Top Court dismisses Ex-Andhra Pradesh CM N Chandrababu Naidu’s appeal in Rs 370 crore skill development scam case; expresses divergent views on interpretation of section 17(A) of PC Act & refers matter to CJI
Justices Bela M. Trivedi & Aniruddha Bose [16-01-2024]

Read Order: NARA CHANDRABABU NAIDU v. THE STATE OF ANDHRA PRADESH  (In CRIMINAL APPEAL NO. 279 OF 2024 - SC)

Tulip Kanth

New Delhi, January 17, 2024:  The Supreme Court has dismissed an appeal of former Andhra Pradesh Chief Minister N Chandrababu Naidu challenging the order rejecting his plea for quashing of FIR registered against him for his involvement in Rs 370 crore Andhra Pradesh Skill Development scam case. However, the Division Bench, comprising Justice Bela M. Trivedi and Justice Aniruddha Bose, expressed divergent views on interpretation of section 17(A) of Prevention Of Corruption Act which postulates prior approval from the appointing authority in relation to any enquiry or investigation.

The appellant was aggrieved by initiation of a criminal proceeding against him and his detention in connection with the same by the respondent State through its CID. Allegations were made against him for commission of offences under Sections 166, 167, 418, 420, 465, 468, 471, 409, 209 and 109 read with Sections 120-B, 34 and 37 of the Indian Penal Code, 1860 and Section 12 and 13(2) read with Sections 13(1)(c) and (d) of the Prevention of Corruption Act, 1988. The said offences are alleged to have been committed between the years 2015 and 2019, during which period he was the Chief Minister of the State of Andhra Pradesh. The offences primarily related to siphoning of public funds

The appellant was arrested and was remanded to judicial custody by the Special Judge. The appellant applied before the High Court for quashing the F.I.R. implicating him. The legality of the remand order was also challenged in the same petition before the High Court. The appellant’s plea was rejected and his petition was dismissed by a Single Judge. The present appeal before the Top Court was against this judgment of dismissal of the said petition.

The primarily allegation against the appellant was facilitating diversion of public money in the approximate range of Rs 370 crores, which was to be used for setting up of six clusters of skill development centres in Andhra Pradesh. The total project cost was conceived to be Rs 3281,05,13,448/- with each of the six clusters costing Rs.546,84,18,908/-. Government contribution was limited to 10 percent of the cost, with SIEMENS and Design Tech providing grant-in-aid of 90% . It was the State’s case that requirement of contribution of the two corporate entities was ignored and the final memorandum of agreement only entailed outflow of Rs.330 crores from the State to Design Tech.

The main complaint against the appellant was that he had fast tracked the project and approved the cost estimation with criminal intent and by pursuing the government officials, he had ensured release of Rs 370 crore. The project was allotted to Design Tech and SIEMENS on nomination basis, without following any tender process. Misappropriation of government funds through corrupt and illegal methods had been alleged and abuse of official position had been attributed to the appellant.

It was noticed by the Bench that the original FIR was registered on 09.12.2021 and the appellant was implicated in the aforesaid offences on 08.09.2023. There was no evidence of any substantive enquiry, inquiry, or investigation made against him prior to coming into operation of the Section 17A of the 1988 Act. On behalf of the appellant, the main argument revolved around the non- compliance of Section 17A in implicating the appellant under Sections 12, 13(2) read with 13(1) (c) and (d) of the 1988 Act and proceeding against him inter-alia, under the aforesaid provisions.

Section 17A states that no police officer shall conduct any enquiry or inquiry or investigation into any offence alleged to have been committed by a public servant under this Act, where the alleged offence is relatable to any recommendation made or decision taken by such public servant in discharge of his official functions or duties, without the previous approval of the Governement or the sanctioning Authority.

Justice Bose was of the view that the point of time Section 17A of 1988 Act would become applicable is the starting point of enquiry, inquiry, or investigation and not the time of commission of the alleged offence. In the event any of the three acts on the part of the prosecution is triggered off post 26.07.2018, the mandate of Section 17A would be applicable. It was observed that if the process of enquiry commences at a time attracting specific provisions of the 1988 Act which stand deleted by the Amendment Act of 2018, the restrictive protection in form of Section 17A ought to be granted.

“The said section, however, as I have already narrated, had become operational when the enquiry started. Thus, proceeding on the basis that the said provision is prospective in its operation, the material point of time for determining its prospectivity would be the starting point of enquiry or inquiry and investigation”, Justice Bose asserted.

It was observed that the offences against the appellant related to the same or similar set of transactions in relation to which the Special Judge was proceeding with the case initiated by the F.I.R. against the other accused persons. Justice Bose opined that the alleged commission of IPC offences were not mere ancillary to the 1988 Act offences and if commission of offences by the appellant under the IPC provisions is proved, could form the basis of conviction independent of the offences under the 1988 Act.

Justice Bose thus held that if an enquiry, inquiry or investigation is intended in respect of a public servant on the allegation of commission of offence under the 1988 Act after Section 17A thereof becomes operational, which is relatable to any recommendation made or decision taken, at least prima facie, in discharge of his official duty, previous approval of the authority postulated in sub-section (a) or (b) or (c) of Section 17A of the 1988 Act shall have to be obtained. In absence of such previous approval, the action initiated under the 1988 Act shall be held illegal.

It was also observed that the appellant cannot be proceeded against for offences under the Prevention of Corruption Act, 1988 as no previous approval of the appropriate authority has been obtained. It was opined that the Special Judge had the jurisdiction to pass an order even if the offences under the 1988 Act could not be invoked at that stage. Lack of approval in terms of Section 17A would not have rendered the entire order of remand non-est, Justice Bose held while also adding that the appellant could be proceeded against before the Special Judge for allegations of commission of offences under the Indian Penal Code.

Justice Trivedi noted that Section 17A bars the police officer from conducting any enquiry or inquiry or investigation of offences relatable to recommendations made or decision taken by public servant in discharge of official functions or duties, without the previous approval of the concerned authorities mentioned therein.

“Section 17A having been introduced as a part of larger legislative scheme, and the other offences under the PC Act having been redefined or newly inserted by way of Amendment Act, 2018, Section 17A is required to be treated as a substantive and not merely a procedural in nature. Such a substantive amendment could not be made applicable retrospectively to the offences like Section 13(1)(c) and 13(1)(d), which have been deleted under the Amendment Act, 2018”, she further held.

Justice Trivedi also noticed that the intention of the legislature was to make Section 17A applicable only to the new offences as amended by Amendment Act, 2018 and not to the offences which existed prior to the coming into force of the Amendment Act 2018.

“Even otherwise, absence of an approval as contemplated in Section 17A for conducting enquiry, inquiry or investigation of the offences alleged to have been committed by a public servant in purported exercise of his official functions or duties, would neither vitiate the proceedings nor would be a ground to quash the proceedings or the FIR registered against such public servant”, Justice Trivedi stated.

Thus, dismissing the appeal, she observed that the Appellant having been implicated for the other offences under IPC also, the Special Court was completely within its jurisdiction to pass the remand order in view of the powers conferred upon it under Section 4 and 5 of the PC Act.

However, considering the fact that both the Judges had expressed different views on the interpretation of Section 17A of the Prevention of Corruption Act, 1988 as also its applicability to the appellant in the subject-case, the Bench referred the matter to the Chief Justice of India.

“The Registry to place the papers before the Hon’ble the Chief Justice of India so that appropriate decision can be taken for the constitution of a Larger Bench in this case for adjudication on the point on which contrary opinions have been expressed by us”, the Top Court ordered.