In W.P. (CRL) 299/2019 -DEL HC- Delhi High Court dismisses charges against DANICS officer in housing society fraud case due to lack of sanction under Section 197 of CrPC
Justice Tushar Rao Gedela [22-11-2023]

Read Order: Rakesh Bhatnagar V. Central Bureau of Investigation

Chahat Varma

New Delhi, November 24, 2023: The Delhi High Court has quashed charges against DANICS officer in a cooperative society fraud case. The Court held that the charges were untenable in the absence of the appropriate sanction under Section 197 of the Code of Criminal Procedure (Cr.P.C.).

In this case, the Central Bureau of Investigation (CBI) had registered a case against several individuals, including Rakesh Bhatnagar, for offenses under various sections of the Indian Penal Code and the Prevention of Corruption Act. The case pertained to the alleged conspiracy and fraudulent activities involving the Arvind Cooperative Group Housing Society Limited in New Delhi. The society, which was purportedly not functioning in accordance with applicable laws and regulations, was wound up, and subsequently, individuals including Srichand, Anna Wankhede, Mohan Lal, and others were accused of conspiring to cheat the Government of NCT Delhi. The investigation revealed alleged instances of impersonation, forgery, cheating, and use of forged documents to fraudulently obtain land from the Delhi Development Authority at a lower rate. The investigation also uncovered the concealment of material information with a purported mala fide intention and conspiracy between the accused individuals. Rakesh Bhatnagar, working as Joint Registrar in the Registrar Cooperative Societies office, New Delhi, was implicated for irregularly recommending a note sheet, not ensuring the revival or liquidation status of the society, and endorsing recommendations for the approval of a freeze list of society members for land allotment to the Society. It was alleged that as a Joint Registrar, Bhatnagar failed to point out that the society was under liquidation and therefore ineligible for land allotment without revival.

The single-judge of Justice Tushar Rao Gedela bench highlighted that a strong suspicion, founded on material that can be translated into evidence at the trial stage, was essential to maintain an order on charges. It noted that such suspicion should not be based on pure subjective satisfaction or moral notions, but rather be premised on material that allows the court to entertain a prima facie view that the accused had committed the offense.

The bench observed that both the Trial Court and the CBI, presumed that the petitioner, was aware of the order for the liquidation of the society. However, it was admitted by the prosecution that this winding-up order was not part of the subject file and was discovered by the CBI in the society's file maintained by the DDA. Given this admitted factual situation, the bench found it difficult, if not impossible, to conclude that the petitioner had conscious knowledge of the said order. The observation suggested that it would be challenging to determine complicity or culpability on the part of the petitioner for wilfully concealing or overlooking such an order when approving a note put up by his subordinate.

The bench also observed that, on the date of approval by the petitioner, the rule in force indicated that the order of liquidation may not have been in effect. The definition of 'Defunct Society' as per Rule 2 (viii) of the Delhi Co-Operative Societies Rules 1973, which was applicable at the time of the alleged offence, required a formal and written order by the Registrar of Cooperative Societies for a society to be deemed defunct. No such order was found to exist or was presented by the CBI.

Thus, the bench held that the question of the petitioner being part of a larger conspiracy with all other co-accused persons, including other government servants, did not seem to be established. The bench emphasized that suspicion, unless found to be grave, should not lead to the framing of charges.

Further, the bench referred to the judgments rendered in Prof. N.K. Ganguly v. CBI New Delhi [LQ/SC/2015/1543] and A. Sreenivasa Reddy v. Rakesh Sharma & Anr [LQ/SC/2023/812], elucidating the legal principles concerning sanction under Section 197 of the Cr.P.C. The bench highlighted key aspects from these judgments. Firstly, it was emphasized that for the purpose of obtaining previous sanction from the appropriate government under Section 197 of the Cr.P.C., it was vital to establish that the alleged offense was committed in discharge of official duty by the accused. The bench also noted that the protection provided by Sub-section (1) of Section 197 of the Cr.P.C. was available only to public servants whose appointing authority was the Central Government or the State Government, and not to every public servant. Furthermore, the bench clarified that while in a prosecution under the Prevention of Corruption Act, sanction was mandatory for offenses exclusively under the Act, in cases under the general penal law against a public servant, the necessity of sanction under Section 197 of the Cr.P.C. depends on factual aspects. The bench emphasized the importance of establishing a ‘nexus’ between the act and the official duty of the public servant, and noted that to commit an offense punishable under the law can never be a part of the official duty of a public servant.

The counsel for the CBI had not contested the absence of sanction under Section 197 of the Cr.P.C obtained from the Competent Authority against the petitioner. Given this admission, the petition was allowed, and the order framing charges against the petitioner with respect to offenses under the PC Act as well as the offenses under the IPC were quashed and set aside.Top of Form