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TMI Blog2020 (2) TMI 804X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby quashed - Petition allowed - decided in favor of petitioner. - WRIT PETITION No. 8552 of 2018 - - - Dated:- 11-2-2020 - HONOURABLE JUSTICE G. SRI DEVI FOR THE PETITIONER : C SINDHU KUMARI ORDER This Writ Petition is filed by the petitioners/A-1 and A-2, under Article 226 of the Constitution of India, seeking to quash the F.I.R.No. RC MA1 2017 A 0021 of SPE, CBI, ACB Chennai, dated 20.09.2017 registered against them by the 2nd respondent herein under Section 13 (2) read with Section 13 (1) (e) of the Prevention of Corruption Act, 1988. Brief facts of the case of the petitioners are that the 1st petitioner is the Civil Servant of I.R.S. 1992 batch and she is presently working as a Commissioner of Income Tax (Audit) at Hyderabad. She had built up her career in the Income Tax Department since 11th October, 1992 when she joined as Asst. Commissioner of Income Tax and she had worked in different places as Joint Commissioner, Additional Commissioner and the Commissioner of Income Tax and she had an unblemished career; her service record has always been excellent, outstanding and she never faced any departmental or disciplinary enquiry in her entire car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made by her husband, the 2nd petitioner herein, at the time of his election to the State Assembly, but in the impugned F.I.R. it has been stated that they have acquired assets/pecuniary advantage to the tune of ₹ 5,95,58,322/- against the income of ₹ 4,84,76,630/- and, therefore, they are having disproportionate assets to a tune of ₹ 1,10,81,692/- which is 22.86% of the income earned by them. It is further submitted that the impugned F.I.R. is liable to be quashed as the very particulars mentioned in the F.I.R. do not support the conclusions therein. Even if all the averments in the F.I.R. and the particulars stated therein are taken on their face value, they do not constitute any offence of misconduct under Section 13 (1) (e) of the Prevention of Corruption Act, 1988. There is absolutely no chance of ending the proceedings in their conviction and the impugned F.I.R. is vitiated by lack of bona fides. In law, criminal proceeding should not be set in motion against anyone, especially those in Government Service, mechanically and even without any prima facie case. Obviously, as the 2nd petitioner belongs to a rival political party to the ruling party, the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under C.C.A. Rules. After the construction, the entire construction was valued by a Government Approved Valuer and a Chartered Engineer and the same was intimated to the Principal Chief Commissioner of Income Tax by letter, dated 14th March, 2016. The said letter along with the valuation report, dated 11th March, 2016 were filed before her higher officials and the same has been approved vide letter, dated 12th June, 2017. The said letter and valuation report are filed as Annexure-23. It is also submitted that in the impugned F.I.R. there are glaring illegalities, inconsistencies which the Court may kindly be pleased to take into consideration which will prove that the entire F.I.R. is based on misconception, misreading and ex-facie illegal. In a tabular form the said inconsistencies are filed as Annexure-24. A tabulation of the incomes declared by the petitioners as per the Income Tax Returns are filed as Annexure- 25 and 26. It is further submitted that major and substantial irregularity is in items as Sl. Nos. 6 and 7. These two items are: Western and Eastern side portions of their house in Plot No. 126. These items were purchased even as per the Statement-A in the F.I.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the asset mentioned at Sl.No.26 is Ac.2.00 of land in Survey No. 61 in Devanahalli, Banglore at a cost of ₹ 8 lakhs in the name of the 2nd petitioner. This item was sold as is evident from the Statement- C at Sl.No.9. When this land was sold at ₹ 1 Crore, the income should have been taken as ₹ 1 Crore, but arbitrarily the income earned was shown as ₹ 72,50,000/- on sale of this asset, this is also ex- facie illegal. When, as per the item at Sl.No.9 of Statement-C, this item is no longer available, the same could not have been included as an asset at Sl. No.26 of Statement-B at ₹ 8.00 lakhs. This is another irregularity which is the excess value shown. It is also submitted that the details of immovable assets furnished by the 2nd petitioner as required under the Representation of Peoples Act, 1951 and Rules made there under, Current Market Values are mentioned, though the said assets were purchased long back or were inherited long back. Those Current Market Values for those assets cannot be taken for the purpose of ascertaining or coming to a conclusion that the petitioners have assets disproportionate to their known sources of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd when assets are not in excess of their income, as is evident from the above referred aspects, there is no basis for the impugned F.I.R. requiring any enquiry or trial. It is apparent on the face of it that the assets have been arbitrarily valued ignoring the Valuation Report, I.T. Returns and I.P.R. Returns filed by the petitioners. As these are unimpeachable material on which there can be no controversy and which in fact was the basis for the impugned F.I.R., this Court can look into these aspects and adjudicate as to whether the impugned F.I.R. has, even prima facie, any basis for continuing any further proceedings pursuant to it. It is further submitted that both the petitioners are Income Tax Assesses and they have filed their Returns for the relevant periods. These income particulars are available with the respondents and the Returns indicate the income of the petitioners. But strangely without any basis in the impugned F.I.R, their incomes (at Sl. No.4 in Statement-C ) are mentioned as approximately , which is ex-facie illegal. This is in respect of the 2nd petitioner s income. There is no basis for taking his income approximately when his Income Tax Returns are availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and with mala fide intentions and out of political considerations, as the 2nd petitioner belongs to an opposite party to the Ruling Party in the State. There is absolutely no chance of conviction of the petitioners in the impugned F.I.R. registered against them and it is liable to be quashed as per the settled legal principles laid down by the Apex Court in series of judgments. Respondents filed Counter denying the averments made in the affidavit filed in support of the writ petition. It is stated that the F.I.R. was registered based on the source information for possession of disproportionate assets to the tune of ₹ 1,10,81,692/- which is 22.86% more than the known sources of income earned by the petitioners.. There is no requirement of law to afford opportunity to the petitioners/accused to explain about their assets, income and expenditure before registration of the case. There is also no command of law to conduct Preliminary Enquiry (PE) before registration of FIR in all cases. The F.I.R. was registered based on the source information after obtaining the orders of the competent authority as per the Crime Manual of C.B.I. and it was not registered in a mechanical mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that both the petitioners are income tax assesses and they have been filing their income tax returns regularly. The assets held by the petitioners at the beginning of the check period were mentioned as Statement-A and the assets at the end of check period were mentioned as Statement-B. The income during the check period is mentioned as Statement-C. Annexure-1 to 6 filed along with the writ petition are the Income Tax Returns of the 1st petitioner for the financial years 2010-11 to 2015-16 and Annexure-7 to 14 are her immovable property declarations for the period 2010 to 2017 made by her as a Government Servant and in the said I.P.Rs., she had declared all the assets held by her, whether acquired or inherited along with their values thereof. Annexure-15 is copy of the affidavit filed by the 2nd petitioner as required under the Representation of Peoples Act, 1951 and the Rules made there under. Annexure-16 to 21 are the income tax returns filed by the 2nd petitioner for the financial years 2010-2011 to 2015-2016. It is also stated that the value of Sl.Nos.6 and 7 was shown as ₹ 9,50,000/- and ₹ 6.00 lakhs respectively in Statement-A, whereas in Statement-B, these two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Utpal Kumar Basu and others (1994) 4 SCC 711 11. Navinchandra N.Majithia v. State of Maharashtra and others (2000) 7 SCC 640 12. Om Prakash Srivastava v. Union of India and another (2006) 6 SCC 207 13.The First Custodian Fund (India) v. The Nedungadi Bank Limited (2007) 6 MhLj 295 Learned Special Public Prosecutor for C.B.I. cases, while reiterating the contentions made in the counter, would submit that the High Court at Hyderabad for the State of Telangana has no territorial jurisdiction to entertain the writ petition, because the F.I.R. is registered and submitted to the Principal Special Judge for C.B.I. Cases (VIII Additional City Civil Court, Chennai), therefore the High Court of Madras alone has jurisdiction. However, by an order, dated 24.09.2019, this Court has already held that most part of the cause of action arose within the territorial jurisdiction of this Court, this Court has got jurisdiction to entertain the Writ Petition. The respondents did not challenge the said order and as such the said order has attained finality. Hence, there is no need to answer this question once again. Learned Special Public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the process of any court or otherwise to secure the ends of justice. Where criminal proceedings are initiated based on illicit material collected on search and arrest which are per se illegal and vitiate not only a conviction and sentence based on such material but also the trial itself, the proceedings cannot be allowed to go on as it cannot but amount to abuse of the process of the court; in such a case not quashing the proceedings would perpetuate abuse of the process of the court resulting in great hardship and injustice to the accused. In our opinion, exercise of power under Section 482 CrPC to quash proceedings in a case like the one on hand, would indeed secure the ends of justice .. No doubt, as rightly submitted by the learned Special Public Prosecutor, quashing of F.I.R. is an exceptional incident. While explaining the power of the High Court under Section 482 of the Code and Article 226 of the Constitution of India, the Apex Court has laid down the principles where an F.I.R. can or cannot be quashed. (Vide State of Haryana and others v. Ch.Bhajan Lal and others (1992) Supp. (1) SCC 335). The Court in the backdrop of interpretation of various relevant p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. The Apex Court in Dinesh Chandubhai Patel v. State of Gujarat and another (2018) 3 SCC 114 has cautioned the High Courts to examine the merits of the case within the parameters prescribed in Bhajan Lal ( supra). That means, while entertaining application for quashing of F.I.R., the High Court, shall not only examine whether it will fall within any one or the other tests provided by Bhajan Lal ( supra) but also, for that purpose, may travel into examining the merits of the case in order to find whether there is chance of trial on the accusations made in the F.I.R. While resisting the contentions of the petitioners, the learned Special Public Prosecutor for the respondents relied upon two precedents from the Supreme Court viz., State of Madhya Pradesh v. Awadh Kishor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eless, it throws light on the circumstances and situations where the Court s inherent power can be exercised. If the material relied upon or referred in the F.I.R. itself shows that it is not paving a prima facie case to proceed with, and without reference to the documents filed by the petitioners, it is a fit case for believing that if further proceedings are taken in pursuance of such F.I.R. that is lacking basic ingredients of offence, would amount to abuse of process of criminal law. Whether the F.I.R. discloses offence under the P. C. Act : One of the main arguments addressed on behalf of the petitioners is that the F.I.R. does not attract the penal provisions of Section 13 (2) read with 13 (e) of the Prevention of Corruption Act, even without considering the material produced by the petitioners. To this end, the petitioners Counsel cited Varala Bharath Kumar and another v. State of Telangana and another ( supra) wherein the Court at Para 8 of the report concluded that if the complaint did not disclose any wilful conduct which is of such a nature as is likely to attract the penal provisions of Section 498-A of I.P.C., the High Court is justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than one year but which may extend to seven years and shall also be liable to fine. However, it is pertinent to note that the above provision underwent amendment by the Prevention of Corruption (Amendment) act, 2018 with effect from 26.07.2018 Vide Notification No.SO3664(E) dated 26.07.2018. Since the F.I.R. is registered on 20.09.2017, it is only the pre-amended provision of Section 13 is rightly applicable. The essential ingredient to attract sub section (1) (e) public servant possessing the property disproportionate to his known sources of income and according to sub-Section (2) the misconduct of the public servant shall be the element for punishment. Conjoint reading of both the provisions demonstrates that possessing assets disproportionate to the known sources of income of public servant is a punishable misconduct. Invariably, the F.I.R. shall disclose that the petitioners being public servants committed such misconduct. For this purpose, the F.I.R. shall be examined: Against column 3 (a) in the F.I.R., it is mentioned: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty shall be provided to the petitioners after source information and before registering the F.I.R. and a preliminary enquiry, in such cases is mandated by the C.B.I. Manual. Otherwise, learned Senior Counsel maintains that the registration of F.I.R. without complying with such obligatory preliminary enquiry is abuse of process and such would fall within the ambit of one or the other guidelines prescribed by Bhajan Lal ( supra). Learned Senior Counsel laid emphasis, for that purpose on Sl.Nos. 1, 3 and 5 of the said guidelines. He has taken this Court through the averments in the F.I.R. which reveals that mutually inconsistent and inherently improbable statements are made to bring the case under the purview of the penal provisions relating to misconduct of the petitioners. These objections/arguments are considered and analysed hereunder. Whether preliminary enquiry is mandatory? The learned Senior Counsel Sri S.S.Prasad has taken every pain to make this Court to read the Central Bureau of Investigation (Crime) Manual, 2005 extensively, of course, adhering to relevant paragraphs and their implications in the light of certain judicial precedents. However, this argument was dispe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 154 of Cr.P.C., a preliminary enquiry may be registered after obtaining approval of the competent Authority. A PE may be converted into RC as soon as sufficient material becomes available to show that prima facie there has been commission of a cognizable offence Where a public servant is involved in the case, Courts are consistently expressing the view that a Preliminary Enquiry is advisable. In Bhajan Lal and others ( supra) Supreme Court has categorically held that before a public servant is charged with an act of dishonesty which amounts to serious misdemeanour and a F.I.R. is lodged against him, there must be some suitable preliminary enquiry into the allegations by a responsible officer. A Constitution Bench of Supreme Court in the case of Lalitha Kumari v. Government of U.P. and others (2014) 2 SCC 1 endorsed the ratio in P.Sirajuddin v. State of Madras (1970) 1 SCC 595 and held that cases of corruption are ordinarily an exception to the mandatory rule of immediate registration of F.I.R. The Apex Court has held as follows: 108. In the context of offences relating to corruption, this Court in P.Sirajuddin ( supra) expressed the need for a preliminary in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pies of the PE Registration Reports should be sent to the authorities mentioned in the Annexure 9-A to this chapter. In Noor Aga v. State of Punjab and another (2008) 16 SCC 417 the Court held that the guidelines should be substantially complied. It is said: 122. Guidelines issued should not only be substantially complied, but also in a case involving penal proceedings, vis-`-vis a departmental proceeding, rigours of such guidelines may be insisted upon. Another important factor which must be borne in mind is as to whether such directions have been issued in terms of the provisions of the statute or not. When directions are issued by an authority having the legal sanction granted therefor, it becomes obligatory on the part of the subordinate authorities to comply therewith. Xxxxx 124. Logical corollary of these discussions is that the guidelines such as those present in the Standing Order cannot be blatantly flouted and substantial compliance therewith must be insisted upon for so that sanctity of physical evidence in such cases remains intact. Clearly, there has been no substantial compliance of these guidelines by the inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are multiple irregularities committed in showing the value of assets, omissions and commissions and had there been a preliminary enquiry before the registration of impugned F.I.R., this would not have been resulted and consequent to the said F.I.R. which is callously, arbitrarily and mechanically registered, the petitioners were put to unnecessary difficulties and this will attach stigma to them, being public servants and particularly because, the 2nd petitioner is in active politics and is Member of Legislative Assembly. To decide whether the F.I.R. is mechanically registered, without application of mind and with caprice, each of the points highlighted by the petitioners will be taken into consideration. Whether the F.I.R. contains prima facie material to attract the misconduct that the petitioners possess assets disproportionate to their Known sources of income ? The primary argument of the petitioners Senior Counsel is that when the income therefrom are shown in the annual reports submitted to the Department and accounted for in the Income Tax Returns, it shall be accepted without any demur and the act of the respondents in under valuing the sales, over valuing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other words, only after the prosecution has proved the required ingredients, the burden of satisfactorily accounting for the possession of such resources or property shifts to the accused. The expression known sources of income in Section 13 (1) (e) of the Act has two elements, first the income must be received from a lawful source and secondly the receipt of such income must have been intimated in accordance with the provisions of law, rules or orders for the time being applicable to the public servant. (Vide: Kedari Lal v. State of M.P. (2015) Latest Case Law 229 SC). In this reported case, the Supreme Court after approving earlier judgments, observed in para No.12 as under: 12. In the instant case, every single amount received by the appellant has been proved on record through the testimony of the witnesses and is also supported by contemporaneous documents and intimations to the Government. It is not the case that the receipts so projected were bogus or was part of a calculated device. The fact that these amounts were actually received from the sources so named is not in dispute. Furthermore, these amounts are well reflected in the Income Tax Returns fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value realised by such sale as per transaction effected on 27.02.2016, that the said intimation has been taken on record by the department. This annexure also contains three letters dated 07.08.2012 regarding the intimation given by the 1st petitioner as to the investment of ₹ 3.5 lakhs, ₹ 5.00 lakhs and ₹ 7.00 lakhs in Fixed Deposits, as taken on record. There is another letter, dated 15.05.2012 from the department to the effect that the 1st petitioner s investment of ₹ 10.00 lakhs in DSP Blackrock Money Manager Fund is taken on record; similarly, the letter, dated 02.03.2012 shows that the 1st petitioner has declared certain movable properties (investments) to the department and that intimation is recorded. The 1st petitioner has also informed the department under Rule 18 (2) of CCS (Conduct) Rules showing the transaction for immovable property, and also investment transactions of movable properties and by letter, dated 16.02.2012, that intimation has been recorded by the department but giving an advice to her to ensure filing such intimations without delay. Annexures-P10 to P11 are the Income Tax Returns of the 2nd petitioner for the financial year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers would emphasize that the F.I.R. is registered in a hurry that too at Chennai, even without taking pains to conduct preliminary enquiry to ascertain the truth and correctness of the figures of disproportionate assets mentioned in the F.I.R., because, the counter affidavit speaks that on the sole basis of source information, directly F.I.R. is registered. This Court is unable to accept the correctness of the arguments advanced by the learned Standing Counsel for the respondent that the correctness of such information will be verified by giving opportunity to the petitioners, during course of investigation. That means, the respondents are accepting their mistake in not conducting preliminary enquiry. It is in the light of the above legal and factual issues, this Court is inclined to dwell upon the scrutiny of the irregularities pointed out by the petitioners in the statements A to D of the F.I.R. to adjudicate upon the core issue whether the respondents have prima facie material to conclude that the petitioners are in possession of disproportionate assets. Miscalculation of income: In detail, the petitioners, besides swearing to the facts in the petition a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72 27,000 36,637 2,00,000 14,45,109 2013-14 13,87,838 0 83,628 2,50,000 17,21,466 2014-15 15,55,154 0 21,822 50,000 16,26,976 2015-16 19,73,017 8,57,765 47,938 1,50,000 30,28,720 Total 82,56,486 11,95,265 2,26,505 8,50,000 1,05,28,256 So far as the 2nd petitioner s income is concerned, the Annexure-P17 shows the following computations. Details of errots in the FIR Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.00 6,75,000 1,74,642 0.00 0.00 24,48,030 2014- 2015 11,40,000 5,15,700 0.00 0.00 1,62,127 0.00 0.00 18,17,827 2015- 2016 14,06,667 5,51,309 1,94,765 0.00 1,38,832 0.00 0.00 22,91,573 Total 6,389,291 26,19,766 5,83,695 27,98,207 7,49,366 2,82,115 8,12,846 1,42,35,286 Thus, the total income declared by both the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the respondents are yet to enquire officials, purchasers/sellers regarding the actual consideration, what made them to give deduction of ₹ 27.50 lakhs is unknown. There is no justification given by the respondents for this exercise to reduce the income from sale of immovable property by a larger sum of ₹ 27,50,000/-. This is another mistake that occurred in registering the F.I.R. purely based on the Source Information, without conducting preliminary inquiry. Therefore, without looking into the evidence relied upon by the petitioners, this Court has no hesitation to hold that a sum of ₹ 27,50,000/- shall be added to the income of the 2nd petitioner as a known source . Inclusion of assets not in existence : One more delusion sneaked in the F.I.R. is including or showing the Bangalore property again in the assets list. At item No.26 of statement-B (Statement showing the assets at the end of the check period (29-02-2016), it is shown as under : 26 Survey No.61, Devanahalli, Bangalore (Agreement for sale executed on 01.11.2010) 2 acres (Purchase cost of ₹ 8,00,000/- and Development C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondents and to that extent, it should be held that the F.I.R. is lacking prima facie material to sustain the value of ₹ 5,15,50,000/-. The respondents in their Counter affidavit at Para No.23 as below : 23. It is submitted that the 1st petitioner had intimated her department about the construction of the house and also submitted the valuation report, dated 11.03.2016 with the valuation of ₹ 4,14,21,800/-. She also declared that a total investment of ₹ 4,43,76,986/- was made in construction of the said house property, till 29.02.2016. It is further submitted that the construction value of ₹ 5,00,00,000/- (Statement-B) was taken in the F.I.R. based on the source information. However, in the further part of the said paragraph, it is explained by the respondents that after registration of F.I.R., during investigation, they got the value of the property assessed by the Central Public Works Department, who have examined the measurements and approved plans and arrived at the value of the said item at ₹ 6,48,85,300/-. In their own words, the relevant part of the Counter Affidavit, reads as under : Further during the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrary and erratic and thereby the respondents have increased the value of assets at the end of the check period by ₹ 10.00 lakhs. Except saying that the CPWD Engineers valued the cost of the building during investigation, the respondents did not explain why the value of Elevator had to be shown separately. This is visibly a mistake committed by the respondents. Annexure-P15 is the copy of letter, dated 14.03.2016 addressed by the 1st petitioner to the Principal Chief Commissioner of Income Tax (CCA), Chennai, intimating the department about completion of construction of house property, with Annexures 1 to 6 therewith. Out of them, Annexure-1 shows the details of cost of construction. In that Annexure item-H deals with Lifts. Sl.No.31 of Statement-B in Annexure-P1 is Oscan elevator for property is shown at a value of ₹ 10,00,000/-. There is another lift Schindler at a cost of ₹ 12,46,500/- and total cost of the Lifts comes to ₹ 22,46,500/- In the abstract of cost of construction, this value is included. The total construction costs in the abstract from A to W items is shown by the approved valuer at ₹ 4,14,21,800/-. In the Memorandum, dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d working is as hereunder : Sl. No. Particulars of Assets Amount A Assets at the beginning of the check period 1,35,26,066 B Assets at the end of the check period 5,86,72,866 C Assets during the check period (B-A) 4,51,46,800 D Income during the check period 6,20,29,158 E Expenditure during the check period 40,33,322 F Assets + Expenditure Income (DA) -1,28,49,036 The above figures demonstrate that there is no disproportionate asset at all. On the contrary there is an excess of income of ₹ 1,28,49,036/- over and above the assets. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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