated 25-7-2006 is intended to subvert the procedure prescribed by the Statute. It is pointed out that the Apex Court had permitted the present Chief Minister who was an intervener before the Supreme Court to raise the objection against the proposed withdrawal before the court concerned. He ought to have followed the said order of the Supreme Court rather than reversing the above order of the State for political reasons. A comparison of both the G.Os. would reveal that the subsequent G.O. has been issued without application of mind. An order without assigning reasons is ex-facie illegal. 12. On the other hand, the State had filed the affidavit pointing out that despite the decision taken to withdraw from the prosecution as expressed through the affidavit filed on 24-11-2005 in the Supreme Court in Crl.A. 801/2003 no CRL.R.P.NO.430/2001 -21- application for withdrawal was filed by the Public Prosecutor before the Court of the Special Judge. It is pointed out that in fact the decision was taken without consulting the Public Prosecutor and without concurrence of the investigating agency. After the change