*THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY + WRIT PETITION No.18428 of 2009 % Dated: 9-6-2011 # M.B. Rajanikanth & another … Petitioners VERSUS $ The State Inspector of Police, CBI, ACB, Visakhapatnam & others … Respondents ! Counsel for the petitioners: Sri B. Chinnapa Reddy ^ Counsel for respondents 1&2: Sri P. Kesava Rao Counsel for respondents 3-5: Sri Sampath Prabhakar for Sri E. Ajay Reddy <GIST: > HEAD NOTE: ? Cases referred: 1) AIR 1945 PC 18 2) (1980) 1 SCC 554 3) (1970) 1 SCC 653 4) AIR 1963 SC 447 5) (1972) 1 SCC 452 6) (1973) 3 SCC 753 7) (2004) 4 SCC 129 8) (1977) 4 SCC 451 9) (2008) 3 SCC 542 10) 2001 (1) ALD (Crl.) 689 11) 2009 (2) ALT 562 12) 1992 Suppl (1) SCC 335 13) (2005) 13 SCC 540 14) (2002) 6 SCC 174 15) (2002) 3 SCC 89 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THE NINTH DAY OF JUNE TWO THOUSAND AND ELEVEN PRESENT THE HON'BLE MR JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.18428 of 2009 Between: M.B. Rajanikanth & another. ..... Petitioners AND The State Inspector of Police, CBI, ACB, Visakhapatnam & others. .....Respondents Counsel for the petitioners: Sri B. Chinnapa Reddy Counsel for respondents 1&2: Sri P. Kesava Rao Counsel for respondents 3-5: Sri Sampath Prabhakar for Sri E. Ajay Reddy The Court made the following: THE HON'BLE MR JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.18428 of 2009 ORDER: The petitioners, who are the former employees of the Vijaya Bank, a nationalized Bank (for short, “the Bank”) originally filed the present Writ Petition seeking quashing of the First Information Report bearing No.RCVSP2007A0021 of SPE : CBI, Visakhapatnam, dated 05.12.2007 and C.C.No.6 of 2009 on the file of the Special Judge for CBI cases, Visakhapatnam by issue of a writ of Mandamus. At the instance of the petitioners, the prayer has been amended by including C.C.Nos.18 of 2010, 19 of 2010 and 20 of 2010 in the prayer for being quashed. The facts, which are necessary for disposal of this Writ Petition, are briefly set-out hereunder. Petitioner No.1 was the Manager and petitioner No.2 was the Assistant Manager of the Bank of Patamata branch, Vijayawada. During their tenure at Patamata branch, they faced allegations in connection with sanctioning and disbursing of loans to a tune of Rs.57.95 lakhs in favour of eight borrowers on the strength of fake and forged documents. Following a departmental enquiry, the matter was entrusted to the Central Bureau of Investigation (CBI). On the instructions of respondent No.2, respondent No.3 sent a report, which was registered as FIR No. RCVSP2007A0021 by respondent No.1 on 05.12.2007 for the offences under Sections 120-B, 420 and 471 of the Indian Penal Code (IPC) and under Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988 (for short, “the 1988 Act”). After a thorough investigation, respondent No.1 has filed charge sheet No.2 of 2009 and the case was taken on file as C.C.No.6 of 2009 by the Special Judge for CBI cases, Visakhapatnam for the offences under Sections 120-B, 420, 468, 471 and 477-A IPC and Sections 13(2) read with Section 13(1)(d) of the 1988 Act. After the issue of process by the Special Judge for CBI cases, the present Writ Petition is filed seeking quashing of FIR and criminal proceedings. In their affidavit, the petitioners mainly averred that entrustment of the case to CBI is contrary to circular No.173 of 2005, dated 24.09.2005, as under the said circular, cases involving allegations of misappropriation of amount to a tune of Rs.1 crore and above alone have to be referred to the CBI for investigation and that therefore the investigation by the CBI and filing of charge sheet by it is contrary to the said circular. The further averment which constituted the basis for the Writ Petition is that in column No.XII of the report dated 12.11.2007 of respondent No.3, it is mentioned that the case has been referred to CBI, as the said agency has already been investigating into a housing loan fraud case relating to the same branch in which the petitioners are working and that as no such investigation relating to the Benz Circle branch, Vijayawada, was pending and the investigation was relating to Eluru Road Branch, Vijayawada, entrustment of the investigation to CBI is based on a factual misconception. A detailed counter-affidavit has been filed by the Inspector of Police, CBI, Visakhapatnam branch, wherein a preliminary objection was taken on the maintainability of the Writ Petition under Article 226 of the Constitution of India for quashing the criminal proceedings. On merits, it is averred that the petitioners have misinterpreted circular No.173 of 2005, which envisages that the Chief Vigilance Officer in consultation with EMD may refer a case involving amount less than Rs.1 crore or a case which cannot be classified on monetary limits, to the CBI, if, in the opinion of the Chief Vigilance Officer the case is of serious nature. It is further averred that as serious fraud is alleged and the investigation revealed commission of such fraud, entrustment of the case to CBI is justifiable in terms of the said circular. Respondent No.1 therefore prayed for dismissal of the Writ Petition. I have heard Sri B. Chinnapa Reddy, learned counsel, who made elaborate submissions for the petitioners; Sri P. Kesava Rao, learned Standing counsel for CBI for respondent Nos.1 and 2 and Sri Sampath Prabhakar, who represented Sri E.Ajay Reddy, for respondent Nos.3 to 5. The respective pleadings of the parties throw up two issues, namely; (i) the maintainability of the Writ Petition for quashing criminal proceedings more so when charge sheets have already been filed and the cases have been taken cognizance by the competent criminal Court and (ii) the scope of interference of this Court with the criminal proceedings. The consequential issue to be considered is whether this Court’s interference is warranted to quash the criminal proceedings in the present case. Investigation into a criminal offence, it is trite, falls within the exclusive domain of the executive. One of the core functions of the police, which forms part of the State executive, is registration of first information report on receipt of information relating to commission of an offence cognizable or otherwise and cause investigation on such information in accordance with the procedure laid down by Chapter XII of the Code of Criminal Procedure, 1973 (for short, “the Code”). The Courts seldom interfere with this core function of the police. The superior Courts, however, which possess inherent powers, which fact received statutory recognition in the successive codes of criminal procedure (Section 561-A of the Code of Criminal Procedure, 1898 and Section 482 of the Code of Criminal Procedure, 1973), do interfere with the criminal proceedings even at the investigation stage for one or more of the three purposes, namely; (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of Court, and (iii) to otherwise secure the ends of justice, as envisaged under Section 482 of the Code. The leading case on this point is Emperor vs. Khwaja Nazir Ahmed[1]. This oft- quoted judgment, which formed the basis for several subsequent Supreme Court judgments, laid down that the police have statutory right to investigate into an offence and the Courts including the High Courts can interfere under its inherent powers only when a charge has been preferred and not before. The Privy Council, however, made an exception to its view by holding that such non- interference by Courts at the stage of investigation is subject to the right of the Court to intervene in an appropriate case under Section 491 of the Code of 1898 to give directions in the nature of habeas corpus. This view was followed by the Apex Court in State of Bihar vs. J.A.C. Saldanha[2], wherein it was held: “25. There is a clear-cut and well demarcated sphere of activity in the field of crime detection and crime punishment. Investigation of an offence is the field exclusively reserved for the executive through the Police Department the superintendence over which vests in the State Government. The executive which is charged with a duty to keep vigilance over law and order situation is obliged to prevent crime and if an offence is alleged to have been committed it is its bounden duty to investigate into the offence and bring the offender to book. Once it investigates and finds an offence having been committed it is its duty to collect evidence for the purpose of proving the offence. Once that is completed and the investigating officer submits report to the Court requesting the Court to take cognizance of the offence under Section 190 of the Code its duty comes to an end. On a cognizance of the offence being taken by the Court the police function of investigation comes to an end subject to the provision contained in Section 173(8), there commences the adjudicatory function of the judiciary to determine whether an offence has been committed and if so, whether by the person or persons charged with the crime by the police in its report to the Court, and to award adequate punishment according to law for the offence proved to the satisfaction of the Court. There is thus a well defined and well demarcated function in the field of crime detection and its subsequent adjudication between the police and the Magistrate. This has been recognized way back in Emperor v. Khwaja Nazir Ahmad…… 26. This view of the Judicial Committee clearly demarcates the functions of the executive and the judiciary in the field of detection of crime and its subsequent trial and it would appear that the power of the police to investigate into a cognizable offence is ordinarily not to be interfered with by the judiciary.” In S.N. Sharma v. Bipen Kumar Tiwari[3], the Supreme Court took the view that the power of the police to investigate any cognizable offence is uncontrolled by the Magistrate and it is only in cases where the police decide not to investigate the case, can the Magistrate intervene and either direct an investigation, or, in the alternative, himself proceed or depute a Magistrate subordinate to him to proceed to enquire into the case. The Court, however, added a rider in paragraph 11 of the judgment and held: “11. ……. though the Code of Criminal Procedure gives to the police unfettered power to investigate all cases where they suspect that a cognizable offence has been committed, in appropriate cases an aggrieved person can always seek a remedy by invoking the power of the High Court under Article 226 of the Constitution under which, if the High Court could be convinced that the power of investigation has been exercised by a police officer mala fide, the High Court can always issue a writ of Mandamus restraining the police officer from misusing his legal powers.” In State of W.B. v. S.N. Basak[4], the Supreme Court restated the principle that the police have statutory right to investigate into the circumstances of any alleged cognizable offence without authority from a Magistrate and that power of the police to investigate cannot be interfered with by the exercise of power under the inherent power of the High Court. I n Hazari Lal Gupta vs. Rameshwar Prasad[5], the Supreme Court held that the High Court can quash proceedings while exercising jurisdiction under Section 561-A of the Criminal Procedure Code, 1898, if there is no legal evidence or if there is any impediment to the institution or continuance of proceedings, but the High Court does not ordinarily enquire as to whether the evidence is “reliable or not”. I n Nirmaljit Singh Hoon vs. State of W.B.[6], the Supreme Court held: “35. ……the police authorities have under Sections 154 and 156 of the Code a statutory right to investigate into a cognizable offence without requiring any sanction from a judicial authority and even the High Court has no inherent power under Section 561-A of the Code to interfere with the exercise of that statutory power.” In State of W.B. vs. Sujit Kumar Rana[7], the Supreme Court held that the power under Section 482 of the Code can be exercised by the High Court in relation to a matter pending before a criminal Court or where a power is exercised by the Court under the Code of Criminal Procedure. In Kurukshetra University vs. State of Haryana[8], while dealing with the scope of the High Court’s power under Section 482 of the Code, the Supreme Court observed that inherent powers do not confer an arbitrary jurisdiction on the High Court to act according to whim or caprice and that the statutory power has to be exercised sparingly with circumspection and in the rarest of the rare cases. Upon reviewing the entire case law on the subject, a two Judge Bench of the Supreme Court in Divine Retreat Centre vs. State of Kerala and others[9] inter alia held as under: “In our view, there is nothing like unlimited arbitrary jurisdiction conferred on the High Court under Section 482 of the Code. The power has to be exercised sparingly, carefully and with caution only where such exercise is justified by the tests laid down in the section itself. It is well settled that Section 482 does not confer any new power on the High Court but only saves the inherent power which the Court possessed before the enactment of the Code. There are three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of Court, and (iii) to otherwise secure the ends of justice.” In Gudavalli Murali Krishna vs. Gudavalli Madhavi[10], a learned Judge of this court (T. Surya Rao, J.) was faced with precisely the same question as has been framed in this case, namely; whether a Writ Petition under Article 226 is a proper and appropriate remedy for interference with a pending criminal proceeding. The learned Judge has noticed two conflicting judgments on this issue: Hasan AH Khan vs. State of A.P. (1992 (1) ALT 146), wherein a learned Single Judge held that criminal proceedings can be quashed by the High Court under its inherent power under Section 482 Cr.P.C., which can be invoked only after initiation of criminal proceedings by filing a charge sheet but not at the investigation stage and where the investigation is taken up by the police on the basis of the FIR and other material which do not disclose any cognizable offence or mala fide or any colourable exercise of power any person aggrieved can invoke the jurisdiction of the High Court under Article 226 of the Constitution to quash the FIR and the investigation. I n S. Sarat Babu Chowdary vs. Inspector of Police (1992 (3) ALT 454), a Division Bench of this Court held that High Court cannot quash FIR under Section 482 Cr.P.C. and equally it cannot exercise such a power under Article 226 by applying the principle that what it cannot do under Section 482 Cr.P.C., it cannot do the same under Article 226 of the Constitution. After an exhaustive consideration of the case law holding the field, the learned Judge held: “From the conspectus of the above judgments, it is manifest that the inherent powers of the High Court under Section 482 of the Cr.P.C. can be invoked to quash the proceedings even at the threshold – be it a FIR or a complaint or a charge-sheet. The inherent powers to be exercised by the High Court under Section 482 of the Cr.P.C. is efficacious remedy. When such an efficacious alternative remedy is available, the High Court should be loath and circumspect to exercise its extraordinary jurisdiction under Article 226 of the Constitution.” In Reckitt and Benckiser (India) Ltd., New Delhi vs. State of Andhra Pradesh, rep., by Drugs Inspector, Hyderabad[11] another learned Single Judge of this court (V.V.S. Rao, J.) considered the same question once again in the light of the decided case law beginning with Emperor vs. Khwaja Nazir Ahmed (AIR 1945 PC 18) and including the judgments of the Apex Court in R.P. Kapoor vs. State of Punjab (AIR 1960 SC 866), State of Haryana vs. Bhajan Lal (AIR 1982 SC 604), State of West Bengal vs. Swapan Kumar Guha (AIR 1982 SC 949), State of Himachal Pradesh vs. Pirthi Chand ((1996) 2 SCC 37), Zandu Pharmaceutical Works Ltd., vs. Mohd. Sharaful Haque ((2005) 1 SCC 122) and Pepsi Foods Limited vs. Special Judicial Magistrate ((1998) 5 SCC 749). The learned Single Judge has summarized his conclusions in para 12 of the judgment as under: “In view of the case law as above, it may be taken as well settled that having regard to the safeguards provided in Cr.P.C. including the power vested in the High Court to quash an FIR or criminal proceedings, ordinarily a Writ Petition under Article 226 of Constitution of India would not lie. In appropriate cases, however, there cannot be sustainable objection for the High Court treating a petition under Article 226 of Constitution of India as one under Article 227 and/or under Section 482 of Cr.P.C. Even while doing so, the law requires the Court not to interfere with investigation at the stage of FIR, or criminal proceedings during the trial especially when prima facie triable criminal case is made out. It is also axiomatic that while exercising power under Section 482 Cr.P.C. or Article 227, the High Court does not act as an appellate authority or inquisitorial/investigatory authority. High Court cannot even give directions to the police to initiate criminal action and/or investigate the case in particular manner (see Divine Retreat Centre vs. State of Kerala ((2008) 3 SCC 542).” The preponderance of the judicial opinion reflected in the case law referred to above does not favour Courts’ interference at the investigation stage. However, in exceptional circumstances where the ingredients of Section 482 were satisfied, the High Courts may interfere with the investigation by invoking its inherent powers. When such a power is available with the High Court, I do not find any reason for an aggrieved party to invoke the jurisdiction of this Court under Article 226 of the Constitution of India and I am in respectful agreement with the views of my learned Brothers T.Ch.Surya Rao, J., and V.V.S.Rao, J., that ordinarily a Writ Petition under Article 226 of the Constitution of India would not lie to quash either a FIR or a criminal proceeding and in appropriate cases the High Court can exercise its power under Section 482 Cr.P.C. for this purpose. I have, therefore, no hesitation to hold that this Writ Petition filed invoking the jurisdiction of this Court under Article 226 of the Constitution is wholly misconceived. As this Writ Petition is pending since 2009 and there is already an order of stay, I find it wholly inappropriate to relegate the petitioners to invoke the jurisdiction of this Court under Section 482 Cr.P.C. Instead, I deem it necessary to consider this case from the stand point of Section 482 Cr.P.C. to put a quietus to this litigation. The inherent power of this Court to quash a FIR or a criminal investigation is well defined by various judicial precedents, some of which have already been referred to hereinbefore. Instead of burdening this judgment with the entire case law on the subject, it would be appropriate to refer to a few judgments, which reflect the core judicial principles in this regard. I n State of Haryana and others vs. Bhajan Lal and others[12] the Supreme Court laid down broad guidelines for exercise of the inherent powers of the High Courts to quash FIR or criminal proceedings, which are as under: “1. Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. 2. Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. 3. Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. 4. Where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. 5. Where the allegations made in the Fir or complaint are so absurd and inherently improbable on the basis of which no prudent person can even reach a just conclusion that there is sufficient ground for proceeding against the accused. 6. Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. 7. Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.” I n State of Orissa vs. Saroj Kumar Sahoo[13], the Supreme Court laid down the following propositions: “1. The exercise of power under Section 482 Cr.P.C. is the exception and not the rule. The section does not confer any new powers on the High Court. It only saves the inherent power which the Court possessed before the enactment of Cr.P.C. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under Cr.P.C., (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. 2. While exercising the powers under Section 482 Cr.P.C., the High Court does not function as a Court of appeal or revision. Inherent jurisdiction under the section, through wide, has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone the Courts exist. Authority of the Court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the Court has the power to prevent abuse. It would be an abuse of process of the Court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers the Court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of Court or quashing of these proceedings would otherwise serve the ends of justice. 3. The inherent power should not be exercised to stifle a legitimate prosecution. The High Court being the highest Court of a State should normally refrain from giving a prima facie decision in a case where the entire facts are incomplete and hazy, more so when the evidence has not been collected and produced before the Court and the issues involved, whether factual or legal, are of magnitude and cannot be seen in their true perspective