Supreme Court of India
M.E. SHIVALINGAMURTHYversusCENTRAL BUREAU OF INVESTIGATION, BENGALURU
- Citation
- 2020 INSC 6
- Decided
- 7 January 2020
- Disposal
- Dismissed
- Bench
- SANJAY KISHAN KAUL
Holding
Under Section 227 CrPC, discharge may be granted only on the basis of prosecution material; the defence cannot be examined, and where the prosecution material raises grave suspicion, discharge is not warranted.
Summary
The case involved a partnership firm (AMC) whose reconstitution in 2009 led the Director of Mines and Geology of Karnataka (the appellant) to issue Mineral Dispatch Permits (MDPs) to the new partners. The Central Bureau of Investigation alleged that the appellant acted without the prior State Government sanction required under Rule 37 of the Mineral Concession Rules, constituting conspiracy, cheating and corruption under various IPC and PC Act provisions. The appellant filed an application for discharge under Section 227 of the CrPC; the trial court discharged him, but the High Court set aside that order. The Supreme Court examined the scope of Section 227, holding that only the material produced by the prosecution may be considered and the defence cannot be examined at the discharge stage; where the prosecution material raises grave suspicion, discharge is not permissible. Applying this principle, the Court found the prosecution material sufficient to sustain the charge and dismissed the appeal, thereby upholding the High Court’s order.
Issues considered
- The proper scope of Section 227 of the Code of Criminal Procedure in granting discharge.
- Whether the defence of an accused can be considered at the stage of a Section 227 application.
- If the prosecution material raises grave suspicion sufficient to deny discharge.
- Whether the appellant’s issuance of MDPs violated Rule 37 of the Mineral Concession Rules requiring prior State Government sanction.
- Whether the appellant can be held liable for conspiracy and other offences under the IPC and the Prevention of Corruption Act.
Legislation cited
- Code of Criminal Procedure, 1973s. 227
- Indian Penal Code, 1860s. 120B, s. 379, s. 409, s. 420, s. 447, s. 468, s. 471, s. 477A
- Mineral Concession Rules, 1960s. 37
- Mines and Minerals (Development and Regulation) Act, 1957s. 26(2)
- Prevention of Corruption Act, 1988s. 13(1)(c), s. 13(1)(d), s. 13(2)
Subjects
Section 227 CrPCdischargedefence not consideredgrave suspicionMineral Dispatch PermitRule 37conspiracymining lawcorruptionpartnership reconstitution
Judgment
794 [2020]
SUPREME COURT 1 S.C.R. 794
REPORTS [2020] 1 S.C.R.
A M.E. SHIVALINGAMURTHY
v.
CENTRAL BUREAU OF INVESTIGATION, BENGALURU
(Criminal Appeal No. 957 of 2017)
B JANUARY 07, 2020
[SANJAY KISHAN KAUL AND K. M. JOSEPH, JJ.]
Code of Criminal Procedure, 1973 – s. 227 – Discharge –
There was a Partnership firm “AMC”, first accused and second
accused became partners of the firm in 2009 – The appellant was
C
arrayed as the third accused – There was a reference in the charge-
sheet to a conspiracy between the first accused and the second
accused – The appellant was director of Mines and Geology in the
State at the relevant time – It was alleged that appellant had acted
in pursuance to the criminal conspiracy and abused his official
D position with a dishonest and fraudulent intention to cheat the
Government and knowingly made a false note in the file that he
had discussed the matter, relating to issuance of the Mineral Dispatch
Permit (MDP) to the new partners of the firm, viz., the first accused
and the second accused, with the Deputy Director (legal) and
directed Deputy Director to issue MDP – It was alleged in the
E
charge-sheet that the acts of the accused including the third accused
(appellant) constituted criminal offences u/ss. 120B, 420, 379, 409,
447, 468, 471, 477A of IPC and ss. 13 (2), 13 (1) (c) and 13 (1) (d)
of the Prevention of Corruption Act, 1988 – Applications were filed
u/s. 227 of the Cr.P.C. seeking discharge – The Trial Court discharged
F the second accused and the appellant – This order was set aside by
the High Court – On appeal, held: The prosecution case largely
depended upon the statement of the Deputy Director legal who took
a definite stand that no opinion was sought from him by the appellant
– A matter, u/r. 37 of the Rules, therefore, according to the prosecution
case, which ought to have gone to the State Government for prior
G
sanction, came to be dealt with by the appellant as Director of Mines
– This led to the issue of MDP – If the defence of the appellant is
not to be looked into, which included the practice of obtaining in
the past whenever the firm was reconstituted and also the version
of the appellant that he did in fact speak with the Deputy Director
H (legal) and acted on his advice and further that this fact would be
794
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 795
INVESTIGATION, BENGALURU
established if the Deputy Director legal was questioned in his A
presence, they would appear to be matter which may not be available
to the appellant to press before the Court considering the application
u/s. 227 of the Cr.P.C. – Consequently, the appeal is dismissed –
Mines and Minerals (Development and Regulation) Act, 1957 –
Mineral Concession Rules, 1960 – r. 37.
B
Code of Criminal Procedure, 1973 – s. 227 – Contours of
jurisdiction under – Held: The principle established is to take the
materials produced by the prosecution, both in the form of oral
statements and also documentary material, and act upon it without
it been subjected to questioning through cross-examination and
everything assumed in favour of the prosecution, if a scenario C
emerges where no offence, as alleged, is made out against the
accused, it, undoubtedly, would enure to the benefit of the accused
warranting the Trial Court to discharge the accused – It is not open
to the accused to rely on material by way of defence and persuade
the court to discharge him. D
Code of Criminal Procedure, 1973 – s. 227 – Discharge –
Defence of accused seeking discharge – Held: The defence of the
accused is not to be looked into at the stage when the accused
seeks to be discharged u/s. 227 of the Cr.PC (State of J & K v.
Sudershan Chakkar and another) – The expression, “the record of E
the case”, used in Section 227 of the Cr.PC, is to be understood as
the documents and the articles, if any, produced by the prosecution
– The Code does not give any right to the accused to produce any
document at the stage of framing of the charge – At the stage of
framing of the charge, the submission of the accused is to be
confined to the material produced by the Police (State of Orissa v. F
Debendra Nath Padhi).
Dismissing the appeal, the Court
HELD: 1. The defence of the accused is not to be looked
into at the stage when the accused seeks to be discharged under G
Section 227 of the Cr.PC (State of J & K v. Sudershan Chakkar
and another). The expression, “the record of the case”, used in
Section 227 of the Cr.PC, is to be understood as the documents
and the articles, if any, produced by the prosecution. The Code
does not give any right to the accused to produce any document
at the stage of framing of the charge. At the stage of framing of H
796 SUPREME COURT REPORTS [2020] 1 S.C.R.
A the charge, the submission of the accused is to be confined to
the material produced by the Police (State of Orissa v. Debendra
Nath Padhi). [Para 15][805-D-E]
2. It is here that again it becomes necessary to remind the
contours of the jurisdiction under Section 227 of the Cr.PC. The
B principle established is to take the materials produced by the
prosecution, both in the form of oral statements and also
documentary material, and act upon it without it been subjected
to questioning through cross-examination and everything
assumed in favour of the prosecution, if a scenario emerges where
no offence, as alleged, is made out against the accused, it,
C undoubtedly, would enure to the benefit of the accused warranting
the Trial Court to discharge the accused. [Para 25][810-A-B]
3. It is not open to the accused to rely on material by way of
defence and persuade the court to discharge him. [Para 26][810-
C]
D
4. In this case, as already noticed, going by the statements
made by the subordinates working in the Office of the appellant,
on receipt of the letter from the erstwhile partners of AMC dated
26.12.2009, two of his subordinates, including the Additional
Director, did recommend that the matter requires a legal opinion.
E The noting, which is undisputed in this case, made by the
appellant, would appear to suggest that he had spoken to the
Deputy Director (Legal). The prosecution case largely depends
upon the statement of the Deputy Director (Legal) who takes a
definite stand that no opinion was sought from him. A matter,
F under Rule 37 of the Rules, therefore, according to the
prosecution case, which ought to have gone to the State
Government for prior sanction, came to be dealt with by the
appellant as Director of Mines. This led to the issue of MDPs. It
is, no doubt, true that there may not be any other material to link
the appellant with various other acts and omissions which have
G been alleged against the first accused in particular along with the
fifth accused and other accused. However, the fact remains, if
the defence of the appellant is not to be looked into, which
included the practice obtaining in the past whenever the firm
was reconstituted, and also the version of the appellant that he
H
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 797
INVESTIGATION, BENGALURU
did in fact speak with the Deputy Director (Legal) and acted on A
his advice and further that this fact would be established if the
Deputy Director (Legal) was questioned in his presence, they
would appear to be matter which may not be available to the
appellant to press before the court considering the application
under Section 227 of the Cr.PC. [Para 29][810-F-H; 811-A-B]
B
Sree Ramakrishna Mining Company v. Commissioner
of Income-Tax, Mysore (1966) SCC Online Kar 73;
State of J & K v. Sudershan Chakkar and another AIR
1995 SC 1954; State of Orissa v. Debendra Nath Padhi
AIR 2005 SC 359 – referred to.
C
P. Vijayan v. State of Kerala and another (2010) 2 SCC
398 – relied on.
Case Law Reference
(2010) 2 SCC 398 relied on Para 14
D
AIR 1995 SC 1954 referred to Para 15
AIR 2005 SC 359 referred to Para 15
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
957 of 2017.
From the Judgment and Order dated 07.11.2016 of the High Court E
of Karnataka at Bengaluru in Criminal Revision Petition No. 838 of
2016.
Kapil Sibal, Sr. Adv., S. Udaya Kumar Sagar, Ms. Bina Madhavan,
L. M. Chidanandayya, Ms. Akanksha Mehra, Ms. Vasudha Singh, M/s.
Lawyer S Knit & Co, Akshay Amritanshu, Shekhar Vyas, Arvind Kumar F
Sharma, Ms. Nithya Rao, Mukesh Kumar Maroria, Parmatma Singh,
Mayank Jain, Madhur Jain, Ms. Aakriti Dhawan, Ms. Nishtha Singh,
Advs. for the appearing parties.
The Judgment of the Court was delivered by
G
K. M. JOSEPH, J.
1. The appeal is directed against the Order of the High Court
setting aside the Order passed by the Magistrate allowing the application
filed by the appellant to discharge him.
H
798 SUPREME COURT REPORTS [2020] 1 S.C.R.
A 2. The charge-sheet came to be filed on the basis of a FIR dated
01.10.2011. The appellant was Director of Mines and Geology in the
State of Karnataka at the relevant time. There was a partnership firm
by the name M/s Associated Mineral Company (‘AMC’, for short). The
offences are alleged to revolve around the affairs of the said firm. First
accused is the husband of the second accused. They became partners
B
of the firm (AMC) in 2009. Appellant was arrayed as the third accused.
There was reference in the charge-sheet to a conspiracy between the
first accused and the second accused. It is alleged, inter alia, that they
obtained an undated letter from one Shri K.M. Vishwanath, the Ex-
Partner, which is after his retirement with effect from 01.08.2009 from
C the firm, which was addressed to the appellant, seeking directions to the
Deputy Director of Mines and Geology, Hospet in Karnataka to issue
the Mineral Dispatch Permit (‘MDP’ for short) to the new partners,
viz., the first accused and the second accused. It is further averred that
the investigation revealed that the appellant marked the said letter to the
Case Worker who put up the note seeking orders for referring the matter
D
for legal opinion which was also approved and recommended by the
Additional Director and put up to the appellant for orders. Appellant is
alleged to have acted in pursuance to the criminal conspiracy and abused
his official position with a dishonest and fraudulent intention to cheat the
Government of Karnataka and knowingly made a false note in the file
E that he had discussed this matter with the Deputy Director (Legal) and
directed Deputy Director, Mines and Geology, Hospet for issue of MDPs
to the new partners, viz., the first accused and the second accused by
violating Mines and Minerals (Development and Regulation) Act, 1957
(hereinafter referred to as ‘the Act’, for short) and Mineral Concession
Rules, 1960 (hereinafter referred to as ‘the Rules’, for short). There are
F
various allegations regarding other accused. As far as appellant is
concerned, it is alleged further in the charge-sheet that the acts of the
accused, seven in number, including the third accused (appellant),
constitutes criminal offences punishable under Sections 120B, 420, 379,
409, 447, 468, 471, 477A of the Indian Penal Code, 1860 (hereinafter
G referred to as ‘the IPC’, for short) and Sections 13(2) and 13(1)(c) and
13(1)(d) of the Prevention of Corruption Act, 1988. No doubt, the origin
of this investigation is to be traced to an Order passed by this Court
dated 29.03.2011 in Special Leave Petition (Criminal) No. 7366-7367 of
2010 and connected matters ordering investigation into the illegalities
into the matter of Mining Lease No. 2434 of AMC. The allegations
H
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 799
INVESTIGATION, BENGALURU [K. M. JOSEPH, J.]
include the allegation that the accused conspired to commit theft of A
Government property, i.e., mineral ore. They allegedly trespassed into
the forest area and other areas of Bellary District: carried out illegal
mining and transported it. Though, second accused (A2) to seventh
accused(A7) filed applications under Section 227 of the Code of Criminal
Procedure, 1973 (hereinafter referred to as ‘Cr.PC’, for short) seeking
B
discharge, by Order dated 08.10.2015, the Trial Court discharged the
second accused and the appellant. It is this Order which has been set
aside by the High Court by the impugned Order.
APPLICATION BY THE APPELLANT SEEKING
DISCHARGE
C
3. It is, inter alia, stated as follows:
Appellant is known for his honesty and dignity as a public servant.
He earned his name as an excellent and honest Officer in all the places
where he was posted. He was not issued a single article of charges
while discharging his duties. Though, he started as a Member of the D
Karnataka State Civil Service, he was promoted to the Cadre of Indian
Administrative Service (IAS) as he had an impeccable service record.
He was posted as Director of Mines in Geology, having regard to his
service record. By virtue of the delegation under Section 26(2) of the
Act, the execution of the lease deed lies with the Director of Mines and
Geology. AMC was granted the Mining Lease by the State way back in E
1966. The firm was reconstituted several times by inducting new partners
and retiring old partners. As and when there is the reconstitution of the
firm, the firm intimated to the Department of Geology of the reconstitution
and conducted the mining operation in the name of AMC by the newly
inducted partners. Though, several reconstitutions have taken place, no F
application has been filed under Rule 37 of the Rules for transfer of the
lease on the ground that the assets, viz., the Mining Lease belongs to the
firm and not to any individual partners. Therefore, there was no
requirement of making an application under Rule 37 of the Rules seeking
transfer of the Mining Lease. Records produced by the official before
the Court reveal that the Department has understood that reconstitution G
did not amount to transfer as the partnership is the owner of the asset,
viz., the Mining Lease. On inducting first and second accused, the
reconstituted firm made application to Deputy Director seeking MDP
by intimating that two new partners were inducted. The application was
sent to the Director for issuance of MDP. In addition to the application H
800 SUPREME COURT REPORTS [2020] 1 S.C.R.
A filed to the Deputy Director seeking MDPs, Shri K.M. Vishwanath, Ex-
Partner, representing the firm, made application to the Director, placing
on record that firm had been reconstituted by inducting the first and the
second accused and, accordingly, intimated under Rule 62 of the Rules.
It is stated further that after receiving the application by the Department,
the file will have to be processed in the Mining Lease Section. There is
B
an elaborate procedure followed while considering applications in
Department of Mines and Geology. The Section Officer initially examines
the file. A detailed note on the application is prepared. The file, along
with note sheet, is sent to the Superintendent of the Mining Leases Section
who is a senior Officer who examines the note sheet and puts up the
C same before the Additional Director. The Additional Director, who is the
senior-most departmental Officer in the Department, examines the entire
file and puts up the file before the Director. He passes an order considering
the law applicable. If it is within the jurisdiction, he disposes the application.
If an order from the State Government is required, it is so referred with
comments. The Director signs the lease deed by virtue of delegation
D
under Section 26(2) of the Act.
4. Appellant found that the firm was constituted by Shri Jali
Mahadevappa an Shri Jali Mallikarjun in the year 1966 and the lease
was obtained in the name of AMC as a firm registered under the
Partnership Act. The lease, as per the records, is the asset of the firm.
E The firm, viz., AMC, was reconstituted on 30.06.1983 by inducting Shri
L. Lingaraju as one of the partners on account of retirement of Shri
J. Mallikarjun. On 13.02.1984, the firm was reconstituted again wherein
Shri B. Ananda joined as a partner and Shri J. Lingaraju retired. On
13.02.1982, Smt. B. Vasanthi joined in place of Shri J. Vamadevappa
F who retired from the firm. On 13.06.1986, Shri B. Vasudev entered the
firm as a partner and Smt. B. Vasanthi retired from the firm. By Deed
of Partnership dated 10.06.1990, Shri Mohammed Kasim joined the firm
and Shri B. Ananda retired from the firm. Again, Smt. Asha Mohammad
Haroon joined as partner in place of Shri B. Vasudev who retired. Again,
AMC was reconstituted by inducting Shri K.M. Prabhu and Smt.
G Parvathamma. There was further reconstitution by inducting Smt. Sujata
Prabhu and Shri K.M. Sujan, as partners. Lastly, on 01.09.2009, the first
accused and the second accused were inducted as partners. From 1981,
on several occasions, the firm was, thus, reconstituted and the application
under Rule 37 of the Rules was not filed before the State Government.
H Partners filed Form V before the Registrar of Firms intimating
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 801
INVESTIGATION, BENGALURU [K. M. JOSEPH, J.]
reconstitution. Never was an application made under Rule 37 as and A
when reconstitution was done on the ground that the firm was the owner
of the mining lease. Only intimation under Rule 62 of the Rules was
given. The Case Worker-CW24 has suggested to take legal opinion which
was put up along with the note sheet. There was no note put up suggesting
the applicability of Rule 37 of the Rules. If there was a suggestion about
B
the applicability of such Rule, the appellant would have taken appropriate
decision. The precedent available also was relied upon. The decision
taken was a bonafide decision. The suggestion to take legal opinion
was endorsed by the Additional Director which is produced before the
Court as Exhibit D-765, the note sheet. During the course of the
examination of the file, it was brought to the notice of the appellant that C
Rule 37 was not applicable. A communication was sent to the Deputy
Director, Hospet that the permits will have to be issued to the AMC but
not in the names of the partners. The appellant further submitted that
after receipt of the file, he contacted the Deputy Director (Legal)
telephonically who informed that the reconstitution of the firm had taken
D
place by inducting new partners and permits may be issued in the name
of the Company and not in the name of the partners which was denied
by the said Deputy Director (Legal) at a later stage. He sought support
of Section 27 of the Act which protected acts done in good faith under
the Act. He pointed out that during the investigation, he gave details of
various firms who have leases with the Government which have not E
obtained permission under Rule 37. The procedure which was consistently
followed for obtaining MDPs by intimating reconstitution under Rule 62
was brought to the notice. It was contended that taking a bonafide
administrative decision on the understanding of Rule 37 and based on
previous precedents, should not be considered as cheating. Reading of
F
the charge-sheet and allegations, according to the appellant, basically
surrounded around Section 420 of the IPC.
5. The statements of CW7, CW21, CW24, CW26, CW202 and
CW109 were enlisted by the prosecution in support of the charge. The
appellant pointed out the statements of the witnesses and the documents
produced clearly reveal there is no material much less prima facie G
material to frame the charges.
ORDER PASSED BY THE MAGISTRATE
6. The Court noted the submission of the appellant that AMC had
been reconstituted on a number of occasions. No fault was found in H
802 SUPREME COURT REPORTS [2020] 1 S.C.R.
A accepting reconstitution. Only when the first and second accused became
partners in the year 2009, the appellant was faulted. Reliance is seen
placed on the judgment of the judgment of the Division Bench of the
High Court in Sree Ramakrishna Mining Company v. Commissioner of
Income-Tax, Mysore1. Thereafter, reliance is placed on decisions which
were rendered under the Indian Stamp Act, 1899 for the proposition that
B
an instrument evidencing the distribution of assets of a firm, on dissolution
or retirement of a partner, would not amount to a conveyance. The
principles relating to discharge under Sections 227 and 228 were
discussed, and finally, it was held as follows:
“41. In view of the above said citations, it is evident that act of
C A-3 in directing his subordinates to issue MOP to M/s. Associated
Mining Company belonging to accused Nos.1 and 2 does not
amount to fastening criminal liability of him. In the statement of
CWs 7, 21, 24, 26, 109 and 202, absolutely there is no material to
show that A-3 has committed criminal conspiracy to help accused
D Nos.1 and 2 in directing his officials to issue Mineral Dispatch
Permit and as such there is considerable force in the argument of
learned Counsel for accused No.3 and I am unable to accept the
argument addressed by learned Special Public Prosecutor. Hence,
I answer IA. No.30 deserves to be allowed. I answer.”
E FINDINGS OF THE HIGH COURT
7. After noting the rival contentions, the court notes that for
punishing under Section 120B of the IPC, the prosecution is required to
prove the conspiracy. The agreement, which is illegal, can be proved by
necessary implication. It is to be largely proved from the inference of
F the illegal acts or omissions by the conspirators. The incriminating
evidence collected by the prosecution, it is noted, is that the appellant
recommended issuance of MDPs in gross violation of the Act despite
the office noting to the effect that the matter required legal opinion. The
stand of the appellant that he had discussed the matter with the Legal
Department is seen negatived by CW21. As to his contention that many
G a time AMC was reconstituted and he had really discussed the matter
with CW21 before directing the issue of MDPs, was found to be a
matter of defence which could not be pressed at the threshold.
H 1
1966 SCC Online Kar 73 / ILR 1966 Mys. 1945
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 803
INVESTIGATION, BENGALURU [K. M. JOSEPH, J.]
8. We notice the following findings: A
“12. Applying the formulae of (some/mere suspicion – grave
suspicion: as enunciated in Dilawar Balu Kurane’s case (supra)
and Union of India -vs- Prafulla Kumar Samai and another reported
in AIR 1979 SC 366, to the evidentiary material placed before the
court against respondent, then also the needle tilts more towards B
grove suspicion. The subject matter involved in this case is the
natural resource of the country and the alleged offence is said to
have caused loss to the State exchequer substantially. The
respondent is a responsible officer of the State. Consciously he
passed the order in violation of the statutory provisions.
C
13. The learned Trial Judge in the order impugned has made an
omnibus observation that his action does not fasten criminal liability
on him and the statement of the witnesses does not show that he
committed criminal conspiracy. Though there was no direct
evidence, the learned Trial Judge has lost sight of incriminating
material appearing in the circumstantial evidence placed by the D
prosecution. Limited power vested with the Trial Court to sift and
weigh the evidence is transgressed by the learned Trial Judge in
the impugned order, hence requires intervention in this revision
jurisdiction.”
9. Accordingly, the petition was allowed setting aside the order of E
the Sessions Judge discharging the appellant.
10. We heard Shri Kapil Sibal, learned Senior Counsel appearing
for the appellant. We also heard learned Counsel appearing for the
respondent.
F
11. Shri Kapil Sibal, learned Senior Counsel for the appellant,
submits as follows:
The lease was originally in favour of AMC in the year 1966.
Thereafter, the firm was reconstituted on a large number of occasions.
The procedure followed was intimation being given to the Department
G
under Rule 62 of the Rules about the reconstitution. Rule 37 of the Rules
was not invoked. This is a case where the action of the appellant was
bonafide. Proceeding on the basis that Rule 37 applies, he further submits,
this is not a case where the appellant could be prosecuted for the criminal
offences. The appellant acted on the basis of the practice. He contacted
the Deputy Director (Legal). H
804 SUPREME COURT REPORTS [2020] 1 S.C.R.
A 12. There is also case of the appellant that he had directed MDP
to be issued in the name of the firm. He had also made it clear that
permit be also not issued to the partners. There was no other material
produced on record by the prosecution. This is not a case where there is
material to establish any criminal conspiracy.
B 13. Per contra, the learned Counsel for the respondent-Central
Bureau of Investigation, Bengaluru, supported the order. In particular,
reliance is placed on the specific stand of the Charge Witness-CW21 to
the effect that the appellant had not sought his legal opinion contrary to
the stand of the appellant.
C LEGAL PRINCIPLES APPLICABLE IN REGARD TO AN
APPLICATION SEEKING DISCHARGE
14. This is an area covered by a large body of case law. We refer
to a recent judgment which has referred to the earlier decisions, viz., P.
Vijayan v. State of Kerala and another2 and discern the following
D principles:
i. If two views are possible and one of them gives rise to
suspicion only as distinguished from grave suspicion, the Trial
Judge would be empowered to discharge the accused.
ii. The Trial Judge is not a mere Post Office to frame the charge
E at the instance of the prosecution.
iii. The Judge has merely to sift the evidence in order to find out
whether or not there is sufficient ground for proceeding.
Evidence would consist of the statements recorded by the
Police or the documents produced before the Court.
F
iv. If the evidence, which the Prosecutor proposes to adduce to
prove the guilt of the accused, even if fully accepted before it
is challenged in cross-examination or rebutted by the defence
evidence, if any, “cannot show that the accused committed
offence, then, there will be no sufficient ground for proceeding
G with the trial”.
v. It is open to the accused to explain away the materials giving
rise to the grave suspicion.
2
H (2010) 2 SCC 398
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 805
INVESTIGATION, BENGALURU [K. M. JOSEPH, J.]
vi. The court has to consider the broad probabilities, the total A
effect of the evidence and the documents produced before
the court, any basic infirmities appearing in the case and so
on. This, however, would not entitle the court to make a roving
inquiry into the pros and cons.
vii. At the time of framing of the charges, the probative value of B
the material on record cannot be gone into, and the material
brought on record by the prosecution, has to be accepted as
true.
viii. There must exist some materials for entertaining the strong
suspicion which can form the basis for drawing up a charge C
and refusing to discharge the accused.
15. The defence of the accused is not to be looked into at the
stage when the accused seeks to be discharged under Section 227 of
the Cr.PC (See State of J & K v. Sudershan Chakkar and another3).
The expression, “the record of the case”, used in Section 227 of the D
Cr.PC, is to be understood as the documents and the articles, if any,
produced by the prosecution. The Code does not give any right to the
accused to produce any document at the stage of framing of the charge.
At the stage of framing of the charge, the submission of the accused is
to be confined to the material produced by the Police (See State of
Orissa v. Debendra Nath Padhi4). E
ANALYSIS OF THE CASE
16. Having set out the legal principles, as aforesaid, let us consider
the facts:
Undoubtedly, the appellant came to be appointed as the Director F
of Mines and Geology of the State of Karnataka by virtue of Notification
dated 09.06.2008. He continued in the said post till 25.10.2010. Mining
Lease No.625 was executed on 02.03.1966 between the Governor and
AMC, a registered firm. The Managing Partner was one Shri Jali
Mahadevappa. The partners of the AMC, viz., Shri K.M. Parvatamma
G
and Shri K.M. Vishwanath sent a letter dated 26.12.2009. It reads as
follows:
3
AIR 1995 SC 1954
4
AIR 2005 SC 359 H
806 SUPREME COURT REPORTS [2020] 1 S.C.R.
A “To:
The Director
Mines & Geology Mineral
Khanija Bhavan
B Race Course Road
Bangalore.
Sub: Change in Constitution of Associated Mining Company ML
No.2434- Reg.
C Sir,
We undersigned are lease owner of Associated Mining Company
of Guru Iron Ore Mines at Venkatagiri Village, Sandur Taluk,
Bellary Dist, bearing ML No.2434 (Old 625).
For better management we admitted as Partners Mr. G. Janardhan
D Reddy and Mrs. G. Lakshmi Aruna of 123/350 Veerabagouda
Colony, Opp Kumaraswamy Temple Club Road, Bellary on 31 st
July, 2009. Subsequently on 1 st August, 2009 Smt. K.M.
Parvatamma and Mr. K.M. Vishwanath retired.
Mr. G. Janardhana Reddy and Mrs. G. Lakshmi Aruna are sole
E Partners of the Mine. The admission and Retirement deed are
enclosed herewith for your perusal. This is for your kind
information.
Kindly issue permission to transport the ore from Mines to various
destinations.
F
Thanking you,
Yours sincerely,
sd/-
Smt. K. Parvatamma
G
sd/-
Mr. K.M. Vishwanath”
17. The role, which is attributed to the appellant, begins essentially
with this letter. It is the case of the prosecution that having regard to
H
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 807
INVESTIGATION, BENGALURU [K. M. JOSEPH, J.]
Rule 37 of the Rules, it was incumbent upon the appellant, before acting A
upon the reconstitution of the firm, to obtain the previous sanction of the
State Government. The Charge Witnesse-CW24-D. Hanumantha,
undoubtedly, has given statement indicating that the letter aforesaid was
marked to him to process the same. He further stated that he proposed
that legal opinion may be obtained. Finally, it was submitted to the
B
Additional Director. The Additional Director also recommended the
need to obtain legal opinion. The matter came up before the appellant on
04.01.2010. On 04.01.2010, it appears that appellant has ordered:
“… “spoken to Dy. Director (Legal), the company remains
the same, whereas the partners might have been included or
removed, and this they are supposed to approach the law board. C
In the present case, the partners are not asking for MDP (Mineral
Dispatch Permits) in their names, but in the name of the company.
Permits may be issued only in the name of the company viz.,
AMC where lease is also sanctioned to the same company only.
The partners are changed, but you are not going to issue MDPs D
to the partners. Hence inform DD Hospet that MDPs may be
issued only in the name of the Company.”…”
18. The Additional Director has also spoken on similar lines.
19. The case of the prosecution, which has appealed to the High
Court, is essentially based on the fact that on the one hand, the appellant E
in his Order dated 04.01.2010 (Draft) which was finalised on 05.01.2010,
spoke about having obtained legal opinion by speaking to Deputy Director
(Legal), the Deputy Director (Legal) has taken the stand that he has not
given any such opinion. The statement of the Deputy Director (Legal)
has been produced by the appellant along with Criminal Miscellaneous F
Petition No. 122009 of 2009. He has stated, inter alia, as follows:
“However, no opinion was sought from me in this regard”.
He has further stated that since the contents of the letter dated
26.12.2009 disclosed that the entire lease holding rights were
transferred in favour of the first and second accused, it is contrary G
to Rule 37 of the Rules. However, ignoring the provisions of Rule
37, the direction was issued to Deputy Director to issue the MDPs
in the name of the Company. However, he further states that
AMC is a firm not a company. He further stated that if there is no
change in the rights of the lessee, then, someone else gets rights
H
808 SUPREME COURT REPORTS [2020] 1 S.C.R.
A over the leasehold rights. The said act will attract provisions of
Rule 37 of the Rules. He has also stated that though an application
was filed on 29.07.1994 in view of the fact that the Mining Lease
was due to expire on 01.03.1996, the lease is renewed from the
year 2000 to 2010 by the Minister since the Forest Department
gave permission. He goes on to state that the lease ought to have
B
been renewed with effect from 02.03.1996 for a period of ten
years.
20. It is necessary to notice Rule 37 of the Rules which were
made in 1960. Rule 37 reads as follows, inter alia:
C “37. Transfer of lease :- (1) The lessee shall not, without the
previous consent in writing of the State Government and in the
case of mining lease in respect of any mineral specified in Part
‘A’ and Part ‘B’ of the First Schedule to the Act, without
the previous approval of the Central Government :-
D (a) assign, sublet, mortgage, or in any other manner, transfer
the mining lease, or any right, title or interest therein, or
(b) enter into or make any bonafide arrangement, contract,
or understanding whereby the lessee will or may be directly
or indirectly financed to a substantial extent by, or under
E which the lessee’s operations or undertakings will or may
be substantially controlled by, any person or body of
persons other than the lessee:”
(Emphasis supplied)
21. The Trial Court has placed reliance on judgment of the Division
F Bench of the Mysore High Court in Sree Ramakrishna Mining Company
(supra). In fact, the Court in the said case, considered Rule 37 of the
Mineral Concession Rules of 1949, which read as follows:
“37. Transfer of lease:- The lessee may with the previous
sanction of the State Government and subject to conditions
G specified in the first proviso to rule 35 and in rule 38, transfer his
lease or any right, title, or interest therein, to a person holding a
certificate of approval on payment of a fee of Rs.100 to the State
Government.”
(Emphasis supplied)
H
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 809
INVESTIGATION, BENGALURU [K. M. JOSEPH, J.]
22. It is clear that the provision, as obtained prior to 1960, when A
the Rules were made, was different.
23. In the aforesaid case, the question came to be decided in a
Reference under Section 66 of the Income Tax Act, 1922. One of the
questions which fell for decision was the effect of there being no previous
sanction of the Government under Rule 37 for the transfer of lease. We B
may notice that the Court in Sree Ramakrishna Mining Company (supra),
inter alia, held as follows:
“The 37th Rule, as can be seen from its language does not concern
itself with the formation of a partnership such as the one before
us, and, its principal purpose is to provide for the transfer of a C
lease granted under the provisions of the Rules. It is in the nature
of an enabling provision which authorises a transfer by the lessee
to a person who has a certificate of approval, and, directs that
such transfer could be made with the previous sanction of the
Government subject to the other conditions with which we are
not concerned. There is a distinction between a statutory provision D
which contains an express prohibition against the performance of
a certain act and one which enables its performance subject to
prescribed conditions. While in the former case, there will be no
difficulty in coming to the conclusion if nothing else could be said
about it that the absolute prohibition against the performance of E
the act is what is forbidden by law, the same could not be said if
the matter falls within the second category. Now the 37th rule
does not, in express terms, forbid a transfer but authorises a
transfer with the previous sanction of the Government and subject
to other conditions.”
F
24. The provisions of Rule 37, which would control destiny of
this case, is, as it was obtained in the year 2009. Also could it not be
contended that decisions rendered under the Stamp Act may not be
relevant to understood the scope of Rule (37) of the Rules. No doubt,
there is a case for the appellant that on a number of reconstitutions took
place in regard to the firm-AMC, and on no occasion, was an issue G
relating to infraction of Rule 37, raised. All that the appellant did was, he
acted in accordance with the practice obtaining in the Department. There
is the case for the appellant that in this regard, Rule 37, as such, was not
pointedly invoked by either the Additional Director or the SDA.
H
810 SUPREME COURT REPORTS [2020] 1 S.C.R.
A 25. It is here that again it becomes necessary that we remind
ourselves of the contours of the jurisdiction under Section 227 of the
Cr.PC. The principle established is to take the materials produced by the
prosecution, both in the form of oral statements and also documentary
material, and act upon it without it been subjected to questioning through
cross-examination and everything assumed in favour of the prosecution,
B
if a scenario emerges where no offence, as alleged, is made out against
the accused, it, undoubtedly, would enure to the benefit of the accused
warranting the Trial Court to discharge the accused.
26. It is not open to the accused to rely on material by way of
defence and persuade the court to discharge him.
C
27. However, what is the meaning of the expression “materials
on the basis of which grave suspicion is aroused in the mind of the
court’s”, which is not explained away? Can the accused explain away
the material only with reference to the materials produced by the
prosecution? Can the accused rely upon material which he chooses to
D produce at the stage?
28. In view of the decisions of this Court that the accused can
only rely on the materials which are produced by the prosecution, it must
be understood that the grave suspicion, if it is established on the materials,
should be explained away only in terms of the materials made available
E by the prosecution. No doubt, the accused may appeal to the broad
probabilities to the case to persuade the court to discharge him.
29. In this case, as already noticed, going by the statements made
by the subordinates working in the Office of the appellant, on receipt of
the letter from the erstwhile partners of AMC dated 26.12.2009, two of
F his subordinates, including the Additional Director, did recommend that
the matter requires a legal opinion. The noting, which is undisputed in
this case, made by the appellant, would appear to suggest that he had
spoken to the Deputy Director (Legal). The prosecution case largely
depends upon the statement of the Deputy Director (Legal) who takes a
G definite stand that no opinion was sought from him. A matter, under Rule
37 of the Rules, therefore, according to the prosecution case, which
ought to have gone to the State Government for prior sanction, came to
be dealt with by the appellant as Director of Mines. This led to the issue
of MDPs. It is, no doubt, true that there may not be any other material to
link the appellant with various other acts and omissions which have been
H
M.E. SHIVALINGAMURTHY v. CENTRAL BUREAU OF 811
INVESTIGATION, BENGALURU [K. M. JOSEPH, J.]
alleged against the first accused in particular along with the fifth accused A
and other accused. However, the fact remains, if the defence of the
appellant is not to be looked into, which included the practice obtaining in
the past whenever the firm was reconstituted, and also the version of
the appellant that he did in fact speak with the Deputy Director (Legal)
and acted on his advice and further that this fact would be established if
B
the Deputy Director (Legal) was questioned in his presence, they would
appear to be matter which may not be available to the appellant to press
before the court considering the application under Section 227 of the
Cr.PC.
30. This being the outcome of our discussion, the inevitable
consequence is that we are not persuaded to hold that the High Court C
was in error in the view it has taken. Consequently, the appeal fails and
it stands dismissed. We, however, make it clear that the observations
made by us are for the purpose of deciding the application under Section
227 of the Cr.PC. and they are not to trammel the Court.
D
Ankit Gyan Appeal dismissed.
E
F
G
H
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