N. BHARGAVAN PILLAI (DEAD) BY LRS. AND ANR.versusSTATE OF KERALA

A
            N. BHARGA VAN PILLAI (DEAD) BY LRS. AND ANR.
                                           V.
                                STA TE OF KERALA

                                  APRIL 20, 2004
B
              [DORAISWAMY RAJU ANDARIJITPASAYAT,JJ.]


          Prevention of Corruption Act, 1947; Section 5(2) and 19-Criminal
    Procedure ·code, 1973 : Section 197-Penal Code, 1860; Section 409-
C   Pr.;bation of Offenders Act, 1958; Section 18-Public Servant-Cognizance
    ofoffence ofmisappropriation ofstock without previous sanction- Co"ectness
    of-Held, sanction not a condition precedent for an offence of
    misappropriation-On facts, entrustment of stock was proved-Hence,
    conviction upheld.
D         Appellant was on deputation for 5 year as Junior Manager in State Civil
    Supplies Corporation. Subsequently, he was appointed as unit Miinager in a
    Unit- depot of the Corporation. On the last day of the period of deputation, the
    appellant went on leave without handing over charge and keys of the godown
    to his successor. PW 3, the successor, assumed charge of the depot. The
E   appellant reported for duty and in the presence of PW 2, opened the godown.
    When the stock taking was done in the godown, it was found that there was
    a shortage of stock of rice, palmoline and sugar worth Rs. 1,63,770. the
    appellant deposited Rs. 50,000 immediately and undertook to pay the balance
    of the amount in instalments. The appellant was suspended from service. The
    Managing Director of the Corporation reported the matter to Director of
F   Vigilance (Investigation) and he directed registration of a case against the
    appellant. In the mean time, the appellant retired from service and hence
    sanction for the prosecution was not obtained. The trial court cnvicted the
    appellant under section 5(2) of the Prevention ofCorruptionAct,1947 and
    section 409 IPC and was sentenced to undergo rigorous imprisonment for
G   two years and a fine of Rs. 1,00,000 with default stipulation. The High Court,
    in appeal, confirfued the conviction and sentence.

         In appeal to the Court, the appellant contended that requisite sanction
    under Sec.tion 19 of the Prevention of Corruption Act, 1947 and Section 197

                                         444
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                    N.B. PILLAI v. STATE OF KERALA                         445
Cr.Pc has not been obtained before framing cha.rg\s and hence the whole            A
proceeding is non est; that the prosecution has not established any mis-
appropritation and/or mens rea of the alleged crime by the appellant; that the
essential ingredients necessary to prove the accusation under section 409
IPC are absent; and that the benefit under the Probation of Offenders Act,
1958 should be given since he undertook to pay the differential amount and         B
also deposited part of the amount.

      The respondent-State contended that the mis-appropriation done by the
appellant was not his official duty and hence sanction under Section 197 Cr.PC
is not required; that the benefit of the Probation of Offenders Act, 1958 is
not available to the appellant.                                                    C
      Dismissing the appeal , the court

      HELD:l.1 Sanction under Section 197 Cr,PC is not a condition precedent
for an offence under section 409 IPC. (451-CJ

       Jiwan Dass v. State of Haryana, (1999) 2 sec 530; Bore Gowda v. D
State of Karnataka, (2000] 10 SCC 260; Kalicharan Mqhapatra v. State of
Orissa, (1998) 6 SCC 411; R. Balakrishna Pillaiv. State ofKera/a, AIR (1996)
SC 90ll and State pfMP. v. MP. Gupta, JT (2003) IO SC 32, referred to.

       1.2. The actual mode of entrustment or mis-appropriation is not to _be      E.
proved by the prosecution. Once entrustment is proved, it is for the appellant
to prove as to how the property entrusted was dealt with. It was not only on the
basis of the undertaking that the conviction was recorded, but the other
evide\)Ce on record also unerringly proved entrustment. Therefore, it was for
the appellant to prove as to how the property entrusted with him was dealt
with. No material was placed in that regard. Therefore, the courts below           F
correctly held entrustment to have been proved. The concurrent findings of
fact recorded by the courts below relating to entrustment and mis-
appropriation are well merited and fully justified on the basis of evidence on
record and do not suffer from any perversity or patent error of law to warrant
interference. [451-D-G)
                                                                                   G
      1.3. Section 18 of the Probation of Offenders Act, 1958 rules out
application of the Probation Act to a case covered under Section 5(2) of the
Act. Therefore, there is no substance in appellant's plea relating to grant of
benefit under the Probation Act. [451-G; 452-AJ
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    446                       SUPREME COURT REPORTS [2004) SUPP. I_ S.C.R.

A            CRIMINAL APPE'9f-.ATE JURISDICTION : Criminal Appeal No. 1262 of
     1998.

           From the Judgment and Order dated 14.7.98 of the Kerala High Court
    in Crl. A. No. 840 of 1994.

B            C.N. Sree Kumar for the Appellants.

             Ramesh Babu M.R. for the Respondent.

             The Judgment of the Court was delivered by

C         ARIJIT PASAYAT, J. N. Bhargavan Pillai (hereinafter referred to as
    'accused') as appellant questioned correctness of the judgment rendered by
    learned Single Judge of the Kerala High Court upholding his conviction under
    Section 5(2) of the Prevention of Corruption Act, 1947 (iil short the 'Act') and
    Section 409 of the Indian Penal Code, 1860 (in short the 'IPC'). For the offence
    under the Act, he was sentenced to undergo rigorous imprisonment for two
D   years and to pay a fine of Rs. l,00,000 with a default stipulation of 6 months
    imprisonment and sentence of one year for the offence undenthe IPC. Since
    he died during pendency of the appeal, his legal representatives sought for
    impletion arid have been impleaded.

             Accusations which led to trial of the accused are essentially as follows:
E
           The accused was employed in the Civil Supplies Department in the rank
    of Assistant Taluk Supply Officer. He was working as Junior Manager on
    deputation in the Kerala State Civil Supplies Corporation (in short the
    'Corporation'), at Kowdiar. While he was functioning as s~ctt,-by Ex.P-19
F order dated 14.4. I 983 of the Regional Manager, of the Corporation,.
    Thiruvananthapuram, he was appointed as Unit Manager of the Corporation,
    Unit Punalur. Pursuant to the orders he took charge as Unit Manager in the
    Punalur Unit. His 5 years deputation to the Corporation was to be completed
    on 30.6.1986. But, instead of relieving hiin, the Corporation had requested the
    Civil Supplies' Department to extend his term of deputation by one year
G stating that certain liabilities were outstanding. But later, the request for          .   ~




    extension of deputation was limited upto 30.11.1986 by Ext.P-38 letter dated
  . 4.11.1986 from the Managing Director of the Corporation to the Director of
    Civil Supplies, Board of Revenue. By the same letter, the Regional Manager
    of the Corporation, was directed to relieve the accused to his parent depart_ment
H on 30.11.1986 itself. Pursuant to the direction, the Regional Manager issued
             N.B. PILLAI v. STATE OF KERALA [PASA YAT, J.]                  447

Ext.P-20 order dated 29. l l.1986 relieving the accused effective from the A
afternoon of29.l l.1986. However, the accused did not hand over charge on
29.11.1986. He did not attend the office after 27.11.1986, but applied for leave.
As he did not attend the office on 29.11.1986, the Regional Manager by Ext.
P-22 dated 1.12.1986 permitted Natarajan Asari (PW-3), the Senior Assistant
in the Punalur depot to assume charge effective from that date. Accordingly, B
PW-3 assumed charge of the depot and this was reported by the Regional
Manager to the Managing Director of the Corporation by Ext. P-23 dated
4.12.1986. The stock of the Punalur Depot were partly stored in the
Warehousing Corporation godown at Punalur and partly in the godown
attached to the office, referred to by the witnesses as self-godown. Though
PW-3 assumed charge, the accused had not handed over the keys of the C
godown or verified the stock. Thereafter the accused reported in the depot
on 13.12.1986 and in the presence of the then Assistant Manager (Accounts)
(PW-2) in the Regional Office of the Corporation, brought the keys and
opened the godown. He also undertook in writing by Ext.P-24 to hand over
charge ori the 13th, 15th and 16th December, 1986. In the presence of the D
accused the items found in the godown were verified. Only the stock of2 l.875
quintals of M.P. boiled rice and 84 kg. of tamarind were found in the self-
godown. A stock statement was also obtained from the State Warehousing .
Corporation. The Managing Director of the Corporation directed a special
audit to be conducted by PW-1 who was then working as an Assistant
Manager in the Internal Audit Wing of the Corporation on deputation from E
the Accountant General's Office. Accordingly, PW-1 conducted a special
audit and Ext.P-1 was prepared.

      The stock in the State Warehousing Corporation godown as also the
self-godown were verified as on 31.3.1986. As per Ext.P-2 stock verification        F
report, there was an actual stock of37.8 quintals of Palmolein and 44 quintals
of free sale sugar. Subsequent to l.4. l 986, IOO quintals of paper boiled rice
were transferred from the Warehousing Corporation Depot to the self-godown,
and 23.65 quintals were returned from the Onam markets in Punalur. Thus, the
physical stock should have been 123.65 quintals of boiled rice. But the actual      G
stock found was 21.65 quintals. Thus, there was a shortage of 102 quintals.
Similarly, a total quantity of 72 quintals of Palmolein had been transferred from
the State Warehousing Corporation godown to the self-godown as per Exts.
P9 and Pl 1 goods transfer orders and Exts. PIO and P12 good transfer notes
signed by the accused. But, there was no stock of palmolein. There was a
stock of 46 quintals of free sale sugar as on 1.4.1986. Out of this 5 quinta!s      H

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    448                     SUPREME COURT REPORTS [2004] SUPP. l S.C.R.

A   had been transferred to the _Maveli Store, Punalur as per a consignment note
    dated 31.10.1986. The stock register showe~ a closing balance of 30 quintals,
    but no stock was available in the godown. PW-1 assessed the total value of
    shortage of rice at Rs.33, 150 that of palmolein at Rs.1,08,000 and sugar at
    Rs.22,620. He also reported that the accused had withdrawn loading and
B   transporting charges for these articles as per Exts. Pl3 and P14 series vouchers.
    No irregularity was found in the transactions under Imprest, .or in the accounts
    regarding sales and remittance. There was excess stock in the Warehousing
    Corporation godown as the ration dealers had not lifted and that was tallied
    by 31.12.1986 also. By Ext P-1, PW-1 fixed accused's liability including
    infructuous expenses on transporting and cost of missing empty barrels at
C   Rs.1,70,640. On 29.12.1986 the accused undertook to remit Rs. l,63,770 being
    the value of the shortage of 72 quintals of palmolein, 102 quintals of rice and
    39 quintals of sugar and in part pa~ment, deposited Rs.50,000 in the Punalur
    Depot on that day. By Ext. P-17 he undertook to deposit half the amount by
    2.1.1987 and the balance by 31st March next year. Thereafter the matter was
D   reported to the Board of Revenue and the accused was suspended from
    service by Ext.P-37 order of the Board of Revenue, dated 3 l. l.1987. The
    Managing Director of the Corporation wrote to the Director of Vigilance
    (Investigation) along with a copy ofExt.P-1 report. The Director of Vigilance
    (Investigation) sanctioned registration of a case. On the basis of the direction
E   the then Deputy Superintendent of Police, Vigilance, Kollam (PW-10) registered
    a case as per Ext.P-39. He entrusted the investigation to Inspector of the
    Kollam Vigilance Unit-I (PW-11), who conducted the investigation and sent
    a reirort to his higher authorities. In the meantime, the accused retired from
    service on 28.2.1992. Since he had retired from service sanction for prosecution
    became unnecessary. The case was transferred to the newly established
F   Pathanamthitta Vigilance Unit. PW-12, the Deputy Superintendent of Police,
    Vigilance, Pathanamthitta Unit who was put in charge of this case also verified
    the records and filed the charge sheet.

          Before the trial Court accused pleaded innocence. Twelve witnesses
G were examined and 47 documents were exhibited for the prosecution to further
    its case. Though the ·accused did not examine any witness, documents were
    marked as Exts. D-1 to D-5. The trial Court on consideration of materials held
    the accused guilty and convicted him as afore-noted. The High Court in
    appeal confirmed the conviction, and sentence.

H         In support of the appeal, Mr. C.N. Sree Kumar, learned counsel submitted




                                                                                        )
             N.B. PILLAI v. STATE OF KERALA [PASA YAT, J.]                449

that in the absence of a sanction for the prosecution in terms of Section 19 A
of the Act and Section 197 of the Code of Criminal Procedure, 1973 (in short
the 'Code') the whole proceeding was non est and the trial was vitiated.
Additionally, it was submitted that the prosecution has not established any
mis-appropriation and/or mens rea of the alleged crime and, therefore, both
the trial Court and the High Court have acted contrary to law. It was further
submitted that both the trial Court and the High Court proceeded on mere B
surmises and conjectures to hold that the accused had committed mis-
appropriation. The essential ingredients necessary to prove the accusations
under Section 409 IPC are squarely absent. Additionally, it was submitted that
both the trial Court and the High Court have attached undue importance to
the fact that the accused-appellant had agreed to pay the differential amount. C
Reliance was placed on a decision of this Court in Jiwan Dass v. State of
Haryana, [1999] 2 SCC 530 to contend that even if the accused had agreed
to pay the amount that was not material while considering the issue whether
the ingredients have been established by the prosecution. It is a case where
the sanction which was sought for was refused. The prosecution has acted
unfairly in taking advantage of the position that after retirement sanction is D
not necessary under the Act. In any event, in respect of a retired employee
sanction is necessary in terms of Section 197 of the Code. Effort has been
made to overreach and circumvent law after retirement and such arbitrary
action should not be countenanced. Finally, it was submitted that taking note
of the small amount involved and the fact that the accused has already E
deposited the amount the benefit available under the Probation of Offenders
Act, 1958 (in short the 'Probation Act') can be extended. Strong reliance is
placed on a decision of this Court in Bore Gowda v. State of Karnataka,
[2000] 10 sec 260. It is pointed out that though accused has died during
pendency of appeal his legal representatives have been impleaded and benefit
available under Section 12 of the Probation Act should not be denied to them. F

      In response, Mr. Ramesh Babu learned counsel for the respondent-State
submitted that the Courts below have acted in accordance with law keeping
in view the correct principles and the factual scenario. Mis-appropriation is
no part of an employee's official duty and, therefore, the question of any
sanction under Section 197 of the Code does not arise. In any event, initially,   G
the sanction was not accorded because the accused had retired and had
agreed to pay the amount but that was not the final decision. In a case
involving corruption it would be against public interest not to proceed against
the accused who is guilty of mis-appopriating huge amount of stock meant
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    450                     SUPREME COURT REPORTS [2004) SUPP. I S.C.R.

A for the people. The Probation Act has no application to the cases covered
    under the Act.

          When the newly-worded Section 197 appeared in the Code ~ith the
    words "when any person who is or was a public servant" (as against the
    truncated expression in the corresponding provisior. of the old Code of
B   Criminal Procedure, 1898), a contention was raised before this C:ourt' in
    Kalicharan Mahapatra v. State of Orissa, [1998] 6 SCC 411 that the lega-1
    position must be treated as changed even in regard to offences under the Old
    Act and New Act also. The said contention was, however,,repelled by this
    Court wherein a two-Judge Bench has held thus :
c           "A public servant who committed an offence mentioned in the Act,
            while he was a public servant, can be prosecuted with the sanction
            contemplated in Section 19 of the Act if he continues to be a public
            servant when the court takes cognizance of the offence. But if he
            ceases to be a public servant by that time, the court can take
D           cognizance of the offence without any such sanction.';

           The correct legal position, therefore, is that an accused facing
    prosecution for offences under the Old Act or New Act cannot claim any
    immunity on the ground of want of sanction, if he ceased to be a public
    servant on the date· when the court took cognizance of the said offences. But
E   the position is different in cases where Section 197 of the Code has application.

          Section 197(1) provides that when any person who is or was a public
    servant was not removable from his office save by or with the sanction of
    the Government is accused of any offence alleged to have been committed
    by him while acting or purporting to act in the discharge of his official duty,
F   no Court shall take cognizance of such offence except with the previous
    sanction (a) in the case of a person who is employed or, as the case may be,
    was at the time of commission of the alleged offence employed, in connection
    with the affairs of the Union, of the Central Government and (b) in the case
    of a person who is employed or, as the case may be, was at the time of
G   commission of the alleged offence employed, in connection with the affairs
    of a State, of the State Government.

          We may mention that the Law Commission in its 4lst Report in paragraph
    15 .123 while dealing with Section 197, as it then stood, observed "it appears _
    to us that protection under the section is_ needed as much after retirement of
H
             N.B.PILLAI v. STATE OF KERALA [PASAYAT, J.]                    451

the public servant as before retirement. The protection afforded by the section     A
would be rendered illusory if it were open to a private person harbouring a
grievance to wait until the public servant ceased to hold his official position,
and then to lodge a complaint. The ultimate justification for the protection
conferred by Section 197 is the public interest in seeing that official acts do
not lead to needless or vexatious prosecution. It should be left to the
Government to determine from that point of view the question of the expediency      B
of prosecuting any public servant". It was in pursuance of this observation
that the expression 'was' come to be employed after the expression 'is' to
make the sanction applicable even in cases where a retired public servant is
sought to be prosecuted.

     Above position was highlighted in R. Ba/akrishna Pillai v. State of
                                                                                    c
Kera/a, AIR (1996) SC 90 I.

     As noted in State of MP. v. MP. Gupta, JT (2003) IO SC 32, sanction
under Section 197 of the Code is not a condition precedent for an offence
under Section 409 IPC.                                                              D
        It is fairly well settled position in law that actual mode of entrustment
or mis-appropriation is not to be proved by the prosecution. Once entrustment
is proved, it is for the accused to prove as to how the property entrusted was
dealt with. In Jiwan Dass's case (supra) the factual position was entirely
different. It was held that the undertaking given in that case could not be held    E
to be confession or admission. In the present case, the factual scenario as
noticed by the trial Court and the High Court is different. It was not on!:· on
the basis of the undertaking that the conviction was recorded, but the other
evidence on record also unerringly proved entrustment. Therefore, it was for
the accused to prove as to how the property entrusted with him was dealt            F
with. No material was placed in that regard. Therefore, the Courts below
correctly held entrustment to have been proved. The concurrent findings of
fact recorded by the Courts below relating to entrustment and mis-appropriation
in our view are well merited and fully justified on the basis of evidence on
record and do not suffer from any perversity or patent error of law to warrant
interference.                                                                       G
      Coming to the plea relating to benefits under the Probation Act, it is to
be noted that Section 18 of the said Act clearly rules out application of the
Probation Act to a case covered under Section 5(2) of the Act. Therefore,
there is no substance in the accused-appellant's plea relating to grant of
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    452                    SUPREME COURT REPORTS [2004] SUPP. I S.C.R.

A benefit under the Probation Act. The decision in Bore Gowda 's case (supra)
    does not even indicate that Section 18 of the Probation Act was taken note
    of. In view of the specific statutory. bar the view, if any, expressed without
    analysing the statutory provision cannot in our view be treated as a binding
    precedent and at the most is to be considered as having been rendered per
B   incuriam. Looked at from any angle, the appeal is sans merit and deserves
    dismissal which we direct.

    B.S.                                                      Appeal dismissed.




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