2013 (11) TMI 1754 - SC - Indian Laws

Validity of Sanction order passed by competent authority at stage of inquiry or at pretrial stage for Prosecution - CBI manual - Disproportionate assets by Finance officials - Money laundering - The Appellant, CBI registered a preliminary enquiry against the Respondent for disproportionate assets. After conclusion of the preliminary enquiry, a regular case was registered. During the course of investigation, it came to light that disproportionate assets was 7615.45 times of his known sources of income. It further surfaced that the Respondent was involved in money laundering; and for channelising his ill-gotten wealth, had established a number of companies wherein his family members were the founding Directors. The Central Vigilance Commission after examining the said case advised the Ministry of Finance to grant sanction for prosecution. Hence, the sanction order was issued under the seal and signature of the Under Secretary (V and L), Ministry of Finance. HELD THAT - The stage of examining the validity of sanction is during the trial and court do not propose to say that the validity should be examined during the stage of inquiry or at pretrial stage. It is to be kept in mind that sanction lifts the bar for prosecution. Therefore, it is not an acrimonious exercise but a solemn and sacrosanct act which affords protection to the government servant against frivolous prosecution. Further, it is a weapon to discourage vexatious prosecution and is a safeguard for the innocent, though not a shield for the guilty. If the sanction order on its face indicates that all relevant material i.e. FIR, disclosure statements, recovery memos, draft charge sheet and other materials on record were placed before the sanctioning authority and if it is further discernible from the recital of the sanction order that the sanctioning authority perused all the material, an inference may be drawn that the sanction had been granted in accordance with law.

Issues Involved:
1. Validity of the sanction granted under Section 19 of the Prevention of Corruption Act, 1988.
2. Stage at which the validity of the sanction can be questioned.
3. Alleged failure of justice due to non-consideration of relevant materials by the sanctioning authority.
4. Compliance with procedural requirements in granting the sanction.

Issue-wise Detailed Analysis:

1. Validity of the sanction granted under Section 19 of the Prevention of Corruption Act, 1988:
The appeal challenged the validity of the sanction for prosecution granted by the competent authority. The Respondent argued that the sanction was invalid as the relevant material, including witness statements and documentary evidence, was not placed before the sanctioning authority. The High Court found that the sanctioning authority had not considered the entire material available with the investigating agency, making the sanction order factually incorrect. The Supreme Court emphasized that the prosecution must send the entire relevant record to the sanctioning authority, and the authority must conduct a complete and conscious scrutiny of the record before granting sanction.

2. Stage at which the validity of the sanction can be questioned:
The Supreme Court reiterated that the validity of the sanction should generally be examined during the trial, not at a pre-trial stage. However, in this case, the High Court had remanded the matter to the trial court to record a finding on any failure of justice due to the alleged non-consideration of relevant materials by the sanctioning authority. The Supreme Court acknowledged that the peculiar facts and circumstances of the case warranted this approach, as the issue of sanction had been partly addressed before the petition was filed.

3. Alleged failure of justice due to non-consideration of relevant materials by the sanctioning authority:
The Respondent contended that the sanctioning authority did not examine the relevant documents before granting the sanction, leading to a failure of justice. The High Court noted that the CBI had not sent the complete record to the sanctioning authority, and the Special Public Prosecutor for CBI conceded that only the SP's report, along with lists of oral and documentary evidence, was sent. The Supreme Court emphasized that the sanctioning authority must apply its mind to all relevant materials before granting sanction, and any error or omission in this regard could result in a failure of justice.

4. Compliance with procedural requirements in granting the sanction:
The Supreme Court highlighted the importance of strict compliance with procedural requirements in granting sanction. The CBI manual, based on statutory provisions of the Code of Criminal Procedure, provides guidelines for the CBI's functioning, which must be adhered to scrupulously. The Court noted that the sanction order should ex facie disclose that the sanctioning authority had considered the evidence and other material placed before it. The Court also referenced various judgments emphasizing the need for the sanctioning authority to conduct a thorough and independent scrutiny of the record before granting sanction.

Conclusion:
The Supreme Court dismissed the appeal, upholding the High Court's decision to remand the matter to the trial court for further consideration. The Court clarified that the trial court should proceed without being influenced by the observations made in the judgment and conclude the matter expeditiously. The Court emphasized that no latitude could be given in matters of corruption and that the procedural requirements for granting sanction must be strictly observed to ensure justice.

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