14 Oct 2023 4:16 AM GMT
Objecting to former Andhra Pradesh Chief Minister N Chandrababu Naidu's plea for quashing of criminal proceedings in connection with a skill development scam in the state, the state police's crime investigation department (CID) cautioned the Supreme Court on Friday(October 13) against nipping the investigation at the bud at this stage. The state agency, in particular, emphasised the losses to the tune of hundreds of crores suffered by the public exchequer to highlight the seriousness of the allegations and the need for a probe.
Senior Advocate Mukul Rohatgi, appearing for the State of Andhra Pradesh, disputed the petitioner's contention that this was a case of political vendetta or 'regime revenge' by pointing to the contemporaneous inquiries being conducted by central agencies like the Directorate of Goods and Services Tax (DGST), the Securities and Exchange Board of India (SEBI), and income tax authorities. "The number of central agencies examining the issue shows that this is not the state government's vendetta," the senior counsel insisted.
A bench of Justices Aniruddha Bose and Bela M Trivedi was hearing Naidu’s special leave petition challenging an order passed by the Andhra Pradesh High Court last month declining to quash a first information report (FIR) arraigning the ex-chief minister as one of the accused in the scam. Naidu was arrested in connection with this case on September 9 by the AP CID and has been in custody since.
The court started hearing Naidu's plea on October 3. It has mainly revolved around the applicability of Section 17A of the Prevention of Corruption Act, 1988. Section 17A, inserted in July 2018 by way of an amendment, mandates that the competent authority's prior sanction must be obtained before launching an investigation against a public servant. It is this provision that Naidu has cited to challenge his arrest by the Andhra Pradesh police's CID. The thrust of his argument is that the department did not obtain the governor's sanction before arraigning him as the 37th accused in the skill development scam case.
On the first day of the hearing, the Justice Bose-led bench raised questions about whether the provision would apply to an offence predating the 2018 amendment that introduced it. The court also questioned whether Section 17A would be applicable when the FIR mentioned offences under both the Prevention of Corruption Act and the Indian Penal Code, 1860. A battery of lawyers - including senior advocates Harish Salve, Abhishek Manu Singhvi, and Sidharth Luthra - appearing for Naidu, argued that Section 17A should be applicable since the inquiry commenced after the 2018 amendment, notwithstanding the date of the offence. On the contrary, the State, represented by Senior Advocate Mukul Rohatgi, contended that the inquiry began before 2018. The hearing was finally adjourned with an instruction to the state government to provide the entire compilation of documents submitted to the high court.
The debate over the interpretation of Section 17A of the Prevention of Corruption Act continued on the subsequent two dates of hearing. On the next day, Salve argued that Section 17A was introduced to prevent instances of "regime revenge." Maintaining that the inquiry against Naidu only began in 2021, the senior counsel asserted that Naidu would be entitled to the protective cover of Section 17A. In this connection, he relied on the union government's standard operating procedure on Section 17A to argue that prior approval was required at every stage, from inquiry to the investigation. In response to this, the court asked the senior counsel if it could adopt an interpretation of the section that would "defeat the objectives of the act". Salve countered this by saying that the interpretation would strengthen the legislation, allowing public servants to act freely and instituting a framework of accountability for the investigating agency.
On the last occasion, Salve argued that charges against the former chief minister under the Prevention of Corruption Act could not be separated from the criminal conspiracy, cheating, forgery, and other charges under the Indian Penal Code, 1860. This was in response to a question posed during the previous hearings about whether the criminal proceedings could continue against Naidu even if the offences under the PC Act were dropped or did not survive. But even if the Prevention of Corruption Act is 'taken out', Salve said, it is not a sessions judge, but a magistrate who can grant a remand. This would mean the order remanding the legislator to custody would be denuded of jurisdiction and liable to be set aside, the senior counsel told the bench. Rohatgi, however, did not agree that the special court's remand order would become invalid if the offences under the Prevention of Corruption Act do not survive or are dropped on grounds of non-compliance with the prior sanction provision. Not that I am conceding that the PC Act 'goes', he said, but even if it does, the special judge will retain its jurisdiction to try all offences not under the Prevention of Corruption Act.
Yesterday, Rohatgi urged the court to not "nip the investigation at the bud", saying that the nature of the scam and the seriousness of the allegations warranted a probe -
"The allegation is that the Andhra Pradesh Skill Development Corporation is formed with the objective of providing skill development to the youth of the nation. For that, they entered into an agreement with two companies without floating any tender. Before anything was set up, 370 crores were parted by the development corporation in favour of these companies, without looking at what is on the ground and overruling the department's objection. This money was transferred by these companies to certain shell companies that then withdrew hundreds of crore in cash. Most of this went back to the petitioner. That is the nature of the scam that has been alleged. If Naidu's attempt is successful, it will nip the investigation at the bud. That should be abhorred."
"At what level was this decision taken?" Justice Trivedi asked the senior counsel, referring to the formation of the skill development corporation in the state and the agreement it subsequently entered with two companies.
"By the chief minister," he replied, "We may be right, we may be wrong. But this has to be investigated."
Justice Bose asked at this juncture, "How do you trace the money to the petitioner?"
Rohatgi claimed that Naidu had overseen the formation of the skill development corporation and the agreement with the companies to whom funds were allegedly diverted. He elaborated -
Besides this, Rohatgi repeated his earlier submission that Section 17A would not apply to the present case inasmuch as it was introduced in July 2018, after the alleged offences had already been committed. He elaborated, saying that even though the first information report (FIR) validly invoked provisions that were later repealed because they were in force at the time of the commission of the offence, Section 17A would not 'relate back' to that time since it is meant to be prospective.
Alternatively Rohatgi argued that the allegations could never remotely be considered to be a decision, determination, or recommendation in discharge of public functions to come within the protective cover of the section. The Supreme Court has held that even stricter bars on the prosecution under Section 197 of the Code of Criminal Procedure, 1973 or Section 19 of the Prevention of Corruption Act cannot have a 'stultifying' effect, the senior counsel contended. He then said the provision cannot be read in isolation to provide an 'umbrella of protection' and must be interpreted in line with the object of the anti-corruption legislation. Where there is a doubt regarding an interpretation, he told the bench, the Supreme Court has favoured an interpretation that enabled the eradication of corruption.
In any case, the application of Section 17A, he further argued, can only be debated when the facts are examined by the judge trying the case. Such questions cannot be decided in a petition for quashing of criminal proceedings under Section 482 of the Code of Criminal Procedure, unless the parties are in agreement about whether an act is in discharge of a public duty. "Otherwise," he argued, "This question of fact on which there is a difference in perception cannot be decided in Section 482 petition. How will you decide within five to ten days of the investigation commencing? There is no way the court will agree to scuttle the investigation at this stage."
"I've never seen a petition under Section 482 being filed on the same day. This was argued in the high court, and then on the same day, an appeal was filed in the Supreme Court," Rohatgi added, pointing to the timeline of Naidu's arraignment as an accused, his subsequent arrest and remand to custody, and the litigation initiated by him in the high court.
In response to Rohatgi's submissions regarding Section 17A of the Prevention of Corruption Act, Justice Bose said, "We followed the logic of your argument, but we are having some doubts about the implementation of this provision. The bar is on starting any inquiry. Will the investigating officer have to form an opinion first?"
Rohatgi answered, "The authority will have to see whether the allegations contained can remotely be connected to a recommendation or decision in discharge of public duties."
This is an entry-point bar unlike Section 197 CrPC, Justice Bose reasoned. "How will the person who is starting the inquiry decide...They will have to, while writing the general diary, record the application of Section 17A."
The senior counsel explained that the investigating officer would have to decide on the basis of the material available whether the allegations revealed a bona fide determination or decision in the exercise of the official duties of a public servant. "But, if the facts show to the contrary..."
"But he has not even started the inquiry. How will he know?" Justice Bose exclaimed, before stressing the need to figure out the 'workability' of the provision.
The hearing was adjourned until October 17, Tuesday. In related news, the court also orally asked the AP CID to not arrest Naidu in the FiberNet scam case till the next date of hearing.
Background
Nara Chandrababu Naidu, Telugu Desam Party president and erstwhile Andhra Pradesh chief minister, has been arrested in connection with a skill development scam in the state, with the state crime investigation department claiming to have prime facie evidence of the former chief minister’s key role in the alleged embezzlement of around Rs 371 crore from the Andhra Pradesh Skill Development Corporation through fictitious companies during the TDP's rule between 2014 and 2019. He is the 37th accused in a 2021 FIR related to the multi-crore scam involving the state skill development corporation.
The opposition Telugu Desam Party leader was arrested by the Andhra Pradesh CID on September 9 and has remained in custody since. Subsequently, a Vijayawada court remanded Naidu to police custody for September 23 and 24. On Sunday, Naidu’s judicial remand was extended till October 5.
Last week, the Andhra Pradesh High Court dismissed Naidu’s plea for quashing of the FIR. In his petition, he argued that the trial court’s order remanding him to custody did not consider that the CID had failed to obtain prior approval from the governor, as required by Section 17A of the Prevention of Corruption Act. However, a bench of Justice K Sreenivas Reddy ruled that prior sanction from the competent authority was unnecessary for the investigation since the use of public funds, allegedly for personal gain, did not constitute an act in the discharge of official duties. The court also agreed that given the seriousness of economic offences, the investigation should not be hindered, especially at this early stage.
Challenging this ruling, the TDP leader has approached the Supreme Court in a special leave petition.
Case Details
Nara Chandrababu Naidu v. State of Andhra Pradesh & Anr. | Special Leave Petition (Criminal) No. 12289 of 2023